As filed with the Securities and Exchange Commission on September 17, 1996
REGISTRATION NO. 333-[ ]
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CONTINENTAL AIRLINES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 4512 74-2099724
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
2929 ALLEN PARKWAY, SUITE 2010
HOUSTON, TEXAS 77019
(713) 834-2950
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANTS PRINCIPAL EXECUTIVE OFFICES)
----------------------------------------
JEFFERY A. SMISEK, ESQ.
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
CONTINENTAL AIRLINES, INC.
2929 ALLEN PARKWAY, SUITE 2010
HOUSTON, TEXAS 77019
(713) 834-2950
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES OF CORRESPONDENCE TO:
MICHAEL L. RYAN, ESQ.
CLEARY, GOTTLIEB, STEEN & HAMILTON
ONE LIBERTY PLAZA
NEW YORK, NEW YORK 10006
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement of the Securities
becomes effective.
----------------------------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
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CALCULATION OF REGISTRATION FEE
====================================================================================================================
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED OFFERING PRICE PER UNIT AGGREGATE OFFERING REGISTRATION
PRICE (1) FEE(2)
- --------------------------------------------------------------------------------------------------------------------
Pass Through Certificates, $290,000 100% $290,000 $100
Series 1996-2
- --------------------------------------------------------------------------------------------------------------------
(1) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933, as amended.
(2) Pursuant to Rule 429, a registration fee of $176,114.59 was previously paid
in connection with the registration of $510,733,000 in aggregate principal
amount of pass through certificates under a Registration Statement on
Form S-4 (File No. 333-04827) filed by the Registrant.
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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CONTINENTAL AIRLINES, INC.
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING LOCATION IN THE PROSPECTUS
OF INFORMATION REQUIRED BY ITEMS IN FORM S-4
ITEM LOCATION IN PROSPECTUS
---- ----------------------
1. Forepart of the Registration Statement
and Outside Front Cover Page of
Prospectus...................................... Facing Page of the Registration Statement; Cross Reference
Sheet; Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus............................. Available Information; Outside Back Cover Page of Prospectus
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information................... Prospectus Summary; Risk Factors; The Company; Selected
Financial Data
4. Terms of the Transaction.......................... Prospectus Summary; Risk Factors; The Exchange Offer;
Description of New Certificates; Plan of Distribution; Certain
Federal Income Tax Considerations
5. Pro Forma Financial Information................... Not Applicable
6. Material Contracts With the Company
Being Acquired.................................. Not Applicable
7. Additional Information Requred for
Reoffering by Persons and Parties
Deemed to be Underwriters....................... Not Applicable
8. Interests of Named Experts and Counsel............ Not Applicable
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities..................................... Not Applicable
10. Information with Respect to S-3
Registrants..................................... Prospectus Summary; The Company; Recent Developments
11. Incorporation of Certain Information by
Reference....................................... Available Information; Incorporation of Certain Documents by
Reference
12. Information with Respect to S-2 or S-3
Registrants..................................... Not Applicable
13. Incorporation of Certain Information by
Reference....................................... Not Applicable
14. Information with Respect to Registrants
Other Than S-3 or S-2 Registrants............... Not Applicable
15. Information with Respect to S-3
Companies....................................... Not Applicable
16. Information with Respect or S-2 to S-3
Companies....................................... Not Applicable
17. Information with Respect to Companies
Other Than S-3 or S-2 Companies................. Not Applicable
18. Information if Proxies, Consents or
Authorizations Are to be Solicited.............. Not Applicable
19. Information if Proxies, Consents or
Authorizations Are Not to be
Solicited or in an Exchange Offer............... Prospectus Summary; The Exchange Offer; Description of New
Certificates
********************************************************************************
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE *
* SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR *
* MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT *
* BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL *
* OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE *
* SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE *
* UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS *
* OF ANY SUCH STATE. *
********************************************************************************
SUBJECT TO COMPLETION--DATED SEPTEMBER 17, 1996
PROSPECTUS
Continental Airlines, Inc.
Offer to Exchange Pass Through Certificates, Series 1996-2,
which have been registered under the Securities Act of 1933, as amended,
for any and all outstanding Pass Through Certificates, Series 1996-2
The Exchange Offer will expire at 5:00 p.m., New York City time,
on [ ], 1996, unless extended.
Pass Through Certificates, Series 1996-2 (the "New Certificates"),
which have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a Registration Statement of which this Prospectus
is a part, are hereby offered, upon the terms and subject to the conditions set
forth in this Prospectus and the accompanying letter of transmittal (the "Letter
of Transmittal" and, together with this Prospectus, the "Exchange Offer"), in
exchange for an equal principal amount of outstanding Pass Through Certificates,
Series 1996-2 (the "Old Certificates"), of which $171,749,000 aggregate
principal amount is outstanding as of the date hereof. The New Certificates and
the Old Certificates are collectively referred to herein as the "Certificates."
Any and all Old Certificates that are validly tendered and not
withdrawn on or prior to 5:00 P.M., New York City time, on the date the Exchange
Offer expires, which will be [ ], 1996 (30 calendar days following the
commencement of the Exchange Offer) unless the Exchange Offer is extended (such
date, including as extended, the "Expiration Date") will be accepted for
exchange. Tenders of Old Certificates may be withdrawn at any time prior to 5:00
P.M., New York City time on the Expiration Date. The Exchange Offer is not
conditioned upon any minimum principal amount of Old Certificates being tendered
for exchange. However, the Exchange Offer is subject to certain customary
conditions which may be waived by the Company and to the terms of the
Registration Rights Agreement (as defined herein). Old Certificates may be
tendered only in integral multiples of $1,000. See "The Exchange Offer."
The New Certificates will be entitled to the benefits of the same
Pass-Through Trust Agreements (as defined herein) which govern the Old
Certificates and will govern the New Certificates. The form and terms of the New
Certificates are the same in all material respects as the form and terms of the
Old Certificates, except that the New Certificates do not contain terms with
respect to the interest rate step-up provisions and the New Certificates have
been registered under the Securities Act and therefore will not bear legends
restricting the transfer thereof. See "The Exchange Offer" and "Description of
New Certificates."
Each Certificate represents a fractional undivided interest in one of
the four Continental Airlines 1996-2 Pass Through Trusts (the "Class A Trust",
the "Class B Trust", the "Class C Trust" and the "Class D Trust" and,
collectively, the "Trusts") formed pursuant to four separate pass through trust
agreements (the "Pass Through Trust Agreements") between Continental and
Wilmington Trust Company (the "Trustee"), as trustee under each Trust. Pursuant
to an Intercreditor Agreement (as defined herein), (i) the Certificates of the
Class B Trust are subordinated in right of payment to the Certificates of the
Class A Trust, (ii) the Certificates of the Class C Trust are subordinated in
right of payment to the Certificates of the Class B Trust and (iii) the
Certificates of the Class D Trust are subordinated in right of payment to the
Certificates of the Class C Trust. Payments of interest on the Certificates
issued by each Trust (other than the Class D Trust) are supported by separate
liquidity facilities for the benefit of the
(continued on next page)
----------------------
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
PARTICIPANTS IN THE EXCHANGE OFFER, SEE "RISK FACTORS" BEGINNING ON PAGE 25 OF
THIS PROSPECTUS.
----------------------
Final Expected
Pass Through Certificates Principal Amount Interest Rate Distribution Date
- ------------------------- ---------------- ------------- -----------------
1996-2A.................... $ 82,513,000 7.75% July 2, 2014
1996-2B.................... $ 35,363,000 8.56% July 2, 2014
1996-2C.................... $ 35,363,000 10.22% July 2, 2014
1996-2D.................... $ 18,510,000 11.50% April 2, 2008
------------
TOTAL $171,749,000
============
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
--------------------
The date of this Prospectus is [ ], 1996
(continued from cover page)
holders of such Certificates, each such facility provided initially by De
Nationale Investeringsbank N.V. ("DNIB"), in an amount sufficient to pay
interest thereon at the applicable interest rate for such Trust on six
successive quarterly distribution dates.
All of the Equipment Notes held in each Trust will accrue interest at the
applicable rate per annum for such Trust, payable on January 2, April 2, July 2
and October 2 of each year commencing on July 2, 1996. Such interest will be
passed through to Certificateholders (as defined herein) of such Trust on each
such date, in each case subject to the Intercreditor Agreement (as defined
herein). See "Description of New Certificates--General" and "--Payments and
Distributions." The New Certificates will accrue interest at the applicable per
annum rate for such Trust, from the last date on which interest was paid on the
Old Certificates surrendered in exchange therefor. See "The Exchange
Offer--Interest on New Certificates."
Scheduled principal payments on the Equipment Notes held in each Trust will
be passed through to the Certificateholders of each such Trust on January 2,
April 2, July 2 and October 2 in certain years, commencing on October 2, 1996,
in the case of each of the Class A Trust, the Class B Trust and the Class C
Trust and July 2, 1996, in the case of the Class D Trust, in accordance with the
principal repayment schedule set forth below under "Description of New
Certificates--Pool Factors" and "Description of the Equipment Notes--Principal
and Interest Payments", in each case subject to the Intercreditor Agreement.
Under each Pass Through Trust Agreement, an Event of Default will occur if
the Trustee fails to pay within 10 business days of the due date thereof: (i)
the outstanding Pool Balance (as defined herein) of the applicable Class of
Certificates on the Final Maturity Date (as defined herein) for such Class or
(ii) interest due on such Certificates on any distribution date (unless the
Subordination Agent (as defined herein) shall have made an Interest Drawing (as
defined herein) in an amount sufficient to pay such interest and shall have
distributed such amount to the Certificateholders entitled thereto).
Each Class of New Certificates will be represented by a single, permanent
global Certificate in fully registered form and will be deposited with the
Trustee as custodian for and registered in the name of a nominee of DTC.
Beneficial interests in the permanent global Certificates will be shown on, and
transfers thereof will be effected through, records maintained by DTC and its
participants.
Based on interpretations by the staff of the Securities and Exchange
Commission (the "Commission"), as set forth in no-action letters issued to third
parties, including Exxon Capital Holdings Corporation, SEC No-Action Letter
(available April 13, 1989) (the "Exxon Capital Letter"), Morgan Stanley & Co.
Incorporated, SEC No-Action Letter (available June 5, 1991) (the "Morgan Stanley
Letter") and Shearman & Sterling, SEC No-Action Letter (available July 2, 1993)
(the "Shearman & Sterling Letter") (collectively, the "Exchange Offer No-Action
Letters"), the Company believes that the New Certificates issued pursuant to the
Exchange Offer may be offered for resale, resold or otherwise transferred by
holders thereof (other than a broker-dealer who acquires such New Certificates
directly from the Trustee for resale pursuant to Rule 144A under the Securities
Act or any other available exemption under the Securities Act or any holder that
is an "affiliate" of the Company as defined under Rule 405 of the Securities
Act), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Certificates are
acquired in the ordinary course of such holders business and such holders are
not engaged in, and do not intend to engage in, a distribution of such New
Certificates and have no arrangement with any person to participate in a
distribution of such New Certificates. By tendering the Old Certificates in
exchange for New Certificates, each holder, other than a broker-dealer, will
represent to the Company that: (i) it is not an affiliate of the Company (as
defined under Rule 405 of the Securities Act) nor a broker-dealer tendering Old
Certificates acquired directly from the Company for its own account; (ii) any
New Certificates to be received by it will be acquired in the ordinary course of
its business; and (iii) it is not engaged in, and does not intend to engage in,
a distribution of such New Certificates and has no arrangement or understanding
to participate in a distribution of the New Certificates. If a holder of Old
Certificates is engaged in or intends to engage in a distribution of the New
Certificates or has any arrangement or understanding with respect to the
distribution of the New Certificates to be acquired pursuant to the Exchange
Offer, such holder may not rely on the applicable interpretations of the staff
of the Commission and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any secondary resale
transaction. Each broker-dealer that receives New Certificates for its own
account pursuant to the Exchange Offer (a "Participating Broker-Dealer") must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Certificates. The Letter of Transmittal states that by so acknowledging
and by delivering a prospectus, a Participating Broker-Dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a Participating Broker-Dealer in connection with resales of New
Certificates received in exchange for Old Certificates where such Old
Certificates were acquired by such Participating Broker-Dealer as a result of
market-making activities or other trading activities. Pursuant to the
Registration Rights Agreement, the Company has agreed that starting on the
Expiration Date it will make this Prospectus available to any Participating
Broker-Dealer for use in connection with any such resale. See "Plan of
Distribution."
The Company will not receive any proceeds from this offering. The Company
has agreed to pay the expenses of the Exchange Offer. No underwriter is being
utilized in connection with the Exchange Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF OLD CERTIFICATES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES AND BLUE SKY LAWS OF SUCH JURISDICTION.
Prior to this Exchange Offer, there has been no public market for the Old
Certificates or New Certificates. If such a market were to develop, the New
Certificates could trade at prices that may be higher or lower than their
principal amount. Neither Continental nor any Trust has applied or intends to
apply for listing of the New Certificates on any national securities exchange or
for quotation of the New
2
Certificates through the National Association of Securities Dealers Automated
Quotation System. One or more of Morgan Stanley & Co. Incorporated, CS First
Boston Corporation and FIELDSTONE FPCG SERVICES, L.P. (the "Initial Purchasers")
have previously made a market in the Old Certificates and Continental has been
advised that Morgan Stanley & Co. Incorporated and CS First Boston Corporation
presently intend to make a market in the New Certificates, as permitted by
applicable laws and regulations, after consummation of the Exchange Offer. None
of the Initial Purchasers is obligated, however, to make a market in the Old
Certificates or the New Certificates and any such market making activity may be
discontinued at any time without notice at the sole discretion of each Initial
Purchaser. There can be no assurance as to the liquidity of the public market
for the New Certificates or that any active public market for the New
Certificates will develop or continue. If an active public market does not
develop or continue, the market prices and liquidity of the New Certificates may
be adversely affected. See "Risk Factors--Absence of a Public Market for the New
Certificates."
3
AVAILABLE INFORMATION
Continental is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information may be
inspected and copied at the following public reference facilities maintained by
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549; Seven World Trade Center, 13th Floor, New York, New York
10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may also be obtained from the Public
Reference Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, upon payment of prescribed rates. The
Commission maintains a Web site at http://www.sec.gov containing reports, proxy
statements and other information regarding registrants that file electronically
with the Commission, including Continental. In addition, reports, proxy
statements and other information concerning Continental may be inspected and
copied at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New
York, New York 10005.
Continental is the successor to Continental Airlines Holdings, Inc.
("Holdings"), which merged with and into Continental on April 27, 1993.
Holdings had also been subject to the informational requirements of the Exchange
Act.
This Prospectus constitutes a part of a registration statement on Form S-4
(together with all amendments and exhibits, the "Registration Statement") filed
by Continental with the Commission, through the Electronic Data Gathering,
Analysis and Retrieval System ("EDGAR"), under the Securities Act, with respect
to the New Certificates offered hereby. This Prospectus omits certain of the
information contained in the Registration Statement, and reference is hereby
made to the Registration Statement for further information with respect to
Continental and Holdings and the securities offered hereby. Although statements
concerning and summaries of certain documents are included herein, reference is
made to the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. These documents may be
inspected without charge at the office of the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and copies may be obtained at fees
and charges prescribed by the Commission.
REPORTS TO PASS THROUGH CERTIFICATEHOLDERS
Wilmington Trust Company, in its capacity as Pass Through Trustee under
each of the Trusts, will provide the certificateholders of each Trust certain
periodic reports concerning the distributions made from such Trust. See
"Description of New Certificates--Reports to Certificateholders."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 0-9781) are
hereby incorporated by reference in this Prospectus: (i) Continental's Annual
Report on Form 10-K for the year ended December 31, 1995 (as amended by Forms
10-K/A1 and 10-K/A2 filed on March 8, 1996 and April 10, 1996, respectively),
(ii) Continental's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1996 and June 30, 1996, and (iii) Continental's Current Reports on Form 8-K,
filed on January 31, 1996, March 26, 1996, May 7, 1996, June 27, 1996, July
22, 1996 and September 16, 1996.
All reports and any definitive proxy or information statements filed by
Continental pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of the
offering of the securities offered hereby shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated herein by reference, or contained in this Prospectus, shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or
4
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE THAT ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE WITHOUT CHARGE TO
ANY PERSON TO WHOM A PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST OF
SUCH PERSON, FROM CONTINENTAL AIRLINES, INC., 2929 ALLEN PARKWAY, SUITE 2010,
HOUSTON, TEXAS 77019, ATTENTION: SECRETARY, TELEPHONE (713) 834-2950. IN ORDER
TO ENSURE TIMELY DELIVER OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY
_________, 1996.
5
PROSPECTUS SUMMARY
The following summary information is qualified in its entirety by the
detailed information and financial statements (including the notes thereto)
appearing elsewhere in this Prospectus. Prospective investors should consider
carefully the matters discussed under the caption "Risk Factors." Unless
otherwise stated or unless the context otherwise requires, references to
"Continental" or the "Company" include Continental Airlines, Inc. and its
predecessors and subsidiaries. Information contained in this Prospectus relating
to the outstanding principal amount of the Certificates and Equipment Notes is
provided as of the date of the issuance of the Old Certificates without giving
effect to any intervening payments of principal on the Certificates or Equipment
Notes. See "Description of the New Certificates--Pool Factors."
THE COMPANY
Continental Airlines, Inc. is a major United States air carrier
engaged in the business of transporting passengers, cargo and mail. Continental
is the fifth largest United States airline (as measured by revenue passenger
miles in the first six months of 1996) and, together with its wholly owned
subsidiary, Continental Express, Inc. ("Express"), and its 91%-indirect owned
subsidiary, Continental Micronesia, Inc. ("CMI"), serves 190 airports worldwide.
The Company operates its route system primarily through domestic hubs
at Newark, Houston Intercontinental and Cleveland, and a Pacific hub on the
neighboring islands of Guam and Saipan. Each of Continentals three U.S. hubs is
located in a large business and population center, contributing to a high volume
of "origin and destination" traffic. The Guam/Saipan hub is strategically
located to provide service from Japanese and other Asian cities to popular
resort destinations in the western Pacific. Continental is the primary carrier
at each of these hubs, accounting for 52%, 79%, 53% and 72% of all daily jet
departures, respectively.
Continental directly serves 133 U.S. cities, with additional cities
(principally in the western and southwestern United States) connected to
Continental's route system under agreements with America West Airlines, Inc.
("America West"). Internationally, Continental flies to 57 destinations and
offers additional connecting service through alliances with foreign carriers.
Continental operates 59 weekly departures to five European cities and markets
service to four other cities through code-sharing agreements. Continental
recently announced new service from Newark to Lisbon, Portugal, which is
scheduled to commence May 1, 1997. Continental is one of the leading airlines
providing service to Mexico and Central America, serving more destinations in
Mexico than any other United States airline. In addition, Continental flies to
four cities in South America. Through its Guam/Saipan hub, Continental provides
extensive service in the western Pacific, including service to more Japanese
cities than any other United States carrier.
The Company is a Delaware corporation. Its executive offices are
located at 2929 Allen Parkway, Suite 2010, Houston, Texas 77019, and its
telephone number is (713) 834-2950.
THE EXCHANGE OFFER
Registration Rights Agreement......... The Old Certificates were issued on
May 20, 1996 to the Initial
Purchasers. The Initial Purchasers
placed the Old Certificates with
institutional investors. In connection
therewith, the Company, the Trustee,
as trustee under each of the Trusts,
and the Initial Purchasers entered
into the Registration Rights Agreement
providing, among other things, for the
Exchange Offer. See "The Exchange
Offer."
The Exchange Offer.................... New Certificates are being offered in
exchange for an equal principal amount
of Old Certificates. As of the date
hereof, $171,749,000 aggregate
principal amount of Old Certificates
are outstanding. Old Certificates may
be tendered only in integral multiples
of $1000.
6
Resale of New Certificates............ Based on interpretations by the staff
of the Commission, as set forth in no-
action letters issued to third
parties, including the Exchange Offer
No-Action Letters, the Company
believes that the New Certificates
issued pursuant to the Exchange Offer
may be offered for resale, resold or
otherwise transferred by holders
thereof (other than a broker-dealer
who acquires such New Certificates
directly from the Trustee for resale
pursuant to Rule 144A under the
Securities Act or any other available
exemption under the Securities Act or
any holder that is an "affiliate" of
the Company as defined under Rule 405
of the Securities Act), without
compliance with the registration and
prospectus delivery provisions of the
Securities Act, provided that such New
Certificates are acquired in the
ordinary course of such holders'
business and such holders are not
engaged in, and do not intend to
engage in, a distribution of such New
Certificates and have no arrangement
with any person to participate in a
distribution of such New Certificates.
By tendering the Old Certificates in
exchange for New Certificates, each
holder, other than a broker-dealer,
will represent to the Company that:
(i) it is not an affiliate of the
Company (as defined under Rule 405 of
the Securities Act) nor a broker-
dealer tendering Old Certificates
acquired directly from the Company for
its own account; (ii) any New
Certificates to be received by it were
acquired in the ordinary course of its
business; and (iii) it is not engaged
in, and does not intend to engage in,
a distribution of such New
Certificates and has no arrangement or
understanding to participate in a
distribution of the New Certificates.
If a holder of Old Certificates is
engaged in or intends to engage in a
distribution of the New Certificates
or has any arrangement or
understanding with respect to the
distribution of the New Certificates
to be acquired pursuant to the
Exchange Offer, such holder may not
rely on the applicable interpretations
of the staff of the Commission and
must comply with the registration and
prospectus delivery requirements of
the Securities Act in connection with
any secondary resale transaction. Each
Participating Broker-Dealer that
receives New Certificates for its own
account pursuant to the Exchange Offer
must acknowledge that it will deliver
a prospectus in connection with any
resale of such New Certificates. The
Letter of Transmittal states that by
so acknowledging and by delivering a
prospectus, a Participating Broker-
Dealer will not be deemed to admit
that it is an "underwriter" within the
meaning of the Securities Act. This
Prospectus, as it may be amended or
supplemented from time to time, may be
used by a Participating Broker-Dealer
in connection with resales of New
Certificates received in exchange for
Old Certificates where such Old
Certificates were acquired by such
Participating Broker-Dealer as a
result of market-making activities or
other trading activities. The Company
has agreed that, starting on the
Expiration Date and ending on the
close of business 180 days after the
Expiration Date, it will make this
Prospectus available to any
Participating Broker-Dealer for use in
connection with any such resale. See
"Plan of Distribution." To comply with
the securities laws of certain
jurisdictions, it may be necessary to
qualify for sale or
7
register the New Certificates prior to
offering or selling such New
Certificates. The Company has agreed,
pursuant to the Registration Rights
Agreement and subject to certain
specified limitations therein, to
register or qualify the New
Certificates for offer or sale under
the securities or "blue sky" laws of
such jurisdictions as may be necessary
to permit the holders of New
Certificates to trade the New
Certificates without any restrictions
or limitations under the securities
laws of the several states of the
United States.
Consequences of Failure to Exchange
Old Certificates...................... Upon consummation of the Exchange
Offer, subject to certain exceptions,
holders of Old Certificates who do not
exchange their Old Certificates for
New Certificates in the Exchange Offer
will no longer be entitled to
registration rights and will not be
able to offer or sell their Old
Certificates, unless such Old
Certificates are subsequently
registered under the Securities Act
(which, subject to certain limited
exceptions, the Company will have no
obligation to do), except pursuant to
an exemption from, or in a transaction
not subject to, the Securities Act and
applicable state securities laws. See
"Risk Factors--Risk Factors Relating
to the Certificates and the Offering--
Consequences of Failure to Exchange"
and "The Exchange Offer--Terms of the
Exchange Offer."
Expiration Date....................... 5:00 p.m., New York City time, on
[__________], 1996 (30 calendar days
following the commencement of the
Exchange Offer), unless the Exchange
Offer is extended, in which case the
term "Expiration Date" means the
latest date and time to which the
Exchange Offer is extended.
Interest on the New Certificates...... The New Certificates will accrue
interest at the applicable per annum
rate for such Trust set forth on the
cover page of this Prospectus, from
the last date on which interest was
paid on the Old Certificates
surrendered in exchange therefor.
Interest on the New Certificates is
payable on January 2, April 2, July 2
and October 2 of each year commencing
July 2, 1996, subject to the terms of
the Intercreditor Agreement.
Conditions to the Exchange Offer...... The Exchange Offer is not conditioned
upon any minimum principal amount of
Old Certificates being tendered for
exchange. However, the Exchange Offer
is subject to certain customary
conditions, which may be waived by the
Company. See "The Exchange Offer--
Conditions." Except for the
requirements of applicable federal and
state securities laws, there are no
federal or state regulatory
requirements to be complied with or
obtained by the Company in connection
with the Exchange Offer.
Procedures for Tendering Old
Certificates.......................... Each holder of Old Certificates
wishing to accept the Exchange Offer
must complete, sign and date the
Letter of Transmittal, or a facsimile
thereof, in accordance with the
instructions contained herein and
therein, and mail or otherwise deliver
such Letter of Transmittal, or such
facsimile, together with the Old
Certificates to be exchanged and any
other required documentation to the
Exchange Agent (as defined herein) at
the address set forth herein
8
or effect a tender of Old Certificates
pursuant to the procedures for book-
entry transfer as provided for herein.
See "The Exchange Offer--Procedures
for Tendering" and "--Book Entry
Transfer."
Guaranteed Delivery Procedures........ Holders of Old Certificates who wish
to tender their Old Certificates and
whose Old Certificates are not
immediately available or who cannot
deliver their Old Certificates and a
properly completed Letter of
Transmittal or any other documents
required by the Letter of Transmittal
to the Exchange Agent prior to the
Expiration Date may tender their Old
Certificates according to the
guaranteed delivery procedures set
forth in "The Exchange Offer--
Guaranteed Delivery Procedures."
Withdrawal Rights..................... Tenders of Old Certificates may be
withdrawn at any time prior to 5:00
p.m., New York City time, on the
Expiration Date. To withdraw a tender
of Old Certificates, a written or
facsimile transmission notice of
withdrawal must be received by the
Exchange Agent at its address set
forth herein under "The Exchange
Offer--Exchange Agent" prior to 5:00
p.m., New York City time, on the
Expiration Date.
Acceptance of Old Certificates and
Delivery of New Certificates.......... Subject to certain conditions, any and
all Old Certificates which are
properly tendered in the Exchange
Offer prior to 5:00 p.m., New York
City time, on the Expiration Date will
be accepted for exchange. The New
Certificates issued pursuant to the
Exchange Offer will be delivered
promptly following the Expiration
Date. See "The Exchange Offer--Terms
of the Exchange Offer."
Certain Tax Considerations............ The exchange of New Certificates for
Old Certificates should not be a sale
or exchange or otherwise a taxable
event for Federal income tax purposes.
See "Certain Federal Income Tax
Considerations."
Exchange Agent........................ Wilmington Trust Company is serving as
exchange agent (the "Exchange Agent")
in connection with the Exchange Offer.
Fees and Expenses..................... All expenses incident to the
Company'ss consummation of the
Exchange Offer and compliance with the
Registration Rights Agreement will be
borne by the Company. See "The
Exchange Offer--Fees and Expenses."
Use of Proceeds....................... There will be no cash proceeds payable
to Continental from the issuance of
the New Certificates pursuant to the
Exchange Offer. The proceeds from the
sale of the Old Class A, B, C and D
Certificates were used to purchase the
Series A, B, C and D Equipment Notes
issued by (i) the related Owner
Trustees in connection with the
refinancing of the indebtedness
incurred by the Owner Trustees to
finance the purchase of each of the
Leased Aircraft and (ii) Continental,
as owner of the Owned Aircraft. The
Equipment Notes issued in respect of
the Leased Aircraft represent in the
aggregate the entire debt portion
currently outstanding of the leveraged
lease transactions relating the Leased
Aircraft. Continental received cash
proceeds from the sale of the Old
Certificates, representing that
portion of the total proceeds from
the sale of the Old Certificates as
was used to
9
purchase the Equipment Notes issued
with respect to the Owned Aircraft.
See "Use of Proceeds."
SUMMARY OF TERMS OF NEW CERTIFICATES
The Exchange Offer relates to the exchange of up to $171,749,000 aggregate
principal amount of Old Certificates for up to an equal aggregate principal
amount of New Certificates. The New Certificates will be entitled to the
benefits of the same Pass Through Trust Agreements that govern the Old
Certificates and will govern the New Certificates. The form and terms of the New
Certificates are the same in all material respects as the form and terms of the
Old Certificates, except that the New Certificates do not contain terms with
respect to the interest rate step-up provisions and the New Certificates have
been registered under the Securities Act and therefore will not bear legends
restricting the transfer thereof. See "Description of New Certificates."
Trusts................................ Each of the Continental Airlines 1996-
2A Pass Through Trust, the Continental
Airlines 1996-2B Pass Through Trust,
the Continental Airlines 1996-2C Pass
Through Trust and the Continental
Airlines 1996-2D Pass Through Trust
has been formed pursuant to one of the
four separate Pass Through Trust
Agreements that were entered into
between the Company and Wilmington
Trust Company, as trustee under each
Trust. Each Trust is a separate
entity.
New Certificates Offered.............. Pass Through Certificates issued by
each Trust, representing fractional
undivided interests in such Trust. The
New Certificates issued by the Class A
Trust, the Class B Trust, the Class C
Trust and the Class D Trust are
referred to herein as "Class A
Certificates", "Class B Certificates",
"Class C Certificates", and "Class D
Certificates", respectively.
Subordination Agent................... Wilmington Trust Company, as
subordination agent under the
Intercreditor Agreement (the
"Subordination Agent").
Liquidity Provider.................... De Nationale Investeringsbank N.V., a
bank organized under the laws of The
Netherlands. DNIB has provided three
separate liquidity facilities for the
benefit of the holders of Class A
Certificates, Class B Certificates and
Class C Certificates, respectively.
10
SUMMARY OF TERMS OF CERTIFICATES
CLASS A CLASS B CLASS C CLASS D
CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES
---------------- ---------------- ---------------- --------------
Aggregate Face Amount........ $82,513,000 $35,363,000 $35,363,000 $18,510,000
Initial Loan to Aircraft
Value (cumulative)(1)........ 35.0% 50.0% 65.0% 72.9%
Expected Principal
Distribution Window
(in years)................... 0.4-18.1 0.4-18.1 0.4-18.1 0.1-11.9
Initial Average Life
(in years)................... 10.3 10.3 10.3 7.1
Regular Distribution Dates... January 2, January 2, January 2, January 2,
April 2, April 2, April 2, April 2,
July 2 & July 2 & July 2 & July 2 &
October 2 October 2 October 2 October 2
Final Expected Regular
Distribution Date............ July 2, 2014 July 2, 2014 July 2, 2014 April 2, 2008
Final Maturity Date.......... January 2, 2016 January 2, 2016 January 2, 2016 April 2, 2008
Minimum Denomination......... $ 100,000 $ 100,000 $ 100,000 $ 100,000
(S) 1110 Protection(2)....... Yes Yes Yes Yes
Liquidity Facility Coverage.. 6 quarterly 6 quarterly 6 quarterly None
interest interest interest
payments payments payments
Initial Liquidity Facility
Amount(3).................... $ 9,592,136 $ 4,540,609 $ 5,421,148 None
(1) Assumes an aggregate appraised Aircraft value of $235,753,333.
(2) The benefits of Section 1110 of the U.S. Bankruptcy Code are available to
the Loan Trustees.
(3) For each Class of Certificates (other than the Class D Certificates), the
initial amount of the Liquidity Facility covers six consecutive quarterly
interest payments (without regard to any future payments of principal on
such Certificates). In aggregate for Class A, B and C Certificates, the
initial amount of Liquidity Facilities will be $19,553,893.
11
EQUIPMENT NOTES AND THE AIRCRAFT
Set forth below is certain information about the Equipment Notes to be
held in the Trusts and the Aircraft securing such Equipment Notes:
OUTSTANDING
AIRCRAFT EQUIPMENT PRINCIPAL
REGISTRATION AIRCRAFT NOTE AMOUNT OF APPRAISED
NUMBER AIRCRAFT TYPE DELIVERY DATE MATURITY DATE EQUIPMENT NOTES VALUE
- -------------- ------------- ------------- --------------- --------------- ------------
N12114 Boeing 757-224 July 1995 January 2, 2013 $ 37,652,850.00 $ 51,650,000
N14115 Boeing 757-224 August 1995 January 2, 2013 37,798,650.00 51,850,000
N12116 Boeing 757-224 March 1996 April 2, 2014 37,386,771.20 52,593,333
N19117 Boeing 757-224 April 1996 July 2, 2014 37,310,876.80 52,660,000
N33637 Boeing 737-524 April 1996 April 2, 2008 21,599,852.00 27,000,000
--------------- ------------
$171,749,000.00 $235,753,333
=============== ============
The appraised value of each Aircraft set forth above is based upon the
lesser of the average and median fair market value of such Aircraft as appraised
by three independent appraisal and consulting firms: Aircraft Information
Services, Inc. ("AISI"), BK Associates, Inc. ("BK") and Morten Beyer and
Associates, Inc. ("MBA") (collectively, the "Appraisers") as of March 26, 1996.
See "Risk Factors--Appraisals and Realizable Value of Aircraft" and "Description
of the Aircraft and the Appraisals."
LOAN TO AIRCRAFT VALUE RATIOS
The following table sets forth loan to Aircraft value ratios ("LTVs")
for each Class of Certificates as of the date of the issuance of the Old
Certificates and the Regular Distribution Dates specified therein. The LTVs for
each Class of Certificates were obtained for each such Regular Distribution Date
by dividing (i) the expected Pool Balance of such Class of Certificates together
in each case with the expected Pool Balance of all other Classes of Certificates
senior in right of payment to such Class of Certificates under the Intercreditor
Agreement determined immediately after giving effect to the distributions
expected to be made on such Regular Distribution Date, by (ii) the assumed value
of all of the Aircraft (the "Assumed Aggregate Aircraft Value") on such Regular
Distribution Date based on the assumptions set forth below.
The table is based on the assumption that the value of each Aircraft
included in the Assumed Aggregate Aircraft Value opposite May 20, 1996
depreciates by approximately 2% of the initial appraised value per year until
the fifteenth year after the year of delivery of such Aircraft and by
approximately 4% of the initial appraised value per year thereafter. Other
rates or methods of depreciation would result in materially different LTVs and
no assurance can be given (i) that the depreciation rates and method assumed for
the purpose of the table are the ones most likely to occur or (ii) as to the
actual future value of any Aircraft. Although the table is compiled on an
aggregate basis, it should be noted that, since the Equipment Notes are not
cross-collateralized with respect to the Aircraft, the excess proceeds realized
from the disposition of any particular Aircraft would not be available to offset
shortfalls on the Equipment Notes relating to any other Aircraft. Therefore,
upon the occurrence of an Indenture Default, even if the Aircraft as a group
could be sold for more than the total amounts payable in respect of all of the
outstanding Equipment Notes, if certain Aircraft were sold for less than the
total amount payable in respect of the related Equipment Notes, there would not
be sufficient proceeds to pay all Classes of Certificates in full. See
"Description of the Equipment Notes--Loan to Value Ratios of Equipment Notes"
for additional information regarding LTVs for the Equipment Notes issued in
respect of each Aircraft, which may be more relevant in a default situation than
the aggregate values shown in the following table. Thus, the table should not be
considered a forecast or prediction of expected or likely LTVs but simply a
mathematical calculation based on one set of assumptions.
12
ASSUMED
AGGREGATE CLASS A CLASS A CLASS B CLASS B CLASS C CLASS C
AIRCRAFT CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES CERTIFICATES
DATE VALUE(1) POOL BALANCE LTV POOL BALANCE LTV POOL BALANCE LTV
--------------- ------------ ------------ ------------ ------------ ------------ ----------- -----------
May 20, 1996 $235,753,333 $82,513,000 35.0% $35,363,000 50.0% $35,363,000 65.0%
April 2, 1997 230,996,022 80,211,435 34.7 34,376,604 49.6 34,376,604 64.5
April 2, 1998 226,238,710 78,298,749 34.6 33,556,878 49.4 33,556,878 64.3
April 2, 1999 221,481,399 76,732,939 34.6 32,885,813 49.5 32,885,813 64.3
April 2, 2000 216,724,087 74,696,896 34.5 32,013,218 49.2 32,013,218 64.0
April 2, 2001 211,966,776 70,171,427 33.1 30,073,725 47.3 30,073,725 61.5
April 2, 2002 207,209,464 64,361,692 31.1 27,583,834 44.4 27,583,834 57.7
April 2, 2003 202,452,152 59,256,220 29.3 25,395,768 41.8 25,395,768 54.4
April 2, 2004 197,694,841 56,106,628 28.4 24,045,938 40.5 24,045,938 52.7
April 2, 2005 192,937,529 51,029,240 26.4 21,869,909 37.8 21,869,909 49.1
April 2, 2006 188,180,218 46,648,812 24.8 19,992,575 35.4 19,992,575 46.0
April 2, 2007 183,422,906 41,230,376 22.5 17,670,379 32.1 17,670,379 41.7
April 2, 2008 158,145,595 32,311,412 20.4 13,847,748 29.2 13,847,748 37.9
April 2, 2009 153,928,283 27,084,981 17.6 11,607,849 25.1 11,607,849 32.7
April 2, 2010 149,710,971 21,778,620 14.5 9,333,694 20.8 9,333,694 27.0
April 2, 2011 143,381,415 13,837,522 9.7 5,930,367 13.8 5,930,367 17.9
April 2, 2012 134,946,792 5,653,696 4.2 2,423,013 6.0 2,423,013 7.8
April 2, 2013 65,257,067 2,378,146 3.6 1,019,205 5.2 1,019,205 6.8
April 2, 2014 30,542,800 423,321 1.4 181,423 2.0 181,423 2.6
CLASS D CLASS D
CERTIFICATES CERTIFICATES
DATE POOL BALANCE LTV
-------------- ------------ ------------
May 20, 1996 $18,510,000 72.9%
April 2, 1997 18,219,435 72.4
April 2, 1998 18,037,450 72.2
April 2, 1999 16,172,624 71.6
April 2, 2000 12,443,551 69.8
April 2, 2001 8,928,294 65.7
April 2, 2002 8,641,881 61.9
April 2, 2003 8,321,082 58.5
April 2, 2004 7,961,770 56.7
April 2, 2005 7,559,320 53.0
April 2, 2006 7,108,555 49.8
April 2, 2007 6,603,672 45.3
April 2, 2008 0 37.9
April 2, 2009 0 32.7
April 2, 2010 0 27.0
April 2, 2011 0 17.9
April 2, 2012 0 7.8
April 2, 2013 0 6.8
April 2, 2014 0 2.6
(1) The Assumed Aggregate Aircraft Value set forth opposite May 20, 1996 (but
not the Assumed Aggregate Aircraft Values for subsequent dates) was
determined based upon the lesser of the average and median fair market value
of all Aircraft as appraised by the Appraisers as of March 26, 1996 (see
"Description of the Aircraft and the Appraisals"). No assurance can be given
that such value represents the realizable value of any Aircraft. See "Risk
Factors--Risk Factors Relating to the Certificates and the Offering--
Appraisals and Realizable Value of Aircraft" and "Description of the
Aircraft and the Appraisals."
13
CASH FLOW STRUCTURE
Set forth below is a diagram illustrating the structure for the
offering of the Certificates and certain cash flows.
[CASH FLOW STRUCTURE CHART APPEARS HERE]
- ------------------
* Each Leased Aircraft is subject to a separate Lease and the related
Indenture; the Owned Aircraft is subject to a separate Indenture.
** Liquidity Facilities are available with respect to the Class A Certificates,
the Class B Certificates and the Class C Certificates.
14
Trust Property........................ The property of each Trust (the "Trust
Property") consists of (i) Equipment
Notes issued (a) on a recourse basis
by Continental in connection with the
financing of the Owned Aircraft and
(b) on a nonrecourse basis by each of
the Owner Trustees in four separate
leveraged lease transactions to
refinance the current indebtedness of
the related Owner Trustee, originally
incurred to finance the purchase of
each of the Leased Aircraft leased by
the related Owner Trustee to
Continental, (ii) the rights of such
Trust under the Intercreditor
Agreement (including all monies
receivable in respect of such rights),
(iii) except for the Class D Trust,
all monies receivable under the
Liquidity Facility for such Trust and
(iv) funds from time to time deposited
with the Trustee in accounts relating
to such Trust. The Equipment Notes
with respect to the Owned Aircraft
were issued in four series under an
Indenture (the "Owned Aircraft
Indenture") between Continental and
the indenture trustee thereunder (the
"Owned Aircraft Trustee"). The
Equipment Notes with respect to each
Leased Aircraft were issued in four
series under an Indenture (each, a
"Leased Aircraft Indenture" and
together with the other Leased
Aircraft Indentures and the Owned
Aircraft Indenture, the "Indentures")
between the applicable Owner Trustee
and the indenture trustee thereunder
(the "Leased Aircraft Trustee" and
together with the other Leased
Aircraft Trustees and the Owned
Aircraft Trustee, the "Loan
Trustees"). Each Trust has acquired,
pursuant to a certain Note Purchase
Agreement (the "Note Purchase
Agreement") and certain Refunding
Agreements (each, a "Refunding
Agreement" and together with the other
Refunding Agreements and the Note
Purchase Agreement, the "Financing
Agreements"), those Equipment Notes
having an interest rate equal to the
interest rate applicable to the
Certificates to be issued by such
Trust. The maturity dates of the
Equipment Notes acquired by each Trust
will occur on or before the final
expected Regular Distribution Date
applicable to the Certificates to be
issued by such Trust. The aggregate
original principal amount of the
Equipment Notes to be held in each
Trust is the same as the aggregate
original face amount of the
Certificates to be issued by such
Trust.
Certificates; Denominations........... The New Certificates of each Trust
will be issued in a minimum
denomination of $1,000 and integral
multiples thereof. See "Description of
the New Certificates--General."
Regular Distribution Dates............ January 2, April 2, July 2 and October
2, commencing July 2, 1996.
Special Distribution Dates............ Any Business Day on which a Special
Payment is to be distributed.
Record Dates.......................... The fifteenth day preceding a Regular
Distribution Date or a Special
Distribution Date.
Distributions......................... All payments of principal, premium (if
any) and interest received by the
Trustee on the Equipment Notes held in
each Trust will be distributed by the
Trustee to the holders of the
Certificates (the
"Certificateholders") of such Trust on
the Regular Distribution Dates
referred to above, subject to the
provisions of the Intercreditor
Agreement. Payments on the Equipment
Notes held in each Trust are scheduled
to be received in specified amounts by
the Trustee of such Trust on January
2, April 2, July 2 and October 2,
commencing on July 2, 1996, and to be
distributed to the Certificateholders
of such Trust on the corresponding
Regular Distribution Date, subject to
the provisions of the Intercreditor
Agreement. Payments of principal,
premium (if any) and interest
resulting from the early redemption or
purchase (if any)
15
of the Equipment Notes held in any
Trust will be distributed on a Special
Distribution Date after not less than
20 days' notice from the Trustee to
the Certificateholders of such Trust,
subject to the provisions of the
Intercreditor Agreement. For a
discussion of distributions upon an
Indenture Default, see "Description of
the New Certificates--Indenture
Defaults and Certain Rights Upon an
Indenture Default."
Events of Default..................... Events of default under each Pass
Through Trust Agreement (each, a "PTC
Event of Default") are the failure to
pay within 10 Business Days of the due
date thereof: (i) the outstanding Pool
Balance of the applicable Class of
Certificates on the Final Maturity
Date for such Class or (ii) interest
due on such Certificates on any
distribution date (unless in the case
of the Class A, B or C Certificates
the Subordination Agent shall have
made an Interest Drawing with respect
thereto in an amount sufficient to pay
such interest and shall have
distributed such amount to the
Certificateholders entitled thereto).
The Final Maturity Dates for each of
the Class A, B and C Certificates is
January 2, 2016, and the Final
Maturity Date for the Class D
Certificates is April 2, 2008. Any
failure to make expected principal
distributions on any Class of
Certificates on any Regular
Distribution Date (other than the
Final Maturity Date) will not
constitute a PTC Event of Default with
respect to such Certificates.
Purchase Rights of
Certificateholders.................... Upon the occurrence and during the
continuation of a Triggering Event (as
defined below), (i) the Class B
Certificateholders shall have the
right to purchase all, but not less
than all, of the Class A Certificates,
(ii) the Class C Certificateholders
shall have the right to purchase all,
but not less than all, of the Class A
Certificates and the Class B
Certificates and (iii) the Class D
Certificateholders shall have the
right to purchase all, but not less
than all, of the Class A Certificates,
the Class B Certificates and the Class
C Certificates, in each case at a
purchase price equal to the Pool
Balance of the relevant Class or
Classes of Certificates plus accrued
and unpaid interest thereon to the
date of purchase without premium but
including any other amounts due to the
Certificateholders of such Class or
Classes.
"Triggering Event" means (x) the
occurrence of an Indenture Default
under all Indentures resulting in a
PTC Event of Default with respect to
the most senior Class of Certificates
then outstanding, (y) the acceleration
of all of the outstanding Equipment
Notes or (z) certain bankruptcy or
insolvency events involving
Continental.
Equipment Notes
(a) Interest......................... The Equipment Notes held in each Trust
accrue interest at the applicable rate
per annum for such Trust set forth on
the cover page of this Prospectus,
payable on January 2, April 2, July 2
and October 2 of each year commencing
on July 2, 1996, and such interest
payments will be passed through to
Certificateholders of such Trust on
each such date until the final
distribution date for such
Certificates, in each case, subject to
the Intercreditor Agreement. Interest
is calculated on the basis of a 360-
day year consisting of twelve 30-day
months. See "Description of the
Equipment Notes--Principal and
Interest Payments". The interest rates
for the Equipment Notes are subject to
change under certain circumstances
described in "Exchange Offer--Terms of
the Exchange Offer" to the same extent
as the interest rates for the Old
Certificates. The New Certificates do
16
not contain terms with respect to
interest rate step-up provisions of
the Old Certificates.
(b) Principal........................ Scheduled principal payments on the
Equipment Notes held in each Trust
will be passed through to the
Certificateholders of each such Trust
on January 2, April 2, July 2 and
October 2 in certain years, commencing
on October 2, 1996, in the case of
each of the Class A Trust, the Class B
Trust and the Class C Trust and on
July 2, 1996, in the case of the Class
D Trust, in accordance with the
principal repayment schedule set forth
below under "Description of New
Certificates--Pool Factors" and
"Description of the Equipment Notes--
Principal and Interest Payments", in
each case, subject to the
Intercreditor Agreement.
(c) Redemption and Purchase
Mandatory Redemption............. If an Event of Loss occurs with
respect to any Aircraft and such
Aircraft is not replaced by
Continental under the related Lease
(in the case of a Leased Aircraft) or
under the Owned Aircraft Indenture (in
the case of the Owned Aircraft), the
Equipment Notes issued with respect to
such Aircraft will be redeemed in
whole, in each case at a price equal
to the aggregate unpaid principal
thereof, together with accrued
interest thereon to, but not
including, the date of redemption, but
without any premium.
Optional Redemption and
Purchase......................... All of the Equipment Notes issued with
respect to any Aircraft may be
redeemed prior to maturity at a price
equal to the aggregate unpaid
principal thereof, together with
accrued interest thereon to, but not
including, the date of redemption,
plus, if such redemption is made prior
to September 22, 2006 (in the case of
the Equipment Notes held by the Class
A Trust, the Class B Trust or the
Class C Trust) or June 26, 2003 (in
the case of the Equipment Notes held
by the Class D Trust) (each, a
"Premium Termination Date"), a Make-
Whole Premium (as defined herein). See
"Description of the Equipment Notes--
Redemption" for a description of the
manner of computing such Make-Whole
Premium and the circumstances under
which the Equipment Notes may be so
redeemed.
If, with respect to a Leased Aircraft,
(x) one or more Lease Events of
Default shall have occurred and be
continuing, (y) in the event of a
bankruptcy proceeding involving
Continental, (i) during the Section
1110 Period (as defined herein), the
trustee in such proceeding or
Continental does not agree to perform
its obligations under the related
Lease or (ii) at any time after
agreeing to perform such obligations,
such trustee or Continental ceases to
perform such obligations or (z) the
Loan Trustee with respect to such
Equipment Notes shall take action or
notify the applicable Owner Trustee
that it intends to take action to
foreclose the lien of the related
Leased Aircraft Indenture, then in
each case the Equipment Notes issued
with respect to such Leased Aircraft
may be purchased by the Owner Trustee
or Owner Participant on the applicable
purchase date at a price equal to the
aggregate unpaid principal thereof,
together with accrued interest thereon
to, but not including, the purchase
date, but without any premium
(provided that a premium shall be
payable if such Equipment Notes are to
be purchased pursuant to clause (x)
above when a Lease Event of Default
shall have occurred and be continuing
for less than 120 days). Continental,
as owner of the Owned Aircraft, has no
comparable right under the Owned
Aircraft Indenture to purchase the
Equipment Notes under such
17
circumstances.
(d) Security......................... The Equipment Notes issued with
respect to each Aircraft are secured
by a security interest in such
Aircraft and, in the case of each
Leased Aircraft, by an assignment to
the related Loan Trustee of certain of
the related Owner Trustees rights
under the Lease with respect to such
Aircraft, including the right to
receive payments of rent thereunder,
with certain exceptions. The Equipment
Notes are not cross-collateralized
and, consequently, the Equipment Notes
issued in respect of any one Aircraft
are not secured by any of the other
Aircraft or the Leases related
thereto. There are no cross-default
provisions in the Indentures or in the
Leases. Consequently, events resulting
in an Indenture Default under any
particular Indenture may or may not
result in an Indenture Default
occurring under any other Indenture,
and a Lease Event of Default under any
particular Lease will not constitute a
Lease Event of Default under any other
Lease. If the Equipment Notes issued
with respect to one or more Aircraft
are in default and the Equipment Notes
issued with respect to the remaining
Aircraft are not in default, no
remedies will be exercisable under the
Indentures with respect to such
remaining Aircraft. See "Description
of the Equipment Notes--Security and
Indenture Defaults, Notice and
Waiver".
Although the Equipment Notes issued in
respect of the Leased Aircraft are not
obligations of, or guaranteed by,
Continental, the amounts
unconditionally payable by Continental
for lease of the Leased Aircraft will
be sufficient to pay in full when due
all amounts required to be paid on the
Equipment Notes issued in respect of
the Leased Aircraft. The Equipment
Notes issued in respect of the Owned
Aircraft are direct obligations of
Continental. See "Description of the
Equipment Notes--General".
(e) Section 1110 Protection.......... Cleary, Gottlieb, Steen & Hamilton,
counsel to Continental, has advised
(x) the Leased Aircraft Trustees that
the Owner Trustee, as lessor under the
Lease relating to each Leased
Aircraft, and the related Leased
Aircraft Trustee, as assignee of such
Owner Trustee's rights under such
Lease pursuant to the related Leased
Aircraft Indenture, are entitled to
the benefits of Section 1110 of the
U.S. Bankruptcy Code with respect to
the airframe and engines comprising
the related Leased Aircraft and (y)
the Owned Aircraft Trustee that it is
entitled to the benefits of Section
1110 of the U.S. Bankruptcy Code with
respect to the airframe and engines
comprising the Owned Aircraft. See
"Description of the Equipment Notes--
Remedies" for a description of that
opinion and certain assumptions
contained therein.
(f) Ranking.......................... Series B Equipment Notes issued in
respect of any Aircraft are
subordinated in right of payment to
Series A Equipment Notes issued in
respect of such Aircraft; Series C
Equipment Notes issued in respect of
such Aircraft are subordinated in
right of payment to such Series B
Equipment Notes; and Series D
Equipment Notes issued in respect of
such Aircraft are subordinated in
right of payment to such Series C
Equipment Notes. On each Distribution
Date, (i) payments of interest and
principal due on Series A Equipment
Notes issued in respect of any
Aircraft will be made prior to
payments of interest and principal due
on Series B Equipment Notes issued in
respect of such Aircraft, (ii)
payments of interest and principal due
on such Series B Equipment Notes will
be made prior to payments of interest
and principal due on Series C
Equipment Notes issued in respect of
such Aircraft and (iii) payments of
interest and principal due on such
18
Series C Equipment Notes will be made
prior to payments of interest and
principal due on Series D Equipment
Notes issued in respect of such
Aircraft.
(g) Owner Participant................ Gaucho-2 Inc., a wholly owned
subsidiary of The Boeing Company
("Boeing"), is currently the owner
participant ("Owner Participant") with
respect to all of the four leveraged
leases for the Leased Aircraft. The
Owner Participant and certain of its
affiliates have various business
relationships with Continental,
including as a supplier of certain
equipment and services to Continental.
The Owner Participant has the right to
sell, assign or otherwise transfer its
interests as Owner Participant in any
or all of such leveraged leases,
subject to the terms and conditions of
the relevant Participation Agreement
and related documents.
Liquidity Facilities.................. The Subordination Agent and the
Liquidity Provider entered into a
revolving credit agreement (each, a
"Liquidity Facility") with respect to
each Trust (other than the Class D
Trust). Under each of the Liquidity
Facilities, the Liquidity Provider
will, if necessary, make advances
("Interest Drawings") in an aggregate
amount (the "Required Amount")
sufficient to pay interest on the
Class A, B or C Certificates, as the
case may be, on up to six successive
quarterly Regular Distribution Dates
(without regard to any future payments
of principal on such Certificates) at
the respective interest rates shown on
the cover page of this Prospectus
(plus an additional margin specified
by the Registration Rights Agreement,
if applicable) for such Certificates
(the "Stated Interest Rates"). The
initial amount available under the
Liquidity Facilities for the Class A
Certificates, the Class B Certificates
and the Class C Certificates is
$9,592,136, $4,540,609 and $5,421,148,
respectively. An Interest Drawing
under the relevant Liquidity Facility
will be made promptly after any
Regular Distribution Date if, after
giving effect to the subordination
provisions of the Intercreditor
Agreement, there are insufficient
funds available to the Subordination
Agent to pay interest on any Class A,
B or C Certificates; provided,
however, that on any date the maximum
amount available under such Liquidity
Facility to fund any shortfall in
interest due on such Certificates will
not exceed an amount equal to the then
Required Amount of such Liquidity
Facility. The Liquidity Facility for
any Class of Certificates does not
provide for drawings thereunder to pay
for principal of or premium on the
Certificates of such Class, any
interest on the Certificates of such
Class in excess of the Stated Interest
Rates, or principal of or interest or
premium on the Certificates of any
other Class.
Upon each Interest Drawing under any
Liquidity Facility, the Subordination
Agent will be obligated to reimburse
(to the extent that the Subordination
Agent has available funds therefor)
the Liquidity Provider for the amount
of such drawing. Such reimbursement
obligation and any other amounts owing
to the Liquidity Provider under each
Liquidity Facility or certain other
agreements (the "Liquidity
Obligations") will rank pari passu
with the Liquidity Obligations
relating to all other Liquidity
Facilities and will rank senior to the
Certificates in right of payment. Upon
reimbursement in full of the Interest
Drawings, together with any accrued
interest thereon, under any Liquidity
Facility, the amount available under
such Liquidity Facility will be
reinstated to the then Required Amount
of such Liquidity Facility; provided
that the amount will not be so
reinstated if (i) a Liquidity Event of
Default shall have occurred and be
continuing and (ii) less than 65% of
the
19
aggregate outstanding principal amount
of all Equipment Notes are Performing
Equipment Notes.
"Performing Equipment Note" means an
Equipment Note with respect to which
no payment default has occurred and is
continuing; provided that in the event
of a bankruptcy proceeding involving
Continental under the U.S. Bankruptcy
Code, (i) any payment default existing
during the 60-day period under Section
1110(a)(1)(A) of the U.S. Bankruptcy
Code (or such longer period as may
apply under Section 1110(b) of the
U.S. Bankruptcy Code) (the "Section
1110 Period") shall not be taken into
consideration, unless during the
Section 1110 Period the trustee in
such proceeding or Continental does
not agree to perform its obligations
under the Lease related to such
Equipment Note (in the case of a
Leased Aircraft) or under the Owned
Aircraft Indenture (in the case of the
Owned Aircraft) and (ii) any payment
default occurring after the date of
the order of relief in such proceeding
shall not be taken into consideration
if such payment default is cured under
Section 1110(a)(1)(B) of the U.S.
Bankruptcy Code before the later of 30
days after the date of such default or
the expiration of the Section 1110
Period.
If at any time the short-term
unsecured debt rating of any Liquidity
Provider issued by either Rating
Agency (or if DNIB is such Liquidity
Provider and does not have a published
short-term unsecured debt rating
issued by Standard & Poor's, with
respect to Standard & Poor's only, the
long-term unsecured debt rating of
DNIB issued by Standard & Poor's) is
lower than the Threshold Rating, the
Liquidity Facility for the related
Class of Certificates will be required
to be replaced by another similar
facility to be provided by a financial
institution having such unsecured debt
ratings issued by both Rating Agencies
which are equal to or higher than the
Threshold Rating. If such Liquidity
Facility is not replaced within 10
days after notice of the downgrading,
such Liquidity Facility will be drawn
in full (the "Downgrade Drawing") and
the proceeds will be deposited into a
cash collateral account (the "Cash
Collateral Account") for the related
Class of Certificates and used for the
same purposes and under the same
circumstances and subject to the same
conditions as cash payments of
Interest Drawings under such Liquidity
Facility would be used.
Upon receipt by the Subordination
Agent of a Termination Notice with
respect to any Liquidity Facility from
the Liquidity Provider (given as
described in "Description of the
Liquidity Facilities--Liquidity Events
of Default"), the Subordination Agent
shall request a final drawing (the
"Final Drawing") under such Liquidity
Facility in an amount equal to all
available and undrawn amounts
thereunder and shall hold the proceeds
thereof in the Cash Collateral Account
for the related Trust as cash
collateral to be used for the same
purposes and under the same
circumstances, and subject to the same
conditions, as cash payments of
Interest Drawings under such Liquidity
Facility would be used.
Continental may, at its option, with
or without cause, arrange for a
replacement facility to replace the
Liquidity Facility for any Trust,
subject to certain conditions. If such
replacement facility is provided at
any time after a Downgrade Drawing
under such Liquidity Facility, the
funds on deposit in the Cash
Collateral Account for such Trust will
be returned to the
20
Liquidity Provider being replaced.
Notwithstanding the subordination
provisions of the Intercreditor
Agreement, the holders of the
Certificates issued by each Trust
(other than the Class D Trust) will be
entitled to receive and retain the
proceeds of drawings under the
Liquidity Facility for such Trust. See
"Description of the Liquidity
Facilities".
Liquidity Provider.................... De Nationale Investeringsbank N.V., a
bank organized under the laws of The
Netherlands. DNIB has provided three
separate liquidity facilities for the
benefit of the holders of Class A
Certificates, Class B Certificates and
Class C Certificates, respectively.
Intercreditor Agreement
(a) Subordination.................... The Trusts, the Liquidity Providers
and the Subordination Agent have
entered into an agreement (the
"Intercreditor Agreement") which
provides as follows:
(i) All payments made in respect of
the Equipment Notes and certain other
payments will be made to the
Subordination Agent, which will
distribute such payments in accordance
with the provisions of paragraphs (ii)
and (iii) below.
(ii) On any Regular Distribution Date
or Special Distribution Date (each, a
"Distribution Date"), so long as no
Triggering Event shall have occurred
(whether or not continuing), all
payments received by the Subordination
Agent in respect of the Equipment
Notes and certain other payments shall
be distributed in the following order:
(1) payment of the Liquidity
Obligations; (2) payment of Expected
Distributions to the holders of Class
A Certificates; (3) payment of
Expected Distributions to the holders
of Class B Certificates; (4) payment
of Expected Distributions to the
holders of Class C Certificates; (5)
payment of Expected Distributions to
the holders of Class D Certificates;
and (6) payment of certain fees and
expenses of the Subordination Agent
and the Trustees.
"Expected Distributions" means, with
respect to the Certificates of any
Trust on any Distribution Date (the
"Current Distribution Date") the sum
of (x) accrued and unpaid interest on
such Certificates and (y) the
difference between (A) the Pool
Balance of such Certificates as of the
immediately preceding Distribution
Date and (B) the Pool Balance of such
Certificates as of the Current
Distribution Date, calculated on the
basis that the principal of the
Equipment Notes held in such Trust has
been paid when due (whether at stated
maturity, upon redemption, prepayment
or acceleration or otherwise) and such
payments have been distributed to the
holders of such Certificates.
(iii) Upon the occurrence of a
Triggering Event and at all times
thereafter, all payments received by
the Subordination Agent in respect of
the Equipment Notes and certain other
payments shall be distributed in the
following order: (1) to the
Subordination Agent, the Trustee and
certain other parties in payment of
the Administration Expenses (as
defined herein) and to the Liquidity
Provider in payment of the Liquidity
Obligations; (2) to the holders of
Class A Certificates in payment of
Adjusted Expected Distributions; (3)
to the holders of Class B Certificates
in payment of Adjusted Expected
Distributions; (4) to the holders of
Class C Certificates
21
in payment of Adjusted Expected
Distributions; and (5) to the holders
of Class D Certificates in payment of
Adjusted Expected Distributions.
"Adjusted Expected Distributions"
means, with respect to the
Certificates of any Trust on any
Distribution Date (the "Current
Distribution Date"), the sum of (x)
accrued and unpaid interest on such
Certificates and (y) the greater of:
(A) the difference between (x) the
Pool Balance of such Certificates
as of the immediately preceding
Distribution Date and (y) the Pool
Balance of such Certificates as of
the Current Distribution Date
calculated on the basis that (i)
the principal of the Equipment
Notes other than Performing
Equipment Notes (the "Non-
Performing Equipment Notes") held
in such Trust has been paid in
full and such payments have been
distributed to the holders of such
Certificates and (ii) the
principal of the Performing
Equipment Notes has been paid when
due (but without giving effect to
any acceleration of Performing
Equipment Notes) and such payments
have been distributed to the
holders of such Certificates, and
(B) the amount of the excess, if any,
of (i) the Pool Balance of such
Class of Certificates as of the
immediately preceding Distribution
Date, over (ii) the Aggregate LTV
Collateral Amount for such Class
of Certificates for the Current
Distribution Date;
provided that, until the date of the
initial LTV Appraisals, clause (B)
shall not apply.
"Aggregate LTV Collateral Amount" for
any Class of Certificates for any
Distribution Date means the sum of the
applicable LTV Collateral Amounts for
each Aircraft, minus the Pool Balance
for each Class of Certificates, if
any, senior to such Class, after
giving effect to any distribution of
principal on such Distribution Date on
such senior Class or Classes.
"LTV Collateral Amount" of any
Aircraft for any Class of Certificates
means, as of any Distribution Date,
the lesser of (i) the LTV Ratio for
such Class of Certificates multiplied
by the Appraised Current Market Value
of such Aircraft and (ii) the
outstanding principal amount of the
Equipment Notes secured by such
Aircraft after giving effect to any
principal payments of such Equipment
Notes on or before such Distribution
Date.
"LTV Ratio" means for the Class A
Certificates 35.0%, for the Class B
Certificates 50.0%, for the Class C
Certificates 65.0% and for the Class D
Certificates 72.9%.
"Appraised Current Market Value" of
any Aircraft means the lower of the
average and the median of the most
recent three Appraisals of such
Aircraft. After a Triggering Event
occurs and any Equipment Note becomes
a Non-Performing Equipment Note, the
Subordination Agent shall obtain
Appraisals for the Aircraft (the "LTV
Appraisals") as soon as practicable
and additional LTV Appraisals on or
prior to each anniversary of the date
of such initial LTV Appraisals;
provided that if the Controlling Party
reasonably objects to the appraised
value of the Aircraft shown in such
LTV Appraisals, the Controlling Party
shall have the right to obtain or
cause to
22
be obtained substitute LTV Appraisals
(including LTV Appraisals based upon
physical inspection of the Aircraft).
(b) Intercreditor Rights............. Pursuant to the Intercreditor
Agreement, the Trustees and the
Liquidity Provider have agreed that,
with respect to any Indenture at any
given time, the Loan Trustee will be
directed (a) in taking, or refraining
from taking, any action thereunder by
the holders of at least a majority of
the outstanding principal amount of
the Equipment Notes issued thereunder
as long as no Indenture Default has
occurred and is continuing thereunder
and (b) subject to certain conditions,
in exercising remedies thereunder
(including acceleration of such
Equipment Notes or foreclosing the
lien on the Aircraft securing such
Equipment Notes) by the Controlling
Party insofar as an Indenture Default
thereunder has occurred and is
continuing.
"Controlling Party" with respect to
any Indenture means: (w) the Class A
Trustee; (x) upon payment of Final
Distributions to the holders of Class
A Certificates, the Class B Trustee;
(y) upon payment of Final
Distributions to the holders of Class
B Certificates, the Class C Trustee;
and (z) upon payment of Final
Distributions to the holders of Class
C Certificates, the Class D Trustee.
See "Description of the New
Certificates--Indenture Defaults and
Certain Rights Upon an Indenture
Default" for a description of the
rights of the Certificateholders of
each Trust to direct the respective
Trustees. Notwithstanding the
foregoing, at any time after 18 months
from the earlier to occur of (x) the
date on which the entire available
amount under any Liquidity Facility
shall have been drawn (for any reason
other than a Downgrade Drawing) and
remain unreimbursed and (y) the date
on which all Equipment Notes shall
have been accelerated, the Liquidity
Provider shall have the right to
become the Controlling Party with
respect to such Indenture; provided
that if there is more than one
Liquidity Provider, the Liquidity
Provider with the greatest amount of
unreimbursed Liquidity Obligations
shall have such right. For purposes of
giving effect to the foregoing, the
Trustees (other than the Controlling
Party) have irrevocably agreed (and
the Certificateholders (other than the
Certificateholders represented by the
Controlling Party) shall be deemed to
agree by virtue of their purchase of
Certificates) to exercise their voting
rights as directed by the Controlling
Party. For a description of certain
limitations on the Controlling Partys
rights to exercise remedies, see
"Description of the Equipment Notes--
Remedies".
"Final Distributions" means, with
respect to the Certificates of any
Trust on any Distribution Date, the
sum of (x) accrued and unpaid interest
on such Certificates and (y) the Pool
Balance of such Certificates as of the
immediately preceding Distribution
Date.
(i) Upon the occurrence and during
the continuation of any Indenture
Default under any Indenture, the
Controlling Party may accelerate
and sell all (but not less than
all) of the Equipment Notes
issued under such Indenture to
any person, subject to the
provisions of paragraph (ii)
below. The proceeds of such sale
will be distributed pursuant to
the provisions of the
Intercreditor Agreement.
(ii) So long as any Certificates are
outstanding, during nine months
after the earlier of (x) the
acceleration of the Equipment
Notes under any Indenture or (y)
the bankruptcy or insolvency of
Continental, without
23
the consent of each Trustee, (a)
no Aircraft subject to the lien
of such Indenture or such
Equipment Notes may be sold, if
the net proceeds from such sale
would be less than the Minimum
Sale Price for such Aircraft or
such Equipment Notes, and (b)
with respect to any Leased
Aircraft, the amount and payment
dates of rentals payable by
Continental under the Lease for
such Leased Aircraft may not be
adjusted, if, as a result of such
adjustment, the discounted
present value of all such rentals
would be less than 75% of the
discounted present value of the
rentals payable by Continental
under such Lease before giving
effect to such adjustment, in
each case, using the weighted
average interest rate of the
Equipment Notes issued under such
Indenture as the discount rate.
"Minimum Sale Price" means, with respect
to any Aircraft or the Equipment Notes
issued in respect of such Aircraft, at
any time, the lesser of (1) 75% of the
Appraised Current Market Value of such
Aircraft and (2) the aggregate
outstanding principal amount of such
Equipment Notes, plus accrued and unpaid
interest thereon.
Certificates; Book-Entry
Registration.......................... The New Certificates of each Trust will
be represented by a single permanent
global Certificate in definitive, fully
registered form and registered in the
name of Cede & Co. ("Cede"), as nominee
of The Depository Trust Company ("DTC").
See "Description of the New
Certificates--Book Entry; Delivery
and Form."
Method of Distribution................ The persons in whose names the
Certificates are registered will be
treated as the owners of such
Certificates for the purpose of
receiving payments of principal of and
interest on such Certificates and for
all other purposes whatsoever.
Therefore, none of the Trustee,
Continental, the Loan Trustee, the
Liquidity Provider, the Owner
Participant or the Owner Trustee has any
direct responsibility or liability for
distributions or payments to owners of
beneficial interests in the Certificates
(the "Certificate Owners").
Distributions by the Trustee in respect
of Certificates registered in the name
of Cede, as nominee of DTC, including
the final distribution of principal with
respect to such Certificates of any
Trust, will be made in same-day funds to
DTC. DTC will in turn make distributions
in same-day funds to those participants
in DTC who are credited with ownership
of such Certificates ("DTC
Participants") in amounts proportionate
to the amount of each such DTC
Participants respective holdings of
beneficial interests in such
Certificates. Corresponding payments by
the DTC Participants to beneficial
owners of such Certificates will be the
responsibility of such DTC Participants
and will be made in accordance with
customary industry practices.
Distributions by the Trustee to
Certificateholders in respect of
Certificates issued in definitive form,
other than the final distribution, will
be made by check mailed to each such
Certificateholder of record on the
applicable record date at its address
appearing on the register. The final
distribution with respect to the
Certificates of any Trust will be made
only upon surrender and presentation
thereof to the Trustee. See "Description
of the New Certificates--Book-Entry;
Delivery and Form".
24
Trustee.......................... Wilmington Trust Company will act as Trustee
and as paying agent and registrar for the
Certificates of each Trust. Wilmington Trust
Company will also act as Loan Trustee, as
paying agent and registrar for each Series of
Equipment Notes and as Subordination Agent
under the Intercreditor Agreement.
Federal Income Tax Consequences.. The exchange of New Certificates for Old
Certificates should not be a sale or exchange
or otherwise a taxable event for Federal
income tax purposes.
ERISA Considerations............. In general, employee benefit plans subject to
Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"),
or Section 4975 of the Internal Revenue Code
of 1986, as amended (the "Code") (or entities
which may be deemed to hold the assets of any
such plan) (collectively, "Plans") will be
eligible to purchase the Class A
Certificates. Plans will not be eligible to
purchase Class B, Class C or Class D
Certificates, except that such Certificates
may be acquired with the assets of an
insurance company general account that may be
deemed to constitute Plan assets if the
conditions of Prohibited Transaction Class
Exemption ("PTCE") 95-60 are satisfied.
Holders of Class B, Class C or Class D
Certificates that tender such Old
Certificates in exchange for New Certificates
will be deemed to have represented and
warranted that either (i) no Plan assets have
been used to purchase such Certificate or
(ii) the purchase and holding of such
Certificate is exempt from the prohibited
transaction restrictions of ERISA and Section
4975 of the Code pursuant to PTCE 95-60. See
"ERISA Considerations" and "Transfer
Restrictions". Each Plan fiduciary (and each
fiduciary for a governmental or church plan
subject to rules similar to those imposed on
Plans under ERISA) should consult with its
legal advisor concerning an investment in any
of the Certificates.
25
RISK FACTORS
Holders of Old Certificates should carefully consider the following
risk factors, as well as other information set forth in this Prospectus, before
tendering their Old Certificates in the Exchange Offer. The risk factors set
forth below (other than "--Risk Factors Relating to the Certificates--
Consequences of Failure to Exchange") are generally applicable to the Old
Certificates as well as the New Certificates.
RISK FACTORS RELATING TO THE COMPANY
Continental's History of Operating Losses
Although Continental recorded net income of $224 million in 1995 and
$255 million in the six months ended June 30, 1996, it had experienced
significant operating losses in the previous eight years. In the long term,
Continental's viability depends on its ability to sustain profitable results of
operations.
Leverage and Liquidity
Continental has successfully negotiated a variety of agreements to
increase its liquidity during 1995 and 1996. Nevertheless, Continental remains
more leveraged and has significantly less liquidity than certain of its
competitors, several of whom have available lines of credit and/or significant
unencumbered assets. Accordingly, Continental may be less able than certain of
its competitors to withstand a prolonged recession in the airline industry.
As of June 30, 1996, Continental and its consolidated subsidiaries had
approximately $1.7 billion (including current maturities) of long-term
indebtedness and capital lease obligations and had approximately $867 million of
minority interest, Continental-obligated mandatorily redeemable preferred
securities of subsidiary trust, redeemable warrants, redeemable preferred stock
and common stockholders' equity. Common stockholders' equity reflects the
adjustment of the Company's balance sheet and the recording of assets and
liabilities at fair market value as of April 27, 1993 in accordance with fresh
start reporting.
During the first and second quarters of 1995, in connection with
negotiations with various lenders and lessors, Continental ceased or reduced
contractually required payments under various agreements, which produced a
significant number of events of default under debt, capital lease and operating
lease agreements. Through agreements reached with the various lenders and
lessors, Continental has cured all of these events of default. The last such
agreement was put in place during the fourth quarter of 1995.
As of June 30, 1996, Continental had approximately $825 million of
cash and cash equivalents, including restricted cash and cash equivalents of
$104 million. Continental does not have general lines of credit and has
significant encumbered assets.
Continental had firm commitments with The Boeing Company ("Boeing") to
take delivery of 43 new jet aircraft during the years 1997 through 2002 with an
estimated aggregate cost of $2.6 billion. Continental has recently amended the
terms of its commitments with Boeing to take delivery of a total of 61 jet
aircraft during the years 1997 through 2003 with options for an additional 23
aircraft. The estimated aggregate cost of the firm-commitment aircraft is $2.7
billion. These amendments changed the aircraft mix and timing of delivery of
aircraft, in order to more closely match Continentals anticipated future
aircraft needs. In addition, the Company took delivery of three Beech 1900-D
aircraft in the second quarter of 1996 and an additional four such aircraft are
scheduled to be delivered later in 1996. The Company currently anticipates that
the firm financing commitments available to it with respect to its acquisition
of new aircraft from Boeing and Beech Acceptance Corporation ("Beech") will be
sufficient to fund all new aircraft deliveries scheduled during 1996, and that
it will have remaining financing commitments from aircraft manufacturers of $676
million for jet aircraft deliveries beyond 1996. However, the Company believes
that further financing will be needed to satisfy the remaining amount of such
capital commitments. There can be no assurance that sufficient financing will be
available for all aircraft and other capital expenditures not covered by firm
financing commitments. Continental has also entered into letters of
26
intent or agreements with several outside parties to lease four DC10-30 aircraft
and to purchase three DC10-30 aircraft and two MD-80 aircraft. These nine
aircraft are expected to be delivered by mid-year 1997, and Continental expects
to finance the aircraft to be purchased from available cash or from third-party
sources. The Company's wholly-owned subsidiary, Continental Express, Inc.
("Express"), recently announced an order for EMB-145 regional jets. Express'
order, which is for 25 firm aircraft and 175 option aircraft, is structured so
that Express will lease, under operating leases, the aircraft it takes under the
aircraft order, and neither Express nor Continental will have any obligation to
take aircraft which are not financed by a third party and leased to Express.
Continental will guarantee Express' obligations under the operating leases.
For 1996, Continental expects to incur cash expenditures under
operating leases relating to aircraft of approximately $568 million, compared
with $521 million for 1995, and approximately $229 million relating to
facilities and other rentals, the same amount as for 1995. In addition,
Continental has capital requirements relating to compliance with regulations
that are discussed below. See "--Regulatory Matters."
CMI recently consummated a $320 million secured term loan financing
with a group of banks and other financial institutions. The loan was made in two
tranches--a $180 million five-year amortizing term loan and a $140 million
seven-year amortization extended loan. Each tranche bears interest at a floating
rate. The loan is secured by the stock of CMI and substantially all its
unencumbered assets, consisting primarily of CMI's route authorities, and is
guaranteed by Continental and Air Micronesia, Inc. (CMI's parent company).
CMI used the net proceeds of the financing to prepay $160 million in
principal amount of indebtedness to an affiliate of General Electric Company
(General Electric Company and affiliates, collectively "GE") and to pay
transaction costs, and Continental used the $136 million in proceeds received by
it as an indirect dividend from CMI, together with approximately $28 million of
cash on hand, to prepay approximately $164 million in principal amount of
indebtedness to GE. The bank financing does not contain any restrictive
covenants at the Continental parent level, and none of the assets of Continental
Airlines, Inc. (other than its stock in Air Micronesia, Inc.) is pledged in
connection with the new financing.
The bank financing contains significant financial covenants relating
to CMI, including maintenance of a minimum fixed charge coverage ratio, a
minimum consolidated net worth and minimum liquidity, and covenants restricting
CMI's leverage, its incurrence of certain indebtedness and its pledge of assets.
The financial covenants also limit the ability of CMI to pay dividends to
Continental.
On July 2, 1996, the Company announced its plan to expand its gates
and related facilities in Terminal B as well as planned improvements at Terminal
C at Continental's Houston Intercontinental Airport hub. The expansion is
expected to cost approximately $115 million, which the Company expects will be
funded principally by the issuance of tax-exempt debt by the applicable
municipal authority. In connection therewith, the Company expects to enter into
long-term leases (or amendments to existing leases) with the applicable
municipal authority containing rental payments sufficient to service the related
tax-exempt debt.
Aircraft Fuel
Since fuel costs constitute a significant portion of Continental's
operating costs (approximately 12.5% for the year ended December 31, 1995 and
12.8% for the six months ended June 30, 1996), significant changes in fuel costs
would materially affect the Company's operating results. Jet fuel prices have
recently increased. Fuel prices continue to be susceptible to international
events, and the Company cannot predict near or longer-term fuel prices. The
Company has entered into petroleum option contracts to provide some short-term
protection (currently approximately six months) against a sharp increase in jet
fuel prices. In the event of a fuel supply shortage resulting from a disruption
of oil imports or otherwise, higher fuel prices or curtailment of scheduled
service could result.
27
Certain Tax Matters
The Company's United States federal income tax return reflects net
operating loss carryforwards ("NOLs") of $2.5 billion, subject to audit by the
Internal Revenue Service, of which $1.2 billion are not subject to the
limitations of Section 382 of the Internal Revenue Code ("Section 382"). As a
result, the Company will not pay United States federal income taxes (other than
alternative minimum tax) until it has recorded approximately an additional $1.2
billion of taxable income following December 31, 1995. For financial reporting
purposes, Continental began accruing tax expense on its income statement during
the second quarter of 1996. Section 382 imposes limitations on a corporations
ability to utilize NOLs if it experiences an "ownership change". In general
terms, an ownership change may result from transactions increasing the ownership
of certain stockholders in the stock of a corporation by more than 50 percentage
points over a three-year period. The sale of the Company's common stock in the
Secondary Offering (as defined in and described under "Recent Developments")
gave rise to an increase in percentage ownership by certain stockholders for
this purpose. Based upon the advice of its counsel, Cleary, Gottlieb, Steen &
Hamilton, the Company believes that such percentage increase did not give rise
to an ownership change under Section 382. However, no assurance can be given
that future transactions, whether within or outside the control of the Company,
will not cause a change in ownership, thereby substantially limiting the
potential utilization of the NOLs in a given future year. In the event that an
ownership change should occur, utilization of Continental's NOLs would be
subject to an annual limitation under Section 382 determined by multiplying the
value of the Company's stock (including both common and preferred stock) at the
time of the ownership change by the applicable long-term tax exempt rate (which
was 5.80% for August 1996). Unused annual limitations may be carried over to
later years, and the amount of the limitation may under certain circumstances be
increased by the built-in gains in assets held by the Company at the time of the
change that are recognized in the five-year period after the change. Under
current conditions, if an ownership change were to occur, Continental's NOL
utilization would be limited to approximately $90 million per year.
In connection with the Company's 1993 reorganization under Chapter 11
of the U.S. bankruptcy code effective April 27, 1993 (the "Reorganization") and
the recording of assets and liabilities at fair market value under the American
Institute of Certified Public Accountants' Statement of Position 90-7--
"Financial Reporting by Entities in Reorganization Under the Bankruptcy Code"
("SOP 90-7"), the Company recorded a deferred tax liability at April 27, 1993,
net of the amount of the Company's estimated realizable NOLs as required by
Statement of Financial Accounting Standards No. 109--"Accounting for Income
Taxes". Realization of a substantial portion of the Company's NOLs will require
the completion during the five-year period following the Reorganization of
transactions resulting in recognition of built-in gains for federal income tax
purposes. The Company has consummated one such transaction, which had the effect
of realizing approximately 40% of the built-in gains required to be realized
over the five-year period, and currently intends to consummate one or more
additional transactions. If the Company were to determine in the future that not
all such transactions will be completed, an adjustment to the net deferred tax
liability of up to $116 million would be charged to income in the period such
determination was made.
CMI
CMI's operating profit margins have consistently been greater than the
Company's margins overall. In addition to its non-stop service between Honolulu
and Tokyo, CMI's operations focus on the neighboring islands of Guam and Saipan,
resort destinations that cater primarily to Japanese travelers. Because the
majority of CMI's traffic originates in Japan, its results of operations are
substantially affected by the Japanese economy and changes in the value of the
yen as compared to the dollar. Appreciation of the yen against the dollar during
1993 and 1994 increased CMIs profitability and a decline of the yen against the
dollar may be expected to decrease it. The yen has declined against the dollar
during 1996 as compared to 1995. To reduce the potential negative impact on
CMI's dollar earnings, CMI from time to time purchases average rate options as a
hedge against a portion of its expected net yen cash flow position. Any
significant and sustained decrease in traffic or yields to and from Japan could
materially adversely affect Continental's consolidated profitability.
28
Principal Stockholders
As of July 31, 1996, Air Canada held approximately 10.0% of the common
equity interests and 4.0% of the general voting power of the Company, and Air
Partners, L.P. ("Air Partners") held approximately 9.8% of the common equity
interests and 39.3% of the general voting power of the Company. In addition,
assuming exercise of all of the warrants held by Air Partners, approximately
23.3% of the common equity interests and 52.1% of the general voting power would
be held by Air Partners. As discussed in "Recent Developments," Air Canada has
announced its intention to divest its interest in the Company during December
1996 or early 1997, subject to market conditions. At any time after January 1,
1997, shares of Class A common stock may be freely converted into an equal
number of shares of Class B common stock. Such conversion would effectively
increase the relative voting power of those Class A stockholders who do not
convert. See "Recent Developments."
Various provisions in the Company's Amended and Restated Certificate
of Incorporation (the "Certificate of Incorporation") and Bylaws (the "Bylaws")
currently provide Air Partners with the right to elect one-third of the
directors in certain circumstances; these provisions could have the effect of
delaying, deferring or preventing a change in control of the Company. See
"Recent Developments."
RISK FACTORS RELATING TO THE AIRLINE INDUSTRY
Industry Conditions and Competition
The airline industry is highly competitive and susceptible to price
discounting. The Company has in the past both responded to discounting actions
taken by other carriers and initiated significant discounting actions itself.
Continental's competitors include carriers with substantially greater financial
resources, as well as smaller carriers with lower cost structures. Airline
profit levels are highly sensitive to, and during recent years have been
severely impacted by, changes in fuel costs, fare levels (or "average yield")
and passenger demand. Passenger demand and yields have been adversely affected
by, among other things, the general state of the economy, international events
and actions taken by carriers with respect to fares. From 1990 to 1993, these
factors contributed to the domestic airline industry's incurring unprecedented
losses. Although fare levels have increased recently, significant industry-wide
discounts could be reimplemented at any time, and the introduction of broadly
available, deeply discounted fares by a major United States airline would likely
result in lower yields for the entire industry and could have a material adverse
effect on the Company's operating results.
The airline industry has consolidated in past years as a result of
mergers and liquidations and may further consolidate in the future. Among other
effects, such consolidation has allowed certain of Continental's major
competitors to expand (in particular) their international operations and
increase their market strength. Furthermore, the emergence in recent years of
several new carriers, typically with low cost structures, has further increased
the competitive pressures on the major United States airlines. In many cases,
the new entrants have initiated or triggered price discounting. Aircraft,
skilled labor and gates at most airports continue to be readily available to
start-up carriers. Although management believes that Continental is better able
than some of its major competitors to compete with fares offered by start-up
carriers because of its lower cost structure, competition with new carriers or
other low cost competitors on Continental's routes could negatively impact
Continental's operating results.
Regulatory Matters
In the last several years, the United States Federal Aviation
Administration (the "FAA") has issued a number of maintenance directives and
other regulations relating to, among other things, retirement of older aircraft,
collision avoidance systems, airborne windshear avoidance systems, noise
abatement, commuter aircraft safety and increased inspections and maintenance
procedures to be conducted on older aircraft. The Company expects to continue
incurring expenses for the purpose of complying with the FAA's noise and aging
aircraft regulations. In addition, several airports have recently sought to
increase substantially the rates charged to
29
airlines, and the ability of airlines to contest such increases has been
restricted by federal legislation, U.S. Department of Transportation regulations
and judicial decisions.
Management believes that the Company benefited significantly from the
expiration of the aviation trust fund tax (the "ticket tax") on December 31,
1995, although the amount of any such benefit resulting directly from the
expiration of the ticket tax cannot precisely be determined. In early August
1996, the Congress approved legislation reinstating the ticket tax until
December 31, 1996, and the ticket tax was reinstated on August 27, 1996.
Management believes that the reimposition of the ticket tax has a negative
impact on the Company, although the amount of such negative impact directly
resulting from the reimposition of the ticket tax cannot be precisely
determined.
Additional laws and regulations have been proposed from time to time
that could significantly increase the cost of airline operations by imposing
additional requirements or restrictions on operations, including various new
safety requirements recently proposed. Laws and regulations have also been
considered that would prohibit or restrict the ownership and/or transfer of
airline routes or takeoff and landing slots. Also, the availability of
international routes to United States carriers is regulated by treaties and
related agreements between the United States and foreign governments that are
amendable. Continental cannot predict what laws and regulations may be adopted
or their impact, but there can be no assurance that laws or regulations
currently proposed or enacted in the future will not adversely affect the
Company.
RISK FACTORS RELATING TO THE CERTIFICATES AND THE OFFERING
Consequences of Failure to Exchange
Holders of Old Certificates who do not exchange their Old Certificates
for New Certificates pursuant to the Exchange Offer will continue to be subject
to the restrictions on transfer of such Old Certificates as set forth in the
legend thereon as a consequence of the issuance of the Old Certificates pursuant
to exemptions from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state securities laws. In
general, the Old Certificates may not be offered or sold, unless registered
under the Securities Act, except pursuant to an exemption from, or in a
transaction not subject to, the Securities Act and applicable state securities
laws. The Company does not currently anticipate that it will register the Old
Certificates under the Securities Act. To the extent that Old Certificates are
tendered and accepted in the Exchange Offer, the trading market for untendered
and tendered but unaccepted Old Certificates could be adversely affected.
Appraisals and Realizable Value of Aircraft
Appraisals in respect of the Aircraft (without physical inspection
thereof) have been prepared by AISI, BK and MBA. According to the appraisals of
the three firms, the Aircraft had an aggregate appraised value of $239,360,000,
$229,500,000 and $241,860,000, respectively, in each case as of March 26, 1996.
See "Description of the Aircraft and the Appraisals". However, an appraisal is
only an estimate of value and should not be relied upon as a measure of
realizable value; the proceeds realized upon a sale of any Aircraft may be less
than the appraised value thereof. The value of the Aircraft in the event of the
exercise of remedies under the applicable Indenture will depend on market and
economic conditions, the availability of buyers, the condition of the Aircraft
and other factors. Accordingly, there can be no assurance that the proceeds
realized upon any such exercise with respect to the Equipment Notes and the
Aircraft pursuant to the applicable Pass Through Trust Agreement and the
applicable Indenture would be sufficient to satisfy in full payments due on the
Certificates.
Priority of Distributions; Subordination
Pursuant to the Intercreditor Agreement to which the Trusts, the
Subordination Agent and the Liquidity Providers are parties, on each
Distribution Date, so long as no Triggering Event shall have occurred, all
payments received by the Subordination Agent will be distributed in the
following order: (1) payment of the Liquidity Obligations to the Liquidity
Providers; (2) payment of Expected Distributions to the holders of Class A
Certificates; (3) payment of Expected Distributions to the holders of Class B
Certificates; (4) payment of
30
Expected Distributions to the holders of Class C Certificates; (5) payment of
Expected Distributions to the holders of Class D Certificates; and (6) payment
of certain fees and expenses of the Subordination Agent and the Trustees.
In addition, upon the occurrence of a Triggering Event and at all
times thereafter, all payments received by the Subordination Agent in respect of
the Equipment Notes and certain other payments will be distributed under the
Intercreditor Agreement in the following order: (1) to the Subordination Agent,
the Trustee and certain other parties in payment of the Administration Expenses
and to the Liquidity Providers in payment of the Liquidity Obligations; (2) to
the holders of Class A Certificates in payment of Adjusted Expected
Distributions; (3) to the holders of Class B Certificates in payment of Adjusted
Expected Distributions; (4) to the holders of Class C Certificates in payment of
Adjusted Expected Distributions; and (5) to the holders of Class D Certificates
in payment of Adjusted Expected Distributions.
The priority of distributions after a payment default under any
Equipment Note will have the effect in certain circumstances of requiring the
distribution to more senior Classes of Certificates of payments received in
respect of one or more junior series of Equipment Notes. If this should occur,
the interest accruing on the remaining Equipment Notes would in the aggregate be
less than the interest accruing on the remaining Certificates because such
Certificates include a relatively greater proportion of junior Classes with
relatively higher interest rates. As a result of this possible interest
shortfall, the holders of one or more junior Classes of Certificates may not
receive the full amount due them after a payment default under any Equipment
Note even if all Equipment Notes are eventually paid in full.
Control over Collateral; Sale of Collateral
Pursuant to the Intercreditor Agreement, the Trustees and the
Liquidity Provider have agreed that, with respect to any Indenture at any given
time, the Loan Trustee will be directed (a) in taking, or refraining from
taking, any action thereunder by the holders of at least a majority of the
outstanding principal amount of the Equipment Notes issued thereunder as long as
no Indenture Default has occurred and is continuing thereunder and (b) subject
to certain conditions, in exercising remedies thereunder (including
acceleration of such Equipment Notes or foreclosing the lien on the Aircraft
securing such Equipment Notes) insofar as an Indenture Default has occurred and
is continuing by the Controlling Party. See "Description of the New
Certificates--Indenture Defaults and Certain Rights Upon an Indenture Default"
for a description of the rights of the Certificateholders of each Trust to
direct the respective Trustees. Notwithstanding the foregoing, at any time after
18 months from the earlier to occur of (x) the date on which the entire
available amount under any Liquidity Facility shall have been drawn (for any
reason other than a Downgrade Drawing) and remain unreimbursed and (y) the date
on which all Equipment Notes shall have been accelerated, the Liquidity Provider
shall have the right to elect to become the Controlling Party with respect to
such Indenture. For purposes of giving effect to the foregoing, the Trustees
(other than the Controlling Party) shall irrevocably agree (and the
Certificateholders (other than the Certificateholders represented by the
Controlling Party) shall be deemed to agree by virtue of their purchase of
Certificates) to exercise their voting rights as directed by the Controlling
Party. For a description of certain limitations on the Controlling Party's
rights to exercise remedies, see "Description of the Equipment Notes--Remedies".
Upon the occurrence and during the continuation of any Indenture
Default under any Indenture, the Controlling Party may accelerate and, subject
to the provisions of the immediately following sentence, sell all (but not less
than all) of the Equipment Notes issued under such Indenture to any person. So
long as any Certificates are outstanding, during nine months after the earlier
of (x) the acceleration of the Equipment Notes under any Indenture or (y) the
bankruptcy or insolvency of Continental, without the consent of each Trustee,
(a) no Aircraft subject to the lien of such Indenture or such Equipment Notes
may be sold, if the net proceeds from such sale would be less than the Minimum
Sale Price for such Aircraft or such Equipment Notes, and (b) with respect to
any Leased Aircraft, the amount and payment dates of rentals payable by
Continental under the Lease for such Leased Aircraft may not be adjusted, if, as
a result of such adjustment, the discounted present value of all such rentals
would be less than 75% of the discounted present value of the rentals payable by
Continental under such Lease before giving effect to such adjustment, in each
case, using the weighted average interest rate of the Equipment Notes issued
under such Indenture as the discount rate.
31
Other Business Relationships with Owner Participant
Gaucho-2 Inc., a wholly owned subsidiary of Boeing, is currently the
Owner Participant with respect to all of the four leveraged leases for the
Leased Aircraft. Boeing and certain of its affiliates have various business
relationships with Continental, including as a supplier of certain equipment and
services to Continental. Due to such relationships, Gaucho-2 Inc. as the Owner
Participant may have interests different from those of any other owner
participant without such business relationships.
Absence of a Public Market for the New Certificates
Prior to the Exchange Offer, there has been no public market for the
Old Certificates or the New Certificates. Neither Continental nor any Trust
intends to apply for listing of the New Certificates on any securities exchange
or for quotation of New Certificates on The Nasdaq Stock Market's National
Market or otherwise. Certain of the Initial Purchasers have previously made a
market in the Old Certificates and Continental has been advised that Morgan
Stanley & Co. Incorporated and CS First Boston Corporation presently intend to
make a market in the New Certificates, as permitted by applicable laws and
regulations, after consummation of the Exchange Offer. None of the Initial
Purchasers is obligated, however, to make a market in the Old Certificates or
the New Certificates and any such market making activity may be discontinued at
any time without notice at the sole discretion of each Initial Purchaser. There
can be no assurance as to the liquidity of the public market for the New
Certificates or that any active public market for the Certificates will develop
or continue. If an active public market does not develop, the market price and
liquidity of the Certificates may be adversely affected.
32
RECENT DEVELOPMENTS
STOCK SPLIT
On June 26, 1996, the Board of Directors of the Company declared a
two-for-one stock split (the "Stock Split") pursuant to which (a) one share of
the Company's Class A common stock was issued for each share of Class A common
stock outstanding on July 2, 1996 (the "Record Date") and (b) one share of the
Company's Class B common stock was issued for each share of Class B common stock
outstanding on the Record Date. Shares issuable pursuant to the Stock Split were
distributed on or about July 16, 1996.
CORPORATE GOVERNANCE
On June 26, 1996, at the Company's annual meeting of stockholders (the
"Annual Meeting"), the Company's stockholders approved changes proposed by the
Company to its Certificate of Incorporation, which, together with amendments to
the Company's Bylaws previously approved by the Company's Board of Directors
(collectively, the "Amendments"), generally eliminate special classes of
directors (except for Air Partners' right to elect one-third of the directors in
certain circumstances as described below) and supermajority provisions, and make
a variety of other modifications aimed at streamlining the Company's corporate
governance structure. The amendments to the Company's Certificate of
Incorporation included elimination of Class C common stock, par value $.01 per
share (the "Class C common stock"), of the Company as an authorized class of
capital stock and changed the rights of holders of Class D common stock, par
value $.01 per share (the "Class D common stock"), with respect to election of
directors--holders of Class D common stock will now be entitled to elect one-
third of the directors. Pursuant to the Certificate of Incorporation, Class D
common stock is solely issuable to Air Partners and certain of its affiliates.
There is currently no Class D common stock outstanding. The Amendments, as a
whole, reflect the reduction of Air Canada's equity interest in the Company, as
described below, and the decision of the former directors designated by Air
Canada not to stand for reelection, along with the expiration of various
provisions of the Company's Certificate of Incorporation and Bylaws specifically
included at the time of the Company's reorganization in 1993.
The Amendments also provide that, at any time after January 1, 1997,
shares of Class A common stock may be freely converted into an equal number of
shares of Class B common stock. Under agreements put in place at the time of
the Company's reorganization in 1993, and designed in part to ensure compliance
with the foreign ownership limitations applicable to United States air carriers,
in light of the substantial stake in the Company then held by Air Canada,
holders of Class A common stock were not permitted under the Company's
Certificate of Incorporation to convert their shares to Class B common stock.
In recent periods, the market price of Class A common stock has generally been
below the market price of Class B common stock, which the Company believes is
attributable in part to the reduced liquidity present in the trading market for
Class A common stock. A number of Class A stockholders requested that the
Company provide for free convertibility of Class A common stock into Class B
common stock, and in light of the reduction of Air Canada's equity stake, the
Company determined that the restriction was no longer necessary. Any such
conversion would effectively increase the relative voting power of those Class A
stockholders who do not convert.
On April 19, 1996, the Company's Board of Directors approved certain
agreements (the "Agreements") with its two major stockholders, Air Canada and
Air Partners. The Agreements contain a variety of arrangements intended
generally to reflect the intention that Air Canada has expressed to the Company
of divesting its investment in Continental during December 1996 or early 1997,
subject to market conditions. Air Canada has indicated to the Company that its
original investment in Continental has become less central to Air Canada in
light of other initiatives it has undertaken -- particularly expansion within
Canada and exploitation of the 1995 Open Skies agreement to expand Air Canada's
own flights into the U.S. Because of these initiatives Air Canada has determined
it appropriate to redeploy the funds invested in the Company into other uses in
Air Canada's business. The Agreements also reflect the distribution by Air
Partners, effective March 29, 1996, to its investors (the "AP Investors") of all
of the shares of the Class B common stock held by Air Partners and the desire of
some of the AP Investors to realize the increase in value of their investment in
the Company by selling all or a portion of their shares of Class B common stock.
33
Among other things, the Agreements required the Company to file a
registration statement under the Securities Act to permit the sale by Air Canada
of 2,200,000 shares of Class B common stock held by it and by certain of the AP
Investors of an aggregate of 1,730,240 (each on a pre-Stock Split basis) such
shares pursuant to an underwritten public offering arranged by the Company (the
"Secondary Offering"). The Secondary Offering was completed on May 14, 1996. The
Agreements provided for the following additional steps to be taken in connection
with the completion of the Secondary Offering:
. in light of its reduced equity stake in the Company, Air Canada was
no longer entitled to designate nominees to the Board of Directors
of the Company, caused the four then-present or former members of
the Air Canada board who served as directors of Continental to
decline nomination for reelection as directors and converted all of
its Class A common stock to Class B common stock;
. Air Canada and Air Partners entered into a number of agreements
restricting, prior to December 16, 1996, further disposition of the
common stock of the Company held by either of them; and
. each of the existing Stockholders' Agreement and the registration
rights agreement (the "Original Registration Rights Agreement")
among the parties was modified in a number of respects to reflect,
among other matters, the changing composition of the respective
equity interests of the parties.
After such sale and the conversion by Air Canada of its Class A common
stock into Class B common stock, Air Canada holds approximately 10.0% of the
common equity interests and 4.0% of the general voting power of the Company, and
Air Partners holds approximately 9.8% of the common equity interests and 39.3%
of the general voting power of the Company. If all of the warrants held by Air
Partners were exercised, approximately 23.3% of the common equity interests and
52.1% of the general voting power would be held by Air Partners.
The Company and Air Canada also entered into a memorandum of
understanding, subject to the fulfillment of certain conditions, regarding
modifications to certain of the Company's existing "synergy" agreements with Air
Canada, which covered items such as maintenance and ground facilities, and
resolved certain outstanding commercial issues under the agreements. In May
1996, the Company entered into an agreement with Air Partners for the sale by
Air Partners to the Company from time to time at Air Partners' election for the
one-year period beginning August 15, 1996, of up to an aggregate of $50 million
in intrinsic value (then-current Class B common stock price minus exercise
price) of Air Partners' Class B Warrants pursuant to the Warrant Purchase
Agreement. The purchase price would be payable in cash. The Board of Directors
has authorized the Company to publicly issue up to $50 million in net proceeds
of Class B common stock in connection with any such purchase and the Company has
filed a shelf registration statement with respect thereto that has been declared
effective by the Commission. In connection with this agreement, the Company has
reclassified $50 million from common equity to redeemable warrants.
Because certain aspects of the Agreements raised issues under the
change in control provisions of certain of the Company's employment agreements
and employee benefit plans, these agreements and plans were modified to provide
a revised change of control definition that the Company believes is appropriate
in light of the prospective changes to its equity ownership structure. In
connection with the modifications, payments were made to certain employees,
benefits were granted to certain employees and options equal to 10% of the
amount of the options previously granted to each optionee were granted (subject
to certain conditions) to substantially all employees holding outstanding
options.
34
USE OF PROCEEDS
There will be no cash proceeds payable to Continental from the
issuance of the New Certificates pursuant to the Exchange Offer. The proceeds
from the sale of the Old Certificates were used to purchase the Equipment Notes
issued by (i) the related Owner Trustees in connection with the refinancing of
the indebtedness incurred by the Owner Trustees to finance the purchase of each
of the Leased Aircraft and (ii) Continental, as owner of the Owned Aircraft.
The Equipment Notes issued in respect of the Leased Aircraft represent in the
aggregate the entire debt portion currently outstanding of the leveraged lease
transactions relating to the Leased Aircraft. Continental received cash
proceeds from the sale of the Old Certificates, representing that portion of the
total proceeds from the sale of the Old Certificates as was used to purchase
Equipment Notes issued with respect to the Owned Aircraft.
35
SELECTED FINANCIAL DATA
The following tables set forth selected financial data of (i) the
Company for the three and six months ended June 30, 1996 and 1995, the years
ended December 31, 1995 and 1994 and the period from April 28, 1993 through
December 31, 1993 and (ii) Holdings for the period from January 1, 1993 through
April 27, 1993. The consolidated financial data of both the Company, for the
years ended December 31, 1995 and 1994 and for the period from April 28, 1993
through December 31, 1993, and Holdings, for the period from January 1, 1993
through April 27, 1993, are derived from their respective audited consolidated
financial statements. On April 27, 1993, in connection with the Reorganization,
the Company adopted fresh start reporting in accordance with SOP 90-7. A
vertical black line is shown in the table below to separate Continental's post-
reorganized consolidated financial data from the pre-reorganized consolidated
financial data of Holdings since they have not been prepared on a consistent
basis of accounting. The consolidated financial data of the Company for the
three and six months ended June 30, 1996 and 1995 are derived from its unaudited
consolidated financial statements, which include all adjustments (consisting
solely of normal recurring accruals) that the Company considers necessary for
the presentation of the financial position and results of operations for these
periods. Operating results for the six months ended June 30, 1996 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1996. The Company's selected consolidated financial data should be
read in conjunction with, and are qualified in their entirety by reference to,
the consolidated financial statements, including the notes thereto, incorporated
by reference herein.
PERIOD FROM | PERIOD FROM
REORGANIZATION | JANUARY 1,
THREE MONTHS ENDED SIX MONTHS YEAR ENDED (APRIL 28, | 1993
JUNE 30, ENDED JUNE 30, DECEMBER 31, 1993) THROUGH | THROUGH
------------------ ----------------- ----------------- DECEMBER 31, | APRIL 27,
1996 1995 1996 1995 1995 1994 1993 | 1993
---- ---- ---- ---- ---- ---- ---- | ----
(In millions of dollars, except per share data) |
STATEMENT OF OPERATIONS (unaudited) (unaudited) |
DATA: |
|
Operating Revenue: |
Passenger................. $1,519 $1,355 $2,894 $2,595 $5,302 $ 5,036 $3,493 | $1,622
Cargo, mail and other..... 120 123 234 292 523 634 417 | 235
------ ------ ------ ------ ------ -------- ------ | ------
1,639 1,478 3,128 2,887 5,825 5,670 3,910 | 1,857
------ ------ ------ ------ ------ -------- ------ | ------
Operating Expenses: |
Wages, salaries and |
related costs......... 378 357 742 723 1,432(1) 1,532 1,000 | 502
Aircraft fuel............. 180 168 357 337 681 741 540 | 272
Aircraft rentals.......... 127 124 251 247 497 433 261 | 154
Commissions............... 137 131 263 250 489 439 378 | 175
Maintenance, materials |
and repairs........... 119 101 231 198 429 495 363 | 184
Other rentals and landing |
fees.................. 85 93 169 185 356 392 258 | 120
Depreciation and |
amortization......... 67 65 132 129 253 258 162 | 77
Other..................... 317 330 634 680 1,303 1,391 853 | 487
------ ------ ------ ------ ------ -------- ------ | ------
1,410 1,369 2,779 2,749 5,440 5,681 3,815 | 1,971
------ ------ ------ ------ ------ -------- ------ | ------
Operating Income (Loss).... 229 109 349 138 385 (11) 95 | (114)
------ ------ ------ ------ ------ -------- ------ | ------
Nonoperating Income |
(Expense): |
Interest expense.......... (42) (56) (89) (110) (213) (241) (165) | (52)
Interest capitalized...... -- 3 1 4 6 17 8 | 2
Interest income........... 10 8 19 13 31 23 14 | --
Reorganization items, net. -- -- -- -- -- -- -- | (818)
Other, net................ 9 117 21 108 101 (439)(2) (4) | 5
------ ------ ------ ------ ------ -------- ------ | ------
(23) 72 (48) 15 (75) (640) (147) | (863)
------ ------ ------ ------ ------ -------- ------ | ------
Income (Loss) before |
Income Taxes, Minority |
Interest and |
Extraordinary Gain........ 206 181 301 153 310 (651) (52) | (977)
Net Income (Loss).......... $ 167 $ 102 $ 255 $ 72 $ 224 $ (613) $ (39) | $2,640 (3)
Earnings (Loss) per Common |
and Common Equivalent |
Share(4).................. $2.53 $1.51 $3.90 $1.15 $3.60 $(11.88) $(1.17) | N.M. (5)
====== ====== ====== ====== ====== ======== ====== |
Earnings (Loss) per Common |
Share Assuming Full |
Dilution(4)............... $2.04 $1.49 $3.25 $1.10 $3.15 $(11.88) $(1.17) | N.M. (5)
====== ====== ====== ====== ====== ======== ====== |
36
AS OF AS OF
JUNE 30, DECEMBER 31,
1996 1995
--------- -------------
BALANCE SHEET DATA: (In millions of dollars)
(unaudited)
Cash and Cash Equivalents, including restricted Cash and
Cash Equivalents of $104 and $144, respectively(6)............ $ 825 $ 747
Other Current Assets........................................... 702 568
Total Property and Equipment, Net.............................. 1,436 1,461
Routes, Gates and Slots, Net................................... 1,502 1,531
Other Assets, Net.............................................. 485 514
------ ------
Total Assets.................................................. $4,950 $4,821
====== ======
Current Liabilities............................................ $2,108 $1,984
Long-term Debt and Capital Leases.............................. 1,435 1,658
Deferred Credits and Other Long-term Liabilities............... 540 564
Minority Interest.............................................. 28 27
Continental-Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trust holding solely Convertible
Subordinated Debentures(7).................................... 242 242
Redeemable Warrants(8)......................................... 50 --
Redeemable Preferred Stock..................................... 43 41
Common Stockholders' Equity.................................... 504 305
------ ------
Total Liabilities and Stockholders' Equity.................... $4,950 $4,821
====== ======
- -------------------
(1) Includes a $20 million cash payment in 1995 by the Company in connection
with a 24-month collective bargaining agreement entered into by the Company
and the Independent Association of Continental Pilots.
(2) Includes a provision of $447 million recorded in the fourth quarter of 1994
associated with the planned early retirement of certain aircraft and closed
or underutilized airport and maintenance facilities and other assets.
(3) Reflects a $3.6 billion extraordinary gain from extinguishment of debt.
(4) On June 26, 1996, the Company announced the Stock Split with respect to the
Company's Class A common stock and Class B common stock. Accordingly, the
earnings per share information has been restated to give effect to the
Stock Split.
(5) Historical per share data for Holdings is not meaningful since the Company
has been recapitalized and has adopted fresh start reporting as of April
27, 1993.
(6) Restricted cash and cash equivalents agreements relate primarily to
workers' compensation claims and the terms of certain other agreements. In
addition, CMI is required by loan agreements to maintain certain minimum
consolidated net worth and liquidity levels, which effectively restrict the
amount of cash available to Continental from CMI.
(7) The sole assets of the Trust are Convertible Subordinated Debentures, with
an aggregate principal amount of $250 million, which bear interest at the
rate of 8-1/2% per annum and mature on December 1, 2020. Upon repayment,
the Continental-Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trust will be mandatorily redeemed.
(8) The Company has agreed to repurchase up to $50 million of intrinsic value
(then-current Class B common stock price minus exercise price) of Class B
Warrants at the election of Air Partners during the one year period
commencing August 15, 1996.
37
THE EXCHANGE OFFER
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and reference is made to the
provisions of the Registration Rights Agreement, which has been filed as an
exhibit to the Registration Statement and a copy of which is available as set
forth under the heading "Available Information."
TERMS OF THE EXCHANGE OFFER
General
In connection with the issuance of the Old Certificates pursuant to a
Purchase Agreement dated as of May 9, 1996, between the Company and the Initial
Purchasers, the Initial Purchasers and their respective assignees became
entitled to the benefits of the Registration Rights Agreement.
Under the Registration Rights Agreement, the Company is obligated to
use its best efforts to (i) file the Registration Statement of which this
Prospectus is a part for a registered exchange offer with respect to an issue of
new certificates identical in all material respects to the Old Certificates
within 120 calendar days after May 20, 1996, the date the Old Certificates were
issued (the "Issue Date"), (ii) to cause the Registration Statement to become
effective within 60 days after filing of the Registration Statement, (iii) to
cause the Registration Statement to remain effective until the closing of the
Exchange Offer and (iv) to consummate the Exchange Offer within 30 calendar days
after the date the Registration Statement is declared effective by the
Commission. The Company will keep the Exchange Offer open for a period of not
less than 30 calendar days. The Exchange Offer being made hereby, if commenced
and consummated within the time periods described in this paragraph, will
satisfy those requirements under the Registration Rights Agreement.
Upon the terms and subject to the conditions set forth in this
Prospectus and in the Letter of Transmittal (which together constitute the
Exchange Offer), all Old Certificates validly tendered and not withdrawn prior
to 5:00 p.m., New York City time, on the Expiration Date will be accepted for
exchange. New Certificates of the same class will be issued in exchange for an
equal principal amount of outstanding Old Certificates accepted in the Exchange
Offer. Old Certificates may be tendered only in integral multiples of $1000.
This Prospectus, together with the Letter of Transmittal, is being sent to all
registered holders as of _________, 1996. The Exchange Offer is not conditioned
upon any minimum principal amount of Old Certificates being tendered for
exchange. However, the obligation to accept Old Certificates for exchange
pursuant to the Exchange Offer is subject to certain conditions as set forth
herein under "--Conditions."
Old Certificates shall be deemed to have been accepted as validly
tendered when, as and if the Trustee has given oral or written notice thereof to
the Exchange Agent. The Exchange Agent will act as agent for the tendering
holders of Old Certificates for the purposes of receiving the New Certificates
and delivering New Certificates to such holders.
Based on interpretations by the staff of the Commission, as set forth
in no-action letters issued to third parties, including the Exchange Offer No-
Action Letters, the Company believes that the New Certificates issued pursuant
to the Exchange Offer may be offered for resale, resold or otherwise transferred
by holders thereof (other than a broker-dealer who acquires such New
Certificates directly from the Trustee for resale pursuant to Rule 144A under
the Securities Act or any other available exemption under the Securities Act or
any holder that is an "affiliate" of the Company as defined under Rule 405 of
the Securities Act), without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Certificates
are acquired in the ordinary course of such holders' business and such holders
are not engaged in, and do not intend to engage in, a distribution of such New
Certificates and have no arrangement with any person to participate in a
distribution of such New Certificates. By tendering the Old Certificates in
exchange for New Certificates, each holder, other than a broker-dealer, will
represent to the Company that: (i) it is not an affiliate of the Company (as
defined under Rule 405 of the Securities Act) nor a broker-dealer tendering Old
Certificates
38
acquired directly from the Company for its own account; (ii) any New
Certificates to be received by it will be acquired in the ordinary course of its
business; and (iii) it is not engaged in, and does not intend to engage in, a
distribution of such New Certificates and has no arrangement or understanding to
participate in a distribution of the New Certificates. If a holder of Old
Certificates is engaged in or intends to engage in a distribution of the New
Certificates or has any arrangement or understanding with respect to the
distribution of the New Certificates to be acquired pursuant to the Exchange
Offer, such holder may not rely on the applicable interpretations of the staff
of the Commission and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any secondary resale
transaction. Each Participating Broker-Dealer that receives New Certificates for
its own account pursuant to the Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such New Certificates. The
Letter of Transmittal states that by so acknowledging and by delivering a
prospectus, a Participating Broker-Dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
Participating Broker-Dealer in connection with resales of New Certificates
received in exchange for Old Certificates where such Old Certificates were
acquired by such Participating Broker-Dealer as a result of market-making
activities or other trading activities. The Company has agreed that, starting on
the Expiration Date and ending on the close of business 180 days after the
Expiration Date, it will make this Prospectus available to any Participating
Broker-Dealer for use in connection with any such resale. See "Plan of
Distribution."
In the event that any changes in law or the applicable interpretations
of the staff of the Commission do not permit Continental to effect the Exchange
Offer, if the Registration Statement is not declared effective within 60
calendar days after the filing thereof with the Commission under certain
circumstances or the Exchange Offer is not consummated within 30 days after the
effectiveness of the Registration Statement under certain other circumstances,
at the request of a holder not eligible to participate in the Exchange Offer or
under certain other circumstances described in the Registration Rights
Agreement, Continental will, in lieu of effecting the registration of the New
Certificates pursuant to the Registration Statement and at no cost to the
holders of Old Certificates, (a) as promptly as practicable, file with the
Commission a shelf registration statement (the "Shelf Registration Statement")
covering resales of the Old Certificates, (b) use its best efforts to cause the
Shelf Registration Statement to be declared effective under the Securities Act
by the 180th calendar day after the Issue Date and (c) use its best efforts to
keep effective the Shelf Registration Statement for a period of three years
after its effective date (or for such shorter period as shall end when all of
the Old Certificates covered by the Shelf Registration Statement have been sold
pursuant thereto or may be freely sold pursuant to Rule 144 under the Securities
Act).
In the event that neither the consummation of the Exchange Offer nor
the declaration by the Commission of the Shelf Registration Statement to be
effective (each a "Registration Event") occurs on or prior to the 180th calendar
day following the Issue Date, the interest rate per annum borne by the Equipment
Notes and passed through to holders of Old Certificates shall be increased by
0.50% effective from and including January 2, 1997, to but excluding the date on
which a Registration Event occurs. In the event that the Shelf Registration
Statement ceases to be effective at any time, during the period the Company is
required to keep such Shelf Registration Statement effective, for more than 60
days, whether or not consecutive, during any 12-month period, the interest rate
per annum borne by the Equipment Notes shall be increased by 0.50% from the 61st
day of the applicable 12-month period such Shelf Registration Statement ceases
to be effective until such time as the Shelf Registration Statement again
becomes effective.
Upon consummation of the Exchange Offer, subject to certain
exceptions, holders of Old Certificates who do not exchange their Old
Certificates for New Certificates in the Exchange Offer will no longer be
entitled to registration rights and will not be able to offer or sell their Old
Certificates, unless such Old Certificates are subsequently registered under the
Securities Act (which, subject to certain limited exceptions, the Company will
have no obligation to do), except pursuant to an exemption from, or in a
transaction not subject to, the Securities Act and applicable state securities
laws. See "Risk Factors--Risk Factors Relating to the Certificates--Consequences
of Failure to Exchange."
39
Expiration Date; Extensions; Amendments; Termination
The term "Expiration Date" shall mean ___________, 1996 (30 calendar
days following the commencement of the Exchange Offer), unless the Company, in
its sole discretion, extends the Exchange Offer, in which case the term
"Expiration Date" shall mean the latest date to which the Exchange Offer is
extended. Notwithstanding any extension of the Exchange Offer, if the Exchange
Offer is not consummated by November 16, 1996, the interest rate borne by the
Equipment Notes and passed through to the Certificateholders is subject to
increase. See "--General."
In order to extend the Expiration Date, the Company will notify the
Exchange Agent of any extension by oral or written notice and will mail to the
record holders of Old Certificates an announcement thereof, each prior to 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. Such announcement may state that the Company is
extending the Exchange Offer for a specified period of time.
The Company reserves the right (i) to delay acceptance of any Old
Certificates, to extend the Exchange Offer or to terminate the Exchange Offer
and not permit acceptance of Old Certificates not previously accepted if any of
the conditions set forth herein under "--Conditions" shall have occurred and
shall not have been waived by the Company, by giving oral or written notice of
such delay, extension or termination to the Exchange Agent, or (ii) to amend the
terms of the Exchange Offer in any manner deemed by it to be advantageous to the
holders of the Old Certificates. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by oral or
written notice thereof to the Exchange Agent. If the Exchange Offer is amended
in a manner determined by the Company to constitute a material change, the
Company will promptly disclose such amendment in a manner reasonably calculated
to inform the holders of the Old Certificates of such amendment.
Without limiting the manner in which the Company may choose to make
public announcement of any delay, extension, amendment or termination of the
Exchange Offer, the Company shall have no obligation to publish, advertise, or
otherwise communicate any such public announcement, other than by making a
timely release to an appropriate news agency.
INTEREST ON THE NEW CERTIFICATES
The New Certificates will accrue interest at the applicable per annum
rate for such Trust set forth on the cover page of this Prospectus, from the
last date on which interest was paid on the Old Certificates surrendered in
exchange therefor. Interest on the New Certificates is payable on January 2,
April 2, July 2 and October 2 of each year commencing upon the consummation of
the Exchange Offer, subject to the terms of the Intercreditor Agreement.
PROCEDURES FOR TENDERING
To tender in the Exchange Offer, a holder must complete, sign and date
the Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with any other
required documents, to the Exchange Agent prior to 5:00 p.m., New York City
time, on the Expiration Date. In addition, either (i) certificates for such Old
Certificates must be received by the Exchange Agent along with the Letter of
Transmittal, (ii) a timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Old Certificates, if such procedure is available, into
the Exchange Agent's account at The Depository Trust Company (the" Book-Entry
Transfer Facility") pursuant to the procedure for book-entry transfer described
below, must be received by the Exchange Agent prior to the Expiration Date or
(iii) the holder must comply with the guaranteed delivery procedures described
below. THE METHOD OF DELIVERY OF OLD CERTIFICATES, LETTERS OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH
DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED,
WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF
40
TRANSMITTAL OR OLD CERTIFICATES SHOULD BE SENT TO THE COMPANY. Delivery of all
documents must be made to the Exchange Agent at its address set forth below.
Holders may also request their respective brokers, dealers, commercial banks,
trust companies or nominees to effect such tender for such holders.
The tender by a holder of Old Certificates will constitute an
agreement between such holder and the Company in accordance with the terms and
subject to the conditions set forth herein and in the Letter of Transmittal.
Only a holder of Old Certificates may tender such Old Certificates in
the Exchange Offer. The term "holder" with respect to the Exchange Offer means
any person in whose name Old Certificates are registered on the books of the
Company or any other person who has obtained a properly completed bond power
from the registered holder.
Any beneficial owner whose Old Certificates are registered in the name
of a broker, dealer, commercial bank, trust company or other nominee and who
wishes to tender should contact such registered holder promptly and instruct
such registered holder to tender on his behalf. If such beneficial owner wishes
to tender on his own behalf, such beneficial owner must, prior to completing and
executing the Letter of Transmittal and delivering his Old Certificates, either
make appropriate arrangements to register ownership of the Old Certificates in
such owners name or obtain a properly completed bond power from the registered
holder. The transfer of registered ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as
the case may be, must be guaranteed by any member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or an "eligible guarantor" institution within the meaning of Rule
17Ad-15 under the Exchange Act (each an "Eligible Institution") unless the Old
Certificates tendered pursuant thereto are tendered (i) by a registered holder
who has not completed the box entitled "Special Issuance Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution.
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Certificates listed therein, such Old Certificates
must be endorsed or accompanied by bond powers and a proxy which authorizes such
person to tender the Old Certificates on behalf of the registered holder, in
each case as the name of the registered holder or holders appears on the Old
Certificates.
If the Letter of Transmittal or any Old Certificates or bond powers
are signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and unless waived by the
Company, evidence satisfactory to the Company of their authority to so act must
be submitted with the Letter of Transmittal.
All questions as to the validity, form, eligibility (including time of
receipt) and withdrawal of the tendered Old Certificates will be determined by
the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old
Certificates not properly tendered or any Old Certificates which, if accepted,
would, in the opinion of counsel for the Company, be unlawful. The Company also
reserves the absolute right to waive any irregularities or conditions of tender
as to particular Old Certificates. The Company's interpretation of the terms
and conditions of the Exchange Offer (including the instructions in the Letter
of Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Certificates must be
cured within such time as the Company shall determine. Neither the Company, the
Exchange Agent nor any other person shall be under any duty to give notification
of defects or irregularities with respect to tenders of Old Certificates, nor
shall any of them incur any liability for failure to give such notification.
Tenders of Old Certificates will not be deemed to have been made until such
irregularities have been cured or waived. Any Old Certificates received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned without cost to
such holder by the Exchange Agent to the tendering holders of Old
41
Certificates, unless otherwise provided in the Letter of Transmittal, as soon as
practicable following the Expiration Date.
In addition, the Company reserves the right in its sole discretion,
subject to the provisions of the Indenture, to (i) purchase or make offers for
any Old Certificates that remain outstanding subsequent to the Expiration Date
or, as set forth under "--Conditions," to terminate the Exchange Offer in
accordance with the terms of the Registration Rights Agreement and (ii) to the
extent permitted by applicable law, purchase Old Certificates in the open
market, in privately negotiated transactions or otherwise. The terms of any
such purchases or offers could differ from the terms of the Exchange Offer.
ACCEPTANCE OF OLD CERTIFICATES FOR EXCHANGE; DELIVERY OF NEW CERTIFICATES
Upon satisfaction or waiver of all of the conditions to the Exchange
Offer, all Old Certificates properly tendered will be accepted, promptly after
the Expiration Date, and the New Certificates will be issued promptly after
acceptance of the Old Certificates. See "--Conditions" below. For purposes of
the Exchange Offer, Old Certificates shall be deemed to have been accepted
validly tendered for exchange when, as and if the Company has given oral or
written notice thereof to the Exchange Agent.
In all cases, issuance of New Certificates for Old Certificates that
are accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of certificates for such Old Certificates
or a timely Book-Entry Confirmation of such Old Certificates into the Exchange
Agent's account at the Book-Entry Transfer Facility, a properly completed and
duly executed Letter of Transmittal and all other required documents. If any
tendered Old Certificates are not accepted for any reason set forth in the terms
and conditions of the Exchange Offer or if Old Certificates are submitted for a
greater principal amount than the holder desires to exchange, such unaccepted or
nonexchanged Old Certificates will be returned without expense to the tendering
holder thereof (or, in the case of Old Certificates tendered by book-entry
transfer procedures described below, such nonexchanged Old Certificates will be
credited to an account maintained with such Book-Entry Transfer Facility) as
promptly as practicable after the expiration or termination of the Exchange
Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with
respect to the Old Certificates at the Book-Entry Transfer Facility for purposes
of the Exchange Offer within two business days after the date of this
Prospectus. Any financial institution that is a participant in the Book-Entry
Transfer Facility's systems may make book-entry delivery of Old Certificates by
causing the Book-Entry Transfer Facility to transfer such Old Certificates into
the Exchange Agent's account at the Book-Entry Transfer Facility in accordance
with such Book-Entry Transfer Facility's procedures for transfer. However,
although delivery of Old Certificates may be effected through book-entry
transfer at the Book-Entry Transfer Facility, the Letter of Transmittal or
facsimile thereof with any required signature guarantees and any other required
documents must, in any case, be transmitted to and received by the Exchange
Agent at one of the addresses set forth below under "--Exchange Agent" on or
prior to the Expiration Date or the guaranteed delivery procedures described
below must be complied with.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Certificates desires to tender such
Old Certificates, and the Old Certificates are not immediately available, or
time will not permit such holder's Old Certificates or other required documents
to reach the Exchange Agent before the Expiration Date, or the procedures for
book-entry transfer cannot be completed on a timely basis, a tender may be
effected if (i) the tender is made through an Eligible Institution, (ii) prior
to the Expiration Date, the Exchange Agent receives from such Eligible
Institution a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof) and Notice of Guaranteed Delivery, substantially in the form
provided by the Company (by facsimile transmission, mail or hand delivery),
setting forth the name and address of the holder of Old Certificates and the
amount of Old Certificates tendered, stating that the tender is being made
thereby and guaranteeing that within three New York Stock Exchange ("NYSE")
trading days after the date of execution of the Notice of Guaranteed Delivery,
the certificates for all
42
physically tendered Old Certificates, in proper form for transfer, or a Book-
Entry Confirmation, as the case may be, and any other documents required by the
Letter of Transmittal will be deposited by the Eligible Institution with the
Exchange Agent and (iii) the certificates for all physically tendered Old
Certificates, in proper form for transfer, or a Book-Entry Confirmation, as the
case may be, and all other documents required by the Letter of Transmittal are
received by the Exchange Agent within three NYSE trading days after the date of
execution of the Notice of Guaranteed Delivery.
WITHDRAWAL OF TENDERS
Tenders of Old Certificates may be withdrawn at any time prior to 5:00
p.m., New York City time on the Expiration Date.
For a withdrawal to be effective, a written notice of withdrawal must
be received by the Exchange Agent prior to 5:00 p.m., New York City time on the
Expiration Date at one of the addresses set forth below under "--Exchange
Agent." Any such notice of withdrawal must specify the name of the person having
tendered the Old Certificates to be withdrawn, identify the Old Certificates to
be withdrawn (including the principal amount of such Old Certificates) and
(where certificates for Old Certificates have been transmitted) specify the name
in which such Old Certificates are registered, if different from that of the
withdrawing holder. If certificates for Old Certificates have been delivered or
otherwise identified to the Exchange Agent, then, prior to the release of such
certificates, the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution unless such holder is an
Eligible Institution. If Old Certificates have been tendered pursuant to the
procedure for book-entry transfer described above, any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Old Certificates and otherwise comply with the
procedures of such facility. All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be determined by
the Company, whose determination shall be final and binding on all parties. Any
Old Certificates so withdrawn will be deemed not to have been validly tendered
for exchange for purposes of the Exchange Offer. Any Old Certificates which have
been tendered for exchange but which are not exchanged for any reason will be
returned to the holder thereof without cost to such holder (or, in the case of
Old Certificates tendered by book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures described above, such Old Certificates will be credited to an account
maintained with such Book-Entry Transfer Facility for the Old Certificates) as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Old Certificates may be retendered by
following one of the procedures described under "--Procedures for Tendering" and
"--Book-entry Transfer" above at any time on or prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, Old Certificates
will not be required to be accepted for exchange, nor will New Certificates be
issued in exchange for, any Old Certificates and the Company may terminate or
amend the Exchange Offer as provided herein before the acceptance of such Old
Certificates, if because of any change in law, or applicable interpretations
thereof by the Commission, the Company determines that it is not permitted to
effect the Exchange Offer, and the Company has no obligation to, and will not
knowingly, permit acceptance of tenders of Old Certificates from affiliates of
the Company (within the meaning of Rule 405 under the Securities Act) or from
any other holder or holders who are not eligible to participate in the Exchange
Offer under applicable law or interpretations thereof by the Commission, or if
the New Certificates to be received by such holder or holders of Old
Certificates in the Exchange Offer, upon receipt, will not be tradable by such
holder without restriction under the Securities Act and the Exchange Act and
without material restrictions under the "blue sky" or securities laws of
substantially all of the states of the United States.
43
EXCHANGE AGENT
Wilmington Trust Company has been appointed as Exchange Agent for the
Exchange Offer. Questions and requests for assistance and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent addressed as follows:
By Mail, Overnight Delivery: By Hand:
Wilmington Trust Company Wilmington Trust Company
1100 North Market Street 1105 North Market Street, 1st Floor
Wilmington, Delaware 19890-0001 Wilmington, Delaware 19890
Attention: Jill Rylee Attention: Corporate Trust Operations
Facsimile Transmission:
(302) 651-1079
Confirm by Telephone:
(302) 651-8869
Jill Rylee
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will
be borne by the Company. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail; however, additional solicitations may be
made by telegraph, telephone, telecopy or in person by officers and regular
employees of the Company.
The Company will not make any payments to brokers, dealers or other
persons soliciting acceptances of the Exchange Offer. The Company, however,
will pay the Exchange Agent reasonable and customary fees for its services and
will reimburse the Exchange Agent for its reasonable out-of-pocket expenses in
connection therewith. The Company may also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of the Prospectus and related documents to
the beneficial owners of the Old Certificates, and in handling or forwarding
tenders for exchange.
The expenses to be incurred in connection with the Exchange Offer will
be paid by the Company, including fees and expenses of the Exchange Agent and
Trustee and accounting, legal, printing and related fees and expenses.
The Company will pay all transfer taxes, if any, applicable to the
exchange of Old Certificates pursuant to the Exchange Offer. If, however,
certificates representing New Certificates or Old Certificates for principal
amounts not tendered or accepted for exchange are to be delivered to, or are to
be registered or issued in the name of, any person other than the registered
holder of the Old Certificates tendered, or if tendered Old Certificates are
registered in the name of any person other than the person signing the Letter of
Transmittal, or if a transfer tax is imposed for any reason other than the
exchange of Old Certificates pursuant to the Exchange Offer, then the amount of
any such transfer taxes (whether imposed on the registered holder or any other
persons) will be payable by the tendering holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted with the Letter of
Transmittal, the amount of such transfer taxes will be billed directly to such
tendering holder.
44
DESCRIPTION OF THE NEW CERTIFICATES
The New Certificates will be issued pursuant to four separate Pass
Through Trust Agreements. The following summary describes certain terms of the
Certificates and the Pass Through Trust Agreements. The summary does not
purport to be complete and reference is made to all of the provisions of the
Certificates and the Pass Through Trust Agreements, which have been filed as
exhibits to the Registration Statement and copies of which are available as set
forth under the heading "Available Information." Except as otherwise indicated,
the following summary relates to each of the Trusts and the Certificates issued
by each Trust. The terms and conditions governing each of the Trusts are
substantially the same, except as described under "--Subordination" below and
except that the principal amount, the interest rate, scheduled repayments of
principal, and maturity date applicable to the Equipment Notes held by each
Trust and the final Distribution Date applicable to each Trust will differ.
Citations to the relevant sections of the Pass Through Trust Agreements appear
below in parentheses unless otherwise indicated. Copies of the Pass Through
Trust Agreements are available from the Trustee. Information contained in this
Prospectus relating to the outstanding principal amount of the Certificates and
Equipment Notes is provided as of the date of the issuance of the Old
Certificates without giving effect to any intervening payments of principal on
the Certificates or Equipment Notes. See "--Pool Factors."
GENERAL
The New Certificates of each Trust will be issued in fully registered
form only. Each New Certificate will represent a fractional undivided interest
in the Trust created by the Pass Through Trust Agreement pursuant to which such
Certificate is issued. The Trust Property consists of (i) the Equipment Notes
held in such Trust, all monies at any time paid thereon and all monies due and
to become due thereunder, (ii) the rights of such Trust under the Intercreditor
Agreement (including all monies receivable in respect of such rights), (iii)
except for the Class D Trust, all monies receivable under the Liquidity Facility
for such Trust and (iv) funds from time to time deposited with the Trustee in
accounts relating to such Trust. The New Certificates represent pro rata shares
of the Equipment Notes and other property held in the related Trust and will be
issued only in minimum denominations of $1,000 and integral multiples thereof.
(Section 3.01).
The Certificates represent interests in the respective Trusts and all
payments and distributions thereon will be made only from the Trust Property.
(Section 3.11) The Certificates do not represent an interest in or obligation of
Continental, the Trustees, any of the Loan Trustees or Owner Trustees in their
individual capacities, any Owner Participant, or any affiliate of any thereof.
The existence of each Trust will not limit the liability that Certificate
holders of such Trust would otherwise incur if such holders owned directly the
corresponding Equipment Notes or incurred directly the obligations of such
Trust.
SUBORDINATION
Pursuant to the Intercreditor Agreement to which the Trusts, the
Subordination Agent and the Liquidity Providers are parties, on each
Distribution Date, so long as no Triggering Event shall have occurred, all
payments received by the Subordination Agent will be distributed in the
following order: (1) payment of the Liquidity Obligations to the Liquidity
Providers; (2) payment of Expected Distributions to the holders of Class A
Certificates; (3) payment of Expected Distributions to the holders of Class B
Certificates; (4) payment of Expected Distributions to the holders of Class C
Certificates; (5) payment of Expected Distributions to the holders of Class D
Certificates; and (6) payment of certain fees and expenses of the Subordination
Agent and the Trustees.
In addition, upon the occurrence of a Triggering Event and at all
times thereafter, all payments received by the Subordination Agent in respect of
the Equipment Notes and certain other payments will be distributed under the
Intercreditor Agreement in the following order: (1) to the Subordination Agent,
the Trustees and certain other parties in payment of the Administration Expenses
and to the Liquidity Providers in payment of the Liquidity Obligations; (2) to
the holders of Class A Certificates in payment of; (3) to the holders of Class
B Certificates in payment of Adjusted Expected Distributions; (4) to the holders
of Class C Certificates in payment of Adjusted Expected Distributions; and (5)
to the holders of Class D Certificates in payment of Adjusted Expected
Distributions.
For purposes of calculating Expected Distributions or Adjusted
Expected Distributions, any premium paid on the Equipment Notes held in any
Trust that has not been distributed to the Certificateholders of
45
such Trust (other than such premium or a portion thereof applied to the payment
of interest on the Certificates of such Trust or the reduction of the Pool
Balance of such Trust) shall be added to the amount of Expected Distributions or
Adjusted Expected Distributions.
The priority of distributions after a payment default under any
Equipment Note will have the effect in certain circumstances of requiring the
distribution to more senior Classes of Certificates of payments received in
respect of one or more junior series of Equipment Notes. If this should occur,
the interest accruing on the remaining Equipment Notes would in the aggregate be
less than the interest accruing on the remaining Certificates because such
Certificates include a relatively greater proportion of junior Classes with
relatively higher interest rates. As a result of this possible interest
shortfall, the holders of one or more junior Classes of Certificates may not
receive the full amount due them after a payment default under any Equipment
Note even if all Equipment Notes are eventually paid in full.
PAYMENTS AND DISTRIBUTIONS
Payments of principal, premium (if any) and interest with respect to
the Equipment Notes or other Trust Property held in each Trust will be
distributed by the Trustee to Certificateholders of such Trust on the date
receipt of such payment is confirmed, except in the case of certain types of
Special Payments (as defined herein).
The Equipment Notes held in each Trust accrue interest at the
applicable rate per annum for such Trust set forth on the cover page of this
Prospectus, payable on January 2, April 2, July 2 and October 2 of each year
commencing on July 2, 1996 and such interest payments will be passed through to
Certificateholders of such Trust on each such date until the final Distribution
Date for such Trust, in each case, subject to the Intercreditor Agreement.
Interest is calculated on the basis of a 360-day year consisting of twelve 30-
day months. The interest rates for the Certificates are subject to change under
certain circumstances. See "The Exchange Offer--Terms of the Exchange Offer."
Payments of interest on the Certificates to be issued by each Trust (other than
the Class D Trust) will be supported by a separate Liquidity Facility to be
provided by DNIB (the "Liquidity Provider") for the benefit of the holders of
such Certificates in an aggregate amount (the "Required Amount") sufficient to
pay interest thereon at the Stated Interest Rate for such Trust on up to six
successive quarterly Distribution Dates. Notwithstanding the subordination
provisions of the Intercreditor Agreement, the holders of the Certificates to be
issued by each Trust (other than the Class D Trust) will be entitled to receive
and retain the proceeds of drawings under the Liquidity Facility for such Trust.
See "Description of the Liquidity Facilities".
Payments of principal on the Equipment Notes held in each Trust are
scheduled to be received by the Trustee on January 2, April 2, July 2 or October
2, in certain years depending upon the terms of the Equipment Notes held in such
Trust, commencing October 2, 1996 in the case of each of the Class A Trust, the
Class B Trust and the Class C Trust and on July 2, 1996 in the case of the Class
D Trust. Scheduled payments of interest and principal on the Equipment Notes are
herein referred to as "Scheduled Payments", and January 2, April 2, July 2 and
October 2 of each year are herein referred to as "Regular Distribution Dates".
See "Description of the Equipment Notes--Principal and Interest Payments". The
Final Maturity Date for each of the Class A, B and C Certificates is January 2,
2016 and the Final Maturity Date for the Class D Certificates is April 2, 2008.
The Trustee of each Trust will distribute, subject to the
Intercreditor Agreement, on each Regular Distribution Date to the
Certificateholders of such Trust all Scheduled Payments, the receipt of which is
confirmed by the Trustee on such Regular Distribution Date. Each
Certificateholder of each Trust will be entitled to receive a pro rata share of
any distribution in respect of Scheduled Payments of principal and interest made
on the Equipment Notes held in such Trust. Each such distribution of Scheduled
Payments will be made by the Trustee of each Trust to the Certificateholders of
record of such Trust on the Record Date applicable to such Scheduled Payment
subject to certain exceptions. (Sections 4.01 and 4.02) If a Scheduled Payment
is not received by the Trustee on a Regular Distribution Date but is received
within five days thereafter, it will be distributed to such holders of record on
the date received. If it is received after such five-day period, it will be
treated as a Special Payment (as defined below) and distributed as described
below.
46
Any payment in respect of, or any proceeds of, any Equipment Note or
the Trust Indenture Estate under (and as defined in) each Indenture (other than
a Scheduled Payment) (each, a "Special Payment") will be distributed on, in the
case of an early redemption or a purchase of the Equipment Notes relating to one
or more Aircraft, the date of such early redemption or purchase (which shall be
a Business Day), and otherwise on the Business Day specified for distribution of
such Special Payment pursuant to a notice delivered by the Trustee as soon as
practicable after the Trustee has received funds for such Special Payment, in
each case subject to the Intercreditor Agreement. The Trustee will mail notice
to the Certificateholders of the applicable Trust not less than 20 days prior to
the Special Distribution Date on which any Special Payment is scheduled to be
distributed by the Trustee stating such anticipated Special Distribution Date.
(Section 4.02(c)) Each distribution of a Special Payment, other than a final
distribution, on a Special Distribution Date for any Trust will be made by the
Trustee to the Certificateholders of record of such Trust on the Record Date
applicable to such Special Payment. See "--Indenture Defaults and Certain Rights
Upon an Indenture Default" and "Description of the Equipment Notes--Redemption".
Each Pass Through Trust Agreement requires that the Trustee establish
and maintain, for the related Trust and for the benefit of the
Certificateholders of such Trust, one or more accounts (the "Certificate
Account") for the deposit of payments representing Scheduled Payments on the
Equipment Notes held in such Trust. Each Pass Through Trust Agreement also
requires that the Trustee establish and maintain, for the related Trust and for
the benefit of the Certificateholders of such Trust, one or more accounts (the
"Special Payments Account") for the deposit of payments representing Special
Payments, which account shall be non-interest bearing except in certain
circumstances where the Trustee may invest amounts in such account in certain
permitted investments. Pursuant to the terms of each Pass Through Trust
Agreement, the Trustee is required to deposit any Scheduled Payments relating to
the applicable Trust received by it in the Certificate Account of such Trust and
to deposit any Special Payments so received by it in the Special Payments
Account of such Trust. (Section 4.01) All amounts so deposited will be
distributed by the Trustee on a Regular Distribution Date or a Special
Distribution Date, as appropriate. (Section 4.02)
Distributions by the Trustee from the Certificate Account or the
Special Payments Account of each Trust on a Regular Distribution Date or a
Special Distribution Date in respect of Certificates issued by such Trust in
definitive form will be made to each Certificateholder of record of such
Certificates on the applicable Record Date. (Section 4.02) The final
distribution for each Trust, however, will be made only upon presentation and
surrender of the Certificates for such Trust at the office or agency of the
Trustee specified in the notice given by the Trustee of such final distribution.
The Trustee will mail such notice of the final distribution to the
Certificateholders of such Trust, specifying the date set for such final
distribution and the amount of such distribution. (Section 11.01) See
"--Termination of the Trusts" below. Distributions in respect of Certificates
issued in global form will be made as described in "--Book Entry; Delivery and
Form" below.
If any Regular Distribution Date or Special Distribution Date is not a
Business Day, distributions scheduled to be made on such Regular Distribution
Date or Special Distribution Date will be made on the next succeeding Business
Day without additional interest.
POOL FACTORS
Unless there has been an early redemption, purchase, or a default
in the payment of principal or interest, in respect of one or more issues of
the Equipment Notes held in a Trust, as described in "--Indenture Defaults and
Certain Rights Upon an Indenture Default" and "Description of the Equipment
Notes--Redemption", the Pool Factor with respect to each Trust will decline in
proportion to the scheduled repayments of principal on the Equipment Notes held
in such Trust as described below in "Description of the Equipment Notes--
General". In the event of such redemption, purchase or default, the Pool Factor
and the Pool Balance of each Trust so affected will be recomputed after giving
effect thereto and notice thereof will be mailed to the Certificateholders of
such Trust. Each Trust will have a separate Pool Factor.
The "Pool Balance" for each Trust or for the Certificates issued by
any Trust indicates, as of any date, the original aggregate face amount of the
Certificates of such Trust less the aggregate amount of all
47
payments made in respect of the Certificates of such Trust other than payments
made in respect of interest or premium thereon or reimbursement of any costs and
expenses in connection therewith. The Pool Balance for each Trust as of any
Regular Distribution Date or Special Distribution Date shall be computed after
giving effect to the payment of principal, if any, on the Equipment Notes or
other Trust Property held in such Trust and the distribution thereof to be made
on that date.
The "Pool Factor" for each Trust as of any Regular Distribution Date
or Special Distribution Date is the quotient (rounded to the seventh decimal
place) computed by dividing (i) the Pool Balance by (ii) the original aggregate
face amount of the Certificates of such Trust. The Pool Factor for each Trust as
of any Regular Distribution Date or Special Distribution Date shall be computed
after giving effect to the payment of principal, if any, on the Equipment Notes
or other Trust Property held in such Trust and the distribution thereof to be
made on that date. Assuming that no early redemption or purchase, or default, in
respect of any Equipment Notes shall have occurred, the Pool Factor for each
Trust will be 1.0000000 on the date of issuance of the Certificates; thereafter,
the Pool Factor for each Trust will decline as described herein to reflect
reductions in the Pool Balance of such Trust. The amount of a
Certificateholder's pro rata share of the Pool Balance of a Trust can be
determined by multiplying the par value of the holder's Certificate of such
Trust by the Pool Factor for such Trust as of the applicable Regular
Distribution Date or Special Distribution Date. Notice of the Pool Factor and
the Pool Balance for each Trust will be mailed to Certificateholders of such
Trust on each Regular Distribution Date and Special Distribution Date.
As of the date of sale by the Trustee of the Certificates, assuming
all Equipment Notes shall have been purchased by the Trusts and assuming that no
early redemption or purchase, or default in the payment of principal, in respect
of any Equipment Notes shall occur, the Scheduled Payments of principal on the
Equipment Notes held in the Class A Trust, the Class B Trust, the Class C Trust
and the Class D Trust, and the resulting Pool Factors for such Trusts after
taking into account each Scheduled Payment, are set forth below:
1996-2A 1996-2B 1996-2C 1996-2D
TRUST TRUST TRUST TRUST
EQUIPMENT EQUIPMENT EQUIPMENT EQUIPMENT 1996-2D
NOTES 1996-2A NOTES 1996-2B NOTES 1996-2C NOTES TRUST
SCHEDULED TRUST SCHEDULED TRUST SCHEDULED TRUST SCHEDULED EXPECTED
PAYMENTS OF EXPECTED PAYMENTS OF EXPECTED PAYMENTS OF EXPECTED PAYMENTS OF POOL
DATE PRINCIPAL POOL FACTOR PRINCIPAL POOL FACTOR PRINCIPAL POOL FACTOR PRINCIPAL FACTOR
---- ------------ ------------ ---------- ------------ ----------- ----------- ---------- ----------
May 20, 1996 $ 0 1.0000000 $ 0 1.0000000 $ 0 $ 0 1.0000000
July 2, 1996 0 1.0000000 0 1.0000000 0 1.0000000 37,717 0.9979624
October 2, 1996 16,953 0.9997945 7,265 0.9997945 7,265 0.9997945 81,906 0.9935374
January 2, 1997 1,931,687 0.9763838 827,866 0.9763840 827,866 0.9763840 84,260 0.9889853
April 2, 1997 352,925 0.9721066 151,264 0.9721066 151,264 0.9721066 86,683 0.9843022
July 2, 1997 0 0.9721066 0 0.9721066 0 0.9721066 43,581 0.9819478
October 2, 1997 0 0.9721066 0 0.9721066 0 0.9721066 44,834 0.9795257
January 2, 1998 1,783,882 0.9504872 764,521 0.9504873 764,521 0.9504873 46,122 0.9770339
April 2, 1998 128,804 0.9489262 55,206 0.9489262 55,206 0.9489262 47,448 0.9744705
July 2, 1998 0 0.9489262 0 0.9489262 0 0.9489262 48,813 0.9718334
October 2, 1998 0 0.9489262 0 0.9489262 0 0.9489262 50,216 0.9691205
January 2, 1999 1,513,831 0.9305796 648,787 0.9305797 648,787 0.9305797 51,660 0.9663296
April 2, 1999 51,979 0.9299497 22,278 0.9299497 22,278 0.9299497 1,714,138 0.8737236
July 2, 1999 0 0.9299497 0 0.9299497 0 0.9299497 54,673 0.8707699
October 2, 1999 0 0.9299497 0 0.9299497 0 0.9299497 56,245 0.8677313
January 2, 2000 2,036,043 0.9052743 872,595 0.9052744 872,595 0.9052744 3,558,630 0.6754768
April 2, 2000 0 0.9052743 0 0.9052744 0 0.9052744 59,525 0.6722610
July 2, 2000 0 0.9052743 0 0.9052744 0 0.9052744 61,237 0.6689527
October 2, 2000 0 0.9052743 0 0.9052744 0 0.9052744 62,997 0.6655493
January 2, 2001 3,797,527 0.8592509 1,627,517 0.8592512 1,627,517 0.8592512 3,132,426 0.4963204
April 2, 2001 727,943 0.8504287 311,975 0.8504291 311,975 0.8504291 258,597 0.4823497
July 2, 2001 421,668 0.8453184 180,715 0.8453188 180,715 0.8453188 68,588 0.4786443
October 2, 2001 2,016,729 0.8208771 864,312 0.8208777 864,312 0.8208777 70,560 0.4748323
January 2, 2002 1,782,956 0.7992689 764,129 0.7992695 764,129 0.7992695 72,589 0.4709107
April 2, 2002 1,588,382 0.7800188 680,735 0.7800196 680,735 0.7800196 74,676 0.4668763
July 2, 2002 1,302,015 0.7642393 558,006 0.7642402 558,006 0.7642402 76,823 0.4627260
October 2, 2002 2,148,391 0.7382023 920,739 0.7382034 920,739 0.7382034 79,031 0.4584563
January 2, 2003 441,808 0.7328479 189,351 0.7328489 189,351 0.7328489 81,304 0.4540639
April 2, 2003 1,213,258 0.7181440 519,969 0.7181452 519,969 0.7181452 83,641 0.4495452
July 2, 2003 801,572 0.7084295 343,531 0.7084308 343,531 0.7084308 86,046 0.4448966
October 2, 2003 0 0.7084295 0 0.7084308 0 0.7084308 88,520 0.4401144
48
1996-2A 1996-2B 1996-2C 1996-2D
TRUST TRUST TRUST TRUST
EQUIPMENT EQUIPMENT EQUIPMENT EQUIPMENT 1996-2D
NOTES 1996-2A NOTES 1996-2B NOTES 1996-2C NOTES TRUST
SCHEDULED TRUST SCHEDULED TRUST SCHEDULED TRUST SCHEDULED EXPECTED
PAYMENTS OF EXPECTED PAYMENTS OF EXPECTED PAYMENTS OF EXPECTED PAYMENTS OF POOL
DATE PRINCIPAL POOL FACTOR PRINCIPAL POOL FACTOR PRINCIPAL POOL FACTOR PRINCIPAL FACTOR
---- ------------ ------------ ---------- ------------ ----------- ----------- ---------- ----------
January 2, 2004 $2,302,628 0.6805233 $ 986,845 0.6805246 $ 986,845 0.6805246 $ 91,064 0.4351946
April 2, 2004 45,391 0.6799732 19,455 0.6799745 19,455 0.6799745 93,683 0.4301334
July 2, 2004 0 0.6799732 0 0.6799745 0 0.6799745 96,376 0.4249267
October 2, 2004 0 0.6799732 0 0.6799745 0 0.6799745 99,147 0.4195703
January 2, 2005 5,061,720 0.6186287 2,169,314 0.6186303 2,169,314 0.6186303 101,997 0.4140600
April 2, 2005 15,669 0.6184388 6,716 0.6184404 6,716 0.6184404 104,930 0.4083912
July 2, 2005 0 0.6184388 0 0.6184404 0 0.6184404 107,946 0.4025594
October 2, 2005 0 0.6184388 0 0.6184404 0 0.6184404 111,050 0.3965599
January 2, 2006 4,380,428 0.5653511 1,877,334 0.5653529 1,877,334 0.5653529 114,242 0.3903880
April 2, 2006 0 0.5653511 0 0.5653529 0 0.5653529 117,527 0.3840386
July 2, 2006 0 0.5653511 0 0.5653529 0 0.5653529 120,906 0.3775067
October 2, 2006 0 0.5653511 0 0.5653529 0 0.5653529 124,382 0.3707870
January 2, 2007 5,418,436 0.4996834 2,322,196 0.4996855 2,322,196 0.4996855 127,958 0.3638741
April 2, 2007 0 0.4996834 0 0.4996855 0 0.4996855 131,637 0.3567624
July 2, 2007 0 0.4996834 0 0.4996855 0 0.4996855 135,421 0.3494463
October 2, 2007 0 0.4996834 0 0.4996855 0 0.4996855 139,315 0.3419199
January 2, 2008 5,679,532 0.4308514 2,434,205 0.4308507 2,434,205 0.4308507 6,181,496 0.0079654
April 2, 2008 3,239,432 0.3915918 1,388,426 0.3915886 1,388,426 0.3915886 147,440 0.0000000
July 2, 2008 0 0.3915918 0 0.3915886 0 0.3915886 0 0.0000000
October 2, 2008 0 0.3915918 0 0.3915886 0 0.3915886 0 0.0000000
January 2, 2009 5,226,431 0.3282511 2,239,899 0.3282484 2,239,899 0.3282484 0 0.0000000
April 2, 2009 0 0.3282511 0 0.3282484 0 0.3282484 0 0.0000000
July 2, 2009 0 0.3282511 0 0.3282484 0 0.3282484 0 0.0000000
October 2, 2009 0 0.3282511 0 0.3282484 0 0.3282484 0 0.0000000
January 2, 2010 5,306,362 0.2639417 2,274,155 0.2639395 2,274,155 0.2639395 0 0.0000000
April 2, 2010 0 0.2639417 0 0.2639395 0 0.2639395 0 0.0000000
July 2, 2010 0 0.2639417 0 0.2639395 0 0.2639395 0 0.0000000
October 2, 2010 0 0.2639417 0 0.2639395 0 0.2639395 0 0.0000000
January 2, 2011 7,941,098 0.1677011 3,403,328 0.1676998 3,403,328 0.1676998 0 0.0000000
April 2, 2011 0 0.1677011 0 0.1676998 0 0.1676998 0 0.0000000
July 2, 2011 0 0.1677011 0 0.1676998 0 0.1676998 0 0.0000000
October 2, 2011 0 0.1677011 0 0.1676998 0 0.1676998 0 0.0000000
January 2, 2012 7,085,877 0.0818252 3,036,804 0.0818246 3,036,804 0.0818246 0 0.0000000
April 2, 2012 1,097,949 0.0685189 470,550 0.0685183 470,550 0.0685183 0 0.0000000
July 2, 2012 0 0.0685189 0 0.0685183 0 0.0685183 0 0.0000000
October 2, 2012 0 0.0685189 0 0.0685183 0 0.0685183 0 0.0000000
January 2, 2013 2,077,835 0.0433370 890,501 0.0433366 890,501 0.0433366 0 0.0000000
April 2, 2013 1,197,716 0.0288215 513,307 0.0288212 513,307 0.0288212 0 0.0000000
July 2, 2013 0 0.0288215 0 0.0288212 0 0.0288212 0 0.0000000
October 2, 2013 0 0.0288215 0 0.0288212 0 0.0288212 0 0.0000000
January 2, 2014 1,177,888 0.0145463 504,809 0.0145462 504,809 0.0145462 0 0.0000000
April 2, 2014 776,937 0.0051304 332,973 0.0051303 332,973 0.0051303 0 0.0000000
July 2, 2014 423,321 0.0000000 181,423 0.0000000 181,423 0.0000000 0 0.0000000
49
REPORTS TO CERTIFICATEHOLDERS
On each Regular Distribution Date and Special Distribution Date, the
applicable Trustee will include with each distribution of a Scheduled Payment or
Special Payment, respectively, to Certificateholders of the related Trust a
statement, giving effect to such distribution to be made on such Regular
Distribution Date or Special Distribution Date, setting forth the following
information (per $1,000 aggregate principal amount of Certificate for such
Trust, as to (i) and (ii) below):
(i) the amount of such distribution allocable to principal and the
amount allocable to premium (if any);
(ii) the amount of such distribution allocable to interest; and
(iii) the Pool Balance and the Pool Factor for such Trust. (Section
4.03)
With respect to the Certificates registered in the name of Cede, as
nominee for DTC, on the record date prior to each Distribution Date, the
applicable Trustee will request from DTC a Securities Position Listing setting
forth the names of all DTC Participants reflected on DTCs books as holding
interests in the Certificates on such record date. On each Distribution Date,
the applicable Trustee will mail to each such DTC Participant the statement
described above and will make available additional copies as requested by such
DTC Participant for forwarding to holders of Certificates.
In addition, after the end of each calendar year, the applicable
Trustee will prepare for each Certificateholder of each Trust at any time during
the preceding calendar year a report containing the sum of the amounts
determined pursuant to clauses (i) and (ii) above with respect to the Trust for
such calendar year or, in the event such person was a Certificateholder during
only a portion of such calendar year, for the applicable portion of such
calendar year, and such other items as are readily available to such Trustee and
which a Certificateholder shall reasonably request as necessary for the purpose
of such Certificateholder's preparation of its U.S. federal income tax returns.
(Section 4.03) Such report and such other items shall be prepared on the basis
of information supplied to the applicable Trustee by the DTC Participants and
shall be delivered by such Trustee to such DTC Participants to be available for
forwarding by such DTC Participants to Certificate Owners in the manner
described above.
With respect to the Certificates issued in definitive form, the
applicable Trustee will prepare and deliver the information described above to
each Certificateholder of record of each Trust as the name of such
Certificateholder appears on the records of the registrar of the Certificates.
INDENTURE DEFAULTS AND CERTAIN RIGHTS UPON AN INDENTURE DEFAULT
An event of default under an Indenture (an "Indenture Default") will,
with respect to the Leased Aircraft Indentures, include an event of default
under the related Lease (a "Lease Event of Default"). Since the Equipment Notes
issued under an Indenture may be held in more than one Trust, a continuing
Indenture Default under such Indenture would affect the Equipment Notes held by
each such Trust. There are no cross-default provisions in the Indentures or in
the Leases. Consequently, events resulting in an Indenture Default under any
particular Indenture may or may not result in an Indenture Default under any
other Indenture, and a Lease Event of Default under any particular Lease will
not constitute a Lease Event of Default under any other Lease. If an Indenture
Default occurs in fewer than all of the Indentures, notwithstanding the
treatment of Equipment Notes issued under any Indenture under which an Indenture
Default has occurred, payments of principal and interest on the Equipment Notes
issued pursuant to Indentures with respect to which an Indenture Default has not
occurred will continue to be distributed to the holders of the Certificates as
originally scheduled, subject to the Intercreditor Agreement. See "Description
of the Intercreditor Agreement--Priority of Distributions".
With respect to each Leased Aircraft, the applicable Owner Trustee and
Owner Participant will, under the related Leased Aircraft Indenture, have the
right under certain circumstances to cure Indenture Defaults
50
that result from the occurrence of a Lease Event of Default under the related
Lease. If the Owner Trustee or the Owner Participant exercises any such cure
right, the Indenture Default will be deemed to have been cured.
In the event that the same institution acts as Trustee of multiple
Trusts, in the absence of instructions from the Certificateholders of any such
Trust, such Trustee could be faced with a potential conflict of interest upon an
Indenture Default. In such event, each Trustee has indicated that it would
resign as Trustee of one or all such Trusts, and a successor trustee would be
appointed in accordance with the terms of the applicable Pass Through Trust
Agreement.
Upon the occurrence and continuation of any Indenture Default under
any Indenture, the Controlling Party may accelerate and sell all (but not less
than all) of the Equipment Notes issued under such Indenture to any person,
subject to certain limitations. The proceeds of such sale will be distributed
pursuant to the provisions of the Intercreditor Agreement. Any proceeds
received by the applicable Trustee upon any such sale shall be deposited in the
applicable Special Payments Account and shall be distributed to the
Certificateholders of such Trust on a Special Distribution Date. (Sections 4.01
and 4.02) The market for Equipment Notes at the time of the existence of any
Indenture Default may be very limited and there can be no assurance as to the
price at which they could be sold. If such Trustee sells any such Equipment
Notes for less than their outstanding principal amount, the Certificateholders
will receive a smaller amount of principal distributions than anticipated and
will not have any claim for the shortfall against Continental, any Liquidity
Provider, any Owner Trustee, any Owner Participant or any Trustee.
Any amount, other than Scheduled Payments received on a Regular
Distribution Date, distributed to the Trustee of any Trust by the Subordination
Agent on account of the Equipment Notes or other Trust Property held in such
Trust following an Indenture Default under any Indenture shall be deposited in
the Special Payments Account for such Trust and shall be distributed to the
Certificateholders of such Trust on a Special Distribution Date. (Section 4.02)
In addition, if, following an Indenture Default under any Leased Aircraft
Indenture relating to a Leased Aircraft, the applicable Owner Trustee exercises
its option to redeem or purchase the outstanding Equipment Notes issued under
such Leased Aircraft Indenture, the price paid by such Owner Trustee for the
Equipment Notes issued under such Leased Aircraft Indenture and distributed to
such Trust by the Subordination Agent shall be deposited in the Special Payments
Account for such Trust and shall be distributed to the Certificateholders of
such Trust on a Special Distribution Date. (Section 4.02)
Any funds representing payments received with respect to any defaulted
Equipment Notes held in a Trust, or the proceeds from the sale of any Equipment
Notes held by the Trustee in the Special Payments Account for such Trust shall,
to the extent practicable, be invested and reinvested by such Trustee in certain
permitted investments pending the distribution of such funds on a Special
Distribution Date. (Section 4.04) Such permitted investments are defined as
obligations of the United States or agencies or instrumentalities thereof the
payment of which is backed by the full faith and credit of the United States and
which mature in not more than 60 days or such lesser time as is required for the
distribution of any such funds on a Special Distribution Date. (Section 1.01)
Each Pass Through Trust Agreement provides that the Trustee of the
related Trust shall, within 90 days after the occurrence of any Indenture
Default, give to the Certificateholders of such Trust notice, transmitted by
mail, of all uncured or unwaived defaults with respect to such Trust known to
it, provided that, except in the case of default in the payment of principal,
premium, if any, or interest on any of the Equipment Notes or other Trust
Property held in such Trust, the applicable Trustee shall be protected in
withholding such notice if it in good faith determines that the withholding of
such notice is in the interests of such Certificateholders. (Section 7.02)
Each Pass Through Trust Agreement contains a provision entitling the
Trustee of the related Trust, subject to the duty of such Trustee during a
default to act with the required standard of care, to be offered reasonable
security or indemnity by the holders of the Certificates of such Trust before
proceeding to exercise any right or power under such Pass Through Trust
Agreement at the request of such Certificateholders. (Section 7.03(e))
51
In certain cases, the holders of the Certificates of a Trust
evidencing fractional undivided interests aggregating not less than a majority
in interest of such Trust may on behalf of the holders of all the Certificates
of such Trust waive any past default under the related Pass Through Trust
Agreement or, if the Trustee of such Trust is the Controlling Party, may direct
the Trustee to instruct the applicable Loan Trustee to waive any past Indenture
Default with respect to such Trust and thereby annul any direction given by such
holders to such Loan Trustee with respect thereto, except (i) a default in the
deposit of any Scheduled Payment or Special Payment or in the distribution
thereof, (ii) a default in payment of the principal, premium, if any, or
interest with respect to any of the Equipment Notes held in such Trust and (iii)
a default in respect of any covenant or provision of the related Pass Through
Trust Agreement that cannot be modified or amended without the consent of each
Certificateholder of such Trust affected thereby. (Section 6.05) Each Indenture
provides that, with certain exceptions, the holders of the majority in aggregate
unpaid principal amount of the Equipment Notes issued thereunder may on behalf
of all such holders waive any past default or Indenture Default thereunder.
Notwithstanding the foregoing provisions of this paragraph, however, pursuant to
the Intercreditor Agreement, only the Controlling Party will be entitled to
waive any such past default or Indenture Default.
PURCHASE RIGHTS OF CERTIFICATEHOLDERS
Upon the occurrence and during the continuation of a Triggering Event,
(i) the Class B Certificateholders shall have the right to purchase all, but not
less than all, of the Class A Certificates, (ii) the Class C Certificateholders
shall have the right to purchase all, but not less than all, of the Class A
Certificates and the Class B Certificates and (iii) the Class D
Certificateholders shall have the right to purchase all, but not less than all,
of the Class A Certificates, the Class B Certificates and the Class C
Certificates, in each case at a purchase price equal to the Pool Balance of the
relevant Class or Classes of Certificates plus accrued and unpaid interest
thereon to the date of purchase without premium but including any other amounts
due to the Certificateholders of such Class or Classes.
PTC EVENT OF DEFAULT
A PTC Event of Default is defined under each Pass Through Trust
Agreement as the failure to pay within 10 Business Days of the due date thereof:
(i) the outstanding Pool Balance of the applicable Class of Certificates on the
Final Maturity Date for such Class or (ii) interest due on such Certificates on
any Distribution Date (unless the Subordination Agent shall have made an
Interest Drawing with respect thereto in an amount sufficient to pay such
interest and shall have distributed such amount to the Certificateholders
entitled thereto). Any failure to make expected principal distributions on any
Class of Certificates on any Regular Distribution Date (other than the Final
Maturity Date) will not constitute a PTC Event of Default with respect to such
Certificates. A PTC Event of Default with respect to the most senior Class of
Certificates resulting from an Indenture Default under all Indentures will
constitute a Triggering Event.
MERGER, CONSOLIDATION AND TRANSFER OF ASSETS
Continental is prohibited from consolidating with or merging into any
other corporation or transferring substantially all of its assets as an entirety
to any other corporation unless (i) the surviving successor or transferee
corporation shall (a) be a "citizen of the United States" as defined in Section
40102(a)(15) of Title 49 of the United States Code, as amended, relating to
aviation (the "Aviation Act"), (b) be a United States certificated air carrier
and (c) expressly assume all of the obligations of Continental contained in the
Pass Through Trust Agreements, the Financing Agreements, the Indentures, the
Participation Agreements and the Leases, and any other operative documents; (ii)
immediately after giving effect to such transaction, no Lease Event of Default,
in the case of Leased Aircraft, or Indenture Event of Default, in the case of
the Owned Aircraft, shall have occurred and be continuing; and (iii) Continental
shall have delivered a certificate and an opinion or opinions of counsel
indicating that such transaction complies with such conditions. (Section 5.02;
Leases, Section 13.2; Owned Aircraft Indenture, Section 4.09)
The Pass Through Trust Agreements and the Indentures do not contain
any covenants or provisions which may afford the applicable Trustee or
Certificateholders protection in the event of a highly
52
leveraged transaction, including transactions effected by management or
affiliates, which may or may not result in a change in control of Continental.
MODIFICATIONS OF THE PASS THROUGH TRUST AGREEMENTS AND CERTAIN OTHER AGREEMENTS
Each Pass Through Trust Agreement contains provisions permitting the
execution of supplemental trust agreements, without the consent of the holders
of any of the Certificates of such Trust, (i) to evidence the succession of
another corporation to Continental and the assumption by such corporation of
Continental's obligations under such Pass Through Trust Agreement, (ii) to add
to the covenants of Continental for the benefit of holders of such Certificates
or to surrender any right or power in such Pass Through Trust Agreement
conferred upon Continental, (iii) to correct or supplement any defective or
inconsistent provision of such Pass Through Trust Agreement or to modify any
other provisions with respect to matters or questions arising thereunder,
provided such action shall not materially adversely affect the interests of the
holders of such Certificates, or to cure any ambiguity or correct any mistake,
(iv) to add to such Pass Through Trust Agreement such other provisions as may be
expressly permitted by the Trust Indenture Act and (v) to provide for a
successor Trustee or to add to or change any provision of such Pass Through
Trust Agreement as shall be necessary to facilitate the administration of the
Trust thereunder by more than one Trustee. In addition, each Pass Through Trust
Agreement provides that the Trustee will be permitted to enter into any
amendment or supplement to the Intercreditor Agreement or the Liquidity
Facilities, without the consent of the holders of any Certificates, to cure any
ambiguity or correct any mistake or to correct or supplement any defective or
inconsistent provision thereof or to modify any other provision with respect to
matters or questions arising thereunder; provided that such action shall not
materially adversely affect the interests of the Certificateholders. (Section
9.01)
Each Pass Through Trust Agreement also contains provisions permitting
the execution, with the consent of the holders of the Certificates of the
related Trust evidencing fractional undivided interests aggregating not less
than a majority in interest of such Trust, and with the consent of the
applicable Owner Trustee (such consent not to be unreasonably withheld), of
supplemental trust agreements adding any provisions to or changing or
eliminating any of the provisions of such Pass Through Trust Agreement or
modifying the rights of the Certificateholders, except that no such supplemental
trust agreement may, without the consent of the holder of each Certificate so
affected thereby, (a) reduce in any manner the amount of, or delay the timing
of, any receipt by the Trustee of payments on the Equipment Notes or other Trust
Property held in such Trust or distributions in respect of any Certificate
related to such Trust, or change the date or place of any payment in respect of
any Certificate, or make distributions payable in coin or currency other than
that provided for in such Certificates, or impair the right of any
Certificateholder of such Trust to institute suit for the enforcement of any
such payment when due, (b) permit the disposition of any Equipment Note held in
such Trust, except as provided in such Pass Through Trust Agreement, or
otherwise deprive any Certificateholder of the benefit of the ownership of the
applicable Equipment Notes, (c) alter the priority of distributions specified in
the Intercreditor Agreement, (d) reduce the percentage of the aggregate
fractional undivided interests of the Trust provided for in such Pass Through
Trust Agreement, the consent of the holders of which is required for any such
supplemental trust agreement or for any waiver provided for in such Pass Through
Trust Agreement or (e) modify any of the provisions relating to the rights of
the Certificateholders in respect of the waiver of events of default or receipt
of payment. (Section 9.02)
TERMINATION OF THE TRUSTS
The obligations of Continental and the applicable Trustee with respect
to a Trust will terminate upon the distribution to Certificateholders of such
Trust of all amounts required to be distributed to them pursuant to the
applicable Pass Through Trust Agreement and the disposition of all property held
in such Trust. The applicable Trustee will send to each Certificateholder of
record of such Trust notice of the termination of such Trust, the amount of the
proposed final payment and the proposed date for the distribution of such final
payment for such Trust. The final distribution to any Certificateholder of such
Trust will be made only upon surrender of such Certificateholder's Certificates
at the office or agency of the applicable Trustee specified in such notice of
termination. (Section 11.01)
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THE TRUSTEES
The Trustee for each Trust is Wilmington Trust Company. With certain
exceptions, the Trustees make no representations as to the validity or
sufficiency of the Pass Through Trust Agreements, the Certificates, the
Equipment Notes, the Indentures, the Leases or other related documents.
(Sections 7.04 and 7.15) The Trustee of any Trust shall not be liable, with
respect to the Certificates of such Trust, for any action taken or omitted to be
taken by it in good faith in accordance with the direction of the holders of a
majority in principal amount of outstanding Certificates of such Trust. Subject
to certain provisions, the Trustees shall be under no obligation to exercise any
of their rights or powers under any Pass Through Trust Agreement at the request
of any holders of Certificates issued thereunder unless there shall have been
offered to the Trustees indemnity satisfactory to them. (Section 7.03(d)) Each
Pass Through Trust Agreement provides that the Trustees in their individual or
any other capacity may acquire and hold Certificates issued thereunder and,
subject to certain conditions, may otherwise deal with Continental and with any
Owner Trustee with the same rights they would have if they were not the
Trustees. (Section 7.05)
Any Trustee may resign with respect to any or all of the Trusts of
which it is the Trustee at any time, in which event Continental will be
obligated to appoint a successor trustee. If any Trustee ceases to be eligible
to continue as Trustee with respect to a Trust or becomes incapable of acting as
Trustee or becomes insolvent, Continental may, with the consent of the Owner
Participants for the Leased Aircraft (which consent shall not be unreasonably
withheld), remove such Trustee, or any holder of the Certificates of such Trust
for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of such
Trustee and the appointment of a successor trustee. Any resignation or removal
of the Trustee with respect to a Trust and appointment of a successor trustee
for such Trust does not become effective until acceptance of the appointment by
the successor trustee. (Sections 7.09 and 7.10)
Each Pass Through Trust Agreement provides that Continental or the
Owner Participant will pay the applicable Trustee's fees and expenses. (Section
7.07)
BOOK-ENTRY; DELIVERY AND FORM
The New Certificates of each Trust will be represented by a single,
permanent global Certificate, in definitive, fully registered form without
interest coupons (the "Global Certificates"), to be deposited with the Trustee
as custodian for DTC and registered in the name of Cede, as nominee of DTC.
DTC has advised Continental as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a "banking
organization" within the meaning of the New York Banking law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provision of Section 17A of the Exchange Act. DTC was created to hold securities
for its participants and facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes in
accounts of its participants, thereby eliminating the need for physical movement
of certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and certain other organizations.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly ("indirect
participants").
Upon the issuance of the Global Certificates, DTC or its custodian
credited, on its internal system, the respective principal amount of the
individual beneficial interests represented by such Global Certificates to the
accounts of persons who have accounts with such depositary. Ownership of
beneficial interests Global Certificates is limited to persons who have accounts
with DTC ("participants") or persons who hold interests through participants.
Ownership of beneficial interests in the Global Certificates is shown on, and
the transfer of that ownership is effected only through, records maintained by
DTC or its nominee (with respect to interests of participants) and the records
of participants (with respect to interests of persons other than participants).
The laws of some states require that certain purchasers of securities take
physical delivery of such securities. Such limits and such laws may limit the
market for beneficial interests in the Global Certificates.
54
Qualified institutional buyers may hold their interests in the Global
Certificates directly through DTC if they are participants in such system, or
directly through organizations which are participants in such system.
So long as DTC or its nominee is the registered owner or holder of the
Global Certificates, DTC or such nominee, as the case may be, will be considered
the sole record owner or holder of the Certificates represented by such Global
Certificates for all purposes under the related Pass Through Trust Agreements No
beneficial owners of an interest in the Global Certificates will be able to
transfer that interest except in accordance with DTC's applicable procedures, in
addition to those provided for under the Pass Through Trust Agreements and, if
applicable, Euroclear or Cedel.
Payments of the principal of, premium, if any, and interest on the
Global Certificates will be made to DTC or its nominee, as the case may be, as
the registered owner thereof. Neither Continental, the Trustee, nor any paying
agent will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests in the
Global Certificates or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
Continental expects that DTC or its nominee, upon receipt of any
payment of principal, premium, if any, or interest in respect of the Global
Certificates will credit participants' accounts with payments in amounts
proportionate to their respective beneficial ownership interests in the
principal amount of such Global Certificates, as shown on the records of DTC or
its nominee. Continental also expects that payments by participants to owners of
beneficial interests in such Global Certificates held through such participants
will be governed by standing instructions and customary practices, as is now the
case with securities held for the accounts of customers registered in the names
of nominees for such customers. Such payments will be the responsibility of such
participants.
Neither Continental nor the Trustee has any responsibility for the
performance by DTC or its participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations.
If DTC is at any time unwilling or unable to continue as a depositary
for the Global Certificates and a successor depositary is not appointed by
within 90 days, the Trusts will issue certificates in definitive, fully
registered form in exchange for the Global Certificates.
55
DESCRIPTION OF THE LIQUIDITY FACILITIES
The following summary describes certain terms of the Liquidity
Facilities and certain provisions of the Intercreditor Agreement relating to the
Liquidity Facilities. The summary does not purport to be complete and reference
is made to the provisions of the Liquidity Facilities and such provisions of the
Intercreditor Agreement. The provisions of the Liquidity Facilities are
substantially identical except as otherwise indicated. Copies of such documents
are filed as exhibits to the Registration Statement and are available as set
forth under the heading "Available Information."
GENERAL
With respect to the Certificates of each Trust (other than the Class D
Trust), the Subordination Agent has entered into a Liquidity Facility with the
Liquidity Provider pursuant to which the Liquidity Provider will make one or
more advances to the Subordination Agent to pay interest on such Certificates
subject to certain limitations. The Liquidity Facility for any Trust is
intended to enhance the likelihood of timely receipt by the Certificateholders
of such Trust of the interest payable on the Certificates of such Trust at the
Stated Interest Rate therefor on up to six consecutive quarterly Regular
Distribution Dates. If interest payment defaults occur which exceed the amount
covered by or available under the Liquidity Facility for any Trust, the
Certificateholders of such Trust will bear their allocable share of the
deficiencies to the extent that there are no other sources of funds. Although
DNIB is the initial Liquidity Provider for each of the Class A Trust, the Class
B Trust and the Class C Trust, DNIB may be replaced by one or more other
entities with respect to the Trusts under certain circumstances. Therefore, if
DNIB is no longer the sole Liquidity Provider, the Liquidity Provider for any
Trust may be different from the Liquidity Provider for any other Trust.
DRAWINGS
The initial stated amount available under the Liquidity Facilities for
the Class A Trust, the Class B Trust and the Class C Trust is $9,592,136,
$4,540,609 and $5,421,148, respectively. Except as otherwise provided below,
the Liquidity Facility for each Trust enables the Subordination Agent to make
Interest Drawings thereunder promptly after any Regular Distribution Date to pay
interest then due and payable on the Certificates of such Trust at the Stated
Interest Rate for such Trust to the extent that the amount, if any, available to
the Subordination Agent on such Regular Distribution Date is not sufficient to
pay such interest; provided, however, that the maximum amount available to be
drawn under such Liquidity Facility on any Regular Distribution Date to fund any
shortfall of interest on such Certificates will not exceed an amount equal to
the then Required Amount of such Liquidity Facility. The Liquidity Facility for
any Trust does not provide for drawings thereunder to pay for principal of or
premium on the Certificates of such Trust or any interest on the Certificates of
such Trust in excess of the Stated Interest Rate for such Trust or more than six
quarterly installments of interest thereon or principal of or interest or
premium on the Certificates of any other Trust. (Liquidity Facilities, Section
2.02; Intercreditor Agreement, Section 3.6(b))
Each payment by the Liquidity Provider under each Liquidity Facility
reduces pro tanto the amount available to be drawn under such Liquidity
Facility, subject to reinstatement as hereinafter described. With respect to
any Interest Drawings under the Liquidity Facility for any Trust, upon
reimbursement of the Liquidity Provider in full for the amount of such Interest
Drawings plus interest thereon, the amount available to be drawn under such
Liquidity Facility in respect of interest on the Certificates of such Trust
shall be reinstated to an amount not to exceed the then Required Amount of such
Liquidity Facility; provided, however, that such Liquidity Facility shall not be
so reinstated at any time after (i) a Liquidity Event of Default shall have
occurred and be continuing and (ii) less than 65% of the then aggregate
outstanding principal amount of all Equipment Notes are Performing Equipment
Notes. With respect to any other drawings under such Liquidity Facility,
amounts available to be drawn thereunder are not subject to reinstatement. The
Required Amount of the Liquidity Facility for any Trust will be automatically
reduced from time to time to an amount equal to the next six successive interest
payments due on the Certificates of such Trust (without regard to expected
future payment of principal of such Certificates) at the Stated Interest Rate
for such Trust. (Liquidity Facilities, Section 2.04(a); Intercreditor
Agreement, Section 3.6(j))
56
If at any time the short-term unsecured debt rating of the Liquidity
Provider for any Trust then issued by either Rating Agency (or, if DNIB is such
Liquidity Provider and does not have a published unsecured short-term debt
rating issued by Standard & Poor's, with respect to Standard & Poor's only, the
unsecured long-term debt rating of DNIB issued by Standard & Poor's) is lower
than the Threshold Rating, the Liquidity Facility for such Trust will be
required to be replaced by a Replacement Facility (as defined below). In the
event that such Liquidity Facility is not replaced with a Replacement Facility
within 10 days after notice of the downgrading and as otherwise provided in the
Intercreditor Agreement, the Subordination Agent shall request the Downgrade
Drawing in an amount equal to all available and undrawn amounts thereunder and
shall hold the proceeds thereof in the Cash Collateral Account for such Trust as
cash collateral to be used for the same purposes and under the same
circumstances as cash payments of Interest Drawings under such Liquidity
Facility would be used. (Liquidity Facilities, Section 2.02(c); Intercreditor
Agreement, Section 3.6(c))
A "Replacement Facility" for any Trust means an irrevocable liquidity
facility in substantially the form of the initial Liquidity Facility for such
Trust, including reinstatement provisions, or in such other form (which may
include a letter of credit) as shall permit the Rating Agencies to confirm in
writing their respective ratings then in effect for the Certificates (before
downgrading of such ratings, if any, as a result of the downgrading of the
Liquidity Provider), in a face amount equal to the amount of interest payable on
the Certificates of such Trust (at the Stated Interest Rate for such Trust, and
without regard to expected future principal payments) on the six Regular
Distribution Dates following the date of replacement of such Liquidity Facility
and issued by a Person having unsecured short-term debt ratings issued by both
Rating Agencies which are equal to or higher than the Threshold Rating.
(Intercreditor Agreement, Section 1.1)
"Threshold Rating" means the short-term unsecured debt rating of P-1
by Moody's and A-1 by Standard & Poor's (provided that, so long as DNIB is the
Liquidity Provider and does not have a published short-term unsecured debt
rating issued by Standard & Poor's, the Threshold Rating with respect to
Standard & Poor's shall be its long-term unsecured debt rating of AA-).
The Liquidity Facility for each Trust provides that the Liquidity
Provider's obligations thereunder will expire on the earliest of (i) January 17,
2016; (ii) the date on which such Liquidity Facility is surrendered to the
Liquidity Provider together with a certification that all of the Certificates of
such Trust have been paid in full; (iii) the date such Liquidity Facility is
surrendered to the Liquidity Provider together with a certification that a
Replacement Facility has been substituted for such Liquidity Facility; (iv) the
fifth Business Day following receipt by the Subordination Agent of a Termination
Notice from the Liquidity Provider (see "--Liquidity Events of Default"); and
(v) the date on which no amount is or may (by reason of reinstatement) become
available for drawing under such Liquidity Facility. (Liquidity Facilities,
Section 2.02(b); Intercreditor Agreement, Section 3.6(d))
Continental may, at its option, arrange for a replacement facility at
any time to replace the Liquidity Facility for any Trust, provided that if DNIB
is the Liquidity Provider being replaced, (i) it must be replaced with respect
to all three Liquidity Facilities, (ii) DNIB may not be replaced prior to May
20, 2001 except for cause or for its ceasing to meet the Threshold Ratings and
(iii) from May 20, 2001 to May 20, 2006, if DNIB is replaced other than for
cause or for its ceasing to meet the Threshold Ratings, Continental must pay a
replacement fee to DNIB equal to 0.30% of the then current Required Amount under
each Liquidity Facility. "With cause" and "for cause" means a failure by DNIB to
perform any agreement, covenant or condition required to be performed by it
under any Liquidity Facility or a failure by DNIB to perform any material
agreement, covenant or condition required to be performed by it under the
Intercreditor Agreement. If such replacement facility is provided at any time
after the Downgrade Drawing under such Liquidity Facility, the funds on deposit
in the Cash Collateral Account for such Trust will be returned to the Liquidity
Provider being replaced. (Intercreditor Agreement, Section 3.6(e))
The Intercreditor Agreement provides that, upon receipt by the
Subordination Agent of a Termination Notice with respect to any Liquidity
Facility from the Liquidity Provider (given as described in "--Liquidity Events
of Default"), the Subordination Agent shall request a final drawing (the "Final
Drawing") under such Liquidity Facility in an amount equal to all available and
undrawn amounts thereunder and shall hold the
57
proceeds thereof in the Cash Collateral Account for the related Trust as cash
collateral to be used for the same purposes and under the same circumstances,
and subject to the same conditions, as cash payments of Interest Drawings under
such Liquidity Facility would be used. (Liquidity Facilities, Section 2.02(d);
Intercreditor Agreement, Section 3.6(i))
Drawings under any Liquidity Facility will be made by delivery by the
Subordination Agent of a certificate in the form required by such Liquidity
Facility. Upon receipt of such a certificate, the Liquidity Provider is
obligated to make payment of the drawing requested thereby in immediately
available funds. Upon payment by the Liquidity Provider of the amount specified
in any drawing under any Liquidity Facility, the Liquidity Provider will be
fully discharged of its obligations under such Liquidity Facility with respect
to such drawing and will not thereafter be obligated to make any further
payments under such Liquidity Facility in respect of such drawing to the
Subordination Agent or any other person or entity who makes a demand for payment
in respect of interest on the related Certificates.
REIMBURSEMENT OF DRAWINGS
Amounts drawn under any Liquidity Facility by reason of an Interest
Drawing or the Final Drawing will be immediately due and payable, together with
interest on the amount of such drawing at a rate equal to the applicable LIBOR
plus 1.75% per annum; provided that the Subordination Agent will be obligated to
reimburse such amounts only to the extent that the Subordination Agent has
available funds therefor.
The amount drawn under the Liquidity Facility for any Trust by reason
of the Downgrade Drawing will be treated as follows: (i) such amount will be
released on any Regular Distribution Date to the Liquidity Provider to the
extent that such amount exceeds the Required Amount minus any unreimbursed
Interest Drawings under such Liquidity Facility; (ii) any portion of such amount
withdrawn from the Cash Collateral Account for such Certificates to pay interest
on such Certificates will be treated in the same way as Interest Drawings; and
(iii) the balance of such amount will be invested in Eligible Investments. The
Downgrade Drawing under any Liquidity Facility will bear interest at a rate
equal to the applicable LIBOR plus 0.60% per annum. (Liquidity Facilities,
Section 2.06)
LIQUIDITY EVENTS OF DEFAULT
Events of Default under each Liquidity Facility (each, a "Liquidity
Event of Default") consist of: (i) the acceleration of all the Equipment Notes;
and (ii) certain bankruptcy or similar events involving Continental. (Liquidity
Facilities, Section 1.01)
If (i) any Liquidity Event of Default occurs under any Liquidity
Facility and (ii) less than 65% of the aggregate outstanding principal amount of
all Equipment Notes are Performing Equipment Notes, the Liquidity Provider may,
in its discretion, give a notice of termination of the related Liquidity
Facility and accelerate the reimbursement obligations thereunder (a "Termination
Notice") the effect of which shall be to cause (i) such Liquidity Facility to
expire on the fifth Business Day after the date on which such Termination Notice
is received by the Subordination Agent, (ii) any Drawing remaining unreimbursed
as of the date of termination to be automatically converted into a Final Drawing
under such Liquidity Facility, and (iii) all amounts owing to the Liquidity
Provider automatically to become accelerated. Notwithstanding the foregoing,
the Subordination Agent will be obligated to pay amounts owing to the Liquidity
Provider only to the extent of funds available therefor after giving effect to
the payments in accordance with the provisions set forth under "Description of
the Intercreditor Agreement--Priority of Distributions". (Liquidity Facilities,
Section 6.01)
Upon the circumstances described below under "Description of the
Intercreditor Agreement--Intercreditor Rights", the Liquidity Provider may
become the Controlling Party with respect to the exercise of remedies under the
Indentures. (Intercreditor Agreement, Section 2.6(c))
58
LIQUIDITY PROVIDER
The Liquidity Provider is De Nationale Investeringsbank N.V., which is
a wholesale bank, organized under the laws of The Netherlands, specializing in
long-term lending, equity investments, capital market transactions and various
types of financial consulting and brokerage activities. DNIB had total assets
of approximately NLG 18 billion (approximately $10.7 billion) as of December 31,
1995 and is the tenth largest bank in The Netherlands in terms of assets.
DNIB is active both in The Netherlands and abroad with branch offices
in London and Belgium and subsidiary banks in Singapore and the Netherlands
Antilles. In the last few years approximately 50% of new credit grants went to
borrowers abroad. The shares of DNIB are traded on the Amsterdam Stock
Exchange. The State of The Netherlands owns 50.3% of the banks shares, with the
remaining shares held by institutional and retail investors. DNIB's strategy and
policy are guided by its independent management.
59
DESCRIPTION OF THE INTERCREDITOR AGREEMENT
The following summary describes certain provisions of the
Intercreditor Agreement. The summary does not purport to be complete and
reference is made to the provisions of the Intercreditor Agreement, which has
been filed as an exhibit to the Registration Statement and is available as set
forth under the heading "Available Information."
INTERCREDITOR RIGHTS
Controlling Party
Pursuant to the Intercreditor Agreement, the Trustees and the
Liquidity Provider have agreed that, with respect to any Indenture at any given
time, the Loan Trustee will be directed (a) in taking, or refraining from
taking, any action thereunder by the holders of at least a majority of the
outstanding principal amount of the Equipment Notes issued thereunder (provided
that, for so long as the Subordination Agent is the registered holder of the
Equipment Notes, the Subordination Agent shall act with respect to this clause
(a) in accordance with the directions of the Trustees), so long as no Indenture
Default shall have occurred and be continuing thereunder and (b) after the
occurrence and during the continuance of an Indenture Default thereunder, in
taking, or refraining from taking, any action thereunder, including exercising
remedies thereunder (including acceleration of such Equipment Notes or
foreclosing the lien on the Aircraft securing such Equipment Notes), by the
Controlling Party, subject to the limitations described below. See "Description
of the New Certificates--Indenture Defaults and Certain Rights Upon an Indenture
Default" for a description of the rights of the Certificateholders of each Trust
to direct the respective Trustees. Notwithstanding the foregoing, at any time
after 18 months from the earlier to occur of (x) the date on which the entire
available amount under any Liquidity Facility shall have been drawn (for any
reason other than a Downgrade Drawing) and remain unreimbursed and (y) the date
on which all Equipment Notes shall have been accelerated, the Liquidity Provider
shall have the right to elect to become the Controlling Party with respect to
such Indenture; provided that if there is more than one Liquidity Provider, the
Liquidity Provider with the greatest amount of unreimbursed Liquidity
Obligations shall have such right. For purposes of giving effect to the
foregoing, the Trustees (other than the Controlling Party) shall irrevocably
agree (and the Certificateholders (other than the Certificateholders represented
by the Controlling Party) shall be deemed to agree by virtue of their purchase
of Certificates) to exercise their voting rights as directed by the Controlling
Party. (Intercreditor Agreement, Section 2.6) For a description of certain
limitations on the Controlling Partys rights to exercise remedies, see
"Description of the Equipment Notes--Remedies".
Sale of Equipment Notes or Aircraft
Upon the occurrence and during the continuation of any Indenture
Default under any Indenture, the Controlling Party may accelerate and, subject
to the provisions of the immediately following sentence, sell all (but not less
than all) of the Equipment Notes issued under such Indenture to any person. So
long as any Certificates are outstanding, during nine months after the earlier
of (x) the acceleration of the Equipment Notes under any Indenture or (y) the
bankruptcy or insolvency of Continental, without the consent of each Trustee,
(a) no Aircraft subject to the lien of such Indenture or such Equipment Notes
may be sold, if the net proceeds from such sale would be less than the Minimum
Sale Price for such Aircraft or such Equipment Notes, and (b) with respect to
any Leased Aircraft, the amount and payment dates of rentals payable by
Continental under the Lease for such Leased Aircraft may not be adjusted, if, as
a result of such adjustment, the discounted present value of all such rentals
would be less than 75% of the discounted present value of the rentals payable by
Continental under such Lease before giving effect to such adjustment, in each
case, using the weighted average interest rate of the Equipment Notes issued
under such Indenture as the discount rate.
The Subordination Agent may from time to time during the continuance
of an Indenture Default (and before the occurrence of a Triggering Event)
commission Appraisals with respect to the related Aircraft at the request of the
Controlling Party. (Intercreditor Agreement, Section 4.1)
60
PRIORITY OF DISTRIBUTIONS
So long as no Triggering Event shall have occurred, the payments in
respect of the Equipment Notes and certain other payments received on any
Distribution Date will be promptly distributed by the Subordination Agent on
such Distribution Date in the following order of priority:
(i) to pay the Liquidity Obligations (other than any interest accrued
thereon or the principal amount of any Drawing) (the "Liquidity
Expenses") to the Liquidity Provider;
(ii) to pay interest accrued on the Liquidity Obligations to the
Liquidity Provider;
(iii) to pay or reimburse the Liquidity Provider for the Liquidity
Obligations (other than amounts payable pursuant to clauses (i)
and (ii) above) and, if applicable, to replenish each Cash
Collateral Account up to the Required Amount;
(iv) to pay Expected Distributions to the holders of Class A
Certificates;
(v) to pay Expected Distributions to the holders of Class B
Certificates;
(vi) to pay Expected Distributions to the holders of Class C
Certificates;
(vii) to pay Expected Distributions to the holders of Class D
Certificates; and
(viii) to pay certain fees and expenses of the Subordination Agent and
the Trustees.
"Expected Distributions" means, with respect to the Certificates of
any Trust on any Distribution Date (the "Current Distribution Date") the sum of
(x) accrued and unpaid interest on such Certificates and (y) the difference
between (A) the Pool Balance of such Certificates as of the immediately
preceding Distribution Date and (B) the Pool Balance of such Certificates as of
the Current Distribution Date, calculated on the basis that the principal of the
Equipment Notes held in such Trust has been paid when due (whether at stated
maturity, upon redemption, prepayment or acceleration or otherwise) and such
payments have been distributed to the holders of such Certificates.
Subject to the terms of the Intercreditor Agreement, upon the
occurrence of a Triggering Event and at all times thereafter, all funds received
by the Subordination Agent in respect of the Equipment Notes and certain other
payments will be promptly distributed by the Subordination Agent in the
following order of priority:
(i) to pay certain out-of-pocket costs and expenses actually incurred
by the Subordination Agent or any Trustee or to reimburse any
Certificateholder or the Liquidity Provider in respect of
payments made to the Subordination Agent or any Trustee in
connection with the protection or realization of the value of the
Equipment Notes or any Trust Indenture Estate (the
"Administration Expenses");
(ii) to the Liquidity Provider, to pay the Liquidity Expenses;
(iii) to the Liquidity Provider, to pay interest accrued on the
Liquidity Obligations;
(iv) to the Liquidity Provider, to pay the outstanding amount of all
Liquidity Obligations and, if applicable, so long as at least 65%
of the aggregate outstanding principal amount of all Equipment
Notes are Performing Equipment Notes, to replenish each Cash
Collateral Account up to the Required Amount for the related
Class of Certificates;
(v) to pay certain fees, taxes, charges and other amounts payable to
the Subordination Agent, any Trustee or any Certificateholder;
61
(vi) to pay Adjusted Expected Distributions to the holders of Class A
Certificates;
(vii) to pay Adjusted Expected Distributions to the holders of Class B
Certificates;
(viii) to pay Adjusted Expected Distributions to the holders of Class C
Certificates; and
(ix) to pay to the holders of Class D Certificates.
"Adjusted Expected Distributions" means, with respect to the
Certificates of any Trust on any Current Distribution Date, the sum of (x)
accrued and unpaid interest on such Certificates and (y) the greater of:
(A) the difference between (x) the Pool Balance of such Certificates as
of the immediately preceding Distribution Date and (y) the Pool Balance of
such Certificates as of the Current Distribution Date calculated on the
basis that (i) the principal of the Equipment Notes other than Performing
Equipment Notes (the "Non-Performing Equipment Notes") held in such Trust
has been paid in full and such payments have been distributed to the
holders of such Certificates and (ii) the principal of the Performing
Equipment Notes has been paid when due (but without giving effect to any
acceleration of Performing Equipment Notes) and such payments have been
distributed to the holders of such Certificates, and
(B) the amount of the excess, if any, of (i) the Pool Balance of such
Class of Certificates as of the immediately preceding Distribution Date,
over (ii) the Aggregate LTV Collateral Amount for such Class of
Certificates for the Current Distribution Date;
provided that, until the date of the initial LTV Appraisals, clause (B) shall
not apply.
"Aggregate LTV Collateral Amount" for any Class of Certificates for
any Distribution Date means the sum of the applicable LTV Collateral Amounts for
each Aircraft, minus the Pool Balance for each Class of Certificates, if any,
senior to such Class, after giving effect to any distribution of principal on
such Distribution Date on such senior Class or Classes.
"LTV Collateral Amount" of any Aircraft for any Class of Certificates
means, as of any Distribution Date, the lesser of (i) the LTV Ratio for such
Class of Certificates multiplied by the Appraised Current Market Value of such
Aircraft and (ii) the outstanding principal amount of the Equipment Notes
secured by such Aircraft after giving effect to any principal payments of such
Equipment Notes on or before such Distribution Date.
"LTV Ratio" means for the Class A Certificates 35.0%, for the Class B
Certificates 50.0%, for the Class C Certificates 65.0% and for the Class D
Certificates 72.9%.
"Appraised Current Market Value" of any Aircraft means the lower of
the average and the median of the most recent three Appraisals of such Aircraft.
After a Triggering Event occurs and any Equipment Note becomes a Non-Performing
Equipment Note, the Subordination Agent shall obtain Appraisals for the Aircraft
(the "LTV Appraisals") as soon as practicable and additional LTV Appraisals on
or prior to each anniversary of the date of such initial LTV Appraisals;
provided that if the Controlling Party reasonably objects to the appraised value
of the Aircraft shown in such Appraisals, the Controlling Party shall have the
right to obtain or cause to be obtained substitute LTV Appraisals (including LTV
Appraisals based upon physical inspection of the Aircraft).
"Appraisal" means a fair market value appraisal (which may be a
"desktop" appraisal) performed by any Appraiser or any other nationally
recognized appraiser on the basis of an arm's-length transaction between an
informed and willing purchaser under no compulsion to buy and an informed and
willing seller under no compulsion to sell and both having knowledge of all
relevant facts.
62
Certain amounts payable to the Trustees, the Subordination Agent and
the Liquidity Provider, including fees and expenses of the Trustees and the
Subordination Agent and indemnification obligations of Continental, will not be
entitled to the benefits of the lien of the Indentures. Consequently, if a
default occurs in the payment of any such amounts, and to the extent that such
amounts are distributed to any such party in accordance with the priorities of
distribution described above, the holders of one or more junior Classes of
Certificates may not receive the full amount due them even if all Equipment
Notes are eventually paid in full, and any unpaid amounts will be unsecured
claims against Continental.
Interest Drawings under the Liquidity Facility and withdrawals from
the Cash Collateral Account, in each case in respect of interest on the
Certificates of any Trust (other than the Class D Trust), will be distributed to
the Trustee for such Trust, notwithstanding the priority of distributions set
forth in the Intercreditor Agreement and otherwise described herein. All
amounts on deposit in the Cash Collateral Account for any Trust which are in
excess of the Required Amount and all investment earnings on such amounts on
deposit in the Cash Collateral Account will be paid to the Liquidity Provider.
VOTING OF EQUIPMENT NOTES
In the event that the Subordination Agent, as the registered holder of
any Equipment Note, receives a request for its consent to any amendment,
modification or waiver under such Equipment Note or the related Indenture (or,
if applicable, the Lease, the Participation Agreement or other related
document), (i) if no Indenture Default shall have occurred and be continuing,
the Subordination Agent shall request instructions from the Trustees and the
consent of the Liquidity Provider (which consent shall not be unreasonably
withheld or delayed) and shall vote or consent in accordance with the vote of
the Trustees and the instructions of the Liquidity Provider and (ii) if any
Indenture Default shall have occurred and be continuing with respect to such
Indenture, the Subordination Agent will exercise its voting rights as directed
by the Controlling Party. (Intercreditor Agreement, Section 9.1)
THE SUBORDINATION AGENT
Wilmington Trust Company is the Subordination Agent under the
Intercreditor Agreement. Continental and its affiliates may from time to time
enter into banking and trustee relationships with the Subordination Agent and
its affiliates. The Subordination Agent's address is Wilmington Trust Company,
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Corporate Trust Administration.
The Subordination Agent may resign at any time, in which event a
successor Subordination Agent will be appointed as provided in the Intercreditor
Agreement. The Controlling Party may remove the Subordination Agent for cause
as provided in the Intercreditor Agreement. In such circumstances, a successor
Subordination Agent will be appointed as provided in the Intercreditor
Agreement. Any resignation or removal of the Subordination Agent and
appointment of a successor Subordination Agent does not become effective until
acceptance of the appointment by the successor Subordination Agent.
63
DESCRIPTION OF THE AIRCRAFT AND THE APPRAISALS
THE AIRCRAFT
The Aircraft are comprised of four Boeing 757-200 aircraft and one
Boeing 737-500 aircraft. The Aircraft are designed to be in compliance with
Stage III noise level standards, which constitute the most restrictive
regulatory standards currently in effect in the United States for aircraft noise
abatement. The table below sets forth certain additional information for the
Aircraft.
AIRCRAFT
REGISTRATION AIRCRAFT ENGINE DELIVERY APPRAISED VALUE
------------ -------- ------ -------- ----------- --------------- ----------
NUMBER TYPE TYPE DATE AISI BK MBA
------------ -------- ------ -------- ----------- --------------- ----------
N12114 757-200 RB211-535E4B July 1995 $ 51,650,000 $ 50,250,000 $ 54,010,000
N14115 757-200 RB211-535E4B August 1995 51,850,000 50,250,000 54,240,000
N12116 757-200 RB211-535E4B March 1996 52,600,000 51,000,000 54,180,000
N19117 757-200 RB211-535E4B April 1996 52,750,000 51,000,000 54,230,000
N33637 737-500 CFM56-3B1 April 1996 30,510,000 27,000,000 25,200,000
------------ ------------ ------------
TOTAL $239,360,000 $229,500,000 $241,860,000
============ ============ ============
APPRAISED VALUE
The appraised values set forth in the foregoing chart were determined
by the following three independent aircraft appraisal and consulting firms:
AISI, BK and MBA. Each Appraiser was asked to provide its opinion as to the
fair market value of each Aircraft as of March 26, 1996. As part of this
process, all three Appraisers performed "desk-top" appraisals without any
physical inspection of the Aircraft. The Appraisers have delivered letters
summarizing their respective appraisals, copies of which are annexed to this
Prospectus as Appendix II.
An appraisal is only an estimate of value and should not be relied
upon as a measure of realizable value; the proceeds realized upon a sale of any
Aircraft may be less than the appraised value thereof. The value of the
Aircraft in the event of the exercise of remedies under the applicable Indenture
will depend on market and economic conditions, the availability of buyers, the
condition of the Aircraft and other similar factors. Accordingly, there can be
no assurance that the proceeds realized upon any such exercise with respect to
the Equipment Notes and the Aircraft pursuant to the applicable Indenture would
be as appraised or sufficient to satisfy in full payments due on the Equipment
Notes issued thereunder.
DESCRIPTION OF THE EQUIPMENT NOTES
The statements under this caption are summaries and do not purport to
be complete. The summaries make use of terms defined in and reference is made
to all of the provisions of the Equipment Notes, the Indentures, the Leases, the
Participation Agreements, the Trust Agreements and the Financing Agreements.
Except as otherwise indicated, the following summaries relate to the Equipment
Notes, the Indenture, the Lease, the Participation Agreement, the Trust
Agreement and the Financing Agreement relating to each Aircraft, forms of which
are filed as exhibits to the Registration Statement and are available as set
forth under the heading "Available Information."
GENERAL
The Equipment Notes were issued in four series with respect to each
Aircraft. The Equipment Notes with respect to each Leased Aircraft were issued
under a separate Leased Aircraft Indenture between First Security Bank of Utah,
National Association, as Owner Trustee of a trust for the benefit of the Owner
Participant who is the beneficial owner of such Aircraft, and Wilmington Trust
Company, as Loan Trustee. The Equipment Notes with respect to the Owned
Aircraft were issued under the Owned Aircraft Indenture between Continental and
Wilmington Trust Company, as Owned Aircraft Trustee.
64
The related Owner Trustee leases each Leased Aircraft to Continental
pursuant to a separate Lease between such Owner Trustee and Continental with
respect to such Leased Aircraft. Under each Lease, Continental is obligated to
make or cause to be made rental and other payments to the related Loan Trustee
on behalf of the related Owner Trustee, which rental and other payments will be
at least sufficient to pay in full when due all payments required to be made on
the Equipment Notes issued with respect to such Leased Aircraft. The Equipment
Notes issued with respect to the Leased Aircraft are not, however, direct
obligations of, or guaranteed by, Continental. Continental's rental obligations
under each Lease and the Equipment Notes issued with respect to the Owned
Aircraft are general obligations of Continental.
Gaucho-2 Inc., a wholly-owned subsidiary of The Boeing Company, is
currently the Owner Participant with respect to all of the four leveraged leases
for the Leased Aircraft. Gaucho-2 Inc. has the right to sell, assign or
otherwise transfer its interests as Owner Participant in any or all of such
leveraged leases, subject to the terms and conditions of the relevant
Participation Agreement and related documents.
SUBORDINATION
Series B Equipment Notes issued in respect of any Aircraft are
subordinated in right of payment to Series A Equipment Notes issued in respect
of such Aircraft; Series C Equipment Notes issued in respect of such Aircraft
are subordinated in right of payment to such Series B Equipment Notes; and
Series D Equipment Notes issued in respect of such Aircraft are subordinated in
right of payment to such Series C Equipment Notes. On each Equipment Note
payment date, (i) payments of interest and principal due on Series A Equipment
Notes issued in respect of any Aircraft will be made prior to payments of
interest and principal due on Series B Equipment Notes issued in respect of such
Aircraft, (ii) payments of interest and principal due on such Series B Equipment
Notes will be made prior to payments of interest and principal due on Series C
Equipment Notes issued in respect of such Aircraft and (iii) payments of
interest and principal due on such Series C Equipment Notes will be made prior
to payments of interest and principal due on Series D Equipment Notes issued in
respect of such Aircraft.
PRINCIPAL AND INTEREST PAYMENTS
Subject to the provisions of the Intercreditor Agreement, interest
paid on the Equipment Notes held in each Trust will be passed through to the
Certificateholders of such Trust on the dates and at the rate per annum set
forth on the cover page of this Prospectus until the final expected Regular
Distribution Date for such Trust. Subject to the provisions of the
Intercreditor Agreement, principal paid on the Equipment Notes held in each
Trust will be passed through to the Certificateholders of such Trust in
scheduled amounts on the dates set forth herein until the final expected Regular
Distribution Date for such Trust.
The aggregate original principal amounts of the Equipment Notes issued
with respect to each Aircraft, as such Equipment Notes will be held in each of
the Trusts, are as follows:
AIRCRAFT TRUST TRUST TRUST TRUST
REGISTRATION 1996-2A EQUIPMENT 1996-2B EQUIPMENT 1996-2C EQUIPMENT 1996-2D EQUIPMENT
NUMBER NOTES NOTES NOTES NOTES(1) TOTAL(1)
------------ ------------------ ----------------- ----------------- ------------------ ------------
N12114 $18,077,500 $ 7,747,500 $ 7,747,500 $ 4,080,350 $ 37,652,850
N14115 18,147,500 7,777,500 7,777,500 4,096,150 37,798,650
N12116 18,407,667 7,889,000 7,889,000 3,201,104 37,386,771
N19117 18,431,000 7,899,000 7,899,000 3,081,877 37,310,877
N33637 9,449,333 4,050,000 4,050,000 4,050,519 21,599,852
----------- ----------- ----------- ----------- ------------
TOTAL $82,513,000 $35,363,000 $35,363,000 $18,510,000 $171,749,000
=========== =========== =========== =========== ============
- ---------------
(1) The amounts stated may differ from the actual amounts due to rounding.
Interest is payable on the unpaid principal amount of each Equipment
Note at the rate applicable to such Equipment Note on January 2, April 2, July 2
and October 2 in each year, commencing July 2, 1996.
65
Such interest is computed on the basis of a 360-day year of twelve 30-day
months. Under certain circumstances described in "The Exchange Offer--Terms of
the Exchange Offer;", the interest rates for the Equipment Notes may be
increased to the extent described therein.
If any date scheduled for any payment of principal, premium (if any)
or interest with respect to the Equipment Notes is not a Business Day, such
payment will be made on the next succeeding Business Day without any additional
interest.
REDEMPTION
If an Event of Loss occurs with respect to any Aircraft and such
Aircraft is not replaced by Continental under the related Lease (in the case of
a Leased Aircraft) or under the Owned Aircraft Indenture (in the case of the
Owned Aircraft), the Equipment Notes issued with respect to such Aircraft will
be redeemed, in whole, in each case at a price equal to the aggregate unpaid
principal amount thereof, together with accrued interest thereon to, but not
including, the date of redemption, but without premium, on a Special
Distribution Date. (Indentures, Section 2.10(a))
If Continental exercises its right to terminate a Lease under Section
9 of such Lease, the Equipment Notes relating to the related Leased Aircraft
will be redeemed, in whole, on a Special Distribution Date at a price equal to
the aggregate unpaid principal amount thereof, together with accrued interest
thereon to, but not including, the date of redemption, plus, if such redemption
is made prior to the related Premium Termination Date, a Make-Whole
Premium.(Leased Aircraft Indentures, Section 2.10(b)). See "--The Leases--Lease
Termination".
All of the Equipment Notes issued with respect to a Leased Aircraft
may be redeemed prior to maturity at any time after December 31, 2000 (in the
case of the two Leased Aircraft with registration numbers N12114 and N14115) and
at any time after December 31, 2001 (in the case of the two Leased Aircraft with
registration numbers N12116 and N19117) as part of a refunding or refinancing
thereof under Section 13 of the applicable Participation Agreement, and all of
the Equipment Notes issued with respect to the Owned Aircraft may be redeemed
prior to maturity at any time at the option of Continental, in each case at a
price equal to the aggregate unpaid principal thereof, together with accrued
interest thereon to, but not including, the date of redemption, plus, if such
redemption is made prior to the related Premium Termination Date, a Make-Whole
Premium. (Indentures, Section 2.11)
If notice of such a redemption shall have been given in connection
with a refinancing of Equipment Notes with respect to a Leased Aircraft, such
notice may be revoked not later than three days prior to the proposed redemption
date. (Leased Aircraft Indentures, Section 2.12)
If, with respect to a Leased Aircraft, (x) one or more Lease Events of
Default shall have occurred and be continuing, (y) in the event of a bankruptcy
proceeding involving Continental, (i) during the Section 1110 Period, the
trustee in such proceeding or Continental does not agree to perform its
obligations under the related Lease or (ii) at any time after agreeing to
perform such obligations, such trustee or Continental ceases to perform such
obligations or (z) the Leased Aircraft Trustee with respect to such Equipment
Notes shall take action or notify the applicable Owner Trustee that it intends
to take action to foreclose the lien of the related Indenture, then in each case
the Equipment Notes issued with respect to such Leased Aircraft may be purchased
by the Owner Trustee or Owner Participant on the applicable purchase date at a
price equal to the aggregate unpaid principal thereof, together with accrued
interest thereon to, but not including, the date of redemption, but without any
premium (provided that a Make-Whole Premium shall be payable if such Equipment
Notes are to be purchased pursuant to clause (x) when a Lease Event of Default
shall have occurred and be continuing for less than 120 days). (Leased Aircraft
Indentures, Section 2.14). Continental has no comparable right under the Owned
Aircraft Indenture to purchase the Equipment Notes under such circumstances.
"Make-Whole Premium" means, with respect to any Equipment Note, an
amount (as determined by an independent investment banker of national standing)
equal to the excess, if any, of (a) the
66
present value of the remaining scheduled payments of principal and interest to
maturity of such Equipment Note computed by discounting such payments on a
quarterly basis on each Payment Date (assuming a 360-day year of twelve 30-day
months) using a discount rate equal to the Treasury Yield over (b) the
outstanding principal amount of such Equipment Note plus accrued interest to the
date of determination.
For purposes of determining the Make-Whole Premium, "Treasury Yield"
means, at the date of determination with respect to any Equipment Note, the
interest rate (expressed as a quarterly equivalent and as a decimal and, in the
case of United States Treasury bills, converted to a bond equivalent yield)
determined to be the per annum rate equal to the semi-annual yield to maturity
for United States Treasury securities maturing on the Average Life Date of such
Equipment Note and trading in the public securities markets either as determined
by interpolation between the most recent weekly average yield to maturity for
two series of United States Treasury securities, trading in the public
securities markets, (A) one maturing as close as possible to, but earlier than,
the Average Life Date of such Equipment Note and (B) the other maturing as close
as possible to, but later than, the Average Life Date of such Equipment Note, in
each case as published in the most recent H.15(519) or, if a weekly average
yield to maturity for United States securities maturing on its Average Life Date
of such Equipment is reported on the most recent "H.15(519)" such weekly average
yield to maturity as published in such H.15(519). "H.15(519)" means the weekly
statistical release designated as such, or any successor publication, published
by the Board of Governors of the Federal Reserve System. The date of
determination of a Make-Whole Premium shall be the third Business Day prior to
the applicable payment or redemption date and the "most recent H.15(519)" means
the H.5(519) published prior to the close of business on the third Business Day
prior to the applicable payment or redemption date.
"Average Life Date" for any Equipment Note shall be the date which
follows the time of determination by a period equal to the "Remaining Weighted
Average Life" of such Equipment Note. Remaining Weighted Average Life on a given
date with respect to any Equipment Note shall be the number of days equal to the
quotient obtained by dividing (a) the sum of each of the products obtained by
multiplying (i) the amount of each then remaining scheduled payment of principal
of such Equipment Note by (ii) the number of days from and including such
determination date to but excluding the date on which such payment of principal
is scheduled to be made, by (b) the then outstanding principal amount of such
Equipment Note.
SECURITY
The Equipment Notes issued with respect to each Leased Aircraft are
secured by (i) an assignment by the related Owner Trustee to the related Leased
Aircraft Trustee of such Owner Trustee's rights, except for certain limited
rights, under the Lease with respect to the related Aircraft, including the
right to receive payments of rent thereunder, (ii) a mortgage to such Leased
Aircraft Trustee of such Aircraft, subject to the rights of Continental under
such Lease, and (iii) an assignment to such Leased Aircraft Trustee of certain
of such Owner Trustee's rights under the purchase agreement between Continental
and the related manufacturer. Unless and until an Indenture Default with
respect to a Leased Aircraft has occurred and is continuing, the Leased Aircraft
Trustee may not exercise the rights of the Owner Trustee under the related
Lease, except the Owner Trustee's right to receive payments of rent due
thereunder. The assignment by the Owner Trustee to the Leased Aircraft Trustee
of its rights under the related Lease will exclude rights of such Owner Trustee
and the related Owner Participant relating to indemnification by Continental for
certain matters, insurance proceeds payable to such Owner Trustee in its
individual capacity and to such Owner Participant under liability insurance
maintained by Continental under such Lease or by such Owner Trustee or such
Owner Participant, insurance proceeds payable to such Owner Trustee in its
individual capacity or to such Owner Participant under certain casualty
insurance maintained by such Owner Trustee or such Owner Participant under such
Lease and certain reimbursement payments made by Continental to such Owner
Trustee. (Leased Aircraft Indenture, Granting Clause) The Equipment Notes are
not cross-collateralized, and, consequently, the Equipment Notes issued in
respect of any one Aircraft are not secured by any of the other Aircraft or
replacement aircraft (as described in "--The Leases--Events of Loss") or the
Leases related thereto.
67
The Equipment Notes issued with respect to the Owned Aircraft are
secured by (i) a mortgage to the Owned Aircraft Trustee of such Aircraft and
(ii) an assignment to the Owned Aircraft Trustee of certain of Continental's
rights under its purchase agreement with the related manufacturer.
Funds, if any, held from time to time by the Loan Trustee with respect
to any Aircraft, including funds held as the result of an Event of Loss to such
Aircraft or, in the case of a Leased Aircraft, termination of the Lease, if any,
relating thereto, will be invested and reinvested by such Loan Trustee, at the
direction of the related Owner Trustee in the case of the Leased Aircraft or
Continental in the case of the Owned Aircraft (except in the case of certain
Indenture Defaults), in investments described in the related Indenture.
LOAN TO VALUE RATIOS OF EQUIPMENT NOTES
The following table sets forth loan to Aircraft value ratios for the
Equipment Notes issued in respect of each Aircraft as of the dates specified and
was obtained by dividing (i) the outstanding balance (assuming no payment
default) of such Equipment Notes determined immediately after giving effect to
the payments scheduled to be made in each such month by (ii) the assumed value
(the "Assumed Aircraft Value") of the Aircraft securing such Equipment Notes.
The table is based on the assumption that the value of each Aircraft
set forth opposite May 20, 1996 depreciates by approximately 2% of the initial
appraised value per year until the fifteenth year after the year of delivery of
such Aircraft and by approximately 4% of the initial appraised value per year
thereafter. Other rates or methods of depreciation would result in materially
different loan to Aircraft value ratios and no assurance can be given (i) that
the depreciation rates and method assumed for the purposes of the table are the
ones most likely to occur or (ii) as to the actual value of any Aircraft. Thus
the table should not be considered a forecast or prediction of expected or
likely loan to Aircraft value ratios but simply a mathematical calculation based
on one set of assumptions.
AIRCRAFT REGISTRATION AIRCRAFT REGISTRATION AIRCRAFT REGISTRATION
NUMBER N12114 NUMBER N14115 NUMBER N12116
------------------------------- -------------------------------- ------------------------------
EQUIPMENT EQUIPMENT EQUIPMENT
NOTE ASSUMED LOAN NOTE ASSUMED LOAN NOTE ASSUMED LOAN
OUTSTANDING AIRCRAFT TO OUTSTANDING AIRCRAFT TO OUTSTANDING AIRCRAFT TO
BALANCE VALUE VALUE BALANCE VALUE VALUE BALANCE VALUE VALUE
DATE (MILLIONS) (MILLIONS) RATIO (MILLIONS) (MILLIONS) RATIO (MILLIONS) (MILLIONS) RATIO
--------- ---------- ---------- -------- ----------- ---------- ----- ----------- ---------- -----
May 20, 1996 $37.65 $51.65 72.9% $37.80 $51.85 72.9% $37.39 $52.59 71.1%
April 2, 1997 36.88 50.60 72.9 37.03 50.79 72.9 36.19 51.54 70.2
April 2, 1998 35.76 49.54 72.2 35.95 49.73 72.3 35.74 50.49 70.8
April 2, 1999 34.36 48.49 70.9 34.60 48.68 71.1 35.02 49.44 70.8
April 2, 2000 32.05 47.43 67.6 32.26 47.62 67.7 33.97 48.39 70.2
April 2, 2001 29.52 46.38 63.6 29.69 46.56 63.8 30.14 47.33 63.7
April 2, 2002 27.61 45.33 60.9 27.85 45.50 61.2 26.10 46.28 56.4
April 2, 2003 25.63 44.27 57.9 25.85 44.44 58.2 23.92 45.23 52.9
April 2, 2004 23.97 43.22 55.5 24.09 43.38 55.5 23.92 44.18 54.1
April 2, 2005 22.32 42.16 52.9 22.42 42.33 53.0 20.73 43.13 48.1
April 2, 2006 20.78 41.11 50.6 20.86 41.27 50.6 18.68 42.07 44.4
April 2, 2007 18.36 40.06 45.8 18.51 40.21 46.0 16.26 41.02 39.6
April 2, 2008 15.95 39.00 40.9 16.06 39.15 41.0 14.40 39.97 36.0
April 2, 2009 13.02 37.95 34.3 13.09 38.09 34.4 12.45 38.92 32.0
April 2, 2010 10.31 36.89 27.9 10.30 37.04 27.8 10.32 37.87 27.2
April 2, 2011 6.01 34.78 17.3 5.73 34.92 16.4 7.12 36.82 19.4
April 2, 2012 1.10 32.68 3.4 0.75 32.80 2.3 3.67 34.71 10.6
April 2, 2013 0.00 0.00 0.0 0.00 0.00 0.0 1.44 32.61 4.4
April 2, 2014 0.00 0.00 0.0 0.00 0.00 0.0 0.00 0.00 0.0
68
AIRCRAFT REGISTRATION AIRCRAFT REGISTRATION
NUMBER N19117 NUMBER N33637
--------------------------------------------------- ----------------------------------------------------
EQUIPMENT NOTE EQUIPMENT NOTE
OUTSTANDING ASSUMED OUTSTANDING ASSUMED
BALANCE AIRCRAFT VALUE LOAN TO VALUE BALANCE AIRCRAFT VALUE LOAN TO VALUE
DATE (MILLIONS) (MILLIONS) RATIO (MILLIONS) (MILLIONS) RATIO
--------- ------------- -------------- ------------- ------------- --------------- -------------
May 20, 1996 $37.31 $52.66 70.9% $21.60 $27.00 80.0%
April 2, 1997 36.44 51.61 70.6 20.64 26.46 78.0
April 2, 1998 35.78 50.55 70.8 20.22 25.92 78.0
April 2, 1999 34.90 49.50 70.5 19.80 25.38 78.0
April 2, 2000 33.62 48.45 69.4 19.26 24.84 77.5
April 2, 2001 31.23 47.39 65.9 18.66 24.30 76.8
April 2, 2002 28.57 46.34 61.6 18.04 23.76 75.9
April 2, 2003 25.60 45.29 56.5 17.38 23.22 74.8
April 2, 2004 23.52 44.23 53.2 16.67 22.68 73.5
April 2, 2005 20.95 43.18 48.5 15.91 22.14 71.9
April 2, 2006 18.40 42.13 43.7 15.02 21.60 69.5
April 2, 2007 16.07 41.07 39.1 13.97 21.06 66.3
April 2, 2008 13.59 40.02 34.0 0.00 0.00 0.0
April 2, 2009 11.74 38.97 30.1 0.00 0.00 0.0
April 2, 2010 9.52 37.92 25.1 0.00 0.00 0.0
April 2, 2011 6.84 36.86 18.6 0.00 0.00 0.0
April 2, 2012 4.99 34.76 14.3 0.00 0.00 0.0
April 2, 2013 2.97 32.65 9.1 0.00 0.00 0.0
April 2, 2014 0.79 30.54 2.6 0.00 0.00 0.0
69
LIMITATION OF LIABILITY
The Equipment Notes issued with respect to the Leased Aircraft are not
direct obligations of, or guaranteed by, Continental, the Owner Participant or
the Owner Trustees in their individual capacity. None of the Owner Trustees,
the Owner Participants or the Loan Trustees, or any affiliates thereof, shall be
personally liable to any holder of an Equipment Note or, in the case of the
Owner Trustees and the Owner Participants, to the Loan Trustees for any amounts
payable under the Equipment Notes or, except as provided in each Indenture, for
any liability under such Indenture. All payments of principal of, premium, if
any, and interest on the Equipment Notes issued with respect to any Aircraft
(other than payments made in connection with an optional redemption or purchase
of Equipment Notes issued with respect to a Leased Aircraft by the related Owner
Trustee or the related Owner Participant) will be made only from the assets
subject to the lien of the Indenture with respect to such Aircraft or the income
and proceeds received by the related Loan Trustee therefrom (including, in the
case of the Leased Aircraft, rent payable by Continental under the Lease with
respect to such Aircraft).
Except as otherwise provided in the Indentures, each Owner Trustee in
its individual capacity shall not be answerable or accountable under the
Indentures or under the Equipment Notes under any circumstances except for its
own willful misconduct or gross negligence. None of the Owner Participants will
have any duty or responsibility under any of the Leased Aircraft Indentures or
the Equipment Notes to the Leased Aircraft Trustees or to any holder of any
Equipment Note.
The Equipment Notes issued with respect to the Owned Aircraft are
direct obligations of Continental.
INDENTURE DEFAULTS, NOTICE AND WAIVER
Indenture Defaults under each Indenture include: (a) in the case of a
Leased Aircraft Indenture, the occurrence of any Lease Event of Default under
the related Lease (other than the failure to make certain indemnity payments and
other payments to the related Owner Trustee or Owner Participant unless a notice
is given by such Owner Trustee that such failure shall constitute an Indenture
Default), (b) the failure by the Owner Trustee (other than as a result of a
Lease default or Lease Event of Default), in the case of a Leased Aircraft
Indenture, or Continental, in the case of the Owned Aircraft Indenture, to pay
any interest or principal or premium, if any, when due, under such Indenture or
under any Equipment Note issued thereunder continued for more than 10 business
days, in the case of a Leased Aircraft Indenture, or 15 days, in the case of the
Owned Aircraft Indenture, (c) the failure by the Owner Participant or the Owner
Trustee, in the case of a Leased Aircraft Indenture, or Continental, in the case
of the Owned Aircraft Indenture, to discharge certain liens, continued after
notice and specified cure periods, (d) any representation or warranty made by
the related Owner Trustee or Owner Participant in the related Participation
Agreement or by Continental, the Owner Trustee or Owner Participant in the
related Financing Agreement or certain related documents furnished to the Loan
Trustee pursuant thereto being false or incorrect when made and continuing to be
material and remaining unremedied after notice and specified cure periods, (e)
failure by Continental or the related Owner Trustee or Owner Participant to
perform or observe any covenant or obligation for the benefit of the Loan
Trustee or holders of Equipment Notes under such Indenture or certain related
documents, continued after notice and specified cure periods, (f) the
registration of the related Aircraft ceasing to be effective as a result of the
Owner Participant (in the case of a Leased Aircraft) or Continental (in the case
of the Owned Aircraft) not being a citizen of the United States (subject to a
cure period in the case of the Owned Aircraft), (g) with respect to the Owned
Aircraft, the lapse or cancellation of insurance required under the Owned
Aircraft Indenture, or the operation by Continental of the Owned Aircraft after
having received notice that such insurance has lapsed or been canceled or (h)
the occurrence of certain events of bankruptcy, reorganization or insolvency of
the related Owner Trustee or Owner Participant (in the case of a Leased
Aircraft) or Continental (in the case of the Owned Aircraft). (Leased Aircraft
Indentures, Section 4.02; Owned Aircraft Indenture, Section 5.01) There are no
cross-default provisions in the Indentures or the Leases. Consequently, events
resulting in an Indenture Default under any particular Indenture may or may not
result in an Indenture Default occurring under any other Indenture, and a Lease
Event of Default under any particular Lease will not constitute a Lease Event of
Default under any other Lease.
70
If Continental fails to make any quarterly basic rental payment due under
any Lease, within a specified period after such failure the applicable Owner
Trustee may furnish to the Loan Trustee the amount due on the Equipment Notes
issued with respect to the related Leased Aircraft, together with any interest
thereon on account of the delayed payment thereof, in which event the Leased
Aircraft Trustee and the holders of outstanding Equipment Notes issued under
such Indenture may not exercise any remedies otherwise available under such
Indenture or such Lease as the result of such failure to make such rental
payment, unless Continental has failed to make a rental payment when due on the
six or more immediately preceding quarterly basic rental payment dates or on any
twelve or more previous quarterly basic rental payment dates (or, for so long as
Gaucho-2 Inc. or any other affiliate of Boeing is the Owner Participant, on the
nine or more immediately preceding quarterly basic rental payment dates or on
any sixteen or more previous quarterly basic rental payment dates). The
applicable Owner Trustee also may cure any other default by Continental in the
performance of its obligations under any Lease which can be cured with the
payment of money. (Leased Aircraft Indentures, Section 4.03)
The holders of a majority in principal amount of the outstanding
Equipment Notes issued with respect to any Aircraft, by notice to the Loan
Trustee, may on behalf of all the holders waive any existing default and its
consequences under the Indenture with respect to such Aircraft, except a default
in the payment of the principal of or interest on any such Equipment Notes or a
default in respect of any covenant or provision of such Indenture that cannot be
modified or amended without the consent of each holder of Equipment Notes
affected thereby. (Leased Aircraft Indentures, Section 4.08; Owned Aircraft
Indenture, Section 5.06)
REMEDIES
If an Indenture Default occurs and is continuing under an Indenture, the
related Loan Trustee or the holders of a majority in principal amount of the
Equipment Notes outstanding under such Indenture may, subject to the applicable
Owner Participant's or Owner Trustee's right to cure, as discussed above,
declare the principal of all such Equipment Notes issued thereunder immediately
due and payable, together with all accrued but unpaid interest thereon. The
holders of a majority in principal amount of Equipment Notes outstanding under
such Indenture may rescind any such declaration at any time before the judgment
or decree for the payment of the money so due shall be entered if (i) there has
been paid to the related Loan Trustee an amount sufficient to pay all principal,
interest, and premium, if any, on any such Equipment Notes, to the extent such
amounts have become due otherwise than by such declaration of acceleration and
(ii) all other Indenture Defaults and potential Indenture Defaults under such
Indenture have been cured or waived. (Leased Aircraft Indentures, Section
4.04(b); Owned Aircraft Indenture, Section 5.02(b))
Each Indenture provides that if an Indenture Default under such Indenture
has occurred and is continuing, the related Loan Trustee may exercise certain
rights or remedies available to it under such Indenture or under applicable law,
including (if, in the case of a Leased Aircraft, the corresponding Lease has
been declared in default) one or more of the remedies under such Indenture or,
in the case of a Leased Aircraft, such Lease with respect to the Aircraft
subject to such Lease. The related Leased Aircraft Trustee's right to exercise
remedies under a Leased Aircraft Indenture is subject, with certain exceptions,
to its having proceeded to exercise one or more of the dispossessory remedies
under the Lease with respect to such Leased Aircraft; provided that the
requirement to exercise such remedies under such Lease shall not apply in
circumstances where such exercise has been involuntarily stayed or prohibited by
applicable law or court order for a continuous period in excess of 60 days or
such other period as may be specified in Section 1110(a)(1)(A) of the U.S.
Bankruptcy Code (the "U.S. Bankruptcy Code") (plus an additional period, if any,
resulting from (i) the trustee in such proceeding assuming, or agreeing to
perform its obligations under, such Lease with the approval of the applicable
court or such Leased Aircraft Trustee's consent to an extension of such period,
(ii) such Leased Aircraft Trustee's failure to give any requisite notice, or
(iii) Continental's assumption of such Lease with the approval of the relevant
court). See "--The Leases--Lease Events of Default." Such remedies may be
exercised by the related Leased Aircraft Trustee to the exclusion of the related
Owner Trustee, subject to certain conditions specified in such Indenture, and
Continental, subject to the terms of such Lease. Any Aircraft sold in the
exercise of such remedies will be free and clear of any rights of those parties,
including the rights of Continental under the Lease with respect to such
Aircraft; provided that no exercise of any remedies by the related Leased
Aircraft Trustee may affect the rights of Continental under any Lease unless a
Lease Event of Default has occurred and is continuing.
71
(Leased Aircraft Indentures, Section 4.04; Leases, Section 15) The Owned
Aircraft Indenture does not contain such limitations on the Owned Aircraft
Trustees ability to exercise remedies upon an Indenture Default under the Owned
Aircraft Indenture.
If a bankruptcy proceeding involving Continental under the U.S.
Bankruptcy Code occurs, all of the rights of the Owner Trustee as lessor under a
particular Lease will be exercised by the Owner Trustee in accordance with the
terms thereof unless (i) during the Section 1110 Period the trustee in such
proceeding or Continental does not agree to perform its obligations under such
Lease, (ii) at anytime after agreeing to perform such obligations, such trustee
or Continental ceases to perform such obligations or (iii) the related Loan
Trustee takes action, or notifies the Owner Trustee that such Loan Trustee
intends to take action, to foreclose the lien of the related Leased Aircraft
Indenture in accordance with the provisions of the immediately preceding
paragraph. The Owner Trustee's exercise of such rights shall be subject to
certain limitations and, in no event, reduce the amount or change the time of
any payment in respect of the Equipment Notes or adversely affect the validity
or enforcement of the lien under the related Leased Aircraft Indenture.
If the Equipment Notes issued in respect of one Aircraft are in default,
the Equipment Notes issued in respect of the other Aircraft may not be in
default, and, if not, no remedies will be exercisable under the applicable
Indentures with respect to such other Aircraft.
Section 1110 of the U.S. Bankruptcy Code provides that the right of
lessors, conditional vendors and holders of security interests with respect to
"equipment" (as defined in Section 1110 of the U.S. Bankruptcy Code) to take
possession of such equipment in compliance with the provisions of a lease,
conditional sale contract or security agreement, as the case may be, is not
affected by (a) the automatic stay provision of the U.S. Bankruptcy Code, which
provision enjoins repossessions by creditors for the duration of the
reorganization period, (b) the provision of the U.S. Bankruptcy Code allowing
the trustee in reorganization to use property of the debtor during the
reorganization period, (c) Section 1129 of the U.S. Bankruptcy Code (which
governs the confirmation of plans of reorganization in Chapter 11 cases) and (d)
any power of the bankruptcy court to enjoin a repossession. Section 1110
provides, however, that the right of a lessor, conditional vendor or holder of a
security interest to take possession of an aircraft in the event of an event of
default may not be exercised for 60 days following the date of commencement of
the reorganization proceedings (unless specifically permitted by the bankruptcy
court) and may not be exercised at all if, within such 60-day period (or such
longer period consented to by the lessor, conditional vendor or holder of a
security interest), the trustee in reorganization agrees to perform the debtor's
obligations that become due on or after such date and cures all existing
defaults (other than defaults resulting solely from the financial condition,
bankruptcy, insolvency or reorganization of the debtor). "Equipment" is defined
in Section 1110 of the U.S. Bankruptcy Code, in part, as "an aircraft, aircraft
engine, propeller, appliance, or spare part (as defined in section 40102 of
title 49) that is subject to a security interest granted by, leased to, or
conditionally sold to a debtor that is a citizen of the United States (as
defined in section 40102 of title 49) holding an air carrier operating
certificate issued by the Secretary of Transportation pursuant to chapter 447 of
title 49 for aircraft capable of carrying 10 or more individuals or 6,000 pounds
or more of cargo."
Cleary, Gottlieb, Steen & Hamilton, counsel to Continental, has advised
(x) the Leased Aircraft Trustees that the right of the Owner Trustee, as lessor
under each of the Leases, and the Leased Aircraft Trustee, as assignee of such
Owner Trustee's rights under each of the Leases pursuant to each of the related
Indentures, to exercise its right to take possession of the respective Aircraft
under each of the Leases is entitled to the benefits of Section 1110 of the U.S.
Bankruptcy Code with respect to the airframe and engines comprising the related
Leased Aircraft and (y) the Owned Aircraft Trustee that the right of the Owned
Aircraft Trustee to exercise its right to take possession of the Owned Aircraft
under the Owned Aircraft Indenture is entitled to the benefits of Section 1110
with respect to the airframe and engines comprising the Owned Aircraft. This
opinion assumes that Continental is and will be a citizen of the United States
holding an air carrier operating certificate issued by the Secretary of
Transportation pursuant to chapter 447 of title 49 of the U.S. Code for aircraft
capable of carrying 10 or more individuals or 6,000 pounds or more of cargo. For
a description of certain limitations on the Loan Trustees exercise of rights
contained in the Indenture, see"--Indenture Defaults, Notice and Waiver."
72
The opinion of Cleary, Gottlieb, Steen & Hamilton did not address the
possible replacement of an Aircraft after an Event of Loss in the future, the
consummation of which is conditioned upon the contemporaneous delivery of an
opinion of counsel to the effect that the related Loan Trustee's entitlement to
Section 1110 benefits should not be diminished as a result of such replacement.
See"--The Leases--Events of Loss". The opinion of Cleary, Gottlieb, Steen &
Hamilton also does not address the availability of Section 1110 with respect to
any possible sublessee of a Leased Aircraft subleased by Continental or to any
possible lessee of the Owned Aircraft if it is leased by Continental.
If an Indenture Default under any Indenture occurs and is continuing, any
sums held or received by the related Loan Trustee may be applied to reimburse
such Loan Trustee for any tax, expense or other loss incurred by it and to pay
any other amounts due to such Loan Trustee prior to any payments to holders of
the Equipment Notes issued under such Indenture. (Indentures, Section 3.03)
In the event of bankruptcy, insolvency, receivership or like proceedings
involving an Owner Participant, it is possible that, notwithstanding that the
applicable Leased Aircraft is owned by the related Owner Trustee in trust, such
Leased Aircraft and the related Lease and Equipment Notes might become part of
such proceeding. In such event, payments under such Lease or on such Equipment
Notes might be interrupted and the ability of the related Leased Aircraft
Trustee to exercise its remedies under the related Leased Aircraft Indenture
might be restricted, although such Leased Aircraft Trustee would retain its
status as a secured creditor in respect of the related Lease and the related
Leased Aircraft.
MODIFICATION OF INDENTURES AND LEASES
Without the consent of holders of a majority in principal amount of the
Equipment Notes outstanding under any Indenture, the provisions of such
Indenture and the related Lease, the Participation Agreement and the Trust
Agreement corresponding thereto may not be amended or modified, except to the
extent indicated below.
Certain provisions of any Leased Aircraft Indenture, and of the Lease (so
long as no Indenture Default has occurred and is continuing), the Participation
Agreement, and the Trust Agreement related thereto, may be amended or modified
by the parties thereto without the consent of any holders of the Equipment Notes
outstanding under such Indenture. In the case of each Lease, such provisions
include, among others, provisions relating to (i) the return to the related
Owner Trustee of the related Leased Aircraft at the end of the term of such
Lease and (ii) the renewal of such Lease and the option of Continental at the
end of the term of such Lease to purchase the related Leased Aircraft. (Leased
Aircraft Indentures, Section 9.01) In addition, any Indenture may be amended
without the consent of the holders of Equipment Notes, to, among other things,
cure any defect or inconsistency in such Indenture or the Equipment Notes issued
thereunder provided that such change does not adversely affect the interests of
any such holder or to cure any ambiguity or correct any mistake. (Leased
Aircraft Indentures, Section 9.01; Owned Aircraft Indenture, Section 10.01)
Without the consent of the holder of each Equipment Note outstanding
under any Indenture affected thereby, no amendment or modification of such
Indenture may among other things (a) reduce the principal amount of, or premium,
if any, or interest payable on, any Equipment Notes issued under such Indenture
or change the date on which any principal or premium, if any, or interest is due
and payable, (b) create any security interest with respect to the property
subject to the lien of such Indenture, except as provided in such Indenture, or
deprive any holder of an Equipment Note issued under such Indenture of the lien
of such Indenture upon the property subject thereto or (c) reduce the percentage
in principal amount of outstanding Equipment Notes issued under such Indenture
necessary to modify or amend any provision of such Indenture or to waive
compliance therewith. (Leased Aircraft Indentures, Section 9.01(b); Owned
Aircraft Indenture, Section 10.01(a))
OWNER PARTICIPANT'S RIGHT TO RESTRUCTURE
So long as Gaucho-2 Inc. or any affiliate of The Boeing Company is the
Owner Participant with respect to the leveraged lease of any Leased Aircraft,
subject to certain conditions, such Owner Participant will
73
have the right to restructure such leveraged lease transaction using a "cross-
border lease", a tax lease or head-lease/sublease structure and any other type
of transaction. In no event, however, shall any such restructuring (i) change
the terms and conditions of the rights and obligations of any holder of
Equipment Notes under the relevant Operative Agreements or any holder of
Certificates or (ii) expose any such holder to any additional risks. As a
precondition to any such restructuring, the Owner Participant will be obligated
to deliver to the Leased Aircraft Trustee an appropriate officer's certificate
as to the satisfaction of the foregoing conditions and obtain a written
confirmation from the Rating Agencies prior to the implementation of such
restructuring to the effect that such restructuring will not adversely affect
the ratings of the Certificates. (Participation Agreements, Section 15)
INDEMNIFICATION
Continental is required to indemnify each Loan Trustee, each Owner
Participant and each Owner Trustee for certain losses, claims and other matters.
Continental is required under certain circumstances to indemnify each Owner
Participant against the loss of depreciation deductions and certain other
benefits allowable for certain income tax purposes with respect to the related
Leased Aircraft. Each Owner Participant is required to indemnify the related
Loan Trustee and the holders of the Equipment Notes issued with respect to the
Leased Aircraft in which such Owner Participant has an interest for certain
losses that may be suffered as a result of the failure of such Owner Participant
to discharge certain liens or claims on or against the assets subject to the
lien of the related Indenture.
THE LEASES AND CERTAIN PROVISIONS OF THE OWNED AIRCRAFT INDENTURE
Each Leased Aircraft is leased to Continental by the relevant Owner
Trustee under the relevant Lease. The Owned Aircraft is owned by Continental.
Lease Term Rentals and Payments
Each Leased Aircraft has been leased separately by the relevant Owner
Trustee to Continental for a term commencing on the date on which the Aircraft
was acquired by the Owner Trustee and expiring on a date not earlier than the
latest maturity date of the relevant Equipment Notes, unless terminated prior to
the originally scheduled expiration date as permitted by the applicable Lease.
The quarterly basic rent payment under each Lease is payable by Continental on
each related Lease Payment Date (as defined below) (or, if such day is not a
business day, on the next business day), and has been assigned by the Owner
Trustee under the corresponding Indenture to provide the funds necessary to make
payments of principal and interest due from the Owner Trustee on the Equipment
Notes issued under such Indenture. In certain cases, the quarterly basic rent
payments under the Leases may be adjusted, but each Lease provides that under no
circumstances will rent payments by Continental be less than the scheduled
payments on the related Equipment Notes. In addition, the amount of basic rent
may be increased in an amount necessary to pay additional interest due on the
Equipment Notes on the relevant Lease Payment Date as a result of the resetting
of the rate of interest on the Equipment Notes as required by the terms
thereof--for example, if certain terms of the Registration Rights Agreement
require such a resetting. See "Exchange Offer;". Any balance of each such
quarterly basic rent payment under each Lease, after payment of amounts due on
the Equipment Notes issued under the Indenture corresponding to such Lease, will
be paid over to the Owner Trustee. (Leases, Section 3; Leased Aircraft
Indentures, Section 3.01)
"Lease Payment Date" means, with respect to each Lease, January 2, April
2, July 2 or October 2 during the term of such Lease.
Quarterly payments of interest and principal under the Equipment Notes
issued by Continental under the Owned Aircraft Indenture are payable each
January 2, April 2, July 2 and October 2 (or, if such day is not a business day,
on the next business day). The amount of such quarterly payment may be increased
in an amount equal to any increase in the amount of interest due on such
Equipment Notes on the relevant payment date as a result of the resetting of the
rate of interest on such Equipment Notes as required by certain terms of the
Registration Rights Agreement. (Owned Aircraft Indenture, Section 2.02)
74
Maintenance
Under the terms of each Lease, Continental's obligations in respect of
each Leased Aircraft will be those of a lessee under a "net lease". Accordingly,
under each Lease Continental is obligated, among other things and at its
expense, to keep each Aircraft duly registered and insured, to pay all costs of
operating the Aircraft and to maintain, service, repair and overhaul the
Aircraft so as to keep it in as good an operating condition as when delivered to
Continental, ordinary wear and tear excepted, and in such condition as required
to maintain the airworthiness certificate for the Aircraft in good standing at
all times. (Leases, Sections 7.1 and 8.1 and Annex C.) The Owned Aircraft
Indenture imposes comparable maintenance, service and repair obligations (as
well as comparable registration and insurance obligations discussed below) on
Continental with respect to the Owned Aircraft. (Owned Aircraft Indenture,
Section 4.02)
Possession, Sublease and Transfer
Each Aircraft may be operated by Continental or under lease, sublease or
interchange arrangements, subject to certain restrictions. Normal interchange
and pooling agreements with respect to any Engine are permitted with U.S. air
carriers and foreign air carriers in countries with which the United States
maintains normal diplomatic relations and which recognize and give effect to the
rights of lessors and mortgagees. In the case of a Leased Aircraft, subleases
for a term of up to 60 months are also permitted with solvent U.S. air carriers
and with certain specified foreign air carriers, so long as they are solvent,
subject to a reasonably satisfactory opinion that such country would give effect
to the title of the Owner Trustee in and to the Aircraft and would give effect
to the priority and validity of the lien of the Indenture as if such country
were a party to the Convention on the International Recognition of Rights in
Aircraft (Geneva 1948) ("the Convention"). (Leases, Section 7). With respect to
the Owned Aircraft, so long as no Indenture Event of Default exists under the
Owned Aircraft Indenture, Continental is permitted to lease the Owned Aircraft
or Engines to (a) certain specified foreign air carriers, so long as they are
solvent; (b) any other foreign air carriers, so long as they are solvent,
organized under the laws of a country (other than Taiwan) with which the United
States maintains normal diplomatic relations and the Loan Trustee receives an
opinion of counsel regarding the enforceability of the lien under the Owned
Aircraft Indenture or (c) any U.S. air carrier, so long as it is solvent,
subject, in each case, to certain conditions. (Aircraft Indenture, Section 4.02)
It is uncertain to what extent the relevant Loan Trustee's security interest
would be recognized in an Aircraft located in a country that is not a party to
the Convention, and to what extent such security interest would be recognized in
a jurisdiction adhering to the Convention if the Aircraft is registered in a
jurisdiction not a party to the Convention. Moreover, in the case of an
Indenture Event of Default, the ability of the related Loan Trustee to realize
upon its security interest in an Aircraft could be adversely affected as a legal
or practical matter if such Aircraft were registered or located outside the
United States.
Registration
Continental is required to keep each Aircraft duly registered under the
Transportation Code with the FAA, except (in the case of a Leased Aircraft) if
the relevant Owner Trustee or the relevant Owner Participant fails to meet the
applicable citizenship requirements, and to record each Lease (in the case of a
Leased Aircraft) and Indenture and certain other documents under the
Transportation Code. (Leases, Section 7; Owned Aircraft Indenture, Section
4.02(e)) Such recordation of the Indenture and other documents with respect to
each Aircraft will give the relevant Loan Trustee a first-priority, perfected
security interest in such Aircraft whenever it is located in the United States
or any of its territories and possessions. The Convention provides that such
security interest will also be recognized, with certain limited exceptions, in
those jurisdictions that have ratified or adhere to the Convention. (Leases,
Section 7.1.1; Owned Aircraft Indenture, Section 4.02(e))
So long as no Lease default or Lease Event of Default exists, Continental
has the right to register the Leased Aircraft subject to such Lease in a country
other than the United States at its own expense in connection with a permitted
sublease of the Aircraft to certain specified foreign air carriers, subject to
certain conditions set forth in the related Participation Agreement. These
conditions include a requirement that the country of registration recognizes the
interests of lessors, owner participants and mortgagees and provides
substantially equivalent protection to such interests as provided by law in the
United States. (Leases,
75
Section 7.1.2; Participation Agreements, Section 8.7.12) The Owned Aircraft
Indenture contains comparable provisions with respect to registration of the
Owned Aircraft in connection with a permitted lease of the Owned Aircraft.
(Owned Aircraft Indenture, Section 4.02(e))
Liens
Continental is required to maintain each Aircraft free of any liens,
other than the rights of the relevant Loan Trustee, the holders of the related
Equipment Notes, Continental and, with respect to a Leased Aircraft, the Owner
Participant and Owner Trustee arising under the applicable Indenture, the Lease
(in the case of a Leased Aircraft) or the other operative documents related
thereto, and other than certain limited liens permitted under such documents,
including (i) liens for taxes either not yet due or being contested in good
faith by appropriate proceedings; (ii) materialmens, mechanics' and other
similar liens arising in the ordinary course of business and securing
obligations that either are not yet delinquent or are being contested in good
faith by appropriate proceedings; and (iii) judgment liens so long as such
judgment is discharged or vacated within 30 days or the execution of such
judgment is stayed pending appeal and discharged, vacated or reversed within 30
days after expiration of such stay; provided that in the case of each of the
liens described in the foregoing clauses (i), (ii) and (iii), such liens and
proceedings do not involve any material risk of the sale, forfeiture or loss of
such Aircraft or any interest therein or any discernible risk of criminal
liability or any material risk of civil penalty against the relevant Loan
Trustee or (in the case of a Leased Aircraft) the relevant Owner Trustee or
Owner Participant. (Leases, Section 6; Owned Aircraft Indenture, Section 4.01)
Replacement of Parts; Alterations
Continental is obligated to replace all parts at its expense that may
from time to time be incorporated or installed in or attached to any Aircraft
and that may become lost, damaged beyond repair, worn out, stolen, seized,
confiscated or rendered permanently unfit for use (other than severable parts
added at the option of Continental and obsolete or unsuitable parts that
Continental is permitted to remove to the extent described below). Continental
or any permitted sublessee has the right, at its own expense, to make such
alterations, modifications and additions with respect to each Aircraft as it
deems desirable in the proper conduct of its business and to remove parts which
it deems to be obsolete or no longer suitable or appropriate for use; provided
that such alteration, modification, addition or removal does not diminish the
value, utility, performance or the remaining useful life of the related
Aircraft, Airframe or Engine or adversely affect the commercial use of the
Aircraft for passenger service in the United States or invalidate the Aircraft's
airworthiness certificate, except that the value of the Aircraft may be reduced
by the removal of obsolete or unsuitable parts so long as the aggregate original
cost of all such parts removed from any one Aircraft and not replaced shall not
exceed $250,000 for each Aircraft. (Leases, Section 8.1 and Annex C; Owned
Aircraft Indenture, Section 4.04(d))
Insurance
Continental is required to maintain, at its expense (or at the expense of
a permitted lessee, in the case of the Owned Aircraft, or a permitted sublessee,
in the case of a Leased Aircraft), all-risk aircraft hull insurance covering
each Aircraft, at all times in an amount not less than the stipulated loss value
of the Aircraft (which exceeds the aggregate outstanding principal amount of the
Equipment Notes related to such Aircraft, together with accrued interest
thereon), and all-risk property damage insurance covering Engines and parts
while removed from an aircraft in an amount not less than the replacement cost
of such Engines and parts. All insurance proceeds with respect to a total loss
of an Aircraft, Airframe or Engine and all insurance proceeds in excess of
$3,000,000 per occurrence with respect to repairable damage to an Aircraft,
Airframe or Engine are payable to the relevant Owner Trustee (in the case of a
Leased Aircraft) or to the applicable Loan Trustee, for so long as the relevant
Indenture shall be in effect. Insurance proceeds of up to $3,000,000 per
occurrence with respect to repairable damage to an Aircraft, Airframe or Engine
are payable directly to Continental so long as a default or an Indenture Event
of Default does not exist with respect to the Owned Aircraft Indenture or (in
the case of a Leased Aircraft) the Owner Trustee has not notified the insurance
underwriters that a Lease default or a Lease Event of Default exists. So long as
the loss does not constitute an Event of Loss (as defined below),
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insurance proceeds will be applied to repair or replace the property. (Leases,
Sections 11.1 and 11.5 and Annex D; Owned Aircraft Indenture, Section 4.06)
In addition, Continental is obligated to maintain comprehensive airline
liability insurance at its expense (or at the expense of a permitted lessee, in
the case of the Owned Aircraft, or a permitted sublessee, in the case of a
Leased Aircraft), including, without limitation, third-party and passenger
liability and property damage, cargo and products liability and contractual
liability insurance with respect to each Aircraft. Such liability insurance
shall be of the type usually carried by prudent major United States commercial
air carriers and cover the kind of risks against which prudent United States
commercial air carriers customarily insure. Such liability insurance shall be
underwritten by nationally or internationally recognized insurers of substantial
financial capacity used by other major United States commercial air carriers.
The amount of such liability insurance coverage per occurrence shall be not less
than the amount of comprehensive airline liability insurance from time to time
applicable to aircraft owned or leased and operated by Continental of the same
type as such Aircraft. Continental (but no permitted sublessee) shall have the
right to self-insure any Leased Aircraft to the extent of any applicable minimum
amount per aircraft (or, if applicable, per annum or other period) hull or
liability insurance deductible imposed by the insurer providing such aircraft
hull or liability insurance, which are commensurate with the standard
deductibles in the airline insurance industry available to major U.S. airlines.
(Leases, Section 11.1 and Annex D, Section A) With respect to the Owned
Aircraft, Continental may self-insure in such amounts as are then self-insured
with respect to similar owned or leased aircraft in its fleet, but the amount of
such self-insurance in the aggregate may not exceed 50% of the largest
replacement value of any single aircraft on which Continental carries insurance
or 1 1/2% of the aggregate insurable value (during the preceding calendar year)
of all aircraft on which Continental carries insurance, whichever is less,
unless an insurance broker of national standing shall certify that the standard
among all other major U.S. airlines is a higher level of self-insurance, in
which case Continental may self-insure the Owned Aircraft to such higher level.
(Owned Aircraft Indenture, Section 4.06(d))
Continental is also required to maintain war-risk, hijacking or allied
perils insurance if it (or any permitted sublessee or lessee) operates any
Aircraft, Airframe or Engine in any area of recognized or threatened hostilities
or if Continental (or any permitted sublessee or lessee) maintains such
insurance with respect to other aircraft on the same routes or areas or if the
Aircraft is operated outside the United States or Canada. Continental (but no
permitted sublessee or lessee) may self-insure to the extent of any hull or
liability insurance deductible imposed by the insurer, provided such deductibles
are commensurate with standard deductibles in the aircraft insurance industry.
(Leases, Annex D, Section H; Owned Aircraft Indenture, Section 4.06)
In respect of each Aircraft, Continental is required to cause the
relevant Loan Trustee and holders of the Equipment Notes and (in the case of the
Leased Aircraft) the relevant Owner Participant and Owner Trustee, in its
individual capacity and as owner of such Aircraft, and certain other parties to
be named as additional insured parties under all liability, hull and property
and war risk, hijacking and allied perils insurance policies required with
respect to such Aircraft. In addition, the insurance policies maintained under
the Leases and the Owned Aircraft Indenture will be required to provide that, in
respect of the interests of such additional insured persons, the insurance shall
not be invalidated or impaired by any act or omission of Continental or any
other person and to insure the respective interests of such additional insured
persons, regardless of any breach or violation of any representation, warranty,
declaration, term or condition contained in such policies by Continental, any
permitted sublessee or any other person. (Leases, Annex D, Section D; Owned
Aircraft Indenture, Section 4.06)
Lease Termination
Unless a Lease default or Lease Event of Default shall have occurred and
be continuing, Continental may terminate any Lease on any Lease Payment Date
occurring after the tenth anniversary of the date on which such Lease commenced
and on or before one year prior to the date on which such Lease is scheduled to
expire, if it determines that the Leased Aircraft subject to such Lease is
economically obsolete or surplus to its requirements. Such determination must be
made on a nondiscriminatory basis with respect to the Aircraft subject to such
Lease and all similar aircraft operated by Continental which could also be
terminated. Continental is
77
required to give notice of its intention to exercise its right of termination
described in this paragraph at least six months prior to the proposed date of
termination (which notice may be withdrawn up to 25 days prior to such proposed
date if Continental determines that no bid for such Aircraft of a reasonable
amount has been received); provided that Continental may give only three such
termination notices. In such a situation, if the Owner Trustee elects (subject
to the rights of Continental to purchase the Aircraft as described below) to
sell such Aircraft, Continental is required to use best reasonable efforts to
sell such Aircraft as an agent for such Owner Trustee. If the Owner Trustee
elects to accept any bid, such Owner Trustee shall sell such Aircraft on the
date of termination to the highest cash bidder. If such sale occurs, the
Equipment Notes related thereto are required to be prepaid. The net proceeds of
such sale shall be payable to the applicable Owner Trustee. If the net proceeds
to be received from such sale are less than the termination value for such
Aircraft (which is set forth in a schedule to each Lease), Continental is
required to pay to the applicable Owner Trustee an amount equal to the excess,
if any, of the applicable termination value for such Aircraft over such net
proceeds. Upon payment of termination value for such Aircraft and an amount
equal to the Make-Whole Premium, if any, payable on such date of payment,
together with certain additional amounts and together with all accrued and
unpaid interest thereon, the lien of the relevant Indenture shall be released,
the relevant Lease shall terminate, and the obligation of Continental thereafter
to make scheduled rent payments under such Lease shall cease. However, certain
payment obligations of Continental shall survive the termination of the Lease.
If such Aircraft is not sold by the proposed termination date, such Lease,
including all of Continental's obligations thereunder, shall continue in effect,
and the Equipment Notes related thereto will not be prepaid. (Leases, Section 9;
Leased Aircraft Indentures, Section 2.10(b))
The Owner Trustee has the option to retain title to the Leased Aircraft
if Continental has given a notice of termination under the Lease. In such event,
such Owner Trustee shall pay to the applicable Loan Trustee an amount sufficient
to prepay the outstanding Equipment Notes issued with respect to such Aircraft,
and Continental shall pay to the Owner Trustee an amount equal to the excess, if
any, of the termination value of such Aircraft over the highest bona fide cash
bid made for such Aircraft, together with the Make-Whole Premium, if any, on
such Equipment Notes and all other amounts due and payable to the Owner Trustee
and Owner Participant under such Lease, the related Participation Agreement or
any other related operative document. (Leases, Section 9; Leased Aircraft
Indentures, Section 2.10(b))
Events of Loss
If an Event of Loss occurs with respect to the Airframe or the Airframe
and Engines of an Aircraft, Continental must elect within 20 days after such
occurrence either to make payment with respect to such Event of Loss or to
replace such Airframe and any such Engines. Not later than the first business
day following the sixty-first day following the date of occurrence of such Event
of Loss, or, if earlier, the second business day following the receipt of the
insurance proceeds in respect of such Event of Loss, Continental must either (i)
pay to the applicable Owner Trustee (in the case of a Leased Aircraft) or to the
Owned Aircraft Trustee (in the case of the Owned Aircraft) the stipulated loss
value of such Aircraft, together with certain additional amounts, but, in any
case, without any Make-Whole Premium or (ii) unless a Lease default or any Lease
Event of Default under the relevant Lease (in the case of a Leased Aircraft) or
a default or Indenture Event of Default under the Owned Aircraft Indenture (in
the case of the Owned Aircraft) shall have occurred and be continuing,
substitute an aircraft (or airframe and one or more engines, as the case may be)
for the Aircraft, Airframe or Engine(s) that suffered such Event of Loss.
(Leases, Sections 10.1.1 and 10.1.2; Leased Aircraft Indentures, Section
2.10(a); Owned Aircraft Indenture, Sections 2.10 and 4.05(a))
If Continental elects to replace an Aircraft (or Airframe or Airframe and
one or more Engines, as the case may be) that suffered such Event of Loss, it
shall, in the case of a Leased Aircraft, convey to the related Owner Trustee
title to an aircraft (or airframe or airframe and one or more engines, as the
case may be), and (i) in the case of any replacement airframe for a Leased
Aircraft, such airframe must be (a) manufactured by Boeing under a certain
purchase agreement between The Boeing Company and Continental and (b) delivered
under such agreement after the Airframe to be replaced was delivered to
Continental, (ii) such replacement airframe or airframe and engines must be the
same model as the Airframe or Airframe and Engines to be replaced or an improved
model, with performance and durability characteristics and a value, utility and
remaining useful life at
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least equal to, and in at least as good an operating condition as, the Airframe
or Airframe and Engines to be replaced (assuming that such Airframe and such
Engines were of the value and utility and in the condition and repair required
by the terms of the related Lease, immediately prior to the occurrence of such
Event of Loss). In the case of the Owned Aircraft, any replacement airframe and
engines must be of the same series as the Airframe or Engines or an improved
model of the manufacturer thereof and must have a value and utility at least
equal to, and be in as good operating condition and repair as, the Airframe and
Engines to be replaced (assuming such Airframe and Engines were in the condition
required by the terms of the Owned Aircraft Indenture). Continental is also
required to provide to the relevant Loan Trustee and (in the case of a Leased
Aircraft) the relevant Owner Trustee and Owner Participant (a) a certification
as to compliance with the foregoing requirements from a qualified aircraft
appraiser, together with a certified report setting forth such appraiser's
opinion as to the fair market value of such replacement airframe or engine and
(b) reasonably acceptable opinions of counsel to the effect that (i) Continental
or such Owner Trustee, as the case may be, will acquire good title to such
replacement airframe and, if applicable, replacement engine, free and clear of
all liens (other than permitted liens), (ii) such replacement airframe and, if
applicable, engine will be made subject to the applicable Indenture to the same
extent as the Airframe and, if applicable, Engine replaced thereby, (iii) in the
case of a Leased Aircraft, such Owner Trustee and Loan Trustee (as assignee of
lessor's rights and interests under the Lease) or the Owned Aircraft Trustee, in
the case of the Owned Aircraft, will be entitled to receive the benefits and
protections of Section 1110 of the U.S. Bankruptcy Code with respect to any such
replacement airframe and (to the extent such opinion can be rendered, in view of
applicable law) such replacement engine and (iv) such replacement airframe has
been duly registered and each supplement to such Lease or Indenture, as
applicable, has been duly recorded. (Leases, Sections 10.1.3 and 10.3; Owned
Aircraft Indenture, Section 4.05(c))
If Continental elects not to replace such Aircraft, then upon payment of
the outstanding principal amount of the Equipment Notes issued with respect to
such Aircraft (in the case of the Owned Aircraft) or the stipulated loss value
for such Aircraft (in the case of a Leased Aircraft), together with all
additional amounts then due and unpaid with respect to such Aircraft, which must
be at least sufficient to pay in full as of the date of payment thereof the
aggregate unpaid principal amount under such Equipment Notes together with
accrued but unpaid interest thereon and all other amounts due and owing in
respect of such Equipment Notes, the lien of the Indenture and (in the case of a
Leased Aircraft) the Lease relating to such Aircraft shall terminate with
respect to such Aircraft, the obligation of Continental thereafter to make the
scheduled rent payments (in the case of a Leased Aircraft) or interest and
principal payments (in the case of the Owned Aircraft) with respect thereto
shall cease and (in the case of a Leased Aircraft) the related Owner Trustee
shall transfer all of its right, title and interest in and to the related
Aircraft to Continental. The stipulated loss value and other payments made under
the Leases or the Owned Aircraft Indenture, as the case may be, by Continental
shall be deposited with the applicable Loan Trustee. Amounts in excess of the
amounts due and owing under the Equipment Notes issued with respect to such
Aircraft will be distributed by such Loan Trustee to the applicable Owner
Trustee or to Continental, as the case may be. (Leases, Section 10.1.2; Leased
Aircraft Indentures, Sections 2.06 and 3.02; Owned Aircraft Indenture, Sections
2.10 and 4.05(a)(ii))
If the Owned Aircraft Trustee (in the case of the Owned Aircraft) or the
Owner Trustee and the Leased Aircraft Trustee (in the case of a Leased Aircraft)
are not entitled to Section 1110 benefits with respect to any replacement
airframe or engine or if certain Lease defaults or any Lease Event of Default
(in the case of a Leased Aircraft) or any Indenture Event of Default (in the
case of the Owned Aircraft) has occurred and is continuing, Continental shall
not be entitled to replace such Airframe and shall be required instead to pay
the stipulated loss value applicable to such Airframe and the related Engines,
plus certain additional amounts (in the case of the Leased Aircraft) or the
outstanding principal amount of, and accrued interest on, the Equipment Notes
issued with respect to such Aircraft (in the case of the Owned Aircraft).
(Leases, Section 10.3.2; Owned Aircraft Indenture, Sections 2.10 and 4.05(e))
If an Event of Loss occurs with respect to an Engine alone, Continental
will be required to replace such Engine within 60 days after the occurrence of
such Event of Loss with another engine, free and clear of all liens (other than
certain permitted liens). Such replacement engine shall be the same make and
model as the Engine to be replaced, suitable for installation and use on the
Aircraft, and having performance and durability characteristics and a value and
utility at least equal to, and in at least as good an operating condition as,
the
79
Engine to be replaced (assuming that such Engine was of the value and utility
and in the condition and repair required by the terms of the relevant Lease or
the Owned Aircraft Indenture, as the case may be, immediately prior to the
occurrence of the Event of Loss). (Leases, Section 10.2; Owned Aircraft
Indenture, Section 4.05(a)(ii))
An Event of Loss with respect to an Aircraft, Airframe or any Engine
means any of the following events with respect to such property: (i) the
destruction of such property, damage to such property beyond practical or
economic repair or rendition of such property permanently unfit for normal use;
(ii) the actual or constructive total loss of such property or any damage to
such property or requisition of title or use of such property which results in
an insurance settlement with respect to such property on the basis of a total
loss or a constructive or compromised total loss; (iii) any loss of such
property or loss of use of such property for a period of 90 days or more as a
consequence of any theft, hijacking or disappearance of such property; (iv) any
seizure, condemnation, confiscation, taking or requisition of title to such
property by any governmental entity or purported non-U.S. governmental entity;
(v) any seizure, condemnation, confiscation, taking or requisition of use of
such property that continues until the earliest to occur of (A) the last day of
the Lease term (in the case of a Leased Aircraft) or the maturity date of the
Equipment Notes (in the case of the Owned Aircraft), (B) the date on which the
Aircraft is modified in such a manner as would render conversion of such
property for use in normal commercial passenger service impractical or
uneconomical, (C) the date on which such property is operated or located in any
area excluded from coverage by any insurance policy required to be maintained by
the related Lease (in the case of a Leased Aircraft) or the Owned Aircraft
Indenture (in the case of the Owned Aircraft) (unless an indemnity from the U.S.
Government is obtained in lieu of such insurance), and (D) the date that is 90
days following the commencement of such loss of use (unless such loss of use
results from action by the U.S. Government); or (vi) as a result of any law,
rule, regulation, order or other action by the FAA or any governmental entity,
the use of such property in the normal course of Continental's business of
passenger air transportation is prohibited for 180 days (or 360 days, if
Continental diligently implements all steps which are necessary or desirable to
permit the normal use of such property by it) or for a period expiring on the
last day of the Lease term, whichever is earlier. (Leases, Annex A; Owned
Aircraft Indenture, Annex A)
Purchase Options under the Leases
So long as no Lease default or Lease Event of Default has occurred and is
continuing, Continental has the option to purchase any Leased Aircraft on the
last business day of the original Lease or on the last business day of either of
the two one-year renewal terms at a purchase price equal to the fair market
sales value of such Aircraft. The fair market sales value of such Aircraft shall
be determined not more than 170 days nor less than 150 days prior to the date of
purchase by mutual agreement of Continental and the Owner Trustee or, if they
are unable to agree, by an appraisal. Continental may exercise its purchase
option by delivering an irrevocable notice to the Owner Trustee not more than
180 days nor less than 120 days prior to the proposed date of purchase. The
Owner Trustee shall not be under any obligation to sell such Aircraft to
Continental if the fair market sales value of such Aircraft is determined to be
less than a certain minimum residual value amount. Upon receipt by the Owner
Trustee of payment of the applicable fair market sales value of such Aircraft
and all other amounts due and payable by Continental under the relevant Lease,
Participation Agreement and any other related operative document, the Owner
Trustee shall transfer title to such Aircraft to Continental, provided that all
related Equipment Notes have previously been paid in full. (Leases, Section
17.3; Leased Aircraft Indentures, Section 10.01)
The holder of the Equipment Notes issued under a Leased Aircraft
Indenture does not have any right to amounts payable by Continental in
connection with its exercise of purchase options for the related Leased Aircraft
to the extent that all amounts payable by the relevant Owner Trustee to such
holder under such Equipment Notes, such Indenture and related operative
agreements have been paid in full.
Events of Default under the Leases
Lease Events of Default under each Lease include, among other things, (i)
failure by Continental to make any payment of basic rent, renewal rent,
stipulated loss value or termination value under such Lease
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within five business days after the same shall have become due, or failure by
Continental to pay any other amount due under such Lease or under any other
related operative document within five business days from and after the date of
any written demand therefor from the Owner Trustee; (ii) failure by Continental
to make any excluded payment within five business days after written notice that
such failure constitutes a Lease Event of Default is given by the relevant Owner
Participant to Continental and the relevant Loan Trustee; (iii) failure by
Continental to carry and maintain insurance on and in respect of the Aircraft,
Airframe and Engines subject to such Lease, in accordance with the provisions of
such Lease or the operation of the Aircraft, Airframe or Engines subject to such
Lease at any time when such insurance is not in effect; (iv) failure by
Continental to maintain its corporate existence except as permitted by the
Lease, or the winding up, liquidation or dissolution of Continental; (v) failure
to maintain the registration of the Aircraft with the FAA or with a permitted
foreign registry, failure to record the Indenture or maintain the Indenture of
record as a first-priority, perfected mortgage (subject to permitted liens) or
operation of the Aircraft in any area excluded by insurance coverage required by
such Lease or in any recognized or threatened area of hostilities unless fully
covered by war-risk insurance, as required by Section 11 of such Lease (subject
to certain exceptions); (vi) breach of the covenants in such Lease pertaining to
possession, interchange and pooling of Engines and subleasing; (vii) breach of
certain prohibitions against attempted assignments by Continental of its
obligations under such Lease and against the merger of Continental with any
other person, except as expressly permitted by such Lease; and (viii) failure by
Continental to perform or observe any other covenant or agreement to be
performed or observed by it under such Lease or the related Participation
Agreement or any other related operative document (other than (a) the agreement
by Continental to treat the Lease as a lease for U.S. Federal income tax
purposes and (b) nonpayment provisions under the related tax indemnity agreement
between Continental and the Owner Participant), and such failure shall continue
unremedied for a period of 30 days (or such other shorter applicable period)
after written notice of such failure by the applicable Owner Trustee or Loan
Trustee; (ix) (a) any representation or warranty made by Continental in such
Lease or the related Participation Agreement or in any other related operative
document (other than in the related tax indemnity agreement between Continental
and the Owner Participant) shall prove to have been untrue, inaccurate or
misleading in any material respect at the time made, (b) such representation or
warranty is material at the time in question and (c) the same shall remain
uncured for more than 30 days after the date of written notice thereof to
Continental; and (x) the occurrence of certain voluntary events of bankruptcy,
reorganization or insolvency of Continental or the occurrence of involuntary
events of bankruptcy, reorganization or insolvency which shall continue
undismissed or unstayed for a period of 60 days. (Leases, Section 14)
Indenture Events of Default under the Owned Aircraft Indenture are
discussed above under "--Indenture Defaults, Notice and Waiver".
Remedies Exercisable upon Events of Default under the Lease
If a Lease Event of Default has occurred and is continuing, the
applicable Owner Trustee may (or, so long as the Indenture shall be in effect,
the applicable Loan Trustee may, subject to the terms of the Indenture) exercise
one or more of the remedies provided in such Lease with respect to the related
Aircraft. These remedies include the right to repossess and use or operate such
Aircraft, to rescind or terminate such Lease, to sell or re-lease such Aircraft
free and clear of Continental's rights, except as set forth in the Lease, and
retain the proceeds, and to require Continental to pay, as liquidated damages
any due and unpaid basic rent or renewal rent plus an amount equal to the excess
of the termination value for such Aircraft (specified in schedules to such
Lease) over, at such Owner Trustee's (or, subject to the terms of the relevant
Leased Aircraft Indenture, the Leased Aircraft Trustee's) option, any of (i) the
discounted fair market rental value of such Aircraft for the remainder of the
term of the Lease relating to such Aircraft (using a discount rate equal to 10
per cent per annum), (ii) the fair market sales value of such Aircraft or (iii)
if such Aircraft has been sold, the net sales proceeds from the sale of such
Aircraft (unless such Aircraft is sold at a private sale to the Owner Trustee,
Loan Trustee, Owner Participant or any of their affiliates, in which case the
fair market sales value shall be used). (Leases, Section 15; Indenture,
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Section 4.04) If the Loan Trustee has validly terminated such Lease, the Loan
Trustee may not sell or lease or otherwise afford the use of such Aircraft to
Continental or any of its affiliates. (Leased Aircraft Indentures, Sections 4.03
and 4.04)
Remedies under the Owned Aircraft Indenture are discussed above under
"--Remedies".
Notwithstanding that an Indenture Event of Default has occurred and is
continuing, so long as the Equipment Notes thereunder have not been accelerated
or the Loan Trustee has not taken action or notified the Owner Trustee that it
intends to take action to foreclose the lien of a Leased Aircraft Indenture or
otherwise commence the exercise of any significant remedy under such Indenture
or the related Lease, the Leased Aircraft Trustee may not, without the consent
of the Owner Trustee, enter into any amendment, modification, waiver or consent
in respect of any of the provisions of the related Lease, which consent shall
not be unreasonably withheld if no right or interest of the relevant Owner
Trustee or Owner Participant would be diminished or impaired thereby. (Leased
Aircraft Indentures, Section 5.02)
Transfer of Owner Participant Interests
Subject to certain restrictions, each Owner Participant may transfer all
or any part of, or grant participations in, its interest in the related Leased
Aircraft. (Participation Agreements, Section 12.1.1)
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CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
EXCHANGE OF OLD CERTIFICATES FOR NEW CERTIFICATES
The following summary describes the principal U.S. federal income tax
consequences to Certificateholders of the exchange of the Old Certificates for
New Certificates. This summary is intended to address the beneficial owners of
Certificates that are citizens or residents of the United States, corporations,
partnerships or other entities created or organized in or under the laws of the
United States or any State, or estates or trusts the income of which is subject
to U.S. federal income taxation regardless of its source that will hold the
Certificates as capital assets.
The exchange of Old Certificates for New Certificates (the "Exchange")
pursuant to the Exchange Offer will not be a taxable event for U.S. federal
income tax purposes. As a result, a holder of an Old Certificate whose Old
Certificate is accepted in an Exchange Offer will not recognize gain on the
Exchange. A tendering holder's tax basis in the New Certificates will be the
same as such holder's tax basis in its Old Certificates. A tendering holder's
holding period for the New Certificates received pursuant to the Exchange Offer
will include its holding period for the Old Certificates surrendered therefor.
ALL HOLDERS OF OLD CERTIFICATES ARE ADVISED TO CONSULT THEIR OWN TAX
ADVISORS REGARDING THE UNITED STATES FEDERAL, STATE AND LOCAL TAX CONSEQUENCES
OF THE EXCHANGE OF OLD CERTIFICATES FOR NEW CERTIFICATES AND OF THE OWNERSHIP
AND DISPOSITION OF NEW CERTIFICATES RECEIVED IN THE EXCHANGE OFFER IN LIGHT OF
THEIR OWN PARTICULAR CIRCUMSTANCES.
83
ERISA CONSIDERATIONS
IN GENERAL
ERISA imposes certain requirements on employee benefit plans subject to
ERISA ("ERISA Plans"), and on those persons who are fiduciaries with respect to
ERISA Plans. Investments by ERISA Plans are subject to ERISA's general fiduciary
requirements, including, but not limited to, the requirement of investment
prudence and diversification and the requirement that an ERISA Plan's
investments be made in accordance with the documents governing the Plan.
Section 406 of ERISA and Section 4975 of the Code prohibit certain
transactions involving the assets of an ERISA Plan (as well as those plans that
are not subject to ERISA but which are subject to Section 4975 of the Code, such
as individual retirement accounts (together with ERISA Plans, ("Plans")) and
certain persons (referred to as "parties in interest" or "disqualified persons")
having certain relationships to such Plans, unless a statutory or administrative
exemption is applicable to the transaction. A party in interest or disqualified
person who engages in a prohibited transaction may be subject to excise taxes
and other penalties and liabilities under ERISA and the Code.
The Department of Labor has promulgated a regulation, 29 CFR Section
2510.3-101 (the "Plan Asset Regulation"), describing what constitutes the assets
of a Plan with respect to the Plan's investment in an entity for purposes of
ERISA and Section 4975 of the Code. Under the Plan Asset Regulation, if a Plan
invests (directly or indirectly) in a Certificate, the Plan's assets will
include both the Certificate and an undivided interest in each of the underlying
assets of the corresponding Trust, including the Equipment Notes held by such
Trust, unless it is established that equity participation in the Trust by
employee benefit plans (including Plans and entities whose underlying assets
include plan assets by reason of an employee benefit plan's investment in the
entity) is not "significant" within the meaning of the Plan Asset Regulation. In
this regard, the extent to which there is equity participation in a particular
Trust by, or on behalf of, employee benefit plans will not be monitored. If the
assets of a Trust are deemed to constitute the assets of a Plan, transactions
involving the assets of such Trust could be subject to the prohibited
transaction provisions of ERISA and Section 4975 of the Code unless a statutory
or administrative exemption is applicable to the transaction.
The fiduciary of a Plan that proposes to purchase and hold any
Certificates should consider, among other things, whether such purchase and
holding may involve (i) the direct or indirect extension of credit to a party in
interest or a disqualified person, (ii) the sale or exchange of any property
between a Plan and a party in interest or a disqualified person, and (iii) the
transfer to, or use by or for the benefit of, a party in interest or a
disqualified person, of any Plan assets. In addition, whether or not the assets
of a Trust are deemed to be Plan assets under the Plan Asset Regulation, if
Certificates are purchased by a Plan and Certificates of a subordinate Class are
held by a party in interest or a disqualified person with respect to such Plan,
or vice versa, the exercise by the holder of the subordinate Class of
Certificates of its right to purchase the senior Classes of Certificates upon
the occurrence and during the continuation of a Triggering Event could be
considered to constitute a prohibited transaction unless a statutory or
administrative exemption were applicable. Depending on the identity of the Plan
fiduciary making the decision to acquire or hold Certificates on behalf of a
Plan, Prohibited Transaction Class Exemption ("PTCE") 91-38 (relating to
investments by bank collective investment funds), PTCE 84-14 (relating to
transactions effected by a "qualified professional asset manager"), PTCE 95-60
(relating to investments by an insurance company general account), PTCE 96-23
(relating to transactions directed by an in-house professional asset manager) or
PTCE 90-1 (relating to investments by insurance company pooled separate
accounts) (collectively, the "Class Exemptions") could provide an exemption from
the prohibited transaction provisions of ERISA and Section 4975 of the Code with
respect to such exercise of rights. However, there can be no assurance that any
of these Class Exemptions or any other exemption will be available with respect
to any particular transaction involving the Certificates.
Governmental plans and certain church plans, while not subject to the
fiduciary responsibility provisions of ERISA or the provisions of Section 4975
of the Code, may nevertheless be subject to state or other
84
federal laws that are substantially similar to the foregoing provisions of ERISA
and the Code. Fiduciaries of any such plans should consult with their counsel
before purchasing any Certificates.
Any Plan fiduciary which proposes to cause a Plan to purchase any
Certificates should consult with its counsel regarding the applicability of the
fiduciary responsibility and prohibited transaction provisions of ERISA and
Section 4975 of the Code to such an investment, and to confirm that such
purchase and holding will not constitute or result in a non-exempt prohibited
transaction or any other violation of an applicable requirement of ERISA.
CLASS A CERTIFICATES
An individual exemption may apply to the purchase, holding and secondary
market sale of Class A Certificates by Plans, provided that certain specified
conditions are met. In particular, the Department of Labor has issued individual
administrative exemptions to certain of the Initial Purchasers which are
substantially the same as the administrative exemption issued to Morgan Stanley
& Co., Incorporated, Prohibited Transaction Exemption 90-24 (55 Fed. Reg. 20,548
(1990)) (the "Underwriter Exemption"), which generally exempts from the
application of certain, but not all, of the prohibited transaction provisions of
Section 406 of ERISA and Section 4975 of the Code certain transactions relating
to the initial purchase, holding and subsequent secondary market sale of pass-
through certificates which represent an interest in a trust, the assets of which
include equipment notes secured by leases, provided that certain conditions set
forth in the Underwriter Exemption are satisfied.
The Underwriter Exemption sets a number of general and specific
conditions which must be satisfied for a transaction involving the initial
purchase, holding or secondary market sale of Class A Certificates to be
eligible for exemptive relief thereunder. In particular, the acquisition of
Class A Certificates by a Plan must be on terms that are at least as favorable
to the Plan as they would be in an arm's-length transaction with an unrelated
party; the rights and interests evidenced by the Certificates must not be
subordinated to the rights and interests evidenced by other Certificates of the
same trust estate; the Certificates at the time of acquisition by the Plan must
be rated in one of the three highest generic rating categories by Moody's,
Standard & Poor's, Duff & Phelps Inc. or Fitch Investors Service, Inc.; and the
investing Plan must be an accredited investor as defined in Rule 501(a)(1) of
Regulation D of the Commission under the Securities Act.
The Underwriter Exemption does not apply to the Class B, Class C or Class
D Certificates. Even if all of the conditions of the Underwriter Exemption are
satisfied with respect to the Class A Certificates, no assurance can be given
that the Exemption would apply with respect to all transactions involving the
Class A Certificates or the assets of the Class A Trust. In particular, it
appears that the Underwriter Exemption would not apply to the purchase by Class
B Certificateholders, Class C Certificateholders or Class D Certificateholders
of Class A Certificates in connection with the exercise of their rights upon the
occurrence and during the continuance of a Triggering Event. Therefore, the
fiduciary of a Plan considering the purchase of a Class A Certificate should
consider the availability of the exemptive relief provided by the Exemption, as
well as the availability of any other exemptions with respect to transactions to
which the Exemption may not apply.
CLASS B, CLASS C AND CLASS D CERTIFICATES
The Class B, Class C and Class D Certificates may not be acquired with
the assets of a Plan, except that such Certificates may be acquired with the
assets of an insurance company general account that may be deemed to constitute
Plan assets, provided that the conditions of PTCE 95-60 are satisfied at the
time of the acquisition (and during the holding) of such Certificates. By its
acceptance of a Class B Certificate, Class C Certificate or Class D Certificate,
each Certificateholder will be deemed to have represented and warranted that
either (i) no Plan assets have been used to purchase such Certificate or (ii)
the purchase and holding of such Certificate is exempt from the prohibited
transaction restrictions of ERISA and the Code pursuant to PTCE 95-60. See
"Transfer Restrictions".
Each Plan fiduciary (and each fiduciary for a governmental or church plan
subject to rules similar to those imposed on Plans under ERISA) should consult
with its legal advisor concerning an investment in any of the Certificates.
85
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Certificates for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Certificates. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of New Certificates received in
exchange for Old Certificates where such Old Certificates were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, starting on the Expiration Date and ending on the close of business
180 days after the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale. In addition, until such date all broker-dealers effecting transactions
in the New Certificates may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of New
Certificates by broker-dealers. New Certificates received by broker-dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Certificates or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such New
Certificates. Any broker-dealer that resells New Certificates that were received
by it for its own account pursuant to the Exchange Offer and any broker or
dealer that participates in a distribution of such New Certificates may be
deemed to be an "underwriter" within the meaning of the Securities Act and any
profit of any such resale of New Certificates and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
Starting on the Expiration Date, the Company will promptly send
additional copies of this Prospectus and any amendment or supplement to this
Prospectus to any broker-dealer that requests such documents in the Letter of
Transmittal. The Company has agreed to pay all expenses incident to the Exchange
Offer (including the expenses of one counsel for the Holders of the Notes) other
than commissions or concessions of any brokers or dealers and will indemnify the
Holders of the New Certificates (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the New Certificates and certain United States Federal
income taxation matters with respect to Section 382 will be passed upon for
Continental by Cleary, Gottlieb, Steen & Hamilton, New York, New York.
EXPERTS
The consolidated financial statements (including schedules) of
Continental Airlines, Inc. appearing in Continental Airlines, Inc.'s Annual
Report (Form 10-K) as of December 31, 1995 and 1994, and for the two years ended
December 31, 1995 and the period of April 28, 1993 through December 31, 1993,
and the consolidated statements of operations, redeemable and non-redeemable
preferred stock and common stockholders' equity and cash flows of Continental
Airlines Holdings, Inc. for the period of January 1, 1993 through April 27,
1993, incorporated by reference in this Prospectus have been audited by Ernst &
Young LLP, independent auditors, as set forth in their reports thereon included
therein and incorporated herein by reference, in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing.
86
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REVERENCE IN THIS
PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE EXCHANGE AGENT. NEITHER THIS PROSPECTUS NOR
THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH TOGETHER, CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY SECURITIES IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS, NOR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR
BOTH TOGETHER, NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AT ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THEREOF.
TABLE OF CONTENTS
PAGE
----
AVAILABLE INFORMATION............................................4
REPORTS TO PASS THROUGH CERTIFICATEHOLDERS.......................4
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..................4
PROSPECTUS SUMMARY...............................................6
RISK FACTORS....................................................26
RECENT DEVELOPMENTS.............................................33
USE OF PROCEEDS.................................................35
SELECTED FINANCIAL DATA.........................................36
THE EXCHANGE OFFER..............................................38
DESCRIPTION OF THE NEW CERTIFICATES.............................45
DESCRIPTION OF THE LIQUIDITY FACILITIES.........................56
DESCRIPTION OF THE INTERCREDITOR AGREEMENT......................60
DESCRIPTION OF THE AIRCRAFT AND THE APPRAISALS..................64
DESCRIPTION OF THE EQUIPMENT NOTES..............................64
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES....................83
ERISA CONSIDERATIONS............................................84
PLAN OF DISTRIBUTION............................................86
LEGAL MATTERS...................................................86
EXPERTS.........................................................86
- --------------------------------------------------------------------------------
CONTINENTAL AIRLINES, INC.
OFFER TO EXCHANGE
PASS THROUGH CERTIFICATES, SERIES 1996-2,
WHICH HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OUTSTANDING
PASS THROUGH CERTIFICATES, SERIES 1996-2
PROSPECTUS
SEPTEMBER , 1996
- --------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
The Company's Certificate of Incorporation and Bylaws provide that the
Company will indemnify each of its directors and officers to the full extent
permitted by the laws of the State of Delaware and may indemnify certain other
persons as authorized by the Delaware General Corporation Law (the "GCL").
Section 145 of the GCL provides as follows:
"(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b). Such
determination shall be made (1) by a majority vote of the board of directors who
are not parties to such action, suit or proceeding, even though less than a
quorum, or (2) if there are no such directors, or if such directors so direct,
by independent legal counsel in a written opinion, or (3) by the stockholders.
II-1
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative, or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of undertaking
by or on behalf of such director or officer to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized in this section. Such expenses (including attorneys'
fees) incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent for such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporations obligation to advance expenses (including attorneys'
fees)."
The Certificate of Incorporation and Bylaws also limit the personal
liability of directors to the Company and its stockholders for monetary damages
resulting from certain breaches of the directors fiduciary duties. The bylaws of
the Company provide as follows:
II-2
"No Director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a Director, except for liability (i) for any breach of the Director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the. . . GCL, or (iv) for any
transaction from which the Director derived any improper personal benefit. If
the GCL is amended to authorize corporate action further eliminating or limiting
the personal liability of Directors, then the liability of Directors of the
Corporation shall be eliminated or limited to the full extent permitted by the
GCL, as so amended."
The Company maintains directors' and officers' liability insurance.
Item 21. Exhibits.
Exhibit
Number Exhibit Description
- ------- -------------------
4.1* Form of New 7.75% Continental Airlines Pass Through Certificate
Series 1996-2A (included in Exhibit 4.5)
4.2* Form of New 8.56% Continental Airlines Pass Through Certificate
Series 1996-2B (included in Exhibit 4.6)
4.3* Form of New 10.22% Continental Airlines Pass Through Certificate
Series 1996-2C (included in Exhibit 4.7)
4.4* Form of New 11.50% Continental Airlines Pass Through Certificate
Series 1996-2D (included in Exhibit 4.8)
4.5* Pass Through Trust Agreement, dated as of May 20, 1996, between
Continental Airlines, Inc., and Wilmington Trust Company, as
Trustee, relating to the formation of Continental Airlines
1996-2A Pass Through Trust
4.6* Pass Through Trust Agreement, dated as of May 20, 1996, between
Continental Airlines, Inc., and Wilmington Trust Company, as
Trustee, relating to the formation of Continental Airlines
1996-2B Pass Through Trust
4.7* Pass Through Trust Agreement, dated as of May 20, 1996, between
Continental Airlines, Inc., and Wilmington Trust Company, as
Trustee, relating to the formation of Continental Airlines
1996-2C Pass Through Trust
4.8* Pass Through Trust Agreement, dated as of May 20, 1996, between
Continental Airlines, Inc., and Wilmington Trust Company, as
Trustee, relating to the formation of Continental Airlines
1996-2D Pass Through Trust
4.9* Revolving Credit Agreement, dated May 20, 1996, between
Wilmington Trust Company, as Subordination Agent, as agent and
trustee for the Continental Airlines 1996-2A Pass Through Trust,
as Borrower and DNIB as Liquidity Provider
4.10* Revolving Credit Agreement, dated May 20, 1996, between
Wilmington Trust Company, as Subordination Agent, as agent and
trustee for the Continental Airlines 1996-2B Pass Through Trust,
as Borrower and DNIB as Liquidity Provider
II-3
4.11* Revolving Credit Agreement, dated May 20, 1996, between
Wilmington Trust Company, as Subordination Agent, as agent and
trustee for the Continental Airlines 1996-2C Pass Through Trust,
as Borrower and DNIB as Liquidity Provider
4.12* Intercreditor Agreement dated as of May 20, 1996, among
Wilmington Trust Company, as Trustee under the Continental
Airlines Pass Through Trust 1996-2A, Continental Airlines Pass
Through Trust 1996-2B, Continental Airlines Pass Through Trust
1996-2C and Continental Pass Through Trust 1996-2D, DNIB, as
Class A Liquidity Provider, Class B Liquidity Provider, Class C
Liquidity Provider, and Wilmington Trust Company, as
Subordination Agent and Trustee
4.13* Registration Rights Agreement, dated as of May 20, 1996, among
Continental Airlines, Inc., Wilmington Trust Company, as Trustee
under Continental Airlines Pass Through Trust 1996-2A,
Continental Airlines Pass Through Trust 1996-2B, Continental
Airlines Pass Through Trust 1996-2C, Continental Airlines Pass
Through Trust 1996-2D, and the Initial Purchasers
4.14** Form of Refunding Agreement 114 & 115, dated as of May 20, 1996,
among Continental Airlines, Inc., as Lessee, First Security Bank
of Utah, National Association, as Owner Trustee, Wilmington Trust
Company, as Pass Through Trustee under each of the Continental
Airlines 1996-2 Pass Through Trust Agreements, Fleet National
Bank, formerly named Shawmut Bank Connecticut, National
Association, as Original Pass Through Trustee and Loan
Participant, Gaucho-2 Inc., as Owner Participant, Rolls-Royce
PLC, as Guarantor, Wilmington Trust Company, as Subordination
Agent, Wilmington Trust Company, as Loan Trustee, and Morgan
Stanley & Co. Incorporated, as Aero Trust Certificateholder
4.15** Form of Amended and Restated Participation Agreement 114 & 115
dated as of July 1, 1995, among Continental Airlines, Inc., as
Lessee, Gaucho-2 Inc., as Owner Participant, Wilmington Trust
Company, as Subordination Agent under the Intercreditor Agreement
and as Loan Participant, First Security Bank of Utah, National
Association, as Owner Trustee, and Wilmington Trust Company, as
Loan Trustee
4.16** Form of Amended and Restated Lease Agreement 114 & 115 dated as
of July 1, 1995 between First Security Bank of Utah, National
Association, as Owner Trustee and as Lessor and Continental
Airlines, Inc., as Lessee
4.17** Form of Amended and Restated Trust Indenture and Mortgage 114 &
115, dated as of May 20, 1996, between First Security Bank of
Utah, National Association, as Owner Trustee, and Wilmington
Trust Company, as Loan Trustee
4.18** Form of Trust Agreement 114 & 115 Amendment No. 1 dated May 20,
1996 between Gaucho-2 Inc. as Owner Participant and First
Security Bank of Utah, National Association, as Owner Trustee
II-4
4.19** Form of Refunding Agreement 116 & 117, dated as of May 20, 1996,
among Continental Airlines, Inc., as Lessee, First Security Bank
of Utah, National Association, as Owner Trustee, Wilmington Trust
Company, as Pass Through Trustee under each of the Continental
Airlines 1996-2 Pass Through Trust Agreements, The Boeing
Company, as Loan Participant, Gaucho-2 Inc., as Owner
Participant, Wilmington Trust Company, as Subordination Agent,
and Wilmington Trust Company, as Loan Trustee
4.20** Form of Participation Agreement 116 & 117 Amendment No. 1
dated May 20, 1996, among Continental Airlines, Inc., as Lessee,
Gaucho-2 Inc., as Owner Participant, Wilmington Trust Company, as
Subordination Agent under the Intercreditor Agreement and as Loan
Participant, First Security Bank of Utah, National Association,
as Owner Trustee and Wilmington Trust Company, as Loan Trustee
4.21** Form of Lease Agreement 116 & 117 Amendment No. 1 dated May 20,
1996 between First Security Bank of Utah, National Association,
as Owner Trustee and Lessor and Continental Airlines, Inc., as
Lessee
4.22** Form of Amended and Restated Trust Indenture and Mortgage 116 &
117, dated as of May 20, 1996, between First Security Bank of
Utah, National Association, as Owner Trustee, and Wilmington
Trust Company, as Loan Trustee
4.23* Note Purchase Agreement 637 dated May 20, 1996 among Continental
Airlines, Inc. as Owner, Wilmington Trust Company as Pass Through
Trustee under each of the Continental Airlines 1996-2 Pass
Through Trust Agreements, Wilmington Trust Company, as
Subordination Agent and Wilmington Trust Company as Loan Trustee
4.24* Trust Indenture and Mortgage 637 dated May 20, 1996 between
Continental Airlines, Inc., as Owner, and Wilmington Trust
Company, as Loan Trustee
4.25* Trust Indenture and Mortgage 637 Supplement No. 1 dated May 20,
1996 between Continental Airlines, Inc., as Owner, and Wilmington
Trust Company, as Loan Trustee
4.26** Form of Series A Equipment Note, dated May 20, 1996, 1996, by
First Security Bank of Utah, National Association, as Owner
trustee, payable to Wilmington Trust Company, as Subordination
Agent under the Intercreditor Agreement
4.27** Form of Series B Equipment Note, dated May 20, 1996, by First
Security Bank of Utah, National Association, as Owner trustee,
payable to Wilmington Trust Company, as Subordination Agent under
the Intercreditor Agreement
4.28** Form of Series C Equipment Note, dated May 20, 1996, by First
Security Bank of Utah, National Association, as Owner trustee,
payable to Wilmington Trust Company, as Subordination Agent under
the Intercreditor Agreement
4.29** Form of Series D Equipment Note, dated May 20, 1996, by First
Security Bank of Utah, National Association, as Owner trustee,
payable to Wilmington Trust Company, as Subordination Agent under
the Intercreditor Agreement
5.1* Opinion of Cleary, Gottlieb, Steen & Hamilton relating to
validity of New Certificates
II-5
12.1 Computation of Ratio of Earnings to Fixed Charges (incorporated
by reference to the Company's Registration Statement
(File No. 333-07899))
23.1* Consent of Ernst & Young LLP
23.2* Consent of Cleary, Gottlieb, Steen & Hamilton (included in its
opinion filed as exhibit 5.1)
23.3* Consent of Aircraft Information Services, Inc.
23.4* Consent of BK Associates, Inc.
23.5* Consent of Morten Beyer and Associates, Inc.
23.6* Consent of Cleary, Gottlieb, Steen & Hamilton
24.1* Powers of Attorney
25.1* Statement of Eligibility of Wilmington Trust Company for the
1996-2A Pass Through Certificates, on Form T-1
25.2* Statement of Eligibility of Wilmington Trust Company for the
1996-2B Pass Through Certificates, on Form T-1
25.3* Statement of Eligibility of Wilmington Trust Company for the
1996-2C Pass Through Certificates, on Form T-1
25.4* Statement of Eligibility of Wilmington Trust Company for the
1996-2D Pass Through Certificates, on Form T-1
99.1* Form of Letter of Transmittal
99.2* Form of Notice of Guaranteed Delivery
99.3* Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
99.4* Form of Letter to Clients
- -------------
* Filed herewith.
** Filed herewith. With respect to such Exhibits, separate agreements
have been entered into with respect to each Aircraft. Except for differences in
designations, dollar amounts, interest rates, percentages, final distribution
dates, Aircraft Registration numbers, Manufacturer's Serial Numbers for Aircraft
and Engines and the like, as applicable, there are no material details in which
any such agreements not filed herewith differ from the corresponding Exhibit for
the forms of such documents.
Item 22. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section l0(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration (or the most recent post-
effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the
II-6
registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high and
of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
shall not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to section 13
or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plans annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant, pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by any such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
or not such indemnification is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-7
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b))(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-4 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on September 17, 1996.
CONTINENTAL AIRLINES, INC.
By: /s/ Jeffery A. Smisek
____________________________
Jeffery A. Smisek
Senior Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated, on September 17, 1996.
Signature Title
--------- -----
*
- ------------------------
Gordon M. Bethune President, Chief Executive Officer (Principal
Executive Officer) and Director
*
- ------------------------ Senior Vice President and Chief Financial
Lawrence W. Kellner Officer (Principal Financial Officer)
*
- ------------------------ Staff Vice President and Controller
Michael P. Bonds (Principal Accounting Officer)
*
- ------------------------ Director
Thomas J. Barrack, Jr.
- ------------------------ Director
Lloyd M. Bentsen, Jr.
*
- ------------------------ Director
David Bonderman
*
- ------------------------ Director
Gregory D. Brenneman
*
- ------------------------ Director
Patrick Foley
*
- ------------------------ Director
Douglas H. McCorkindale
*
- ------------------------ Director
George G.C. Parker
*
- ------------------------ Director
Richard W. Pogue
II-9
*
- ------------------------ Director
William S. Price III
*
- ------------------------ Director
Donald L. Sturm
*
- ------------------------ Director
Karen Hastie Williams
*
- ------------------------ Director
Charles A. Yamarone
*By: /s/ Scott R. Peterson
- ----------------------------
Scott R. Peterson,
Attorney-in-fact
II-10
EXHIBIT INDEX
Exhibit
Number Exhibit Description
- ------- -------------------
4.1* Form of New 7.75% Continental Airlines Pass Through Certificate
Series 1996-2A (included in Exhibit 4.5)
4.2* Form of New 8.56% Continental Airlines Pass Through Certificate
Series 1996-2B (included in Exhibit 4.6)
4.3* Form of New 10.22% Continental Airlines Pass Through Certificate
Series 1996-2C (included in Exhibit 4.7)
4.4* Form of New 11.50% Continental Airlines Pass Through Certificate
Series 1996-2D (included in Exhibit 4.8)
4.5* Pass Through Trust Agreement, dated as of May 20, 1996, between
Continental Airlines, Inc., and Wilmington Trust Company, as
Trustee, relating to the formation of Continental Airlines
1996-2A Pass Through Trust
4.6* Pass Through Trust Agreement, dated as of May 20, 1996, between
Continental Airlines, Inc., and Wilmington Trust Company, as
Trustee, relating to the formation of Continental Airlines
1996-2B Pass Through Trust
4.7* Pass Through Trust Agreement, dated as of May 20, 1996, between
Continental Airlines, Inc., and Wilmington Trust Company, as
Trustee, relating to the formation of Continental Airlines
1996-2C Pass Through Trust
4.8* Pass Through Trust Agreement, dated as of May 20, 1996, between
Continental Airlines, Inc., and Wilmington Trust Company, as
Trustee, relating to the formation of Continental Airlines
1996-2D Pass Through Trust
4.9* Revolving Credit Agreement, dated May 20, 1996, between
Wilmington Trust Company, as Subordination Agent, as agent and
trustee for the Continental Airlines 1996-2A Pass Through Trust,
as Borrower and DNIB as Liquidity Provider
4.10* Revolving Credit Agreement, dated May 20, 1996, between
Wilmington Trust Company, as Subordination Agent, as agent and
trustee for the Continental Airlines 1996-2B Pass Through Trust,
as Borrower and DNIB as Liquidity Provider
4.11* Revolving Credit Agreement, dated May 20, 1996, between
Wilmington Trust Company, as Subordination Agent, as agent and
trustee for the Continental Airlines 1996-2C Pass Through Trust,
as Borrower and DNIB as Liquidity Provider
4.12* Intercreditor Agreement dated as of May 20, 1996, among
Wilmington Trust Company, as Trustee under the Continental
Airlines Pass Through Trust 1996-2A, Continental Airlines Pass
Through Trust 1996-2B, Continental Airlines Pass Through Trust
1996-2C and Continental Pass Through Trust 1996-2D, DNIB, as
Class A Liquidity Provider, Class B Liquidity Provider, Class C
Liquidity Provider, and Wilmington Trust Company, as
Subordination Agent and Trustee
4.13* Registration Rights Agreement, dated as of May 20, 1996, among
Continental Airlines, Inc., Wilmington Trust Company, as Trustee
under Continental Airlines Pass Through Trust 1996-2A,
Continental Airlines Pass Through Trust 1996-2B, Continental
Airlines Pass Through Trust 1996-2C, Continental Airlines Pass
Through Trust 1996-2D, and the Initial Purchasers
4.14** Form of Refunding Agreement 114 & 115, dated as of May 20, 1996,
among Continental Airlines, Inc., as Lessee, First Security Bank
of Utah, National Association, as Owner Trustee, Wilmington
Trust Company, as Pass Through Trustee under each of the
Continental Airlines 1996-2 Pass Through Trust Agreements, Fleet
National Bank, formerly named Shawmut Bank Connecticut, National
Association, as Original Pass Through Trustee and Loan
Participant, Gaucho-2 Inc., as Owner Participant, Rolls-Royce
PLC, as Guarantor, Wilmington Trust Company, as Subordination
Agent, Wilmington Trust Company, as Loan Trustee, and Morgan
Stanley & Co. Incorporated, as Aero Trust Certificateholder
4.15** Form of Amended and Restated Participation Agreement 114 & 115
dated as of July 1, 1995, among Continental Airlines, Inc., as
Lessee, Gaucho-2 Inc., as Owner Participant, Wilmington Trust
Company, as Subordination Agent under the Intercreditor
Agreement and as Loan Participant, First Security Bank of Utah,
National Association, as Owner Trustee, and Wilmington Trust
Company, as Loan Trustee
4.16** Form of Amended and Restated Lease Agreement 114 & 115 dated as
of July 1, 1995 between First Security Bank of Utah, National
Association, as Owner Trustee and as Lessor and Continental
Airlines, Inc., as Lessee
4.17** Form of Amended and Restated Trust Indenture and Mortgage 114 &
115, dated as of May 20, 1996, between First Security Bank of
Utah, National Association, as Owner Trustee, and Wilmington
Trust Company, as Loan Trustee
4.18** Form of Trust Agreement 114 & 115 Amendment No. 1 dated May 20,
1996 between Gaucho-2 Inc. as Owner Participant and First
Security Bank of Utah, National Association, as Owner Trustee
4.19** Form of Refunding Agreement 116 & 117, dated as of May 20, 1996,
among Continental Airlines, Inc., as Lessee, First Security Bank
of Utah, National Association, as Owner Trustee, Wilmington
Trust Company, as Pass Through Trustee under each of the
Continental Airlines 1996-2 Pass Through Trust Agreements, The
Boeing Company, as Loan Participant, Gaucho-2 Inc., as Owner
Participant, Wilmington Trust Company, as Subordination Agent,
and Wilmington Trust Company, as Loan Trustee
4.20** Form of Participation Agreement 116 & 117 Amendment No. 1 dated
May 20, 1996, among Continental Airlines, Inc., as Lessee,
Gaucho-2 Inc., as Owner Participant, Wilmington Trust Company,
as Subordination Agent under the Intercreditor Agreement and as
Loan Participant, First Security Bank of Utah, National
Association, as Owner Trustee and Wilmington Trust Company, as
Loan Trustee
4.21** Form of Lease Agreement 116 & 117 Amendment No. 1 dated May 20,
1996 between First Security Bank of Utah, National Association,
as Owner Trustee and Lessor and Continental Airlines, Inc., as
Lessee
4.22** Form of Amended and Restated Trust Indenture and Mortgage 116 &
117, dated as of May 20, 1996, between First Security Bank of
Utah, National Association, as Owner Trustee, and Wilmington
Trust Company, as Loan Trustee
4.23* Note Purchase Agreement 637 dated May 20, 1996 among Continental
Airlines, Inc. as Owner, Wilmington Trust Company as Pass
Through Trustee under each of the Continental Airlines 1996-2
Pass Through Trust Agreements, Wilmington Trust Company, as
Subordination Agent and Wilmington Trust Company as Loan Trustee
4.24* Trust Indenture and Mortgage 637 dated May 20, 1996 between
Continental Airlines, Inc., as Owner, and Wilmington Trust
Company, as Loan Trustee
4.25* Trust Indenture and Mortgage 637 Supplement No. 1 dated May 20,
1996 between Continental Airlines, Inc., as Owner, and
Wilmington Trust Company, as Loan Trustee
4.26** Form of Series A Equipment Note, dated May 20, 1996, 1996, by
First Security Bank of Utah, National Association, as Owner
trustee, payable to Wilmington Trust Company, as Subordination
Agent under the Intercreditor Agreement
4.27** Form of Series B Equipment Note, dated May 20, 1996, by First
Security Bank of Utah, National Association, as Owner trustee,
payable to Wilmington Trust Company, as Subordination Agent
under the Intercreditor Agreement
4.28** Form of Series C Equipment Note, dated May 20, 1996, by First
Security Bank of Utah, National Association, as Owner trustee,
payable to Wilmington Trust Company, as Subordination Agent
under the Intercreditor Agreement
4.29** Form of Series D Equipment Note, dated May 20, 1996, by First
Security Bank of Utah, National Association, as Owner trustee,
payable to Wilmington Trust Company, as Subordination Agent
under the Intercreditor Agreement
5.1* Opinion of Cleary, Gottlieb, Steen & Hamilton relating to
validity of New Certificates
12.1 Computation of Ratio of Earnings to Fixed Charges (incorporated
by reference to the Company's Registration Statement
(File No.333-07899))
23.1* Consent of Ernst & Young LLP
23.2* Consent of Cleary, Gottlieb, Steen & Hamilton (included in its
opinion filed as exhibit 5.1)
23.3* Consent of Aircraft Information Services, Inc.
23.4* Consent of BK Associates, Inc.
23.5* Consent of Morten Beyer and Associates, Inc.
23.6* Consent of Cleary, Gottlieb, Steen & Hamilton
24.1* Powers of Attorney
25.1* Statement of Eligibility of Wilmington Trust Company for the
1996-2A Pass Through Certificates, on Form T-1
25.2* Statement of Eligibility of Wilmington Trust Company for the
1996-2B Pass Through Certificates, on Form T-1
25.3* Statement of Eligibility of Wilmington Trust Company for the
1996-2C Pass Through Certificates, on Form T-1
25.4* Statement of Eligibility of Wilmington Trust Company for the
1996-2D Pass Through Certificates, on Form T-1
99.1* Form of Letter of Transmittal
99.2* Form of Notice of Guaranteed Delivery
99.3* Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
99.4* Form of Letter to Clients
- -----------------
* Filed herewith.
** Filed herewith. With respect to such Exhibits, separate agreements have
been entered into with respect to each Aircraft. Except for differences in
designations, dollar amounts, interest rates, percentages, final distribution
dates, Aircraft Registration numbers, Manufacturers Serial Numbers for Aircraft
and Engines and the like, as applicable, there are no material details in which
any such agreements not filed herewith differ from the corresponding Exhibit for
the forms of such documents.
- -------------------------------------------------------------------
PASS THROUGH TRUST AGREEMENT
Dated as of May 20, 1996
between
CONTINENTAL AIRLINES, INC.
and
WILMINGTON TRUST COMPANY,
as Trustee
Continental Airlines 1996-2A Pass Through Trust
7.75% 1996-2A Initial Pass Through Certificates
7.75% 1996-2A Exchange Pass Through Certificates
- -------------------------------------------------------------------
Reconciliation and tie between Continental Airlines 1996-2A Pass
Through Trust Agreement, dated as of May 20, 1996, and the Trust
Indenture Act of 1939. This reconciliation does not constitute
part of the Pass Through Trust Agreement.
Trust Indenture Act Pass Through Trust
of 1939 Section Agreement Section
- ------------------------ -------------------------
310(a)(1) 7.08
(a)(2) 7.08
312(a) 3.05; 8.01; 8.02
313(a) 8.03
314(a) 8.04(a) - (c)
(a)(4) 8.04(d)
(c)(1) 1.02
(c)(2) 1.02
(d)(1) 7.13; 11.01
(d)(2) 7.13; 11.01
(d)(3) 2.01
(e) 1.02
315(b) 7.02
316(a)(last 1.04(c)
sentence)
(a)(1)(A) 6.04
(a)(1)(B) 6.05
(b) 6.06
(c) 1.04(d)
317(a)(1) 6.03
(b) 7.13
318(a) 12.06
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
1.01. Definitions........................................ 2
1.02. Compliance Certificates and Opinions............... 13
1.03. Form of Documents Delivered to Trustee............. 14
1.04. Directions of Certificateholders................... 14
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES;
ACQUISITION OF EQUIPMENT NOTES
2.01. Issuance of Certificates; Acquisition of
Equipment Notes................................... 16
2.02. Acceptance by Trustee.............................. 18
2.03. Limitation of Powers............................... 19
ARTICLE III
THE CERTIFICATES
3.01. Title, Form, Denomination and Execution of
Certificates...................................... 19
3.02. Restrictive Legends................................ 20
3.03. Authentication of Certificates..................... 22
3.04. Transfer and Exchange.............................. 23
3.05. Book-Entry Provisions for U.S. Global
Certificate and Offshore Global Certificates...... 23
3.06. Special Transfer Provisions........................ 25
3.07. Mutilated, Destroyed, Lost or Stolen
Certificates...................................... 28
3.08. Persons Deemed Owners.............................. 28
3.09. Cancellation....................................... 29
3.10. Temporary Certificates............................. 29
3.11. Limitation of Liability for Payments............... 29
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS
4.01. Certificate Account and Special Payments
Account........................................... 30
ii
Section Page
4.02. Distributions from Certificate Account and
Special Payments Account.......................... 30
4.03. Statements to Certificateholders................... 32
4.04. Investment of Special Payment Moneys............... 33
ARTICLE V
THE COMPANY
5.01. Maintenance of Corporate Existence................. 33
5.02. Consolidation, Merger, etc......................... 33
ARTICLE VI
DEFAULT
6.01. Events of Default.................................. 34
6.02. [Intentionally omitted.]........................... 37
6.03. Judicial Proceedings Instituted by Trustee;
Trustee May Bring Suit............................ 37
6.04. Control by Certificateholders...................... 37
6.05. Waiver of Past Defaults............................ 37
6.06. Right of Certificateholders to Receive Payments
Not to Be Impaired................................ 38
6.07. Certificateholders May Not Bring Suit Except
Under Certain Conditions.......................... 38
6.08. Remedies Cumulative................................ 39
ARTICLE VII
THE TRUSTEE
7.01. Certain Duties and Responsibilities................ 39
7.02. Notice of Defaults................................. 40
7.03. Certain Rights of Trustee.......................... 40
7.04. Not Responsible for Recitals or Issuance of
Certificates...................................... 42
7.05. May Hold Certificates.............................. 42
7.06. Money Held in Trust................................ 42
7.07. Compensation and Reimbursement..................... 42
7.08. Corporate Trustee Required; Eligibility............ 43
7.09. Resignation and Removal; Appointment of
Successor......................................... 43
7.10. Acceptance of Appointment by Successor............. 45
7.11. Merger, Conversion, Consolidation or Succession
to Business....................................... 45
7.12. Maintenance of Agencies............................ 46
7.13. Money for Certificate Payments to Be Held in
Trust............................................. 47
iii
Section Page
7.14. Registration of Equipment Notes in Name of
Subordination Agent............................... 47
7.15. Representations and Warranties of Trustee.......... 47
7.16. Withholding Taxes; Information Reporting........... 49
7.17. Trustee's Liens.................................... 49
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
8.01. The Company to Furnish Trustee with Names and
Addresses of Certificateholders................... 49
8.02. Preservation of Information; Communications to
Certificateholders................................ 50
8.03. Reports by Trustee................................. 50
8.04. Reports by the Company............................. 50
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
9.01. Supplemental Agreements Without Consent of
Certificateholders................................ 51
9.02. Supplemental Agreements with Consent of
Certificateholders................................ 52
9.03. Documents Affecting Immunity or Indemnity.......... 53
9.04. Execution of Supplemental Agreements............... 53
9.05. Effect of Supplemental Agreements.................. 53
9.06. Conformity with Trust Indenture Act................ 53
9.07. Reference in Certificates to Supplemental
Agreements........................................ 54
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
10.01. Amendments and Supplements to Indentures and
Other Financing Documents......................... 54
ARTICLE XI
TERMINATION OF TRUST
11.01. Termination of the Trust.......................... 55
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.01. Limitation on Rights of Certificateholders........ 56
iv
Section Page
12.02. Certificates Nonassessable and Fully Paid......... 56
12.03. Notices........................................... 56
12.04. Governing Law..................................... 57
12.05. Severability of Provisions........................ 58
12.06. Trust Indenture Act Controls...................... 58
12.07. Effect of Headings and Table of Contents.......... 58
12.08. Successors and Assigns............................ 58
12.09. Benefits of Agreement............................. 58
12.10. Legal Holidays.................................... 58
12.11. Counterparts...................................... 58
12.12. Intention of Parties.............................. 59
Schedule 1 - Indentures
Schedule 2 - Financing Agreements
Exhibit A - Form of Certificate
Exhibit B - Form of Certificate for Unlegended
Certificates
Exhibit C - Form of Certificate to Be Delivered in
Connection with Transfers Pursuant to
Regulation S
Exhibit D - Form of Certificate to Be Delivered in
Connection with Transfers to Non-QIB
Accredited Investors
PASS THROUGH TRUST AGREEMENT
This PASS THROUGH TRUST AGREEMENT, dated as of May 20,
1996, between CONTINENTAL AIRLINES, INC., a Delaware corporation,
and WILMINGTON TRUST COMPANY, as Trustee, is made with respect to
the formation of Continental Airlines 1996-2A Pass Through Trust
and the issuance of 7.75% Continental Airlines 1996-2A Pass
Through Certificates representing fractional undivided interests
in the Trust.
WITNESSETH:
WHEREAS, (i) the Company, the Owner Trustees and the
Owner Participants (as such terms and certain other capitalized
terms used herein are defined below) have previously entered into
four separate leveraged lease transactions in connection with the
purchase of four Boeing 757-224 aircraft from the manufacturer
(the "Leased Aircraft") and (ii) the Company has previously
purchased one Boeing 737-524 aircraft from the manufacturer (the
"Owned Aircraft"; together with the Leased Aircraft, the
"Aircraft");
WHEREAS, each Owner Trustee, acting on behalf of the
corresponding Owner Participant, will issue pursuant to an
Indenture, on a non-recourse basis, four series of Equipment
Notes, among other things, to refinance the current indebtedness
of such Owner Trustee originally incurred to finance the purchase
price of the related Leased Aircraft;
WHEREAS, the Company, will issue pursuant to an
Indenture, on a recourse basis, four series of Equipment Notes,
relating to the Owned Aircraft;
WHEREAS, the Trustee, upon execution and delivery of
this Agreement, hereby declares the creation of the Trust for the
benefit of the Certificateholders, and the initial
Certificateholders, as the grantors of the Trust, by their
respective acceptances of the Certificates, join in the creation
of this Trust with the Trustee;
WHEREAS, all Certificates to be issued by the Trust
will evidence fractional undivided interests in the 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 this
Agreement and each of the Financing Agreements to be entered into
by the Trustee simultaneously with the execution and delivery of
this Agreement, the Trustee on behalf of the Trust shall purchase
one or more issues of Equipment Notes having the same interest
rate as, and final maturity dates not later than the final
Regular Distribution Date of, the Certificates issued hereunder
and shall hold such Equipment Notes in trust for the benefit of
the Certificateholders;
WHEREAS, to facilitate the sale of Equipment Notes to,
and the purchase of Equipment Notes by, the Trustee on behalf of
the Trust, the Company has duly authorized the execution and
delivery of this Agreement as the "issuer", as such term is
defined in and solely for purposes of the Securities Act of 1933,
as amended, of the Certificates to be issued pursuant hereto and
as the "obligor", as such term is defined in and solely for
purposes of the Trust Indenture Act of 1939, as amended, with
respect to all such Certificates and is undertaking to perform
certain administrative and ministerial duties hereunder and is
also undertaking to pay the ongoing fees and expenses of the
Trustee;
WHEREAS, all of the conditions and requirements
necessary to make this Agreement, when duly executed and
delivered, a valid, binding and legal instrument, enforceable in
accordance with its terms and for the purposes herein expressed,
have been done, performed and fulfilled, and the execution and
delivery of this Agreement in the form and with the terms hereof
have been in all respects duly authorized; and
WHEREAS, upon issuance of the Exchange Certificates,
if any, or the effectiveness of the Registration Statement, this
Agreement, as amended or supplemented from time to time, will be
subject to the provisions of the Trust Indenture Act of 1939, and
shall, to the extent applicable, be governed by such provisions;
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. Definitions. For all purposes of this
Agreement, except as otherwise expressly provided or unless the
context otherwise requires:
(1) the terms used herein that are defined in this
Article have the meanings assigned to them in this Article,
and include the plural as well as the singular;
(2) all other terms used herein which are defined in
the Trust Indenture Act, either directly or by reference
2
therein, or by the rules promulgated under the Trust
Indenture Act, have the meanings assigned to them therein;
(3) all references in this Agreement to designated
"Articles", "Sections", "Subsections" and other
subdivisions are to the designated Articles, Sections,
Subsections and
other subdivisions of this Agreement;
(4) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section,
Subsection or other subdivision; and
(5) unless the context otherwise requires, whenever
the words "including", "include" or "includes" are used
herein, it shall be deemed to be followed by the phrase
"without limitation".
Affiliate: Means, with respect to any Person, any
other Person directly or indirectly controlling or
controlled by or under common control with such Person,
provided, however, that neither America West Airlines, Inc.
nor any of its subsidiaries shall be deemed to be an
"Affiliate" of the Company for purposes of this Agreement.
For purposes of this definition, "control" means the power,
directly or indirectly, to direct the management and
policies of such Person, whether through the ownership of
voting securities or by contract or otherwise, and the
terms "controlling" and "controlled" have meanings
correlative to the foregoing.
Agent Members: Has the meaning specified in Section
3.05.
Aircraft: Has the meaning specified in the first
recital to this Agreement.
Authorized Agent: Means any Paying Agent or Registrar
for the Certificates.
Avoidable Tax: Means a state or local tax (i) upon (w)
the Trust, (x) the Trust Property, (y) Certificateholders
or (z) the Trustee for which the Trustee is entitled to
seek reimbursement from the Trust Property, and (ii) which
would be avoided if the Trustee were located in another
state, or jurisdiction within a state, within the United
States. A tax shall not be an Avoidable Tax if the Company
or any Owner Trustee shall agree to pay, and shall pay,
such tax.
3
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 Certificate is outstanding, the city and
state in which the Trustee or any Loan Trustee maintains
its Corporate Trust Office or receives and disburses funds.
Cedel: Means Cedel Bank societe anonyme.
Certificate: Means any one of the Initial Certificates
or Exchange Certificates and any such Certificates issued in
exchange therefor or replacement thereof pursuant to this
Agreement.
Certificate Account: Means the account or accounts
created and maintained pursuant to Section 4.01(a).
Certificateholder or Holder: Means the Person in whose
name a Certificate is registered in the Register.
Company: Means Continental Airlines, Inc., a Delaware
corporation, or its successor in interest pursuant to
Section 5.02, or any other obligor (within the meaning of
the Trust Indenture Act) with respect to the Certificates.
Controlling Party: Has the meaning specified in the
Intercreditor Agreement.
Corporate Trust Office: With respect to the Trustee or
any Loan Trustee, means the office of such trustee in the
city at which at any particular time its corporate trust
business shall be principally administered.
Cut-off Date: Means August 2, 1996.
Delayed Equipment Notes: Means the Equipment Notes to
be issued on the applicable Transfer Date in respect of the
two Leased Aircraft bearing Federal Aviation Registration
Marks of N12114 and N14115.
Depositary: Means the Depository Trust Company, its
nominees and their respective successors.
Direction: Has the meaning specified in
Section 1.04(a).
Distribution Date: Means any Regular Distribution Date
or Special Distribution Date.
Equipment Notes: Means the equipment notes issued
under the Indentures.
4
ERISA: Means the Employee Retirement Income Security
Act of 1974, as amended from time to time, or any successor
federal statute.
Escrow Account: Has the meaning specified in
Section 2.01(b).
Escrowed Funds: Has the meaning specified in
Section 2.01(b).
Euroclear: Means the Euroclear System.
Event of Default: Means an Indenture Default under any
Indenture pursuant to which Equipment Notes held by the
Trust were issued.
Exchange Certificates: Means the certificates
substantially in the form of Exhibit A hereto issued in
exchange for the Initial Certificates pursuant to the
Registration Rights Agreement and authenticated hereunder.
Exchange Offer Registration Statement: Means the
Exchange Offer Registration Statement defined in the
Registration Rights Agreement.
Financing Agreements: Means each of the four separate
Refunding Agreements and the Note Purchase Agreement, in
each case, dated the date hereof, listed on Schedule 2
hereto, providing for, among other things, the purchase of
Equipment Notes by the Trustee on behalf of the Trust, as
the same may be amended, supplemented or otherwise modified
from time to time in accordance with its terms.
Financing Documents: With respect to any Equipment
Note, means (i) the related Indenture and Financing
Agreement and (ii) in the case of any Equipment Note
related to a Leased Aircraft, the Lease and the
Participation Agreement relating to such Leased Aircraft.
Fractional Undivided Interest: Means the fractional
undivided interest in the Trust that is evidenced by a
Certificate.
Global Certificates: Has the meaning assigned to such
term in Section 3.01.
Indentures: Means each of the four separate Amended
and Restated Trust Indentures and Mortgages and the Trust
Indenture and Mortgage listed on Schedule 1 hereto, in each
case as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
5
Indenture Default: With respect to any Indenture,
means any Event of Default (as such term is defined in such
Indenture).
Initial Certificates: Means the certificates issued
and authenticated hereunder substantially in the form of
Exhibit A hereto other than the Exchange Certificates.
Initial Purchasers: Means, collectively, Morgan
Stanley & Co. Incorporated, CS First Boston Corporation and
Fieldstone FPCG Services, L.P.
Initial Regular Distribution Date: Means the first
Regular Distribution Date on which a Scheduled Payment is to
be made.
Institutional Accredited Investor: Means an
institutional investor that is an "accredited investor"
within the meaning set forth in Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act.
Intercreditor Agreement: Means the Intercreditor
Agreement dated the date hereof among the Trustee, the
Other Trustees, the Liquidity Provider, the liquidity
provider, if any, relating to the Certificates issued under
(and as defined in) each of the Other Pass Through Trust
Agreements, and Wilmington Trust Company, as Subordination
Agent thereunder, as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
Issuance Date: Means the date of the issuance of the
Initial Certificates.
Lease: Means, with respect to each Leased Aircraft,
the lease between an Owner Trustee, as the lessor, and the
Company, as the lessee, referred to in the related
Indenture, as such lease may be amended, supplemented or
otherwise modified in accordance with its terms.
Leased Aircraft: Has the meaning specified in the
first recital to this Agreement.
Liquidity Facility: Means the Revolving Credit
Agreement dated the date hereof relating to the
Certificates, between the Liquidity Provider and the
Subordination Agent, as amended, replaced, supplemented or
otherwise modified from time to time in accordance with its
terms and the terms of the Intercreditor Agreement.
Liquidity Provider: Means, initially, De Nationale
Investeringsbank N.V., and any replacement or successor
6
therefor appointed in accordance with the Liquidity Facility
and the Intercreditor Agreement.
Loan Trustee: With respect to any Equipment Note or
the Indenture applicable thereto, means the bank or trust
company designated as indenture trustee under such
Indenture, together with any successor to such Loan Trustee
appointed pursuant thereto.
Non-U.S. Person: Means a Person that is not a "U.S.
person", as defined in Regulation S.
Officer's Certificate: Means a certificate signed, (a)
in the case of the Company, by (i) the Chairman or Vice
Chairman of the Board of Directors, the President, any
Executive Vice President, any Senior Vice President or the
Treasurer of the Company, signing alone or (ii) any Vice
President of the Company signing together with the
Secretary, the Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company or, (b) in the case of
an Owner Trustee or a Loan Trustee, a Responsible Officer
of such Owner Trustee or such Loan Trustee, as the case may
be.
Offshore Certificates Exchange Date: Has the meaning
specified in Section 3.01.
Offshore Global Certificates: Has the meaning assigned
to such term in Section 3.01.
Offshore Physical Certificates: Has the meaning
assigned to such term in Section 3.01.
Opinion of Counsel: Means a written opinion of legal
counsel who (a) in the case of counsel for the Company may
be (i) a senior attorney of the Company one of whose
principal duties is furnishing advice as to legal matters,
(ii) Cleary, Gottlieb, Steen & Hamilton, (iii) Hughes
Hubbard & Reed, or (iv) such other counsel designated by
the Company and reasonably acceptable to the Trustee and
(b) in the case of counsel for any Owner Trustee or any
Loan Trustee may be such counsel as may be designated by
any of them whether or not such counsel is an employee of
any of them, and who shall be reasonably acceptable to the
Trustee.
Other Pass Through Trust Agreements: Means each of the
three other Continental Airlines 1996-2 Pass Through Trust
Agreements relating to Continental Airlines 1996-2B Pass
Through Trust, Continental Airlines 1996-2C Pass Through
Trust and Continental Airlines 1996-2D Pass Through Trust,
dated the date hereof.
7
Other Trustees: Means the trustee under the Other Pass
Through Trust Agreements, and any successor or other trustee
appointed as provided therein.
Outstanding: When used with respect to Certificates,
means, as of the date of determination, all Certificates
theretofore authenticated and delivered under this
Agreement, except:
(i) Certificates theretofore cancelled by the
Registrar or delivered to the Trustee or the Registrar
for cancellation;
(ii) Certificates for which money in the full
amount required to make the final distribution with
respect to such Certificates pursuant to Section 11.01
hereof has been theretofore deposited with the Trustee
in trust for the Holders of such Certificates as
provided in Section 4.01 pending distribution of such
money to such Certificateholders pursuant to payment
of such final distribution; and
(iii) Certificates in exchange for or in lieu of
which other Certificates have been authenticated and
delivered pursuant to this Agreement.
Owned Aircraft: Has the meaning specified in the first
recital to this Agreement.
Owner Participant: With respect to any Equipment Note
relating to a Leased Aircraft, means the "Owner
Participant" as referred to in the Indenture pursuant to
which such Equipment Note is issued and any permitted
successor or assign of such Owner Participant; and Owner
Participants at any time of determination means all of the
Owner Participants thus referred to in the Indentures.
Owner Trustee: With respect to any Equipment Note
relating to a Leased Aircraft, means the "Owner Trustee",
as referred to in the Indenture pursuant to which such
Equipment Note is issued, not in its individual capacity
but solely as trustee; and Owner Trustees means all of the
Owner Trustees party to any of the Indentures.
Participation Agreement: With respect to any Leased
Aircraft, means the Participation Agreement referred to in
the related Indenture.
Paying Agent: Means the paying agent maintained and
appointed for the Certificates pursuant to Section 7.12.
8
Permanent Offshore Global Certificates: Has the
meaning specified in Section 3.01.
Permanent Offshore Physical Certificates: Has the
meaning specified in Section 3.01.
Permitted Investments: Means obligations of the United
States of America or agencies or instrumentalities thereof
the payment of which is backed by the full faith and credit
of the United States of America and which mature in not
more than 60 days after the date of acquisition thereof or
such lesser time as is required for the distribution of any
Special Payments on a Special Distribution Date.
Person: Means any person, including any individual,
corporation, partnership, joint venture, association,
joint-stock company, trust, trustee, unincorporated
organization, or government or any agency or political
subdivision thereof.
Physical Certificates: Has the meaning specified in
Section 3.01.
Pool Balance: Means, as of any date, (i) the original
aggregate face amount of the Certificates less (ii) the
aggregate amount of all payments made in respect of such
Certificates other than payments made in respect of
interest or premium thereon or reimbursement of any costs
or expenses incurred in connection therewith. The Pool
Balance as of any Distribution Date shall be computed after
giving effect to the payment of principal, if any, on the
Equipment Notes or other Trust Property held in such Trust
and the distribution thereof to be made on such
Distribution Date.
Pool Factor: Means, as of any date, the quotient
(rounded to the seventh decimal place) computed by dividing
(i) the Pool Balance as at such date by (ii) the original
aggregate face amount of the Certificates. The Pool Factor
as of any Distribution Date shall be computed after giving
effect to the payment of principal, if any, on the
Equipment Notes or other Trust Property and the
distribution thereof to be made on such Distribution Date.
Postponed Notes: Means (i) the Delayed Equipment Notes
and (ii) the Equipment Notes to be held in the Trust as to
which a Postponement Notice shall have been delivered
pursuant to Section 2.01(b).
Postponement Notice: Means an Officer's Certificate of
the Company (1) requesting that the Trustee temporarily
postpone the purchase pursuant to one or more of the
9
Financing Agreements of certain of the Equipment Notes to a
date which is later than the Issuance Date, (2) identifying
the amount of the purchase price of each such Equipment
Note and the aggregate purchase price for all such
Equipment Notes, (3) setting forth the reasons for such
postponement and (4) with respect to each such Equipment
Note, either (a) setting or resetting a new Transfer Date
(which shall be on or prior to the applicable Cut-off Date)
for payment by the Trustee of such purchase price and
issuance of the related Equipment Note, or (b) indicating
that such new Transfer Date (which shall be on or prior to
the applicable Cut-off Date) will be set by subsequent
written notice not less than one Business Day prior to such
new Transfer Date.
Private Placement Legend: Has the meaning specified in
Section 3.02.
PTC Event of Default: Means any failure to pay within
10 Business Days of the due date thereof: (i) the
outstanding Pool Balance on January 2, 2016 or (ii)
interest due on the Certificates on any Distribution Date
(unless the Subordination Agent shall have made an Interest
Drawing (as defined in the Intercreditor Agreement) with
respect thereto in an amount sufficient to pay such
interest and shall have distributed such amount to the
Certificateholders).
QIB: Means a qualified institutional buyer as defined
in Rule 144A.
Record Date: Means (i) for Scheduled Payments to be
distributed on any Regular Distribution Date, other than
the final distribution, the 15th day (whether or not a
Business Day) preceding such Regular Distribution Date, and
(ii) for Special Payments to be distributed on any Special
Distribution Date, other than the final distribution, the
15th day (whether or not a Business Day) preceding such
Special Distribution Date.
Refunding Agreements: Has the meaning specified in the
Indentures.
Register and Registrar: Mean the register maintained
and the registrar appointed pursuant to Sections 3.04
and 7.12.
Registration Rights Agreement: Means the Registration
Rights Agreement dated May 20, 1996, among the Initial
Purchasers, the Trustee, the Other Trustees and the Company,
as amended, supplemented or otherwise modified from time to
time in accordance with its terms.
10
Registration Statement: Means the Registration
Statement defined in the Registration Rights Agreement.
Regular Distribution Date: With respect to
distributions of Scheduled Payments in respect of the
Certificates, means each date designated as a Regular
Distribution Date in this Agreement, until payment of all
the Scheduled Payments to be made under the Equipment Notes
held in the Trust have been made; provided, however, that,
if any such day shall not be a Business Day, the related
distribution shall be made on the next succeeding Business
Day without additional interest.
Regulation S: Means Regulation S under the Securities
Act or any successor regulation thereto.
Responsible Officer: With respect to the Trustee, any
Loan Trustee and any Owner Trustee, means any officer in
the Corporate Trust Office of the Trustee, Loan Trustee or
Owner Trustee or any other officer customarily performing
functions similar to those performed by the persons who at
the time shall be such officers, respectively, or to whom
any corporate trust matter is referred because of his
knowledge of and familiarity with a particular subject.
Rule 144A: Means Rule 144A under the Securities Act
and any successor rule thereto.
Scheduled Payment: With respect to any Equipment Note,
means (i) any payment of principal and interest on such
Equipment Note (other than any such payment which is not in
fact received by the Subordination Agent within five days
of the date on which such payment is scheduled to be made)
due from the obligor thereon or (ii) any payment of
interest on the Certificates with funds drawn under the
Liquidity Facility, which payment represents the
installment of principal at the stated maturity of such
installment of principal on such Equipment Note, the
payment of regularly scheduled interest accrued on the
unpaid principal amount of such Equipment Note, or both;
provided that any payment of principal, premium, if any, or
interest resulting from the redemption or purchase of any
Equipment Note shall not constitute a Scheduled Payment.
SEC: Means the Securities and Exchange Commission, as
from time to time constituted or created under the
Securities Exchange Act of 1934, as amended, or, if at any
time after the execution of this instrument such Commission
is not existing and performing the duties now assigned to
it under the Trust Indenture Act, then the body performing
such duties on such date.
11
Securities Act: Means the United States Securities Act
of 1933, as amended from time to time, or any successor
thereto.
Special Distribution Date: Means each date on which a
Special Payment is to be distributed as specified in this
Agreement; provided, however, that, if any such day shall
not be a Business Day, the related distribution shall be
made on the next succeeding Business Day without additional
interest.
Special Payment: Means (i) any payment (other than a
Scheduled Payment) in respect of, or any proceeds of, any
Equipment Note or Trust Indenture Estate (as defined in
each Indenture), (ii) the amounts required to be
distributed pursuant to the last paragraph of Section
2.01(b) or (iii) the amounts required to be distributed
pursuant to the penultimate paragraph of Section 2.01(b).
Special Payments Account: Means the account or
accounts created and maintained pursuant to Section 4.01(b).
Specified Investments: Means, with respect to
investments to be made with Escrowed Funds pursuant to
Section 2.01(b) hereof, (i) obligations of, or guaranteed
by, the United States Government or agencies thereof, (ii)
open market commercial paper of any corporation
incorporated under the laws of the United States of America
or any State thereof rated at least P-2 or its equivalent
by Moody's Investors Service, Inc. or at least A-2 or its
equivalent by Standard & Poor's Ratings Group, (iii)
certificates of deposit issued by commercial banks
organized under the laws of the United States or of any
political subdivision thereof having a combined capital and
surplus in excess of $100,000,000, which banks or their
holding companies have a short-term deposit rating of P1 by
Moody's Investors Service, Inc. or its equivalent by
Standard & Poor's Ratings Group; provided, however, that
the aggregate amount at any one time so invested in
certificates of deposit issued by any one bank shall not
exceed 5% of such bank's capital and surplus, (iv) U.S.
dollar denominated offshore certificates of deposit issued
by, or offshore time deposits with, any commercial bank
described in clause (iii) above or any subsidiary thereof
and (v) repurchase agreements with any financial
institution having combined capital and surplus of at least
$100,000,000 with respect to any of the obligations
described in clauses (i) through (iv) above as collateral;
provided further that if all of the above investments are
unavailable, all amounts to be invested may be used to
12
purchase Federal Funds from an entity described in
clause (iii) above.
Subordination Agent: Has the meaning specified in the
Intercreditor Agreement.
Temporary Offshore Global Certificates: Has the
meaning specified in Section 3.01.
Transfer Date: Has the meaning assigned to the term
"Refunding Date" or "Funding Date" in each Financing
Agreement.
Triggering Event: Has the meaning assigned to such
term in the Intercreditor Agreement.
Trust: Means the trust created by this Agreement, the
estate of which consists of the Trust Property.
Trust Indenture Act: Except as otherwise provided in
Section 9.06, means the United States Trust Indenture Act of
1939 as in force at the date hereof.
Trust Property: Means (i) the Equipment Notes held as
the property of the Trust and 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 Escrow
Account, the Certificate Account and the Special Payments
Account, and (iii) all rights of the Trust and the Trustee,
on behalf of the Trust, under the Intercreditor Agreement
and the Liquidity Facility, including, without limitation,
all rights to receive certain payments thereunder, and all
monies paid to the Trustee on behalf of the Trust pursuant
to the Intercreditor Agreement or the Liquidity Facility.
Trustee: Means Wilmington Trust Company, or its
successor in interest, and any successor or other trustee
appointed as provided herein.
Trustee's Lien: Has the meaning specified in Section
7.17.
U.S. Global Certificate: Has the meaning specified in
Section 3.01.
U.S. Physical Certificates: Has the meaning specified
in Section 3.01.
Section 1.02. Compliance Certificates and Opinions.
Upon any application or request by the Company, any Owner Trustee
or any Loan Trustee to the Trustee to take any action under any
13
provision of this Agreement, the Company, such Owner Trustee or
such Loan Trustee, as the case may be, shall furnish to the
Trustee (i) an Officer's Certificate stating that, in the opinion
of the signers, all conditions precedent, if any, provided for in
this Agreement relating to the proposed action have been complied
with and (ii) an Opinion of Counsel stating that in the opinion
of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or
request as to which the furnishing of such documents is
specifically required by any provision of this Agreement relating
to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this
Agreement (other than a certificate provided pursuant to Section
8.04(d)) shall include:
(1) a statement that each individual signing such
certificate or opinion has read such covenant or condition
and the definitions in this Agreement relating thereto;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are
based;
(3) a statement that, in the opinion of each such
individual, he has made such examination or investigation
as is necessary to enable him to express an informed
opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been
complied with.
Section 1.03. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by
the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters and any such
Person may certify or give an opinion as to such matters in one
or several documents.
Where any Person is required to make, give or execute
two or more applications, requests, consents, certificates,
statements, opinions or other instruments under this Agreement
14
or, in respect of the Certificates, this Agreement, they may, but
need not, be consolidated and form one instrument.
Section 1.04. Directions of Certificateholders. (a)
Any direction, consent, request, demand, authorization, notice,
waiver or other action provided by this Agreement to be given or
taken by Certificateholders (a "Direction") may be embodied in
and evidenced by one or more instruments of substantially similar
tenor signed by such Certificateholders in person or by an agent
or proxy duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective
when such instrument or instruments are delivered to the Trustee
and, where it is hereby expressly required pursuant to this
Agreement, to the Company or any Loan Trustee. Proof of execution
of any such instrument or of a writing appointing any such agent
or proxy shall be sufficient for any purpose of this Agreement
and conclusive in favor of the Trustee, the Company and any Loan
Trustee, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person
of any such instrument or writing may be proved by the
certificate of any notary public or other officer of any
jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument
acknowledged to him the execution thereof, or by an affidavit of
a witness to such execution sworn to before any such notary or
such other officer and where such execution is by an officer of a
corporation or association or a member of a partnership, on
behalf of such corporation, association or partnership, such
certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such
instrument or writing, or the authority of the Person executing
the same, may also be proved in any other reasonable manner which
the Trustee deems sufficient.
(c) In determining whether the Certificateholders of
the requisite Fractional Undivided Interests of Certificates
Outstanding have given any Direction under this Agreement,
Certificates owned by the Company or any Affiliate thereof shall
be disregarded and deemed not to be Outstanding for purposes of
any such determination. In determining whether the Trustee shall
be protected in relying upon any such Direction, only
Certificates which the Trustee knows to be so owned shall be so
disregarded. Notwithstanding the foregoing, (i) if any such
Person owns 100% of the Certificates Outstanding, such
Certificates shall not be so disregarded, and (ii) if any amount
of Certificates so owned by any such Person have been pledged in
good faith, such Certificates shall not be disregarded if the
pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Certificates and
that the pledgee is not the Company or any Affiliate thereof.
15
(d) The Company may at its option, by delivery of an
Officer's Certificate to the Trustee, set a record date to
determine the Certificateholders entitled to give any Direction.
Notwithstanding Section 316(c) of the Trust Indenture Act, such
record date shall be the record date specified in such Officer's
Certificate, which shall be a date not more than 30 days prior to
the first solicitation of Certificateholders in connection
therewith. If such a record date is fixed, such Direction may be
given before or after such record date, but only the
Certificateholders of record at the close of business on such
record date shall be deemed to be Certificateholders for the
purposes of determining whether Certificateholders of the
requisite proportion of Outstanding Certificates have authorized
or agreed or consented to such Direction, and for that purpose
the Outstanding Certificates shall be computed as of such record
date; provided that no such Direction by the Certificateholders
on such record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Agreement not
later than one year after such record date.
(e) Any Direction by the Holder of any Certificate
shall bind the Holder of every Certificate issued upon the
transfer thereof or in exchange therefor or in lieu thereof,
whether or not notation of such Direction is made upon such
Certificate.
(f) Except as otherwise provided in Section 1.04(c),
Certificates owned by or pledged to any Person shall have an
equal and proportionate benefit under the provisions of this
Agreement, without preference, priority, or distinction as among
all of the Certificates.
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES;
ACQUISITION OF EQUIPMENT NOTES
Section 2.01. Issuance of Certificates; Acquisition of
Equipment Notes. (a) The Trustee is hereby directed to execute
and deliver the Intercreditor Agreement, the Registration Rights
Agreement and each of the Financing Agreements on or prior to the
Issuance Date, each in the form delivered to the Trustee by the
Company. Upon request of the Company and the satisfaction of the
closing conditions specified in each of the Financing Agreements,
the Trustee shall execute, deliver and authenticate Certificates
equalling in the aggregate the aggregate principal amount of the
Equipment Notes to be purchased by the Trustee pursuant to each
of the Financing Agreements on the Transfer Date, and evidencing
the entire ownership interest in the Trust. The Trustee shall
issue and sell such Certificates, in authorized denominations and
16
in such Fractional Undivided Interests, so as to result in the
receipt by the Trustee of consideration in an amount equal to the
aggregate principal amount of such Equipment Notes and,
concurrently therewith, the Trustee shall purchase, pursuant to
the terms and conditions of the Financing Agreements, the
Equipment Notes at a purchase price equal to the amount of such
consideration so received. Except as provided in Sections 3.04
and 3.07 hereof, the Trustee shall not execute, authenticate or
deliver Certificates in excess of the aggregate amount specified
in this paragraph. The provisions of this Subsection (a) are
subject to the provisions of Subsection (b) below.
(b) On or prior to the Issuance Date, the Company may
deliver to the Trustee a Postponement Notice relating to one or
more Postponed Notes (other than the Delayed Equipment Notes)
(which Postponement Notice may be given by the Company only if
one or more conditions to the purchase of such Postponed Notes by
the Trustee shall not have been satisfied or waived pursuant to
the related Financing Agreement). The Trustee shall postpone the
purchase of the Postponed Notes from the consideration received
from the sale of Certificates and shall promptly deposit funds in
an amount equal to the purchase price of such Postponed Notes
(the "Escrowed Funds") into an escrow account (the "Escrow
Account") with the Trustee to be maintained as a part of the
Trust. The Escrowed Funds so deposited shall be invested by the
Trustee at the direction and risk of the Company in Specified
Investments (i) maturing no later than any scheduled Transfer
Date relating to the Postponed Notes or (ii) if no such Transfer
Date has been scheduled, maturing on the next Business Day, or
(iii) if the Company has given notice to the Trustee that any
Postponed Notes will not be issued, with respect to the portion
of the Escrowed Funds relating to such Postponed Notes, maturing
on the next applicable Special Distribution Date, if such
investments are reasonably available for purchase. The Trustee
shall make withdrawals from the Escrow Account only as provided
in this Agreement. Upon request of the Company on one or more
occasions and the satisfaction of the closing conditions
specified in the applicable Financing Agreements on or prior to
the Cut-off Date, the Trustee shall purchase the applicable
Postponed Notes with the Escrowed Funds withdrawn from the Escrow
Account. The purchase price shall equal the principal amount of
such Postponed Notes.
The Trustee shall hold all Specified Investments until
the maturity thereof and will not sell or otherwise transfer
Specified Investments. If Specified Investments held in an Escrow
Account mature prior to any applicable Transfer Date, any
proceeds received on the maturity of such Specified Investments
(other than any earnings thereon) shall be reinvested by the
Trustee at the direction and risk of the Company in Specified
Investments maturing as provided in the preceding paragraph. The
17
Company shall pay to the Trustee for deposit to the Escrow
Account an amount equal to any losses on such Specified
Investments as incurred.
On the Initial Regular Distribution Date, the Company
will pay (in immediately available funds) to the Trustee an
amount equal to (i) the sum of (A) the interest that would have
accrued on any Postponed Notes purchased on or prior to the
Initial Regular Distribution Date if such Postponed Notes had
been purchased on the Issuance Date, from and including the
Issuance Date to but excluding the date of such purchase and (B)
the interest that would have accrued on any Postponed Notes not
purchased on or prior to the Initial Regular Distribution Date
(other than any Postponed Notes for which a Special Distribution
Date specified in the immediately succeeding paragraph has
occurred on or prior to the Initial Regular Distribution Date) if
such Postponed Notes had been purchased on the Issuance Date,
from and including the Issuance Date to but excluding the Initial
Regular Distribution Date, minus (ii) the earnings on Specified
Investments received by the Trustee from and including the later
of the Issuance Date or the date immediately preceding the
Initial Regular Distribution Date on which an amount has been
paid pursuant to the immediately succeeding paragraph to but
excluding the Initial Regular Distribution Date. On the second
Regular Distribution Date, the Company will pay (in immediately
available funds) to the Trustee an amount equal to the interest
that would have accrued on any Postponed Notes purchased after
the Initial Regular Distribution Date and on or prior to the
Cut-off Date if such Postponed Notes had been purchased on the
Initial Regular Distribution Date, from and including the Initial
Regular Distribution Date to but excluding the date of such
purchase, minus (ii) the earnings on Specified Investments
received by the Trustee from and including the later of the
Initial Regular Distribution Date or the date immediately
preceding the second Regular Distribution Date on which an amount
has been paid pursuant to either of the two succeeding paragraphs
to but excluding the second Regular Distribution Date.
If the Company notifies the Trustee prior to the
Cutoff Date that any Postponed Notes will not be issued on or
prior to the Cut-off Date for any reason, on the next Special
Distribution Date occurring more than 20 days following the date
of such notice (i) the Company shall pay to the Trustee for
deposit in the Special Payments Account, in immediately available
funds, an amount equal to the sum of (A) the interest that would
have accrued on the Postponed Notes designated in such notice at
a rate equal to the interest rate applicable to the Certificates
from and including the Issuance Date (if such Special
Distribution Date shall occur on or prior to the Initial Regular
Distribution Date) or the Initial Regular Distribution Date (if
18
such Special Distribution Date occurs after the Initial Regular
Distribution Date) to but excluding such Special Distribution
Date and (B) if any such Postponed Notes shall be Delayed
Equipment Notes and shall not be issued for any reason other than
the occurrence of an Event of Loss (as defined in the related
Indenture) with respect to the Aircraft relating to such Delayed
Equipment Notes, 2% of the aggregate principal amount of such
Delayed Equipment Notes and (ii) the Trustee shall transfer an
amount equal to that amount of Escrowed Funds that would have
been used to purchase the Postponed Notes designated in such
notice plus the amount paid by the Company pursuant to the
immediately preceding clause (i) to the Special Payments Account
for distribution as a Special Payment in accordance with the
provisions hereof.
If, on the Cut-off Date, an amount equal to less than
all of the Escrowed Funds (other than Escrowed Funds referred to
in the immediately preceding paragraph) has been used to purchase
Postponed Notes, on the next Special Distribution Date occurring
more than 20 days following the Cut-off Date (i) the Company
shall pay to the Trustee for deposit in the Special Payments
Account, in immediately available funds, an amount equal to the
sum of (A) the interest that would have accrued on Postponed
Notes originally contemplated to be purchased with such unused
Escrowed Funds (other than Escrowed Funds referred to in the
immediately preceding paragraph) but not so purchased at a rate
equal to the interest rate applicable to the Certificates from
and including the Initial Regular Distribution Date to but
excluding such Special Distribution Date and (B) if any such
Postponed Notes shall be Delayed Equipment Notes and shall not
have been purchased for any reason other than the occurrence of
an Event of Loss (as defined in the related Indenture) with
respect to the Aircraft relating to such Delayed Equipment Notes,
2% of the aggregate principal amount of such Delayed Equipment
Notes and (ii) the Trustee shall transfer such unused Escrowed
Funds and the amount paid by the Company pursuant to the
immediately preceding clause (i) to the Special Payments Account
for distribution as a Special Payment in accordance with the
provisions hereof.
Section 2.02. Acceptance by Trustee. The Trustee, upon
the execution and delivery of this Agreement, acknowledges its
acceptance of all right, title and interest in and to the
Equipment Notes acquired pursuant to Section 2.01 hereof and the
Financing Agreements and declares that the Trustee holds and will
hold such right, title and interest, together with all other
property constituting the Trust Property, for the benefit of all
then present and future Certificateholders, upon the trusts
herein set forth. Subject to Section 7.14, the Trustee shall take
all actions reasonably necessary to effect the registration of
all such Equipment Notes in the name of the Subordination
19
Agent. By its payment for and acceptance of each Certificate
issued to it under this Agreement, each initial Certificateholder
as grantor of the Trust thereby joins in the creation and
declaration of the Trust.
Section 2.03. Limitation of Powers. The Trust is
constituted solely for the purpose of making the investment in
the Equipment Notes, and, except as set forth herein, the Trustee
shall not be authorized or empowered to acquire any other
investments or engage in any other activities and, in particular,
the Trustee shall not be authorized or empowered to do anything
that would cause such Trust to fail to qualify as a "grantor
trust" for federal income tax purposes (including as subject to
this restriction, acquiring any Aircraft (as defined in the
respective Indentures) by bidding such Equipment Notes or
otherwise, or taking any action with respect to any such Aircraft
once acquired).
ARTICLE III
THE CERTIFICATES
Section 3.01. Title, Form, Denomination and Execution
of Certificates. (a) The Initial Certificates shall be known as
the "7.75% 1996-2A Initial Pass Through Certificates" and the
Exchange Certificates shall be known as the "7.75% 1996-2A
Exchange Pass Through Certificates", in each case, of the Trust.
Each Certificate will represent a fractional undivided interest
in the Trust and shall be substantially in the form set forth as
Exhibit A hereto, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted
by this Agreement and may have such letters, numbers or other
marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be
determined by the officers executing such Certificates, as
evidenced by their execution of the Certificates. Any portion of
the text of any Certificate may be set forth on the reverse
thereof, with an appropriate reference thereto on the face of the
Certificate.
(b) The Initial Certificates shall be issued only in
fully registered form without coupons and only in denominations
of $100,000 or integral multiples of $1,000 in excess thereof,
except that one Certificate may be issued in a denomination of
less than $100,000. The Exchange Certificates will be issued in
denominations of $1,000 or integral multiples thereof. Each
Certificate shall be dated the date of its authentication. The
aggregate Fractional Undivided Interest of Certificates shall not
at any time exceed $82,513,000.
20
(c) Initial Certificates offered and sold in reliance
on Rule 144A shall be issued initially in the form of a single
permanent global Certificate in registered form, substantially in
the form set forth as Exhibit A hereto (the "U.S. Global
Certificate"), duly executed and authenticated by the Trustee as
hereinafter provided. The U.S. Global Certificate will be
registered in the name of a nominee for the Depositary and
deposited with the Trustee, as custodian for the Depositary. The
aggregate principal amount of the U.S. Global Certificate may
from time to time be increased or decreased by adjustments made
on the records of the Depositary or its nominee, or of the
Trustee, as custodian for the Depositary or its nominee, as
hereinafter provided.
(d) Initial Certificates offered and sold in offshore
transactions in reliance on Regulation S shall be issued
initially in the form of a single temporary global Certificate in
registered form, substantially in the form set forth as Exhibit A
hereto (the "Temporary Offshore Global Certificate") duly
executed and authenticated by the Trustee as hereinafter
provided. The Temporary Offshore Global Certificates will be
registered in the name of a nominee of the Depositary for credit
to the account of the Agent Members acting as depositaries for
Euroclear and Cedel and deposited with the Trustee as custodian
for the Depositary. At any time following June 29, 1996 (the
"Offshore Certificates Exchange Date"), upon receipt by the
Trustee of a certificate substantially in the form of Exhibit B
hereto, a single permanent global Certificate in registered form
substantially in the form set forth in Exhibit A (the "Permanent
Offshore Global Certificate"; and together with the Temporary
Offshore Global Certificate, the "Offshore Global Certificates"),
duly executed and authenticated by the Trustee as hereinafter
provided, shall be registered in the name of a nominee for the
Depositary and deposited with the Trustee, as custodian for the
Depositary, and the Registrar shall reflect on its books and
records the date of such transfer and a decrease in the principal
amount of any Temporary Offshore Global Certificate in an amount
equal to the principal amount of the beneficial interest in such
Temporary Offshore Global Certificate transferred. The U.S.
Global Certificate and the Offshore Global Certificates are
sometimes referred to as the "Global Certificates".
(e) Initial Certificates offered and sold to
Institutional Accredited Investors shall be issued in the form of
permanent certificated Certificates in registered form in
substantially the form set forth as Exhibit A hereto (the "U.S.
Physical Certificates"). Certificates issued pursuant to Section
3.05(b) in exchange for interests in any Offshore Global
Certificate shall be in the form of permanent certificated
Certificates in registered form substantially in the form set
forth in Exhibit A (the "Offshore Physical Certificates"). The
21
Offshore Physical Certificates and U.S. Physical Certificates are
sometimes collectively herein referred to as the "Physical
Certificates".
(f) The definitive Certificates shall be in registered
form and shall be typed, printed, lithographed or engraved or
produced by any combination of these methods or may be produced
in any other manner, all as determined by the officers executing
such Certificates, as evidenced by their execution of such
Certificates.
Section 3.02. Restrictive Legends. (a) Subject to
Section 3.06, unless and until (i) an Initial Certificate is sold
under an effective Registration Statement or (ii) an Initial
Certificate is exchanged for an Exchange Certificate pursuant to
an effective Exchange Offer Registration Statement, in each case
as provided for in the Registration Rights Agreement, each Global
Certificate (other than the Permanent Offshore Global
Certificate) and each U.S. Physical Certificate shall bear the
following legend (the "Private Placement Legend") on the face
thereof:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR
(C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
CERTIFICATE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT IT
WILL NOT WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL
ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS
CERTIFICATE WAS HELD BY CONTINENTAL AIRLINES, INC., THE
TRUSTEE OR ANY AFFILIATE OF ANY OF SUCH PERSONS RESELL OR
OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A
UNDER THE SECURITIES ACT, (B) INSIDE THE UNITED STATES TO
AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR
MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATE THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE
(THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE),
(C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D)
22
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (E)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT; AND (3) AGREES THAT 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 WITHIN THREE YEARS
AFTER THE LATER OF THE ORIGINAL ISSUANCE OF THIS
CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS
HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY
AFFILIATE OF ANY OF SUCH PERSONS THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO
THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO
THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
(b) Each Global Certificate shall also bear the
following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE TRUSTEE 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 HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR
TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE
PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN.
Section 3.03. Authentication of Certificates. (a) The
Trustee shall duly execute, authenticate and deliver Certificates
in authorized denominations equalling in the aggregate the
aggregate principal amount of the Equipment Notes to be purchased
by the Trustee pursuant to the Financing Agreements and
evidencing the entire ownership of the Trust.
23
(b) No Certificate shall be entitled to any benefit
under this Agreement or be valid or obligatory for any purpose,
unless there appears on such Certificate a certificate of
authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Certificate
shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder.
Section 3.04. Transfer and Exchange. (a) 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 this
Agreement a register (the "Register") for the Certificates in
which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of the
Certificates and of transfers and exchanges of the Certificates
as herein provided. The Trustee shall initially be the registrar
(the "Registrar") for the purpose of registering the Certificates
and transfers and exchanges of the Certificates as herein
provided. A Certificateholder may transfer a Certificate by
written application to the Registrar stating the name of the
proposed transferee and otherwise complying with the terms of
this Agreement, including providing a written certificate or
other evidence of compliance with any restrictions on transfer.
No such transfer shall be effected until, and such transferee
shall succeed to the rights of a Certificateholder only upon,
final acceptance and registration of the transfer by the
Registrar in the Register. Prior to the registration of any
transfer by a Certificateholder as provided herein, the Trustee
shall treat the person in whose name the Certificate is
registered as the owner thereof for all purposes, and the Trustee
shall not be affected by notice to the contrary. Furthermore, the
Depositary shall, by acceptance of a Global Certificate, agree
that transfers of beneficial interests in such Global Certificate
may be effected only through a book-entry system maintained by
the Depositary (or its agent), and that ownership of a beneficial
interest in the Certificate shall be required to be reflected in
a book entry. When Certificates are presented to the Registrar
with a request to register the transfer or to exchange them for
an equal face amount of Certificates of other authorized
denominations, the Registrar shall register the transfer or make
the exchange as requested if its requirements for such
transactions are met. To permit registrations of transfers and
exchanges in accordance with the terms, conditions and
restrictions hereof, the Trustee shall execute and authenticate
Certificates at the Registrar's request. No service charge shall
be made for any registration of transfer or exchange of the
Certificates, but the Trustee may require payment by the
transferor of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith
(other than any such transfer taxes or other similar governmental
24
charges payable upon exchanges pursuant to Section 3.10 or 9.07).
Section 3.05. Book-Entry Provisions for U.S. Global
Certificate and Offshore Global Certificates. (a) Members of, or
participants in, the Depositary ("Agent Members") shall have no
rights under this Agreement with respect to any Global
Certificate held on their behalf by the Depositary, or the
Trustee as its custodian, and the Depositary may be treated by
the Trustee and any agent of the Trustee as the absolute owner of
such Global Certificate for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the
Trustee or any agent of the Trustee from giving effect to any
written certification, proxy or other authorization furnished by
the Depositary or shall impair, as between the Depositary and its
Agent Members, the operation of customary practices governing the
exercise of the rights of a holder of any Certificate. Upon the
issuance of any Global Certificate, the Registrar or its duly
appointed agent shall record a nominee of the Depositary as the
registered holder of such Global Certificate.
(b) Transfers of any Global Certificate shall be
limited to transfers of such Global Certificate or Offshore
Global Certificate in whole, but not in part, to nominees of the
Depositary, its successor or such successor's nominees.
Beneficial interests in the U.S. Global Certificate and any
Offshore Global Certificate may be transferred in accordance with
the rules and procedures of the Depositary and the provisions of
Section 3.06. Beneficial interests in the U.S. Global Certificate
or an Offshore Global Certificate shall be delivered to all
beneficial owners in the form of U.S. Physical Certificates or
Offshore Physical Certificates, as the case may be, if (i) the
Depositary notifies the Trustee that it is unwilling or unable to
continue as Depositary for the U.S. Global Certificate or such
Offshore Global Certificate, as the case may be, and a successor
depositary is not appointed by the Trustee within 90 days of such
notice or (ii) an Event of Default has occurred and is continuing
and the Registrar has received a request from the Depositary to
issue Physical Certificates.
(c) Any beneficial interest in one of the Global
Certificates that is transferred to a Person who takes delivery
in the form of an interest in the other Global Certificate will,
upon such transfer, cease to be an interest in such Global
Certificate and become an interest in the other Global
Certificate and, accordingly, will thereafter be subject to all
transfer restrictions, if any, and other procedures applicable to
beneficial interests in such other Global Certificate for as long
as it remains such an interest.
(d) [Intentionally omitted.]
25
(e) In connection with the transfer of the entire U.S.
Global Certificate or an entire Offshore Global Certificate to
the beneficial owners thereof pursuant to paragraph (b) of this
Section 3.05, such U.S. Global Certificate or Offshore Global
Certificate, as the case may be, shall be deemed to be
surrendered to the Trustee for cancellation, and the Trustee
shall execute, authenticate and deliver, to each beneficial owner
identified by the Depositary in exchange for its beneficial
interest in such U.S. Global Certificate or Offshore Global
Certificate, as the case may be, an equal aggregate principal
amount of U.S. Physical Certificates or Offshore Physical
Certificates, as the case may be, of authorized denominations.
(f) Any U.S. Physical Certificate delivered in
exchange for an interest in the U.S. Global Certificate pursuant
to paragraph (b) of this Section 3.05 shall, except as otherwise
provided by paragraph (f) of Section 3.06, bear the Private
Placement Legend.
(g) Any Offshore Physical Certificate delivered in
exchange for an interest in an Offshore Global Certificate
pursuant to paragraph (b) of this Section shall, except as
otherwise provided by paragraph (f) of Section 3.06, bear the
applicable legend regarding transfer restrictions set forth in
Section 3.02(a).
(h) The registered holder of the U.S. Global
Certificate or any Offshore Global Certificate may grant proxies
and otherwise authorize any Person, including Agent Members and
Persons that may hold interests through Agent Members, to take
any action which a Holder is entitled to take under this
Agreement or the Certificates.
Section 3.06. Special Transfer Provisions. Unless and
until (i) an Initial Certificate is sold under an effective
Registration Statement, or (ii) an Initial Certificate is
exchanged for an Exchange Certificate pursuant to an effective
Exchange Offer Registration Statement, in each case pursuant to
the Registration Rights Agreement, the following provisions shall
apply to such Initial Certificates:
(a) Transfers to Non-QIB Institutional Accredited
Investors. The following provisions shall apply with respect to
the registration of any proposed transfer of a Certificate to any
Institutional Accredited Investor which is not a QIB (excluding
transfers to or by Non-U.S. Persons):
(i) The Registrar shall register the transfer of any
Certificate, whether or not such Certificate bears the
Private Placement Legend, if (x) the requested transfer is
at least three years after the later of the original issue
26
date of the Certificates and the last date on which such
Certificate was held by the Company or any affiliate of any
such persons or (y) the proposed transferee has delivered
to the Registrar a letter substantially in the form of
Exhibit D hereto and the aggregate principal amount of the
Certificates being transferred is at least $100,000.
(ii) If the proposed transferor is an Agent Member
holding a beneficial interest in the U.S. Global
Certificate, upon receipt by the Registrar of (x) the
documents, if any, required by paragraph (i) and (y)
instructions given in accordance with the Depositary's and
the Registrar's procedures, the Registrar shall reflect on
its books and records the date of the transfer and a
decrease in the principal amount of such U.S. Global
Certificate in an amount equal to the principal amount of
the beneficial interest in such U.S. Global Certificate to
be transferred, and the Company shall execute, and the
Trustee shall authenticate and deliver to the transferor or
at its direction, one or more U.S. Physical Certificates of
like tenor and amount.
(b) Transfers to QIBs. The following provisions shall
apply with respect to the registration of any proposed transfer
of an Initial Certificate to a QIB (excluding Non-U.S. Persons):
(i) If the Certificate to be transferred consists of
U.S. Physical Certificates or an interest in any Temporary
Offshore Global Certificate, the Registrar shall register
the transfer if such transfer is being made by a proposed
transferor who has checked the box provided for on the form
of Initial Certificate stating, or has otherwise advised
the Trustee and the Registrar in writing, that the sale has
been made in compliance with the provisions of Rule 144A to
a transferee who has signed the certification provided for
on the form of Initial Certificate stating, or has
otherwise advised the Trustee and the Registrar in writing,
that it is purchasing the Initial Certificate for its own
account or an account with respect to which it exercises
sole investment discretion and that it, or the Person on
whose behalf it is acting with respect to any such account,
is a QIB within the meaning of Rule 144A, and is aware that
the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information
regarding the Trust and/or the Company as it has requested
pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is
relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule
144A.
27
(ii) Upon receipt by the Registrar of the documents
referred to in clause (i) above and instructions given in
accordance with the Depositary's and the Registrar's
procedures therefor, the Registrar shall reflect on its
books and records the date of such transfer and an increase
in the principal amount of the U.S. Global Certificate in
an amount equal to the principal amount of the U.S.
Physical Certificates or interests in the Temporary
Offshore Global Certificate, as the case may be, being
transferred, and the Trustee shall cancel such Physical
Certificates or decrease the amount of such Temporary
Offshore Global Certificate so transferred.
(c) [intentionally omitted.]
(d) Transfers of Interests in the Permanent Offshore
Global Certificate or Offshore Physical Certificates. The
Registrar shall register any transfer of interests in the
Permanent Offshore Global Certificate or Offshore Physical
Certificates without requiring any additional certification.
(e) Transfers to Non-U.S. Persons at Any Time. The
following provisions shall apply with respect to any registration
of any transfer of an Initial Certificate to a Non-U.S. Person:
(i) Prior to the Offshore Certificates Exchange Date,
the Registrar shall register any proposed transfer of an
Initial Certificate to a Non-U.S. Person upon receipt of a
certificate substantially in the form set forth as Exhibit
C hereto from the proposed transferor.
(ii) On and after the Offshore Certificates Exchange
Date, the Registrar shall register any proposed transfer to
any Non-U.S. Person if the Certificate to be transferred is
a U.S. Physical Certificate or an interest in the U.S.
Global Certificate, upon receipt of a certificate
substantially in the form of Exhibit C from the proposed
transferor. The Registrar shall promptly send a copy of
such certificate to the Company.
(iii) Upon receipt by the Registrar of (x) the
documents, if any, required by paragraph (ii) and (y)
instructions in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its
books and records the date of such transfer and a decrease
in the principal amount of such U.S. Global Certificate in
an amount equal to the principal amount of the beneficial
interest in such U.S. Global Certificate to be transferred,
and (B) upon receipt by the Registrar of instructions given
in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and
28
records the date and an increase in the principal amount of
the Offshore Global Certificate in an amount equal to the
principal amount of the U.S. Physical Certificate or the
U.S. Global Certificate, as the case may be, to be
transferred, and the Trustee shall cancel the Physical
Certificate, if any, so transferred or decrease the amount
of such U.S. Global Certificate.
(f) Private Placement Legend. Upon the transfer,
exchange or replacement of Certificates not bearing the Private
Placement Legend, the Registrar shall deliver Certificates that
do not bear the Private Placement Legend. Upon the transfer,
exchange or replacement of Certificates bearing the Private
Placement Legend, the Registrar shall deliver only Certificates
that bear the Private Placement Legend unless either (i) the
circumstances contemplated by paragraph (a)(i)(x) or (e)(ii) of
this Section 3.06 exist or (ii) there is delivered to the
Registrar an Opinion of Counsel to the effect that neither such
legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the
Securities Act.
(g) General. By its acceptance of any Certificate
bearing the Private Placement Legend, each Holder of such a
Certificate acknowledges the restrictions on transfer of such
Certificate set forth in this Agreement and agrees that it will
transfer such Certificate only as provided in this Agreement. The
Registrar shall not register a transfer of any Certificate unless
such transfer complies with the restrictions on transfer of such
Certificate set forth in this Agreement. In connection with any
transfer of Certificates, each Certificateholder agrees by its
acceptance of the Certificates to furnish the Registrar or the
Trustee such certifications, legal opinions or other information
as either of them may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or a
transaction not subject to, the registration requirements of the
Securities Act; provided that the Registrar shall not be required
to determine the sufficiency of any such certifications, legal
opinions or other information.
Until such time as no Certificates remain Outstanding,
the Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 3.05 or
this Section 3.06. 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.
Section 3.07. Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate is surrendered to
29
the Registrar or the Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate
and (b) there is delivered to the Registrar and the Trustee such
security, indemnity or bond, as may be required by them to save
each of them harmless, then, in the absence of notice to the
Registrar or the Trustee that such destroyed, lost or stolen
Certificate has been acquired by a bona fide purchaser, and
provided that the requirements of Section 8-405 of the Uniform
Commercial Code in effect in any applicable jurisdiction are met,
the Trustee shall execute, authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate or Certificates, in authorized
denominations and of like Fractional Undivided Interest and
bearing a number not contemporaneously outstanding.
In connection with the issuance of any new Certificate
under this Section 3.07, the Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee and the
Registrar) connected therewith.
Any duplicate Certificate issued pursuant to this
Section 3.07 shall constitute conclusive evidence of the
appropriate Fractional Undivided Interest in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Certificates.
Section 3.08. Persons Deemed Owners. Prior to due
presentment of a Certificate for registration of transfer, the
Trustee, the Registrar and any Paying Agent may treat the Person
in whose name any Certificate is registered (as of the day of
determination) as the owner of such Certificate for the purpose
of receiving distributions pursuant to Article IV and for all
other purposes whatsoever, and none of the Trustee, the Registrar
or any Paying Agent shall be affected by any notice to the
contrary.
Section 3.09. Cancellation. All Certificates
surrendered for payment or transfer or exchange shall, if
surrendered to the Trustee or any agent of the Trustee other than
the Registrar, be delivered to the Registrar for cancellation and
shall promptly be cancelled by it. No Certificates shall be
authenticated in lieu of or in exchange for any Certificates
cancelled as provided in this Section, except as expressly
permitted by this Agreement. All cancelled Certificates held by
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the Registrar shall be destroyed and a certification of their
destruction delivered to the Trustee.
Section 3.10. Temporary Certificates. Until definitive
Certificates are ready for delivery, the Trustee shall
authenticate temporary Certificates. Temporary Certificates shall
be substantially in the form of definitive Certificates but may
have insertions, substitutions, omissions and other variations
determined to be appropriate by the officers executing the
temporary Certificates, as evidenced by their execution of such
temporary Certificates. If temporary Certificates are issued, the
Trustee will cause definitive Certificates to be prepared without
unreasonable delay. After the preparation of definitive
Certificates, the temporary Certificates shall be exchangeable
for definitive Certificates upon surrender of the temporary
Certificates at the office or agency of the Trustee designated
for such purpose pursuant to Section 7.12, without charge to the
Certificateholder. Upon surrender for cancellation of any one or
more temporary Certificates, the Trustee shall execute,
authenticate and deliver in exchange therefor a like face amount
of definitive Certificates of authorized denominations. Until so
exchanged, the temporary Certificates shall be entitled to the
same benefits under this Agreement as definitive Certificates.
Section 3.11. Limitation of Liability for Payments.
All payments and distributions made to Certificateholders 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 Article IV of this Agreement. Each Certificateholder, by its
acceptance of a Certificate, agrees that it will look solely to
the income and proceeds from the Trust Property for any payment
or distribution due to such Certificateholder pursuant to the
terms of this Agreement and that it will not have any recourse to
the Company, the Trustee, the Loan Trustees, the Liquidity
Providers, the Owner Trustees or the Owner Participants, except
as otherwise expressly provided herein or in the Intercreditor
Agreement.
The Company is a party to this Agreement solely for
purposes of meeting the requirements of the Trust Indenture Act,
and therefore shall not have any right, obligation or liability
hereunder (except as otherwise expressly provided herein).
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ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS
Section 4.01. Certificate Account and Special Payments
Account. (a) The Trustee shall establish and maintain on behalf
of the Certificateholders a Certificate Account as one or more
non-interest-bearing accounts. The Trustee shall hold the
Certificate Account in trust for the benefit of the
Certificateholders, and shall make or permit withdrawals
therefrom only as provided in this Agreement. On each day when a
Scheduled Payment is made to the Trustee under the Intercreditor
Agreement, the Trustee upon receipt thereof shall immediately
deposit the aggregate amount of such Scheduled Payment in the
Certificate Account.
(b) The Trustee shall establish and maintain on behalf
of the Certificateholders a Special Payments Account as one or
more accounts, which shall be non-interest bearing except as
provided in Section 4.04. The Trustee shall hold the Special
Payments Account in trust for the benefit of the
Certificateholders and shall make or permit withdrawals therefrom
only as provided in this Agreement. On each day when one or more
Special Payments are made to the Trustee, the Trustee, upon
receipt thereof, shall immediately deposit the aggregate amount
of such Special Payments in the Special Payments Account.
(c) The Trustee shall present to the related Loan
Trustee of each Equipment Note such Equipment Note on the date of
its stated final maturity or, in the case of any Equipment Note
which is to be redeemed in whole pursuant to the related
Indenture, on the applicable redemption date under such
Indenture.
Section 4.02. Distributions from Certificate Account
and Special Payments Account. (a) On each Regular Distribution
Date or as soon thereafter as the Trustee has confirmed receipt
of the payment of all or any part of the Scheduled Payments due
on such date, the Trustee shall distribute out of the Certificate
Account the entire amount deposited therein pursuant to Section
4.01(a). There shall be so distributed to each Certificateholder
of record on the Record Date with respect to such Regular
Distribution Date (other than as provided in Section 11.01
concerning the final distribution) by check mailed to such
Certificateholder, at the address appearing in the Register, such
Certificateholder's pro rata share (based on the Fractional
Undivided Interest in the Trust held by such Certificateholder)
of the total amount in the Certificate Account, except that, with
respect to Certificates registered on the Record Date in the name
of the nominee of the Depositary (initially, such nominee to be
32
Cede & Co.), such distribution shall be made by wire transfer in
immediately available funds to the account designated by such
nominee.
(b) 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, 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). There shall be so distributed to each Certificateholder
of record on the Record Date with respect to such Special
Distribution Date (other than as provided in Section 11.01
concerning the final distribution) by check mailed to such
Certificateholder, at the address appearing in the Register, such
Certificateholder's pro rata share (based on the Fractional
Undivided Interest in the Trust held by such Certificateholder)
of the total amount in the Special Payments Account on account of
such Special Payment, except that, with respect to Certificates
registered on the Record Date in the name of the nominee of the
Depositary (initially, such nominee to be Cede & Co.), such
distribution shall be made by wire transfer in immediately
available funds to the account designated by such nominee.
(c) The Trustee shall, at the expense of the Company,
cause notice of each Special Payment to be mailed to each
Certificateholder at his address as it appears in the Register.
In the event of redemption or purchase of Equipment Notes held in
the Trust, such notice shall be mailed not less than 20 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 20 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),
(ii) the amount of the Special Payment for each $1,000
face amount Certificate (taking into account any payment to
be made by the Company pursuant to Section 2.01(b)) and the
amount thereof constituting principal, premium, if any, and
interest,
(iii) the reason for the Special Payment, and
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(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
Certificate.
If the amount of premium, if any, payable upon the redemption or
purchase of an 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 received will also be
distributed.
If any redemption of the Equipment Notes held in the
Trust is cancelled, the Trustee, as soon as possible after
learning thereof, shall cause notice thereof to be mailed to each
Certificateholder at its address as it appears on the Register.
Section 4.03. Statements to Certificateholders. (a) On
each Distribution Date, the Trustee will include with each
distribution to Certificateholders of a Scheduled Payment or
Special Payment, as the case may be, a statement setting forth
the following information (per $1,000 face amount Certificate as
to (i) and (ii) below):
(i) the amount of such distribution allocable to
principal and the amount allocable to premium, if any;
(ii) the amount of such distribution allocable to
interest; and
(iii) the Pool Balance and the Pool Factor.
With respect to the Certificates registered in the
name of Cede & Co., as nominee for the Depositary, on the Record
Date prior to each Distribution Date, the Trustee will request
from the Depositary a Securities Position Listing setting forth
the names of all Agent Members reflected on the Depositary's
books as holding interests in the Certificates on such Record
Date. On each Distribution Date, the Trustee will mail to each
such Agent Member the statement described above and will make
available additional copies as requested by such Agent Member for
forwarding to holders of interests in the 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 a Certificateholder of
record a statement containing the sum of the amounts determined
pursuant to clauses (a)(i) and (a)(ii) above with respect to the
Trust for such calendar year or, in the event such Person was a
Certificateholder of record during a portion of such calendar
34
year, for such portion of such year, and such other items as are
readily available to the Trustee and which a Certificateholder
shall reasonably request as necessary for the purpose of such
Certificateholder's preparation of its federal income tax
returns. Such statement and such other items shall be prepared on
the basis of information supplied to the Trustee by the Agent
Members and shall be delivered by the Trustee to such Agent
Members to be available for forwarding by such Agent Members to
the holders of interests in the Certificates in the manner
described in Section 4.03(a).
Section 4.04. Investment of Special Payment Moneys.
Any money received by the Trustee pursuant to Section 4.01(b)
representing a Special Payment which is not to be promptly
distributed shall, to the extent practicable, be invested in
Permitted Investments by the Trustee pending distribution of such
Special Payment pursuant to Section 4.02. Any investment made
pursuant to this Section 4.04 shall be in such Permitted
Investments having maturities not later than the date that such
moneys are required to be used to make the payment required under
Section 4.02 on the applicable Special Distribution Date and the
Trustee shall hold any such Permitted Investments until maturity.
The Trustee shall have no liability with respect to any
investment made pursuant to this Section 4.04, other than by
reason of the willful misconduct or negligence of the Trustee.
All income and earnings from such investments shall be
distributed on such Special Distribution Date as part of such
Special Payment.
ARTICLE V
THE COMPANY
Section 5.01. Maintenance of Corporate Existence. The
Company, at its own cost and expense, will do or cause to be done
all things necessary to preserve and keep in full force and
effect its corporate existence, rights and franchises, except as
otherwise specifically permitted in Section 5.02; provided,
however, that the Company shall not be required to preserve any
right or franchise if the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the
business of the Company.
Section 5.02. Consolidation, Merger, etc. The Company
shall not consolidate with or merge into any other corporation or
convey, transfer or lease substantially all of its assets as an
entirety to any Person unless:
(a) the corporation formed by such consolidation or
into which the Company is merged or the Person that acquires
35
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.
ss. 1110), with respect to the Leases;
(b) the corporation formed by such consolidation or
into which the Company is merged or the Person which
acquires by conveyance, transfer or lease substantially all
of the assets of the Company as an entirety shall execute
and deliver to the Trustee a duly authorized, valid,
binding and enforceable agreement in form and substance
reasonably satisfactory to the Trustee containing an
assumption by such successor corporation or Person of the
due and punctual performance and observance of each
covenant and condition of this Agreement, the Other Pass
Through Trust Agreements, the Financing Agreements, and
each other Financing Document to be performed or observed
by the Company; and
(c) the Company shall have delivered to the Trustee an
Officer's Certificate of the Company and an Opinion of
Counsel of the Company reasonably satisfactory to the
Trustee, each stating that such consolidation, merger,
conveyance, transfer or lease and the assumption agreement
mentioned in clause (b) above comply with this Section 5.02
and that all conditions precedent herein provided for
relating to such transaction have been complied with.
Upon any consolidation or merger, or any conveyance,
transfer or lease of substantially all of the assets of the
Company as an entirety in accordance with this Section 5.02, the
successor corporation or Person formed by such consolidation or
into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under
this Agreement with the same effect as if such successor
corporation or Person had been named as the Company herein. No
such conveyance, transfer or lease of substantially all of the
assets of the Company as an entirety shall have the effect of
releasing any successor corporation or Person which shall have
become such in the manner prescribed in this Section 5.02 from
its liability in respect of this Agreement and any Financing
Document to which it is a party.
36
ARTICLE VI
DEFAULT
Section 6.01. Events of Default. (a) Exercise of
Remedies. Upon the occurrence and during the continuation of any
Indenture Default under any Indenture, the Trustee may, to the
extent it is the Controlling Party at such time (as determined
pursuant to the Intercreditor Agreement), direct the exercise of
remedies as provided in the Intercreditor Agreement.
(b) Purchase Rights of Certificateholders. By
acceptance of its Certificate, each Certificateholder agrees that
at any time after the occurrence and during the continuation of a
Triggering Event,
(i) each Class B Certificateholder shall have the
right to purchase all, but not less than all, of the
Certificates upon ten days' written notice to the Trustee
and each other Class B Certificateholder, provided that (A)
if prior to the end of such ten-day period any other Class
B Certificateholder notifies such purchasing Class B
Certificateholder that such other Class B Certificateholder
wants to participate in such purchase, then such other
Class B Certificateholder may join with the purchasing
Class B Certificateholder to purchase all, but not less
than all, of the Certificates pro rata based on the
Fractional Undivided Interest in the Class B Trust held by
each such Class B Certificateholder and (B) if prior to the
end of such ten-day period any other Class B
Certificateholder fails to notify the purchasing Class B
Certificateholder 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 Certificates pursuant to this Section 6.01(b);
(ii) each Class C Certificateholder shall have the
right (which shall not expire upon any purchase of the
Certificates pursuant to clause (i) above) to purchase all,
but not less than all, of the Certificates and the Class B
Certificates upon ten days' written notice to the Trustee,
the Class B Trustee and each other Class C
Certificateholder, provided that (A) if prior to the end of
such ten-day period any other Class C Certificateholder
notifies such purchasing Class C Certificateholder that
such other Class C Certificateholder wants to participate
in such purchase, then such other Class C Certificateholder
may join with the purchasing Class C Certificateholder to
purchase all, but not less than all, of the Certificates
and the Class B Certificates pro rata based on the Fractional
Undivided Interest in the Class C Trust held by each such
37
Class C Certificateholder and (B) if prior to the end of
such ten day period any other Class C Certificateholder
fails to notify the purchasing Class C Certificateholder of
such other Class C Certificateholder's desire to
participate in such a purchase, then such other Class C
Certificateholder shall lose its right to purchase the
Certificates pursuant to this Section 6.01(b); and
(iii) each Class D Certificateholder shall have the
right (which shall not expire upon any purchase of the
Certificates pursuant to clause (i) above or the purchase
of the Certificates and the Class B Certificates pursuant
to clause (ii) above) to purchase all, but not less than
all, of the Certificates, the Class B Certificates and the
Class C Certificates upon ten days' written notice to the
Trustee, the Class B Trustee, the Class C Trustee and each
other Class D Certificateholder, provided that (A) if prior
to the end of such ten-day period any other Class D
Certificateholder notifies such purchasing Class D
Certificateholder that such other Class D Certificateholder
wants to participate in such purchase, then such other
Class D Certificateholder may join with the purchasing
Certificateholder to purchase all, but not less than all,
of the Certificates, the Class B Certificates and the Class
C Certificates pro rata based on the Fractional Undivided
Interest in the Class D Trust held by each such Class D
Certificateholder and (B) if prior to the end of such ten
day period any other Class D Certificateholder fails to
notify the purchasing Class D Certificateholder of such
other Class D Certificateholder's desire to participate in
such a purchase, then such other Class D Certificateholder
shall lose its right to purchase the Certificates, the
Class B Certificates and the Class C Certificates pursuant
to this Section 6.01(b).
The purchase price with respect to the Certificates
shall be equal to the Pool Balance of the Certificates, together
with accrued and unpaid interest thereon to the date of such
purchase, without premium, but including any other amounts then
due and payable to the Certificateholders under this Agreement,
the Intercreditor Agreement or any other Financing Document or on
or in respect of the Certificates; provided, however, that no
such purchase of Certificates shall be effective unless the
purchaser shall certify to the Trustee that contemporaneously
with such purchase, such purchaser is purchasing, pursuant to the
terms of this Agreement and the Other Pass Through Trust
Agreements, the Certificates, the Class B Certificates and the
Class C Certificates which are senior to the securities held by
such purchaser. Each payment of the purchase price of the
Certificates referred to in the first sentence hereof shall be
made to an account or accounts designated by the Trustee and each
38
such purchase shall be subject to the terms of this Section
6.01(b). Each Certificateholder agrees by its acceptance of its
Certificate that it will, subject to Section 3.04 hereof, upon
payment from such Class B Certificateholder(s), Class C
Certificateholder(s) or Class D Certificateholder(s), as the case
may be, of the purchase price set forth in the first sentence of
this paragraph, forthwith sell, assign, transfer and convey to
the purchaser thereof (without recourse, representation or
warranty of any kind except for its own acts), all of the right,
title, interest and obligation of such Certificateholder in, this
Agreement, the Intercreditor Agreement, the Liquidity Facility,
the Financing Documents and all Certificates held by such
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
Certificateholder's obligations under this Agreement, the
Intercreditor Agreement, the Liquidity Facility and the Financing
Documents. The Certificates will be deemed to be purchased on the
date payment of the purchase price is made notwithstanding the
failure of the Certificateholders to deliver any Certificates
(whether in the form of Physical Certificates or beneficial
interests in Global Certificates) and, upon such a purchase, (i)
the only rights of the Certificateholders will be to deliver the
Certificates to the purchaser and receive the purchase price for
such Certificates and (ii) if the purchaser shall so request,
such Certificateholder will comply with all the provisions of
Section 3.04 hereof to enable new 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 Certificates shall be borne by the purchaser thereof.
As used in this Section 6.01(b), the terms
"Certificateholder", "Class", "Class B Certificate", "Class B
Certificateholder", "Class B Trust", "Class B Trustee", "Class C
Certificate", "Class C Certificateholder", "Class C Trust",
"Class C Trustee", "Class D Certificate", "Class D
Certificateholder", "Class D Trust" and "Class D Trustee", shall
have the respective meanings assigned to such terms in the
Intercreditor Agreement.
Section 6.02. [Intentionally omitted.].
Section 6.03. Judicial Proceedings Instituted by
Trustee; Trustee May Bring Suit. If there shall be a failure to
make payment of the principal of, premium, if any, or interest on
any Equipment Note, or if there shall be any failure to pay Rent
(as defined in the relevant Lease) under any Lease when due and
payable, then the Trustee, in its own name and as trustee of an
express trust, as holder of such Equipment Notes, to the extent
39
permitted by and in accordance with the terms of the
Intercreditor Agreement and the Financing Documents (subject to
the rights of the applicable Owner Trustee or Owner Participant
to cure any such failure in accordance with Section 4.03 of the
applicable Indenture), shall be entitled and empowered to
institute any suits, actions or proceedings at law, in equity or
otherwise, for the collection of the sums so due and unpaid on
such Equipment Notes or under such Lease and may prosecute any
such claim or proceeding to judgment or final decree with respect
to the whole amount of any such sums so due and unpaid.
Section 6.04. Control by Certificateholders. Subject
to Section 6.03 and the Intercreditor Agreement, the
Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than a majority in
interest in the Trust shall have the right to direct the time,
method and place of conducting any proceeding for any remedy
available to the Trustee with respect to the Trust or pursuant to
the terms of the Intercreditor Agreement, or exercising any trust
or power conferred on the Trustee under this Agreement or the
Intercreditor Agreement, including any right of the Trustee as
Controlling Party under the Intercreditor Agreement or as holder
of the Equipment Notes, provided that
(1) such Direction shall not be in conflict with any
rule of law or with this Agreement and would not involve
the Trustee in personal liability or expense,
(2) the Trustee shall not determine that the action so
directed would be unjustly prejudicial to the
Certificateholders not taking part in such Direction, and
(3) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
Direction.
Section 6.05. Waiver of Past Defaults. Subject to the
Intercreditor Agreement, the Certificateholders holding
Certificates evidencing Fractional Undivided Interests
aggregating not less than a majority in interest in the Trust (i)
may on behalf of all of the Certificateholders waive any past
Event of Default hereunder and its consequences or (ii) if the
Trustee is the Controlling Party, may direct the Trustee to
instruct the applicable Loan Trustee to waive, any past Indenture
Default under any Indenture and its consequences, and thereby
annul any Direction given by such Certificateholders or the Trustee
to such Loan Trustee with respect thereto, except a default:
40
(1) in the deposit of any Scheduled Payment or Special
Payment under Section 4.01 or in the distribution of any
payment under Section 4.02 on the Certificates, or
(2) in the payment of the principal of (premium, if
any) or interest on the Equipment Notes, or
(3) in respect of a covenant or provision hereof which
under Article X cannot be modified or amended without the
consent of each Certificateholder holding an Outstanding
Certificate affected thereby.
Upon any such waiver, such default shall cease to
exist with respect to the Certificates and any Event of Default
arising therefrom shall be deemed to have been cured for every
purpose and any direction given by the Trustee on behalf of the
Certificateholders to the relevant Loan Trustee shall be annulled
with respect thereto; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any
right consequent thereon. Upon any such waiver, the Trustee shall
vote the Equipment Notes issued under the relevant Indenture to
waive the corresponding Indenture Default.
Section 6.06. Right of Certificateholders to Receive
Payments Not to Be Impaired. Anything in this Agreement to the
contrary notwithstanding, including, without limitation, Section
6.07 hereof, but subject to the Intercreditor Agreement, the
right of any Certificateholder to receive distributions of
payments required pursuant to Section 4.02 hereof on the
Certificates when due, or to institute suit for the enforcement
of any such payment on or after the applicable Regular
Distribution Date or Special Distribution Date, shall not be
impaired or affected without the consent of such
Certificateholder.
Section 6.07. Certificateholders May Not Bring Suit
Except Under Certain Conditions. A Certificateholder shall not
have the right to institute any suit, action or proceeding at law
or in equity or otherwise with respect to this Agreement, for the
appointment of a receiver or for the enforcement of any other
remedy under this Agreement, unless:
(1) such Certificateholder previously shall have given
written notice to the Trustee of a continuing Event of
Default;
(2) Certificateholders holding Certificates evidencing
Fractional Undivided Interests aggregating not less than
25% of the Trust shall have requested the Trustee in writing
to institute such action, suit or proceeding and shall have
41
offered to the Trustee indemnity as provided in
Section 7.03(e);
(3) the Trustee shall have refused or neglected to
institute such an action, suit or proceeding for 60 days
after receipt of such notice, request and offer of
indemnity; and
(4) no direction inconsistent with such written
request shall have been given to the Trustee during such
60- day period by Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust.
It is understood and intended that no one or more of
the Certificateholders shall have any right in any manner
whatsoever hereunder or under the Certificates to (i) surrender,
impair, waive, affect, disturb or prejudice any property in the
Trust Property or the lien of any Indenture on any property
subject thereto, or the rights of the Certificateholders or the
holders of the Equipment Notes, (ii) obtain or seek to obtain
priority over or preference with respect to any other such
Certificateholder or (iii) enforce any right under this
Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all the Certificateholders
subject to the provisions of this Agreement.
Section 6.08. Remedies Cumulative. Every remedy given
hereunder to the Trustee or to any of the Certificateholders
shall not be exclusive of any other remedy or remedies, and every
such remedy shall be cumulative and in addition to every other
remedy given hereunder or now or hereafter given by statute, law,
equity or otherwise.
ARTICLE VII
THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities. (a)
Except during the continuance of an Event of Default, the Trustee
undertakes to perform such duties as are specifically set forth
in this Agreement, and no implied covenants or obligations shall
be read into this Agreement against the Trustee.
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of
care and skill in their exercise, as a prudent man would exercise
or use under the circumstances in the conduct of its own affairs.
42
(c) No provision of this Agreement shall be construed
to relieve the Trustee from liability for its own negligent
action, its own negligent failure to act, or its own wilful
misconduct, except that
(1) this Subsection shall not be construed to limit
the effect of Subsection (a) of this Section; and
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the
Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts.
(d) Whether or not herein expressly so provided, every
provision of this Trust Agreement relating to the conduct or
affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section.
Section 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, the Trustee shall transmit by mail to the Company, the
Owner Trustees, the Owner Participants, the Loan Trustees and the
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 on the
payment of the principal, premium, if any, or interest on any
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 determine that
the withholding of such notice is in the interests of the
Certificateholders. For the purpose of this Section, the term
"default" means any event that is, or after notice or lapse of
time or both would become, an Event of Default.
Section 7.03. Certain Rights of Trustee. Subject to
the provisions of Section 315 of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in
acting or refraining from acting in reliance upon any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture or other paper or document believed by it to be
genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a written
description of the subject matter thereof accompanied by an
43
Officer's Certificate and an Opinion of Counsel as provided
in Section 1.02 of this Agreement;
(c) whenever in the administration of this Agreement
the Trustee shall deem it desirable that a matter be proved
or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence be
herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officer's Certificate of
the Company, any Owner Trustee or any Loan Trustee;
(d) the Trustee may consult with counsel and the
advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Agreement at the Direction of any of the Certificateholders
pursuant to this Agreement, unless such Certificateholders
shall have offered to the Trustee reasonable security or
indemnity against the cost, expenses and liabilities which
might be incurred by it in compliance with such Direction;
(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture or other paper or document;
(g) the Trustee may execute any of the trusts or
powers under this Agreement or perform any duties under
this Agreement either directly or by or through agents or
attorneys, and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or
attorney appointed with due care by it under this
Agreement;
(h) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith
in accordance with the Direction of the Certificateholders
holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest
in the Trust relating to the time, method and place of
conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon
the Trustee, under this Agreement; and
(i) the Trustee shall not be required to expend or
risk its own funds in the performance of any of its duties
under this Agreement, or in the exercise of any of its
44
rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate
indemnity against such risk is not reasonably assured to
it.
Section 7.04. Not Responsible for Recitals or Issuance
of Certificates. The recitals contained herein and in the
Certificates, except the certificates of authentication, shall
not be taken as the statements of the Trustee, and the Trustee
assumes no responsibility for their correctness. Subject to
Section 7.15, the Trustee makes no representations as to the
validity or sufficiency of this Agreement, any Financing
Agreement, any Equipment Notes, the Certificates or any other
Financing Document, except that the Trustee hereby represents and
warrants that this Agreement has been, and the Intercreditor
Agreement, the Registration Rights Agreement, each Financing
Agreement and each Certificate will be, executed, authenticated
and delivered by one of its officers who is duly authorized to
execute, authenticate and deliver such document on its behalf.
Section 7.05. May Hold Certificates. The Trustee, any
Paying Agent, Registrar or any of their Affiliates or any other
agent in their respective individual or any other capacity may
become the owner or pledgee of Certificates and, subject to
Sections 310(b) and 311 of the Trust Indenture Act, if
applicable, may otherwise deal with the Company, the Owner
Trustees or the Loan Trustees with the same rights it would have
if it were not Trustee, Paying Agent, Registrar or such other
agent.
Section 7.06. Money Held in Trust. Money held by the
Trustee or the Paying Agent in trust hereunder need not be
segregated from other funds except to the extent required herein
or by law and neither the Trustee nor the Paying Agent shall have
any liability for interest upon any such moneys except as
provided for herein.
Section 7.07. Compensation and Reimbursement. The
Company agrees:
(1) to pay, or cause to be paid, to the Trustee from
time to time reasonable compensation for all services
rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse, or cause to be reimbursed, the Trustee upon its
request for all reasonable out-of-pocket expenses,
disbursements and advances incurred or made by the Trustee
in accordance with any provision of this Agreement
(including the reasonable compensation and the expenses and
45
disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to
its negligence, willful misconduct or bad faith or as may
be incurred due to the Trustee's breach of its
representations and warranties set forth in Section 7.15;
and
(3) to indemnify the Trustee pursuant to Section 10.1
of the Participation Agreements (as amended by the
Amendments No. 1 thereto dated as of the date hereof) (as
defined in the Intercreditor Agreement).
The Trustee shall be entitled to reimbursement from,
and shall have a lien prior to the Certificates upon, the Trust
Property for any tax incurred without negligence, bad faith or
willful misconduct, on its part, arising out of or in connection
with the acceptance or administration of such Trust (other than
any tax attributable to the Trustee's compensation for serving as
such), including any costs and expenses incurred in contesting
the imposition of any such tax. If the Trustee reimburses itself
from the Trust Property of such Trust for any such tax, it will
mail a brief report within 30 days setting forth the
circumstances thereof to all Certificateholders as their names
and addresses appear in the Register.
Section 7.08. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
eligible to act as a trustee under Section 310(a) of the Trust
Indenture Act and shall have a combined capital and surplus of at
least $75,000,000 (or a combined capital and surplus in excess of
$5,000,000 and the obligations of which, whether now in existence
or hereafter incurred, are fully and unconditionally guaranteed
by a corporation organized and doing business under the laws of
the United States, any state or territory thereof or of the
District of Columbia and having a combined capital and surplus of
at least $75,000,000). If such corporation publishes reports of
conditions at least annually, pursuant to law or to the
requirements of federal, state, territorial or District of
Columbia supervising or examining authority, then for the
purposes of this Section 7.08, the combined capital and surplus
of such corporation shall be deemed to be its combined capital
and surplus as set forth in its most recent report of conditions
so published.
In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 7.08
to act as Trustee, the Trustee shall resign immediately as
Trustee in the manner and with the effect specified in Section
7.09.
Section 7.09. Resignation and Removal; Appointment of
Successor. (a) No resignation or removal of the Trustee and no
46
appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the
successor Trustee under Section 7.10.
(b) The Trustee may resign at any time as trustee by
giving prior written notice thereof to the Company, the
Authorized Agents, the Owner Trustees and the Loan Trustees. If
an instrument of acceptance by a successor Trustee shall not have
been delivered to the Company, the Authorized Agents, the Owner
Trustees, the Loan Trustees and the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee
may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(c) The Trustee may be removed at any time by
Direction of the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less
than a majority in interest in the Trust delivered to the Trustee
and to the Company, the Owner Trustees and the Loan Trustees.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 310
of the Trust Indenture Act, if applicable, after written
request therefor by the Company or by any Certificateholder
who has been a bona fide Certificateholder for at least six
months; or
(2) the Trustee shall cease to be eligible under
Section 7.08 and shall fail to resign after written request
therefor by the Company or by any such Certificateholder;
or
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of
the Trustee or of its property shall be appointed or any
public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any case, (i) the Company may, with the consent of the
Owner Participants, which consent may not be unreasonably
withheld, remove the Trustee or (ii) any Certificateholder who
has been a bona fide Certificateholder for at least six months
may, on behalf of itself and all others similarly situated,
petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
(e) If a Responsible Officer of the Trustee shall
obtain actual knowledge of an Avoidable Tax which has been or is
likely to be asserted, the Trustee shall promptly notify the
Company and shall, within 30 days of such notification, resign
47
hereunder unless within such 30-day period the Trustee shall have
received notice that the Company has agreed to pay such tax. The
Company shall promptly appoint a successor Trustee in a
jurisdiction where there are no Avoidable Taxes.
(f) If the Trustee shall resign, be removed or become
incapable of acting or if a vacancy shall occur in the office of
the Trustee for any cause, the Company shall promptly appoint a
successor Trustee. If, within one year after such resignation,
removal or incapability, or other occurrence of such vacancy, a
successor Trustee shall be appointed by Direction of the
Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than a majority in
interest in the Trust delivered to the Company, the Owner
Trustees, the Loan Trustees and the retiring Trustee, and the
Company approves such appointment, which approval shall not be
unreasonably withheld, then the successor Trustee so appointed
shall, forthwith upon its acceptance of such appointment, become
the successor Trustee and supersede the successor Trustee
appointed as provided above. If no successor Trustee shall have
been so appointed as provided above and accepted appointment in
the manner hereinafter provided, any Certificateholder who has
been a bona fide Certificateholder for at least six months may,
on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a
successor Trustee.
(g) The successor Trustee shall give notice of the
resignation and removal of the Trustee and appointment of the
successor Trustee by mailing written notice of such event by
first-class mail, postage prepaid, to the Certificateholders as
their names and addresses appear in the Register. Each notice
shall include the name of such successor Trustee and the address
of its Corporate Trust Office.
Section 7.10. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute and
deliver to the Company, the Authorized Agents, the Owner Trustees
and the Loan Trustees and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on request of the Company or
the successor Trustee, such retiring Trustee shall execute and
deliver an instrument transferring to such successor Trustee all
such rights, powers and trusts of the retiring Trustee and shall
duly assign, transfer and deliver to such successor Trustee all
Trust Property held by such retiring Trustee hereunder, subject
nevertheless to its lien, if any, provided for in Section 7.07.
Upon request of any such successor Trustee, the Company, the
48
retiring Trustee and such successor Trustee shall execute and
deliver any and all instruments containing such provisions as
shall be necessary or desirable to transfer and confirm to, and
for more fully and certainly vesting in, such successor Trustee
all such rights, powers and trusts.
No institution shall accept its appointment as a
Trustee hereunder unless at the time of such acceptance such
institution shall be qualified and eligible under this Article
VII.
Section 7.11. Merger, Conversion, Consolidation or
Succession to Business. Any corporation into which the Trustee
may be merged or converted or with which it may be consolidated,
or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor
of the Trustee hereunder, provided such corporation shall be
otherwise qualified and eligible under this Article VII, without
the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Certificates shall
have been executed or authenticated, but not delivered, by the
Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such
execution or authentication and deliver the Certificates so
executed or authenticated with the same effect as if such
successor Trustee had itself executed or authenticated such
Certificates.
Section 7.12. Maintenance of Agencies. (a) There shall
at all times be maintained an office or agency in the location
set forth in Section 12.03 where Certificates may be presented or
surrendered for registration of transfer or for exchange, and for
payment thereof and where notices and demands to or upon the
Trustee in respect of such certificates or this Agreement may be
served; provided, however, that, if it shall be necessary that
the Trustee maintain an office or agency in another location
(e.g., the Certificates shall be represented by Physical
Certificates and shall be listed on a national securities
exchange), the Trustee will make all reasonable efforts to
establish such an office or agency. Written notice of the
location of each such other office or agency and of any change of
location thereof shall be given by the Trustee to the Company,
the Owner Trustees, the Loan Trustees (in the case of any Owner
Trustee or Loan Trustee, at its address specified in the
Financing Agreements or such other address as may be notified to
the Trustee) and the Certificateholders. In the event that no
such office or agency shall be maintained or no such notice of
location or of change of location shall be given, presentations
49
and demands may be made and notices may be served at the
Corporate Trust Office of the Trustee.
(b) There shall at all times be a Registrar and a
Paying Agent hereunder with respect to the Certificates. Each
such Authorized Agent shall be a bank or trust company, shall be
a corporation organized and doing business under the laws of the
United States or any state, with a combined capital and surplus
of at least $75,000,000, or, if the Trustee shall be acting as
the Registrar or Paying Agent hereunder, a corporation having a
combined capital and surplus in excess of $5,000,000, the
obligations of which are guaranteed by a corporation organized
and doing business under the laws of the United States or any
state, with a combined capital and surplus of at least
$75,000,000, and shall be authorized under such laws to exercise
corporate trust powers, subject to supervision by Federal or
state authorities. The Trustee shall initially be the Paying
Agent and, as provided in Section 3.04, Registrar hereunder with
respect to the Certificates. Each Registrar shall furnish to the
Trustee, at stated intervals of not more than six months, and at
such other times as the Trustee may request in writing, a copy of
the Register maintained by such Registrar.
(c) Any corporation into which any Authorized Agent
may be merged or converted or with which it may be consolidated,
or any corporation resulting from any merger, consolidation or
conversion to which any Authorized Agent shall be a party, or any
corporation succeeding to the corporate trust business of any
Authorized Agent, shall be the successor of such Authorized Agent
hereunder, if such successor corporation is otherwise eligible
under this Section, without the execution or filing of any paper
or any further act on the part of the parties hereto or such
Authorized Agent or such successor corporation.
(d) Any Authorized Agent may at any time resign by
giving written notice of resignation to the Trustee, the Company,
the Owner Trustees and the Loan Trustees. The Company may, and at
the request of the Trustee shall, at any time terminate the
agency of any Authorized Agent by giving written notice of
termination to such Authorized Agent and to the Trustee. Upon the
resignation or termination of an Authorized Agent or in case at
any time any such Authorized Agent shall cease to be eligible
under this Section (when, in either case, no other Authorized
Agent performing the functions of such Authorized Agent shall
have been appointed), the Company shall promptly appoint one or
more qualified successor Authorized Agents, reasonably
satisfactory to the Trustee, to perform the functions of the
Authorized Agent which has resigned or whose agency has been
terminated or who shall have ceased to be eligible under this
Section. The Company shall give written notice of any such
appointment made by it to the Trustee, the Owner Trustees and the
50
Loan Trustees; and in each case the Trustee shall mail notice of
such appointment to all Certificateholders as their names and
addresses appear on the Register.
(e) The Company agrees to pay, or cause to be paid,
from time to time to each Authorized Agent reasonable
compensation for its services and to reimburse it for its
reasonable expenses.
Section 7.13. Money for Certificate Payments to Be
Held in Trust. All moneys deposited with any Paying Agent for the
purpose of any payment on Certificates shall be deposited and
held in trust for the benefit of the Certificateholders entitled
to such payment, subject to the provisions of this Section.
Moneys so deposited and held in trust shall constitute a separate
trust fund for the benefit of the Certificateholders with respect
to which such money was deposited.
The Trustee may at any time, for the purpose of
obtaining the satisfaction and discharge of this Agreement or for
any other purpose, direct any Paying Agent to pay to the Trustee
all sums held in trust by such Paying Agent, such sums to be held
by the Trustee upon the same trusts as those upon which such sums
were held by such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released
from all further liability with respect to such money.
Section 7.14. Registration of Equipment Notes in Name
of Subordination Agent. The Trustee agrees that all Equipment
Notes to be purchased by the Trust shall be issued in the name of
the Subordination Agent or its nominee and held by the
Subordination Agent in trust for the benefit of the
Certificateholders, or, if not so held, the Subordination Agent
or its nominee shall be reflected as the owner of such Equipment
Notes in the register of the issuer of such Equipment Notes.
Section 7.15. Representations and Warranties of
Trustee. The Trustee hereby represents and warrants that:
(a) the Trustee is a Delaware banking corporation
organized and validly existing in good standing under the
laws of the State of Delaware;
(b) the Trustee has full power, authority and legal
right to execute, deliver, and perform this Agreement, the
Intercreditor Agreement, the Registration Rights Agreement
and the Financing Agreements and has taken all necessary
action to authorize the execution, delivery, and
performance by it of this Agreement, the Intercreditor
Agreement, the Registration Rights Agreement and the
Financing Agreements;
51
(c) the execution, delivery and performance by the
Trustee of this Agreement, the Intercreditor Agreement, the
Registration Rights Agreement and the Financing Agreements
(i) will not violate any provision of 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, or (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;
(d) the execution, delivery and performance by the
Trustee of this Agreement, the Intercreditor Agreement, the
Registration Rights Agreement and the Financing Agreements
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
(e) this Agreement, the Intercreditor Agreement, the
Registration Rights Agreement and the Financing Agreements
have been duly executed and delivered by the Trustee and
constitute the legal, valid, and binding agreements of the
Trustee, enforceable against it in accordance with their
respective terms, provided 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 7.16. Withholding Taxes; Information
Reporting. The Trustee, as trustee of the grantor trust created
by this Agreement, shall exclude and withhold from each
distribution of principal, premium, if any, and interest and
other amounts due under this Agreement or under the Certificates
any and all withholding taxes applicable thereto as required by
law. The Trustee agrees to act as such withholding agent and, in
52
connection therewith, whenever any present or future taxes or
similar charges are required to be withheld with respect to any
amounts payable in respect of the Certificates, to withhold such
amounts and timely pay the same to the appropriate authority in
the name of and on behalf of the Certificateholders, that it will
file any necessary withholding tax returns or statements when
due, and that, as promptly as possible after the payment thereof,
it will deliver to each such Certificateholder appropriate
documentation showing the payment thereof, together with such
additional documentary evidence as such Certificateholders may
reasonably request from time to time. The Trustee agrees to file
any other information reports as it may be required to file under
United States law.
Section 7.17. Trustee's Liens. The Trustee in its
individual capacity agrees 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 mortgage, pledge, lien, charge,
encumbrance, security interest or claim ("Trustee's Liens") on or
with respect to the Trust Property which is attributable to the
Trustee either (i) in its individual capacity and which is
unrelated to the transactions contemplated by this Agreement, the
Intercreditor Agreement, the Financing Agreements or the
Financing Documents, or (ii) as Trustee hereunder or in its
individual capacity and which arises out of acts or omissions
which are not contemplated by this Agreement.
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.01. The Company to Furnish Trustee with
Names and Addresses of Certificateholders. The Company will
furnish to the Trustee within 15 days after each Record Date with
respect to a Scheduled Payment, and at such other times as the
Trustee may request in writing within 30 days after receipt by
the Company of any such request, a list, in such form as the
Trustee may reasonably require, of all information in the
possession or control of the Company as to the names and
addresses of the Certificateholders, in each case as of a date
not more than 15 days prior to the time such list is furnished;
provided, however, that so long as the Trustee is the sole
Registrar, no such list need be furnished; and provided further,
however, that no such list need be furnished for so long as a
copy of the Register is being furnished to the Trustee pursuant
to Section 7.12.
Section 8.02. Preservation of Information;
Communications to Certificateholders. The Trustee shall
preserve, in as current a form as is reasonably practicable, the
53
names and addresses of Certificateholders contained in the most
recent list furnished to the Trustee as provided in Section 7.12
or Section 8.01, as the case may be, and the names and addresses
of Certificateholders received by the Trustee in its capacity as
Registrar, if so acting. The Trustee may destroy any list
furnished to it as provided in Section 7.12 or Section 8.01, as
the case may be, upon receipt of a new list so furnished.
Section 8.03. Reports by Trustee. Within 60 days after
May 15 of each year commencing with the first full year following
the issuance of the Certificates, the Trustee shall transmit to
the Certificateholders, as provided in Section 313(c) of the
Trust Indenture Act, a brief report dated as of such May 15, if
required by Section 313(a) of the Trust Indenture Act.
Section 8.04. Reports by the Company. The Company
shall:
(a) file with the Trustee, within 30 days after the
Company is required to file the same with the SEC, copies
of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the
foregoing as the SEC may from time to time by rules and
regulations prescribe) which the Company is required to
file with the SEC pursuant to section 13 or section 15(d)
of the Securities Exchange Act of 1934, as amended; or, if
the Company is not required to file information, documents
or reports pursuant to either of such sections, then to
file with the Trustee and the SEC, in accordance with rules
and regulations prescribed by the SEC, such of the
supplementary and periodic information, documents and
reports which may be required pursuant to section 13 of the
Securities Exchange Act of 1934, as amended, in respect of
a security listed and registered on a national securities
exchange as may be prescribed in such rules and
regulations;
(b) file with the Trustee and the SEC, in accordance
with the rules and regulations prescribed by the SEC, such
additional information, documents and reports with respect
to compliance by the Company with the conditions and
covenants provided for in this Agreement, as may be
required by such rules and regulations, including, in the
case of annual reports, if required by such rules and
regulations, certificates or opinions of independent public
accountants;
(c) transmit to all Certificateholders, in the manner
and to the extent provided in Section 313(c) of the Trust
Indenture Act such summaries of any information, documents
and reports required to be filed by the Company pursuant to
subsections (a) and (b) of this Section 8.04 as may be
required by rules and regulations prescribed by the SEC;
and
54
(d) furnish to the Trustee, not less often than
annually, a brief certificate from the principal executive
officer, principal financial officer or principal
accounting officer as to his or her knowledge of the
Company's compliance with all conditions and covenants
under this Agreement (it being understood that for purposes
of this paragraph (d), such compliance shall be determined
without regard to any period of grace or requirement of
notice provided under this Agreement).
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.01. Supplemental Agreements Without Consent
of Certificateholders. Without the consent of the
Certificateholders, the Company may (but will not be required
to), and the Trustee (subject to Section 9.03) shall, at any time
and from time to time, enter into one or more agreements
supplemental hereto or, if applicable, to the Intercreditor
Agreement or the Liquidity Facility in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation
to the Company and the assumption by any such successor of
the covenants of the Company herein contained; or
(2) to add to the covenants of the Company for the
benefit of the Certificateholders, or to surrender any right
or power in this Agreement conferred upon the Company; or
(3) to correct or supplement any provision in this
Agreement, the Intercreditor Agreement or the Liquidity
Facility which may be defective or inconsistent with any
other provision herein or to cure any ambiguity or correct
any mistake or to modify any other provision with respect
to matters or questions arising under this Agreement, the
Intercreditor Agreement or the Liquidity Facility, provided
that any such action shall not materially adversely affect
the interests of the Certificateholders; or
(4) to modify, eliminate or add to the provisions of
this Agreement to such extent as shall be necessary to
continue the qualification of this Agreement (including any
supplemental agreement) under the Trust Indenture Act or
under any similar Federal statute hereafter enacted, and to
add to this Agreement such other provisions as may be ex-
pressly permitted by the Trust Indenture Act, excluding, how-
ever, the provisions referred to in Section 316(a)(2) of the
Trust Indenture Act as in effect at the date as of which
55
this instrument was executed or any corresponding provision
in any similar Federal statute hereafter enacted; or
(5) to evidence and provide for the acceptance of
appointment under this Agreement by the Trustee of a
successor Trustee and to add to or change any of the
provisions of this Agreement as shall be necessary to
provide for or facilitate the administration of the Trust,
pursuant to the requirements of Section 7.10; or
(6) to provide the information required under
Section 7.12 and Section 12.03 as to the Trustee; or
(7) to modify or eliminate provisions relating to the
transfer or exchange of Exchange Certificates or the
Initial Certificates upon consummation of the Exchange
Offer (as defined in the Registration Rights Agreement) or
effectiveness of the Registration Statement.
Section 9.02. Supplemental Agreements with Consent of
Certificateholders. With the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests
aggregating not less than a majority in interest in the Trust, by
Direction of said Certificateholders delivered to the Company and
the Trustee, the Company may (with the consent of the Owner
Trustees, if any, which consent shall not be unreasonably
withheld), and the Trustee (subject to Section 9.03) shall, enter
into an agreement or agreements for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
provisions of this Agreement, the Intercreditor Agreement, the
Liquidity Facility, the Registration Rights Agreement or any
Financing Agreement to the extent applicable to such
Certificateholders or of modifying in any manner the rights and
obligations of such Certificateholders under this Agreement, the
Intercreditor Agreement, the Liquidity Facility, the Registration
Rights Agreement or any Financing Agreement; provided, however,
that no such agreement shall, without the consent of the
Certificateholder of each Outstanding Certificate affected
thereby:
(1) reduce in any manner the amount of, or delay the
timing of, any receipt by the Trustee of payments on the
Equipment Notes held in the Trust or distributions that are
required to be made herein on any Certificate, or change
any date of payment on any Certificate, or change the place
of payment where, or the coin or currency in which, any
Certificate is payable, or impair the right to institute
suit for the enforcement of any such payment or
distribution on or after the Regular Distribution Date or
Special Distribution Date applicable thereto; or
56
(2) permit the disposition of any Equipment Note
included in the Trust Property except as permitted by this
Agreement, or otherwise deprive such Certificateholder of
the benefit of the ownership of the Equipment Notes in the
Trust; or
(3) reduce the percentage of the aggregate Fractional
Undivided Interests of the Trust which is required for any
such supplemental agreement, or reduce such percentage
required for any waiver of compliance with certain
provisions of this Agreement or certain defaults hereunder
and their consequences provided for in this Agreement; or
(4) waive, amend or modify Section 2.4, 3.2 or 3.3 of
the Intercreditor Agreement in a manner adverse to the
Certificateholders; or
(5) modify any of the provisions of this Section 9.02
or Section 6.05, except to increase any such percentage or
to provide that certain other provisions of this Agreement
cannot be modified or waived without the consent of the
Certificateholder of each Certificate affected thereby.
It shall not be necessary for any Direction of
Certificateholders under this Section to approve the particular
form of any proposed supplemental agreement, but it shall be
sufficient if such Direction shall approve the substance thereof.
Section 9.03. Documents Affecting Immunity or
Indemnity. If in the opinion of the Trustee any document required
to be executed by it pursuant to the terms of Section 9.01 or
9.02 affects any interest, right, duty, immunity or indemnity in
favor of the Trustee under this Agreement, the Trustee may in its
discretion decline to execute such document.
Section 9.04. Execution of Supplemental Agreements. In
executing, or accepting the additional trusts created by, any
agreement permitted by this Article or the modifications thereby
of the trusts created by this Agreement, the Trustee shall be
entitled to receive, and shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such
supplemental agreement is authorized or permitted by this
Agreement.
Section 9.05. Effect of Supplemental Agreements. Upon
the execution of any agreement supplemental to this Agreement
under this Article, this Agreement shall be modified in
accordance therewith, and such supplemental agreement shall form
a part of this Agreement for all purposes; and every Holder of a
Certificate theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
57
Section 9.06. Conformity with Trust Indenture Act.
Every supplemental agreement executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act as
then in effect.
Section 9.07. Reference in Certificates to
Supplemental Agreements. Certificates authenticated and delivered
after the execution of any supplemental agreement pursuant to
this Article may bear a notation in form approved by the Trustee
as to any matter provided for in such supplemental agreement;
and, in such case, suitable notation may be made upon Outstanding
Certificates after proper presentation and demand.
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
Section 10.01. Amendments and Supplements to
Indentures and Other Financing Documents. In the event that the
Trustee, as holder of any Equipment Note in trust for the benefit
of the Certificateholders or as Controlling Party under the
Intercreditor Agreement, receives a request for a consent to any
amendment, modification, waiver or supplement under any Indenture
or other Financing Document, the Trustee shall forthwith send a
notice of such proposed amendment, modification, waiver or
supplement to each Certificateholder registered on the Register
as of the date of such notice. The Trustee shall request from the
Certificateholders a Direction as to (a) whether or not to take
or refrain from taking any action which a holder of such
Equipment Note has the option to direct, (b) whether or not to
give or execute any waivers, consents, amendments, modifications
or supplements as a holder of such Equipment Note and (c) how to
vote any Equipment Note if a vote has been called for with
respect thereto. Provided such a request for Certificateholder
Direction shall have been made, in directing any action or
casting any vote or giving any consent as the holder of any
Equipment Note, the Trustee shall vote for or give consent to any
such action with respect to such Equipment Note in the same
proportion as that of (i) the aggregate face amounts of all
Certificates actually voted in favor of or for giving consent to
such action by such Direction of Certificateholders to (ii) the
aggregate face amount of all Outstanding Certificates. For
purposes of the immediately preceding sentence, a Certificate
shall have been "actually voted" if the Holder of such
Certificate has delivered to the Trustee an instrument evidencing
such Holder's consent to such Direction prior to two Business
Days before the Trustee directs such action or casts such vote or
gives such consent. Notwithstanding the foregoing, but subject to
Section 6.04 and the Intercreditor Agreement, the Trustee may, in
its own discretion and at its own direction, consent and
58
notify the relevant Loan Trustee of such consent to any
amendment, modification, waiver or supplement under the relevant
Indenture or any other Financing Document, if an Event of Default
hereunder shall have occurred and be continuing, or if such
amendment, modification or waiver will not adversely affect the
interests of the Certificateholders.
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust. The
respective obligations and responsibilities of the Company and
the Trustee with respect to the Trust shall terminate upon the
distribution to all Holders of Certificates and the Trustee of
all amounts required to be distributed to them pursuant to this
Agreement and the disposition of all property held as part of the
Trust Property; provided, however, that in no event shall the
Trust continue beyond one hundred ten (110) years following the
date of the earliest execution of this Trust Agreement.
Notice of any termination, specifying the Regular
Distribution Date (or Special Distribution Date, as the case may
be) upon which the Certificateholders may surrender their
Certificates to the Trustee for payment of the final Distribution
Date and cancellation, shall be mailed promptly by the Trustee to
Certificateholders not earlier than the 60th day and not later
than the 20th day next preceding such final Distribution Date
specifying (A) the Regular Distribution Date (or Special
Distribution Date, as the case may be) upon which the proposed
final payment of the Certificates will be made upon presentation
and surrender of Certificates at the office or agency of the
Trustee therein specified, (B) the amount of any such proposed
final payment, and (C) that the Record Date otherwise applicable
to such Regular Distribution Date (or Special Distribution Date,
as the case may be) is not applicable, payments being made only
upon presentation and surrender of the Certificates at the office
or agency of the Trustee therein specified. The Trustee shall
give such notice to the Registrar at the time such notice is
given to Certificateholders. Upon presentation and surrender of
the Certificates in accordance with such notice, the Trustee
shall cause to be distributed to Certificateholders such final
payments.
In the event that all of the Certificateholders shall
not surrender their Certificates for cancellation within six
months after the date specified in the above-mentioned written
notice, the Trustee shall give a second written notice to the
remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect
59
thereto. No additional interest shall accrue on the Certificates
after the Regular Distribution Date (or Special Distribution
Date, as the case may be) specified in the first written notice.
In the event that any money held by the Trustee for the payment
of distributions on the Certificates shall remain unclaimed for
two years (or such lesser time as the Trustee shall be satisfied,
after sixty days' notice from the Company, is one month prior to
the escheat period provided under applicable law) after the final
distribution date with respect thereto, the Trustee shall pay to
each Loan Trustee the appropriate amount of money relating to
such Loan Trustee and shall give written notice thereof to the
related Owner Trustees, the Owner Participants and the Company.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of
Certificateholders. The death or incapacity of any
Certificateholder shall not operate to terminate this Agreement
or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any
action or commence any proceeding in any court for a partition or
winding up of the Trust, nor otherwise affect the rights,
obligations, and liabilities of the parties hereto or any of
them.
Section 12.02. Certificates Nonassessable and Fully
Paid. Except as set forth in the last sentence of this Section
12.02, Certificateholders shall not be personally liable for
obligations of the Trust, the Fractional Undivided Interests
represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever, and
Certificates, upon authentication thereof by the Trustee pursuant
to Section 3.03, are and shall be deemed fully paid. No
Certificateholder shall have any right (except as expressly
provided herein) to vote or in any manner otherwise control the
operation and management of the Trust Property, the Trust, or the
obligations of the parties hereto, nor shall anything set forth
herein, or contained in the terms of the Certificates, be
construed so as to constitute the Certificateholders from time to
time as partners or members of an association. Neither the
existence of the Trust nor any provision herein is intended to or
shall limit the liability the Certificateholders would otherwise
incur if the Certificateholders owned Trust Property as
co-owners, or incurred any obligations of the Trust, directly
rather than through the Trust.
Section 12.03. Notices. (a) Unless otherwise
specifically provided herein, all notices required under the
60
terms and provisions of this Agreement shall be in English and in
writing, and any such notice may be given by United States mail,
courier service or telecopy, and any such notice shall be
effective when delivered or received or, if mailed, three days
after deposit in the United States mail with proper postage for
ordinary mail prepaid,
if to the Company, to:
Continental Airlines, Inc.
2929 Allen Parkway
Houston, TX 77019
Attention: Chief Financial Officer and
General Counsel
Facsimile: (713) 523-2831
if to the Trustee, to:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Department
Facsimile: (302) 651-8882
Telephone: (302) 651-8584
(b) The Company or the Trustee, by notice to the
other, may designate additional or different addresses for
subsequent notices or communications.
(c) Any notice or communication to Certificateholders
shall be mailed by first-class mail to the addresses for
Certificateholders shown on the Register kept by the Registrar.
Failure so to mail a notice or communication or any defect in
such notice or communication shall not affect its sufficiency
with respect to other Certificateholders.
(d) If a notice or communication is mailed in the
manner provided above within the time prescribed, it is
conclusively presumed to have been duly given, whether or not the
addressee receives it.
(e) If the Company mails a notice or communication to
the Certificateholders, it shall mail a copy to the Trustee and
to the Paying Agent at the same time.
(f) Notwithstanding the foregoing, all communications
or notices to the Trustee shall be deemed to be given only when
received by a Responsible Officer of the Trustee.
61
(g) The Trustee shall promptly furnish the Company
with a copy of any demand, notice or written communication
received by the Trustee hereunder from any Certificateholder,
Owner Trustee or Loan Trustee.
Section 12.04. Governing Law. THIS AGREEMENT HAS BEEN
DELIVERED IN THE STATE OF NEW YORK AND THIS AGREEMENT AND THE
CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICTS-OF-LAW PRINCIPLES.
Section 12.05. Severability of Provisions. If any one
or more of the covenants, agreements, provisions or terms of this
Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions, or terms shall be deemed
severable from the remaining covenants, agreements, provisions or
terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or
the Trust, or of the Certificates or the rights of the
Certificateholders thereof.
Section 12.06. Trust Indenture Act Controls. This
Agreement is subject to the provisions of the Trust Indenture Act
and shall, to the extent applicable, be governed by such
provisions.
Section 12.07. Effect of Headings and Table of
Contents. The Article and Section headings herein and the Table
of Contents are for convenience only and shall not affect the
construction hereof.
Section 12.08. Successors and Assigns. All covenants,
agreements, representations and warranties in this Agreement by
the Trustee and the Company shall bind and, to the extent
permitted hereby, shall inure to the benefit of and be
enforceable by their respective successors and assigns, whether
so expressed or not.
Section 12.09. Benefits of Agreement. Nothing in this
Agreement or in the Certificates, express or implied, shall give
to any Person, other than the parties hereto and their successors
hereunder, and the Certificateholders, any benefit or any legal
or equitable right, remedy or claim under this Agreement.
Section 12.10. Legal Holidays. In any case where any
Regular Distribution Date or Special Distribution Date relating
to any Certificate shall not be a Business Day, 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
62
on such Regular Distribution Date or Special Distribution Date,
and no interest shall accrue during the intervening period.
Section 12.11. Counterparts. For the purpose of
facilitating the execution of this Agreement and for other
purposes, this Agreement may be executed simultaneously in any
number of counterparts, each of which counterparts shall be
deemed to be an original, and all of which counterparts shall
constitute but one and the same instrument.
Section 12.12. Intention of Parties. The parties
hereto intend that the 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. The powers granted and obligations undertaken
pursuant to this Agreement shall be so construed so as to further
such intent.
63
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed by their respective officers
thereunto 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:
64
EXHIBIT A
FORM OF CERTIFICATE
REGISTERED
No. ______________
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER
THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT WITHIN
THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE
WAS HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY
AFFILIATE OF ANY OF SUCH PERSONS RESELL OR OTHERWISE
TRANSFER THIS CERTIFICATE EXCEPT (A) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (B) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR
MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATE THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE TRUSTEE), (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT 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
WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE
OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFI-
CATE WAS HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY
AFFILIATE OF ANY OF SUCH PERSONS THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO
THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO
THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.]*
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE TRUSTEE 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 HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR
TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE
PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN.]**
- --------
* Not to be included on the face of the Permanent Offshore
Global Certificate.
** To be included on the face of each Global Certificate.
A-2
[GLOBAL CERTIFICATE]*
CONTINENTAL AIRLINES 1996-2A PASS THROUGH TRUST
7.75% Continental Airlines [Initial] [Exchange] Pass Through
Certificate
Series 1996-2A
Final Distribution Date: July 2, 2014
evidencing a fractional undivided interest in a trust, the
property of which includes certain equipment notes each secured
by an Aircraft leased to Continental Airlines, Inc.
$ Fractional Undivided Interest
representing . % 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 1996-2A Pass Through Trust (the "Trust") created
pursuant to a Pass Through Trust Agreement, dated as of May 20,
1996 (the "Agreement"), between Wilmington Trust Company (the
"Trustee") and Continental Airlines, Inc., a corporation
incorporated under Delaware law (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 "7.75% Continental Airlines [Initial] [Exchange]
Pass Through Certificates Series 1996-2A" (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 Certificateholder of this
Certificate assents to and agrees to be bound by the provisions
of the Agreement and the Intercreditor Agreement. The property of
the Trust includes certain Equipment Notes and all rights of the
Trust to receive payments under the Intercreditor Agreement and
the Liquidity Facilities (the "Trust Property"). Each issue of
the Equipment Notes is secured by, among other things, a security
interest in the Aircraft leased to or owned by the Company.
The Certificates represent fractional undivided
interests in the Trust and the Trust Property, and have no
- --------
* To be included on the face of each Global Certificate.
A-3
rights, benefits or interest in respect of any assets or property
other than the Trust Property.
Subject to and in accordance with the terms of the
Agreement and the Intercreditor Agreement, from and to the extent
of funds then available to the Trustee, there will be distributed
on each January 2, April 2, July 2 and October 2 (a "Regular
Distribution Date"), commencing on July 2, 1996, 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
Notes 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 Notes 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 Notes, 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 Regular Distribution Date or 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 Regular Distribution Date or
Special Distribution Date and no 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.
[The Holder of this Certificate is entitled to the
benefits of the Registration Rights Agreement, dated as of May
20, 1996, among the Company, the Trustee and the Initial
Purchasers named therein (the "Registration Rights Agreement").
In the event that neither the consummation of the Exchange Offer
nor the declaration by the Commission of a Shelf Registration to
be effective (a "Registration Event") occurs on or prior to the
180th day after the date of the issuance of the Certificates, the
interest rate per annum borne by the Equipment Notes shall be
increased by 0.50%, from and including January 2, 1997, to but
excluding the date on which a Registration Event occurs. In the
event that the Shelf Registration Statement ceases to be
effective at any time during the period specified by the
Registration Rights Agreement for more than 60 days, whether or
not consecutive, during any 12-month period, the interest rate
per annum borne by the Equipment Notes shall be increased by
A-4
0.50% from the 61st day of the applicable 12-month period such
Shelf Registration Statement ceases to be effective until such
time as the Shelf Registration Statement again becomes
effective.]*
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 AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
Reference is hereby made to the further provisions of
this Certificate set forth in the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon has
been executed by the Trustee, by manual signature, this
Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this
Certificate to be duly executed.
Dated: May 20, 1996 CONTINENTAL AIRLINES
1996-2A PASS THROUGH TRUST
By: WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as
Trustee
Attest: By: ______________________
Name:
Title:
- --------------------
Authorized Signature
- --------
* To be included only on each Initial Certificate.
A-5
[FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Certificates referred to in the
within-mentioned Agreement.
WILMINGTON TRUST COMPANY,
not in its individual
capacity but
solely as Trustee
By: _____________________
Authorized Officer
A-6
[REVERSE OF CERTIFICATE]
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 of their affiliates. The
Certificates are limited in right or 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, proceeds, 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 therein set forth, 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, in the Borough of Manhattan, the City of New
York, 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
A-7
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
[$100,000]* [$1,000]** Fractional Undivided Interest and integral
multiples of $1,000 in excess thereof [except that one
Certificate may be in a denomination of less than $100,000]*. 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 by the Holder of a sum sufficient to cover any
tax or governmental charge payable in connection therewith.
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.
- ---------------
* To be included only on each Initial Certificate.
** To be included only on each Exchange Certificate.
A-8
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 Trustee
with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT PERMANENT OFFSHORE GLOBAL AND
OFFSHORE PHYSICAL CERTIFICATES]
In connection with any transfer of this Certificate
occurring prior to the date that is the earlier of the date of an
effective Registration Statement or __________, 1999, the
undersigned confirms that without utilizing any general
solicitation or general advertising that:
[Check One]
[ ] (a) this Certificate is being transferred in
compliance with the exemption from registration under
the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
or
[ ] (b) this Certificate is being transferred other than
in accordance with (a) above and documents are being
furnished that comply with the conditions of transfer
set forth in this Certificate and the Agreement.
If neither of the foregoing boxes is checked, the Trustee or
other 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
A-9
registration set forth herein and in Section 3.06 of the
Agreement 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 IF (a) ABOVE IS CHECKED.
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, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated: ___________________ __________________________
NOTE: To be executed by an
executive officer.
A-10
EXHIBIT B
FORM OF CERTIFICATE FOR UNLEGENDED CERTIFICATES
[Date]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Trustee Administration
Re: Continental Airlines 1996-2A Pass
Through Trust, Class A Pass Through
Trust Certificates
(the "Certificates")
Dear Sirs:
This letter relates to U.S. $__________ Fractional
Undivided Interest of Certificates represented by a Certificate
(the "Legended Certificate") which bears a legend outlining
restrictions upon transfer of such Legended Certificate. Pursuant
to Section 3.01 of the Pass Through Trust Agreement relating to
the Certificates dated as of May 20, 1996 (the "Trust
Agreement"), between Continental Airlines, Inc. ("Continental")
and you, we hereby certify that we are (or we will hold such
securities on behalf of) a person outside the United States to
whom the Certificates could be transferred in accordance with
Rule 904 of Regulation S promulgated under the U.S. Securities
Act of 1933, as amended. Accordingly, you are hereby requested to
exchange the legended certificate for an unlegended certificate
representing an identical principal amount of Certificates, all
in the manner provided for in the Trust Agreement.
You and Continental are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or
legal proceedings or official inquiry with respect to the matters
covered hereby. Terms used in this certificate have the meanings
set forth in Regulation S.
Very truly yours,
[Name of Certificateholder]
By:______________________
Authorized Signature
EXHIBIT C
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS PURSUANT TO REGULATION S
[date]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Trustee Administration
Re: Continental Airlines 1996-2A Pass Through
Trust (the "Trust"), 7.75% Continental
Airlines Pass Through Certificates
Series 1996-2A (the "Certificates")
Sirs:
In connection with our proposed sale of $_______
Fractional Undivided Interest of the Certificates, we confirm
that such sale has been effected pursuant to and in accordance
with Regulation S under the Securities Act of 1933, as amended,
and, accordingly, we represent that:
(1) the offer of the Certificates was not made to a
person in the United States;
(2) either (a) at the time the buy order was
originated, the transferee was outside the United States or
we and any person acting on our behalf reasonably believed
that the transferee was outside the United States or (b)
the transaction was executed in, on or through the
facilities of a designated off-shore securities market and
neither we nor any person acting on our behalf knows that
the transaction has been pre-arranged with a buyer in the
United States;
(3) no directed selling efforts have been made in the
United States in contravention of the requirements of Rule
903(b) or Rule 904(b) of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act.
In addition, if the sale is made during a restricted
period and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of
Regulation S are applicable thereto, we confirm that such sale
has been made in accordance with the applicable provisions of
Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You and Continental Airlines, Inc. are entitled to
rely upon this letter and are irrevocably authorized to produce
this letter or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:_______________________
Authorized Signature
C-2
EXHIBIT D
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
[date]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Trustee Administration
Re: Continental Airlines 1996-2A Pass-
Through Trust (the "Trust"), 7.75%
Continental Airlines Pass Through
Certificates Series 1996-2A
(the "Certificates")
Dear Sirs:
In connection with our proposed purchase of
$_______________ aggregate principal amount of the Certificates,
we confirm that:
1. We understand that any subsequent transfer of the
Certificates is subject to certain restrictions and
conditions set forth in the Pass Through Trust Agreement
dated as of May 20, 1996 relating to the Certificates (the
"Pass Through Trust Agreement") and the undersigned agrees
to be bound by, and not to resell, pledge or otherwise
transfer the Certificates except in compliance with, such
restrictions and conditions and the Securities Act of 1933,
as amended (the "Securities Act").
2. We understand that the Certificates have not been
registered under the Securities Act, and that the
Certificates may not be offered or sold except as permitted
in the following sentence. We agree, on our own behalf and
on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Certificate,
we will do so only (A) in accordance with Rule 144A under
the Securities Act to a "qualified institutional buyer" (as
defined therein), (B) to an institutional "accredited
investor" (as defined below) that, prior to such transfer,
furnishes to you and Continental Airlines, Inc., a signed
letter substantially in the form of this letter, (C)
outside the United States in accordance with Rule 904 of
Regulation S under the Securities Act, (D) pursuant to the
exemption
from registration provided by Rule 144 under the Securities
Act, or (E) pursuant to an effective registration statement
under the Securities Act, and we further agree to provide
to any person purchasing any of the Certificates from us a
notice advising such purchaser that resales of the Notes
are restricted as stated herein. We further understand that
the Certificates purchased by us will bear a legend to the
foregoing effect.
3. We understand that, on any proposed resale of any
Certificates, we will be required to furnish to you and
Continental Airlines, Inc. such certifications, legal
opinions and other information as you and Continental
Airlines, Inc. may reasonably require to confirm that the
proposed sale complies with the foregoing restrictions. We
further understand that the Certificates purchased by us
will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act) and have such knowledge and
experience in financial and business matters as to be
capable of evaluating the merits and risks of our
investment in the Certificates and we and any accounts for
which we are acting are each able to bear the economic risk
of our or its investment.
5. We are acquiring the Certificates purchased by us
for our own account or for one or more accounts (each of
which is an institutional "accredited investor") as to each
of which we exercise sole investment discretion.
You and Continental Airlines, Inc. are entitled to
rely upon this letter and are irrevocably authorized to produce
this letter or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferor]
By: ________________________
Authorized Signature
D-2
- -------------------------------------------------------------------
PASS THROUGH TRUST AGREEMENT
Dated as of May 20, 1996
between
CONTINENTAL AIRLINES, INC.
and
WILMINGTON TRUST COMPANY,
as Trustee
Continental Airlines 1996-2B Pass Through Trust
8.56% 1996-2B Initial Pass Through Certificates
8.56% 1996-2B Exchange Pass Through Certificates
- -------------------------------------------------------------------
Reconciliation and tie between Continental Airlines 1996-2B Pass
Through Trust Agreement, dated as of May 20, 1996, and the Trust
Indenture Act of 1939. This reconciliation does not constitute
part of the Pass Through Trust Agreement.
Trust Indenture Act Pass Through Trust
of 1939 Section Agreement Section
- ------------------------ -------------------------
310(a)(1) 7.08
(a)(2) 7.08
312(a) 3.05; 8.01; 8.02
313(a) 8.03
314(a) 8.04(a) - (c)
(a)(4) 8.04(d)
(c)(1) 1.02
(c)(2) 1.02
(d)(1) 7.13; 11.01
(d)(2) 7.13; 11.01
(d)(3) 2.01
(e) 1.02
315(b) 7.02
316(a)(last 1.04(c)
sentence)
(a)(1)(A) 6.04
(a)(1)(B) 6.05
(b) 6.06
(c) 1.04(d)
317(a)(1) 6.03
(b) 7.13
318(a) 12.06
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
1.01. Definitions........................................ 2
1.02. Compliance Certificates and Opinions............... 13
1.03. Form of Documents Delivered to Trustee............. 14
1.04. Directions of Certificateholders................... 14
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES;
ACQUISITION OF EQUIPMENT NOTES
2.01. Issuance of Certificates; Acquisition of
Equipment Notes................................... 16
2.02. Acceptance by Trustee.............................. 18
2.03. Limitation of Powers............................... 19
ARTICLE III
THE CERTIFICATES
3.01. Title, Form, Denomination and Execution of
Certificates...................................... 19
3.02. Restrictive Legends................................ 20
3.03. Authentication of Certificates..................... 22
3.04. Transfer and Exchange.............................. 23
3.05. Book-Entry Provisions for U.S. Global
Certificate and Offshore Global Certificates...... 23
3.06. Special Transfer Provisions........................ 25
3.07. Mutilated, Destroyed, Lost or Stolen
Certificates...................................... 28
3.08. Persons Deemed Owners.............................. 28
3.09. Cancellation....................................... 29
3.10. Temporary Certificates............................. 29
3.11. Limitation of Liability for Payments............... 29
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS
4.01. Certificate Account and Special Payments
Account........................................... 30
4.02. Distributions from Certificate Account and
Special Payments Account.......................... 30
4.03. Statements to Certificateholders................... 32
4.04. Investment of Special Payment Moneys............... 33
ARTICLE V
THE COMPANY
5.01. Maintenance of Corporate Existence................. 33
5.02. Consolidation, Merger, etc......................... 33
ARTICLE VI
DEFAULT
6.01. Events of Default.................................. 34
6.02. [Intentionally omitted.]........................... 37
6.03. Judicial Proceedings Instituted by Trustee;
Trustee May Bring Suit............................ 37
6.04. Control by Certificateholders...................... 37
6.05. Waiver of Past Defaults............................ 37
6.06. Right of Certificateholders to Receive Payments
Not to Be Impaired................................ 38
6.07. Certificateholders May Not Bring Suit Except
Under Certain Conditions.......................... 38
6.08. Remedies Cumulative................................ 39
ARTICLE VII
THE TRUSTEE
7.01. Certain Duties and Responsibilities................ 39
7.02. Notice of Defaults................................. 40
7.03. Certain Rights of Trustee.......................... 40
7.04. Not Responsible for Recitals or Issuance of
Certificates...................................... 42
7.05. May Hold Certificates.............................. 42
7.06. Money Held in Trust................................ 42
7.07. Compensation and Reimbursement..................... 42
7.08. Corporate Trustee Required; Eligibility............ 43
7.09. Resignation and Removal; Appointment of
Successor......................................... 43
7.10. Acceptance of Appointment by Successor............. 45
7.11. Merger, Conversion, Consolidation or Succession
to Business....................................... 45
7.12. Maintenance of Agencies............................ 46
7.13. Money for Certificate Payments to Be Held in
Trust............................................. 47
7.14. Registration of Equipment Notes in Name of
ii
Subordination Agent............................... 47
7.15. Representations and Warranties of Trustee.......... 47
7.16. Withholding Taxes; Information Reporting........... 49
7.17. Trustee's Liens.................................... 49
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
8.01. The Company to Furnish Trustee with Names and
Addresses of Certificateholders................... 49
8.02. Preservation of Information; Communications to
Certificateholders................................ 50
8.03. Reports by Trustee................................. 50
8.04. Reports by the Company............................. 50
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
9.01. Supplemental Agreements Without Consent of
Certificateholders................................ 51
9.02. Supplemental Agreements with Consent of
Certificateholders................................ 52
9.03. Documents Affecting Immunity or Indemnity.......... 53
9.04. Execution of Supplemental Agreements............... 53
9.05. Effect of Supplemental Agreements.................. 53
9.06. Conformity with Trust Indenture Act................ 53
9.07. Reference in Certificates to Supplemental
Agreements........................................ 54
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
10.01. Amendments and Supplements to Indentures and
Other Financing Documents........................ 54
ARTICLE XI
TERMINATION OF TRUST
11.01. Termination of the Trust.......................... 55
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.01. Limitation on Rights of Certificateholders........ 56
12.02. Certificates Nonassessable and Fully Paid......... 56
iii
12.03. Notices........................................... 56
12.04. Governing Law..................................... 57
12.05. Severability of Provisions........................ 58
12.06. Trust Indenture Act Controls...................... 58
12.07. Effect of Headings and Table of Contents.......... 58
12.08. Successors and Assigns............................ 58
12.09. Benefits of Agreement............................. 58
12.10. Legal Holidays.................................... 58
12.11. Counterparts...................................... 58
12.12. Intention of Parties.............................. 59
Schedule 1 - Indentures
Schedule 2 - Financing Agreements
Exhibit A - Form of Certificate
Exhibit B - Form of Certificate for Unlegended
Certificates
Exhibit C - Form of Certificate to Be Delivered in
Connection with Transfers Pursuant to
Regulation S
Exhibit D - Form of Certificate to Be Delivered in
Connection with Transfers to Non-QIB
Accredited Investors
iv
PASS THROUGH TRUST AGREEMENT
This PASS THROUGH TRUST AGREEMENT, dated as of May 20,
1996, between CONTINENTAL AIRLINES, INC., a Delaware corporation,
and WILMINGTON TRUST COMPANY, as Trustee, is made with respect to
the formation of Continental Airlines 1996-2B Pass Through Trust
and the issuance of 8.56% Continental Airlines 1996-2B Pass
Through Certificates representing fractional undivided interests
in the Trust.
WITNESSETH:
WHEREAS, (i) the Company, the Owner Trustees and the
Owner Participants (as such terms and certain other capitalized
terms used herein are defined below) have previously entered into
four separate leveraged lease transactions in connection with the
purchase of four Boeing 757-224 aircraft from the manufacturer
(the "Leased Aircraft") and (ii) the Company has previously
purchased one Boeing 737-524 aircraft from the manufacturer (the
"Owned Aircraft"; together with the Leased Aircraft, the
"Aircraft");
WHEREAS, each Owner Trustee, acting on behalf of the
corresponding Owner Participant, will issue pursuant to an
Indenture, on a non-recourse basis, four series of Equipment
Notes, among other things, to refinance the current indebtedness
of such Owner Trustee originally incurred to finance the purchase
price of the related Leased Aircraft;
WHEREAS, the Company, will issue pursuant to an
Indenture, on a recourse basis, four series of Equipment Notes,
relating to the Owned Aircraft;
WHEREAS, the Trustee, upon execution and delivery of
this Agreement, hereby declares the creation of the Trust for the
benefit of the Certificateholders, and the initial
Certificateholders, as the grantors of the Trust, by their
respective acceptances of the Certificates, join in the creation
of this Trust with the Trustee;
WHEREAS, all Certificates to be issued by the Trust
will evidence fractional undivided interests in the 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 this
Agreement and each of the Financing Agreements to be entered into
by the Trustee simultaneously with the execution and delivery of
this Agreement, the Trustee on behalf of the Trust shall purchase
one or more issues of Equipment Notes having the same interest
rate as, and final maturity dates not later than the final
Regular Distribution Date of, the Certificates issued hereunder
and shall hold such Equipment Notes in trust for the benefit of
the Certificateholders;
WHEREAS, to facilitate the sale of Equipment Notes to,
and the purchase of Equipment Notes by, the Trustee on behalf of
the Trust, the Company has duly authorized the execution and
delivery of this Agreement as the "issuer", as such term is
defined in and solely for purposes of the Securities Act of 1933,
as amended, of the Certificates to be issued pursuant hereto and
as the "obligor", as such term is defined in and solely for
purposes of the Trust Indenture Act of 1939, as amended, with
respect to all such Certificates and is undertaking to perform
certain administrative and ministerial duties hereunder and is
also undertaking to pay the ongoing fees and expenses of the
Trustee;
WHEREAS, all of the conditions and requirements
necessary to make this Agreement, when duly executed and
delivered, a valid, binding and legal instrument, enforceable in
accordance with its terms and for the purposes herein expressed,
have been done, performed and fulfilled, and the execution and
delivery of this Agreement in the form and with the terms hereof
have been in all respects duly authorized; and
WHEREAS, upon issuance of the Exchange Certificates,
if any, or the effectiveness of the Registration Statement, this
Agreement, as amended or supplemented from time to time, will be
subject to the provisions of the Trust Indenture Act of 1939, and
shall, to the extent applicable, be governed by such provisions;
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. Definitions. For all purposes of this
Agreement, except as otherwise expressly provided or unless the
context otherwise requires:
(1) the terms used herein that are defined in this
Article have the meanings assigned to them in this Article,
and include the plural as well as the singular;
(2) all other terms used herein which are defined in
the Trust Indenture Act, either directly or by reference
2
therein, or by the rules promulgated under the Trust
Indenture Act, have the meanings assigned to them therein;
(3) all references in this Agreement to designated
"Articles", "Sections", "Subsections" and other
subdivisions are to the designated Articles, Sections,
Subsections and
other subdivisions of this Agreement;
(4) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section,
Subsection or other subdivision; and
(5) unless the context otherwise requires, whenever
the words "including", "include" or "includes" are used
herein, it shall be deemed to be followed by the phrase
"without limitation".
Affiliate: Means, with respect to any Person, any
other Person directly or indirectly controlling or
controlled by or under common control with such Person,
provided, however, that neither America West Airlines, Inc.
nor any of its subsidiaries shall be deemed to be an
"Affiliate" of the Company for purposes of this Agreement.
For purposes of this definition, "control" means the power,
directly or indirectly, to direct the management and
policies of such Person, whether through the ownership of
voting securities or by contract or otherwise, and the
terms "controlling" and "controlled" have meanings
correlative to the foregoing.
Agent Members: Has the meaning specified in Section
3.05.
Aircraft: Has the meaning specified in the first
recital to this Agreement.
Authorized Agent: Means any Paying Agent or Registrar
for the Certificates.
Avoidable Tax: Means a state or local tax (i) upon (w)
the Trust, (x) the Trust Property, (y) Certificateholders
or (z) the Trustee for which the Trustee is entitled to
seek reimbursement from the Trust Property, and (ii) which
would be avoided if the Trustee were located in another
state, or jurisdiction within a state, within the United
States. A tax shall not be an Avoidable Tax if the Company
or any Owner Trustee shall agree to pay, and shall pay,
such tax.
3
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 Certificate is outstanding, the city and
state in which the Trustee or any Loan Trustee maintains
its Corporate Trust Office or receives and disburses funds.
Cedel: Means Cedel Bank societe anonyme.
Certificate: Means any one of the Initial Certificates
or Exchange Certificates and any such Certificates issued in
exchange therefor or replacement thereof pursuant to this
Agreement.
Certificate Account: Means the account or accounts
created and maintained pursuant to Section 4.01(a).
Certificateholder or Holder: Means the Person in whose
name a Certificate is registered in the Register.
Company: Means Continental Airlines, Inc., a Delaware
corporation, or its successor in interest pursuant to
Section 5.02, or any other obligor (within the meaning of
the Trust Indenture Act) with respect to the Certificates.
Controlling Party: Has the meaning specified in the
Intercreditor Agreement.
Corporate Trust Office: With respect to the Trustee or
any Loan Trustee, means the office of such trustee in the
city at which at any particular time its corporate trust
business shall be principally administered.
Cut-off Date: Means August 2, 1996.
Delayed Equipment Notes: Means the Equipment Notes to
be issued on the applicable Transfer Date in respect of the
two Leased Aircraft bearing Federal Aviation Registration
Marks of N12114 and N14115.
Depositary: Means the Depository Trust Company, its
nominees and their respective successors.
Direction: Has the meaning specified in
Section 1.04(a).
Distribution Date: Means any Regular Distribution Date
or Special Distribution Date.
Equipment Notes: Means the equipment notes issued
under the Indentures.
4
ERISA: Means the Employee Retirement Income Security
Act of 1974, as amended from time to time, or any successor
federal statute.
Escrow Account: Has the meaning specified in
Section 2.01(b).
Escrowed Funds: Has the meaning specified in
Section 2.01(b).
Euroclear: Means the Euroclear System.
Event of Default: Means an Indenture Default under any
Indenture pursuant to which Equipment Notes held by the
Trust were issued.
Exchange Certificates: Means the certificates
substantially in the form of Exhibit A hereto issued in
exchange for the Initial Certificates pursuant to the
Registration Rights Agreement and authenticated hereunder.
Exchange Offer Registration Statement: Means the
Exchange Offer Registration Statement defined in the
Registration Rights Agreement.
Financing Agreements: Means each of the four separate
Refunding Agreements and the Note Purchase Agreement, in
each case, dated the date hereof, listed on Schedule 2
hereto, providing for, among other things, the purchase of
Equipment Notes by the Trustee on behalf of the Trust, as
the same may be amended, supplemented or otherwise modified
from time to time in accordance with its terms.
Financing Documents: With respect to any Equipment
Note, means (i) the related Indenture and Financing
Agreement and (ii) in the case of any Equipment Note
related to a Leased Aircraft, the Lease and the
Participation Agreement relating to such Leased Aircraft.
Fractional Undivided Interest: Means the fractional
undivided interest in the Trust that is evidenced by a
Certificate.
Global Certificates: Has the meaning assigned to such
term in Section 3.01.
Indentures: Means each of the four separate Amended
and Restated Trust Indentures and Mortgages and the Trust
Indenture and Mortgage listed on Schedule 1 hereto, in each
case as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
5
Indenture Default: With respect to any Indenture,
means any Event of Default (as such term is defined in such
Indenture).
Initial Certificates: Means the certificates issued
and authenticated hereunder substantially in the form of
Exhibit A hereto other than the Exchange Certificates.
Initial Purchasers: Means, collectively, Morgan
Stanley & Co. Incorporated, CS First Boston Corporation and
Fieldstone FPCG Services, L.P.
Initial Regular Distribution Date: Means the first
Regular Distribution Date on which a Scheduled Payment is to
be made.
Institutional Accredited Investor: Means an
institutional investor that is an "accredited investor"
within the meaning set forth in Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act.
Intercreditor Agreement: Means the Intercreditor
Agreement dated the date hereof among the Trustee, the
Other Trustees, the Liquidity Provider, the liquidity
provider, if any, relating to the Certificates issued under
(and as defined in) each of the Other Pass Through Trust
Agreements, and Wilmington Trust Company, as Subordination
Agent thereunder, as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
Issuance Date: Means the date of the issuance of the
Initial Certificates.
Lease: Means, with respect to each Leased Aircraft,
the lease between an Owner Trustee, as the lessor, and the
Company, as the lessee, referred to in the related
Indenture, as such lease may be amended, supplemented or
otherwise modified in accordance with its terms.
Leased Aircraft: Has the meaning specified in the
first recital to this Agreement.
Liquidity Facility: Means the Revolving Credit
Agreement dated the date hereof relating to the
Certificates, between the Liquidity Provider and the
Subordination Agent, as amended, replaced, supplemented or
otherwise modified from time to time in accordance with its
terms and the terms of the Intercreditor Agreement.
Liquidity Provider: Means, initially, De Nationale
Investeringsbank N.V., and any replacement or successor
6
therefor appointed in accordance with the Liquidity Facility
and the Intercreditor Agreement.
Loan Trustee: With respect to any Equipment Note or
the Indenture applicable thereto, means the bank or trust
company designated as indenture trustee under such
Indenture, together with any successor to such Loan Trustee
appointed pursuant thereto.
Non-U.S. Person: Means a Person that is not a "U.S.
person", as defined in Regulation S.
Officer's Certificate: Means a certificate signed, (a)
in the case of the Company, by (i) the Chairman or Vice
Chairman of the Board of Directors, the President, any
Executive Vice President, any Senior Vice President or the
Treasurer of the Company, signing alone or (ii) any Vice
President of the Company signing together with the
Secretary, the Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company or, (b) in the case of
an Owner Trustee or a Loan Trustee, a Responsible Officer
of such Owner Trustee or such Loan Trustee, as the case may
be.
Offshore Certificates Exchange Date: Has the meaning
specified in Section 3.01.
Offshore Global Certificates: Has the meaning assigned
to such term in Section 3.01.
Offshore Physical Certificates: Has the meaning
assigned to such term in Section 3.01.
Opinion of Counsel: Means a written opinion of legal
counsel who (a) in the case of counsel for the Company may
be (i) a senior attorney of the Company one of whose
principal duties is furnishing advice as to legal matters,
(ii) Cleary, Gottlieb, Steen & Hamilton, (iii) Hughes
Hubbard & Reed, or (iv) such other counsel designated by
the Company and reasonably acceptable to the Trustee and
(b) in the case of counsel for any Owner Trustee or any
Loan Trustee may be such counsel as may be designated by
any of them whether or not such counsel is an employee of
any of them, and who shall be reasonably acceptable to the
Trustee.
Other Pass Through Trust Agreements: Means each of the
three other Continental Airlines 1996-2 Pass Through Trust
Agreements relating to Continental Airlines 1996-2A Pass
Through Trust, Continental Airlines 1996-2C Pass Through
Trust and Continental Airlines 1996-2D Pass Through Trust,
dated the date hereof.
7
Other Trustees: Means the trustee under the Other Pass
Through Trust Agreements, and any successor or other trustee
appointed as provided therein.
Outstanding: When used with respect to Certificates,
means, as of the date of determination, all Certificates
theretofore authenticated and delivered under this
Agreement, except:
(i) Certificates theretofore cancelled by the
Registrar or delivered to the Trustee or the Registrar
for cancellation;
(ii) Certificates for which money in the full
amount required to make the final distribution with
respect to such Certificates pursuant to Section 11.01
hereof has been theretofore deposited with the Trustee
in trust for the Holders of such Certificates as
provided in Section 4.01 pending distribution of such
money to such Certificateholders pursuant to payment
of such final distribution; and
(iii) Certificates in exchange for or in lieu of
which other Certificates have been authenticated and
delivered pursuant to this Agreement.
Owned Aircraft: Has the meaning specified in the first
recital to this Agreement.
Owner Participant: With respect to any Equipment Note
relating to a Leased Aircraft, means the "Owner
Participant" as referred to in the Indenture pursuant to
which such Equipment Note is issued and any permitted
successor or assign of such Owner Participant; and Owner
Participants at any time of determination means all of the
Owner Participants thus referred to in the Indentures.
Owner Trustee: With respect to any Equipment Note
relating to a Leased Aircraft, means the "Owner Trustee",
as referred to in the Indenture pursuant to which such
Equipment Note is issued, not in its individual capacity
but solely as trustee; and Owner Trustees means all of the
Owner Trustees party to any of the Indentures.
Participation Agreement: With respect to any Leased
Aircraft, means the Participation Agreement referred to in
the related Indenture.
Paying Agent: Means the paying agent maintained and
appointed for the Certificates pursuant to Section 7.12.
8
Permanent Offshore Global Certificates: Has the
meaning specified in Section 3.01.
Permanent Offshore Physical Certificates: Has the
meaning specified in Section 3.01.
Permitted Investments: Means obligations of the United
States of America or agencies or instrumentalities thereof
the payment of which is backed by the full faith and credit
of the United States of America and which mature in not
more than 60 days after the date of acquisition thereof or
such lesser time as is required for the distribution of any
Special Payments on a Special Distribution Date.
Person: Means any person, including any individual,
corporation, partnership, joint venture, association,
joint-stock company, trust, trustee, unincorporated
organization, or government or any agency or political
subdivision thereof.
Physical Certificates: Has the meaning specified in
Section 3.01.
Plan Transferee: Means any Plan or any entity that is
using the assets of any Plan to purchase or hold its
interest in a Certificate. For purposes of this definition,
a "Plan" means any employee benefit plan subject to ERISA
as well as any plan that is not subject to ERISA but which
is subject to Section 4975 of the Internal Revenue Code of
1986, as amended.
Pool Balance: Means, as of any date, (i) the original
aggregate face amount of the Certificates less (ii) the
aggregate amount of all payments made in respect of such
Certificates other than payments made in respect of
interest or premium thereon or reimbursement of any costs
or expenses incurred in connection therewith. The Pool
Balance as of any Distribution Date shall be computed after
giving effect to the payment of principal, if any, on the
Equipment Notes or other Trust Property held in such Trust
and the distribution thereof to be made on such
Distribution Date.
Pool Factor: Means, as of any date, the quotient
(rounded to the seventh decimal place) computed by dividing
(i) the Pool Balance as at such date by (ii) the original
aggregate face amount of the Certificates. The Pool Factor
as of any Distribution Date shall be computed after giving
effect to the payment of principal, if any, on the
Equipment Notes or other Trust Property and the
distribution thereof to be made on such Distribution Date.
9
Postponed Notes: Means (i) the Delayed Equipment Notes
and (ii) the Equipment Notes to be held in the Trust as to
which a Postponement Notice shall have been delivered
pursuant to Section 2.01(b).
Postponement Notice: Means an Officer's Certificate of
the Company (1) requesting that the Trustee temporarily
postpone the purchase pursuant to one or more of the
Financing Agreements of certain of the Equipment Notes to a
date which is later than the Issuance Date, (2) identifying
the amount of the purchase price of each such Equipment
Note and the aggregate purchase price for all such
Equipment Notes, (3) setting forth the reasons for such
postponement and (4) with respect to each such Equipment
Note, either (a) setting or resetting a new Transfer Date
(which shall be on or prior to the applicable Cut-off Date)
for payment by the Trustee of such purchase price and
issuance of the related Equipment Note, or (b) indicating
that such new Transfer Date (which shall be on or prior to
the applicable Cut-off Date) will be set by subsequent
written notice not less than one Business Day prior to such
new Transfer Date.
Private Placement Legend: Has the meaning specified in
Section 3.02.
PTC Event of Default: Means any failure to pay within
10 Business Days of the due date thereof: (i) the
outstanding Pool Balance on January 2, 2016 or (ii)
interest due on the Certificates on any Distribution Date
(unless the Subordination Agent shall have made an Interest
Drawing (as defined in the Intercreditor Agreement) with
respect thereto in an amount sufficient to pay such
interest and shall have distributed such amount to the
Certificateholders).
QIB: Means a qualified institutional buyer as defined
in Rule 144A.
Record Date: Means (i) for Scheduled Payments to be
distributed on any Regular Distribution Date, other than
the final distribution, the 15th day (whether or not a
Business Day) preceding such Regular Distribution Date, and
(ii) for Special Payments to be distributed on any Special
Distribution Date, other than the final distribution, the
15th day (whether or not a Business Day) preceding such
Special Distribution Date.
Refunding Agreements: Has the meaning specified in the
Indentures.
10
Register and Registrar: Mean the register maintained
and the registrar appointed pursuant to Sections 3.04
and 7.12.
Registration Rights Agreement: Means the Registration
Rights Agreement dated May 20, 1996, among the Initial
Purchasers, the Trustee, the Other Trustees and the Company,
as amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Registration Statement: Means the Registration
Statement defined in the Registration Rights Agreement.
Regular Distribution Date: With respect to
distributions of Scheduled Payments in respect of the
Certificates, means each date designated as a Regular
Distribution Date in this Agreement, until payment of all
the Scheduled Payments to be made under the Equipment Notes
held in the Trust have been made; provided, however, that,
if any such day shall not be a Business Day, the related
distribution shall be made on the next succeeding Business
Day without additional interest.
Regulation S: Means Regulation S under the Securities
Act or any successor regulation thereto.
Responsible Officer: With respect to the Trustee, any
Loan Trustee and any Owner Trustee, means any officer in
the Corporate Trust Office of the Trustee, Loan Trustee or
Owner Trustee or any other officer customarily performing
functions similar to those performed by the persons who at
the time shall be such officers, respectively, or to whom
any corporate trust matter is referred because of his
knowledge of and familiarity with a particular subject.
Rule 144A: Means Rule 144A under the Securities Act
and any successor rule thereto.
Scheduled Payment: With respect to any Equipment Note,
means (i) any payment of principal and interest on such
Equipment Note (other than any such payment which is not in
fact received by the Subordination Agent within five days
of the date on which such payment is scheduled to be made)
due from the obligor thereon or (ii) any payment of
interest on the Certificates with funds drawn under the
Liquidity Facility, which payment represents the
installment of principal at the stated maturity of such
installment of principal on such Equipment Note, the
payment of regularly scheduled interest accrued on the
unpaid principal amount of such Equipment Note, or both;
provided that any payment of principal, premium, if any, or
interest resulting from the redemption or purchase of any
11
Equipment Note shall not constitute a Scheduled Payment.
SEC: Means the Securities and Exchange Commission, as
from time to time constituted or created under the
Securities Exchange Act of 1934, as amended, or, if at any
time after the execution of this instrument such Commission
is not existing and performing the duties now assigned to
it under the Trust Indenture Act, then the body performing
such duties on such date.
Securities Act: Means the United States Securities Act
of 1933, as amended from time to time, or any successor
thereto.
Special Distribution Date: Means each date on which a
Special Payment is to be distributed as specified in this
Agreement; provided, however, that, if any such day shall
not be a Business Day, the related distribution shall be
made on the next succeeding Business Day without additional
interest.
Special Payment: Means (i) any payment (other than a
Scheduled Payment) in respect of, or any proceeds of, any
Equipment Note or Trust Indenture Estate (as defined in
each Indenture), (ii) the amounts required to be
distributed pursuant to the last paragraph of Section
2.01(b) or (iii) the amounts required to be distributed
pursuant to the penultimate paragraph of Section 2.01(b).
Special Payments Account: Means the account or
accounts created and maintained pursuant to Section 4.01(b).
Specified Investments: Means, with respect to
investments to be made with Escrowed Funds pursuant to
Section 2.01(b) hereof, (i) obligations of, or guaranteed
by, the United States Government or agencies thereof, (ii)
open market commercial paper of any corporation
incorporated under the laws of the United States of America
or any State thereof rated at least P-2 or its equivalent
by Moody's Investors Service, Inc. or at least A-2 or its
equivalent by Standard & Poor's Ratings Group, (iii)
certificates of deposit issued by commercial banks
organized under the laws of the United States or of any
political subdivision thereof having a combined capital and
surplus in excess of $100,000,000, which banks or their
holding companies have a short-term deposit rating of P1 by
Moody's Investors Service, Inc. or its equivalent by
Standard & Poor's Ratings Group; provided, however, that
the aggregate amount at any one time so invested in certifi-
cates of deposit issued by any one bank shall not exceed 5%
12
of such bank's capital and surplus, (iv) U.S. dollar
denominated offshore certificates of deposit issued by, or
offshore time deposits with, any commercial bank described
in clause (iii) above or any subsidiary thereof and (v)
repurchase agreements with any financial institution having
combined capital and surplus of at least $100,000,000 with
respect to any of the obligations described in clauses (i)
through (iv) above as collateral; provided further that if
all of the above investments are unavailable, all amounts
to be invested may be used to purchase Federal Funds from
an entity described in clause (iii) above.
Subordination Agent: Has the meaning specified in the
Intercreditor Agreement.
Temporary Offshore Global Certificates: Has the
meaning specified in Section 3.01.
Transfer Date: Has the meaning assigned to the term
"Refunding Date" or "Funding Date" in each Financing
Agreement.
Triggering Event: Has the meaning assigned to such
term in the Intercreditor Agreement.
Trust: Means the trust created by this Agreement, the
estate of which consists of the Trust Property.
Trust Indenture Act: Except as otherwise provided in
Section 9.06, means the United States Trust Indenture Act of
1939 as in force at the date hereof.
Trust Property: Means (i) the Equipment Notes held as
the property of the Trust and 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 Escrow
Account, the Certificate Account and the Special Payments
Account, and (iii) all rights of the Trust and the Trustee,
on behalf of the Trust, under the Intercreditor Agreement
and the Liquidity Facility, including, without limitation,
all rights to receive certain payments thereunder, and all
monies paid to the Trustee on behalf of the Trust pursuant
to the Intercreditor Agreement or the Liquidity Facility.
Trustee: Means Wilmington Trust Company, or its
successor in interest, and any successor or other trustee
appointed as provided herein.
Trustee's Lien: Has the meaning specified in Section
7.17.
13
U.S. Global Certificate: Has the meaning specified in
Section 3.01.
U.S. Physical Certificates: Has the meaning specified
in Section 3.01.
Section 1.02. Compliance Certificates and Opinions.
Upon any application or request by the Company, any Owner Trustee
or any Loan Trustee to the Trustee to take any action under any
provision of this Agreement, the Company, such Owner Trustee or
such Loan Trustee, as the case may be, shall furnish to the
Trustee (i) an Officer's Certificate stating that, in the opinion
of the signers, all conditions precedent, if any, provided for in
this Agreement relating to the proposed action have been complied
with and (ii) an Opinion of Counsel stating that in the opinion
of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or
request as to which the furnishing of such documents is
specifically required by any provision of this Agreement relating
to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this
Agreement (other than a certificate provided pursuant to Section
8.04(d)) shall include:
(1) a statement that each individual signing such
certificate or opinion has read such covenant or condition
and the definitions in this Agreement relating thereto;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are
based;
(3) a statement that, in the opinion of each such
individual, he has made such examination or investigation
as is necessary to enable him to express an informed
opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been
complied with.
Section 1.03. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by
14
the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters and any such
Person may certify or give an opinion as to such matters in one
or several documents.
Where any Person is required to make, give or execute
two or more applications, requests, consents, certificates,
statements, opinions or other instruments under this Agreement
or, in respect of the Certificates, this Agreement, they may, but
need not, be consolidated and form one instrument.
Section 1.04. Directions of Certificateholders. (a)
Any direction, consent, request, demand, authorization, notice,
waiver or other action provided by this Agreement to be given or
taken by Certificateholders (a "Direction") may be embodied in
and evidenced by one or more instruments of substantially similar
tenor signed by such Certificateholders in person or by an agent
or proxy duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective
when such instrument or instruments are delivered to the Trustee
and, where it is hereby expressly required pursuant to this
Agreement, to the Company or any Loan Trustee. Proof of execution
of any such instrument or of a writing appointing any such agent
or proxy shall be sufficient for any purpose of this Agreement
and conclusive in favor of the Trustee, the Company and any Loan
Trustee, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person
of any such instrument or writing may be proved by the
certificate of any notary public or other officer of any
jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument
acknowledged to him the execution thereof, or by an affidavit of
a witness to such execution sworn to before any such notary or
such other officer and where such execution is by an officer of a
corporation or association or a member of a partnership, on
behalf of such corporation, association or partnership, such
certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such
instrument or writing, or the authority of the Person executing
the same, may also be proved in any other reasonable manner which
the Trustee deems sufficient.
(c) In determining whether the Certificateholders of
the requisite Fractional Undivided Interests of Certificates
Outstanding have given any Direction under this Agreement,
Certificates owned by the Company or any Affiliate thereof shall
be disregarded and deemed not to be Outstanding for purposes of
any such determination. In determining whether the Trustee shall
15
be protected in relying upon any such Direction, only
Certificates which the Trustee knows to be so owned shall be so
disregarded. Notwithstanding the foregoing, (i) if any such
Person owns 100% of the Certificates Outstanding, such
Certificates shall not be so disregarded, and (ii) if any amount
of Certificates so owned by any such Person have been pledged in
good faith, such Certificates shall not be disregarded if the
pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Certificates and
that the pledgee is not the Company or any Affiliate thereof.
(d) The Company may at its option, by delivery of an
Officer's Certificate to the Trustee, set a record date to
determine the Certificateholders entitled to give any Direction.
Notwithstanding Section 316(c) of the Trust Indenture Act, such
record date shall be the record date specified in such Officer's
Certificate, which shall be a date not more than 30 days prior to
the first solicitation of Certificateholders in connection
therewith. If such a record date is fixed, such Direction may be
given before or after such record date, but only the
Certificateholders of record at the close of business on such
record date shall be deemed to be Certificateholders for the
purposes of determining whether Certificateholders of the
requisite proportion of Outstanding Certificates have authorized
or agreed or consented to such Direction, and for that purpose
the Outstanding Certificates shall be computed as of such record
date; provided that no such Direction by the Certificateholders
on such record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Agreement not
later than one year after such record date.
(e) Any Direction by the Holder of any Certificate
shall bind the Holder of every Certificate issued upon the
transfer thereof or in exchange therefor or in lieu thereof,
whether or not notation of such Direction is made upon such
Certificate.
(f) Except as otherwise provided in Section 1.04(c),
Certificates owned by or pledged to any Person shall have an
equal and proportionate benefit under the provisions of this
Agreement, without preference, priority, or distinction as among
all of the Certificates.
16
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES;
ACQUISITION OF EQUIPMENT NOTES
Section 2.01. Issuance of Certificates; Acquisition of
Equipment Notes. (a) The Trustee is hereby directed to execute
and deliver the Intercreditor Agreement, the Registration Rights
Agreement and each of the Financing Agreements on or prior to the
Issuance Date, each in the form delivered to the Trustee by the
Company. Upon request of the Company and the satisfaction of the
closing conditions specified in each of the Financing Agreements,
the Trustee shall execute, deliver and authenticate Certificates
equalling in the aggregate the aggregate principal amount of the
Equipment Notes to be purchased by the Trustee pursuant to each
of the Financing Agreements on the Transfer Date, and evidencing
the entire ownership interest in the Trust. The Trustee shall
issue and sell such Certificates, in authorized denominations and
in such Fractional Undivided Interests, so as to result in the
receipt by the Trustee of consideration in an amount equal to the
aggregate principal amount of such Equipment Notes and,
concurrently therewith, the Trustee shall purchase, pursuant to
the terms and conditions of the Financing Agreements, the
Equipment Notes at a purchase price equal to the amount of such
consideration so received. Except as provided in Sections 3.04
and 3.07 hereof, the Trustee shall not execute, authenticate or
deliver Certificates in excess of the aggregate amount specified
in this paragraph. The provisions of this Subsection (a) are
subject to the provisions of Subsection (b) below.
(b) On or prior to the Issuance Date, the Company may
deliver to the Trustee a Postponement Notice relating to one or
more Postponed Notes (other than the Delayed Equipment Notes)
(which Postponement Notice may be given by the Company only if
one or more conditions to the purchase of such Postponed Notes by
the Trustee shall not have been satisfied or waived pursuant to
the related Financing Agreement). The Trustee shall postpone the
purchase of the Postponed Notes from the consideration received
from the sale of Certificates and shall promptly deposit funds in
an amount equal to the purchase price of such Postponed Notes
(the "Escrowed Funds") into an escrow account (the "Escrow
Account") with the Trustee to be maintained as a part of the
Trust. The Escrowed Funds so deposited shall be invested by the
Trustee at the direction and risk of the Company in Specified
Investments (i) maturing no later than any scheduled Transfer
Date relating to the Postponed Notes or (ii) if no such Transfer
Date has been scheduled, maturing on the next Business Day, or
(iii) if the Company has given notice to the Trustee that any
Postponed Notes will not be issued, with respect to the portion
of the Escrowed Funds relating to such Postponed Notes, maturing
on the next applicable Special Distribution Date, if such
17
investments are reasonably available for purchase. The Trustee
shall make withdrawals from the Escrow Account only as provided
in this Agreement. Upon request of the Company on one or more
occasions and the satisfaction of the closing conditions
specified in the applicable Financing Agreements on or prior to
the Cut-off Date, the Trustee shall purchase the applicable
Postponed Notes with the Escrowed Funds withdrawn from the Escrow
Account. The purchase price shall equal the principal amount of
such Postponed Notes.
The Trustee shall hold all Specified Investments until
the maturity thereof and will not sell or otherwise transfer
Specified Investments. If Specified Investments held in an Escrow
Account mature prior to any applicable Transfer Date, any
proceeds received on the maturity of such Specified Investments
(other than any earnings thereon) shall be reinvested by the
Trustee at the direction and risk of the Company in Specified
Investments maturing as provided in the preceding paragraph. The
Company shall pay to the Trustee for deposit to the Escrow
Account an amount equal to any losses on such Specified
Investments as incurred.
On the Initial Regular Distribution Date, the Company
will pay (in immediately available funds) to the Trustee an
amount equal to (i) the sum of (A) the interest that would have
accrued on any Postponed Notes purchased on or prior to the
Initial Regular Distribution Date if such Postponed Notes had
been purchased on the Issuance Date, from and including the
Issuance Date to but excluding the date of such purchase and (B)
the interest that would have accrued on any Postponed Notes not
purchased on or prior to the Initial Regular Distribution Date
(other than any Postponed Notes for which a Special Distribution
Date specified in the immediately succeeding paragraph has
occurred on or prior to the Initial Regular Distribution Date) if
such Postponed Notes had been purchased on the Issuance Date,
from and including the Issuance Date to but excluding the Initial
Regular Distribution Date, minus (ii) the earnings on Specified
Investments received by the Trustee from and including the later
of the Issuance Date or the date immediately preceding the
Initial Regular Distribution Date on which an amount has been
paid pursuant to the immediately succeeding paragraph to but
excluding the Initial Regular Distribution Date. On the second
Regular Distribution Date, the Company will pay (in immediately
available funds) to the Trustee an amount equal to the interest
that would have accrued on any Postponed Notes purchased after
the Initial Regular Distribution Date and on or prior to the
Cut-off Date if such Postponed Notes had been purchased on the
Initial Regular Distribution Date, from and including the Initial
Regular Distribution Date to but excluding the date of such
purchase, minus (ii) the earnings on Specified Investments
received by the Trustee from and including the later
18
of the Initial Regular Distribution Date or the date
immediately preceding the second Regular Distribution Date on
which an amount has been paid pursuant to either of the two
succeeding paragraphs to but excluding the second Regular
Distribution Date.
If the Company notifies the Trustee prior to the
Cutoff Date that any Postponed Notes will not be issued on or
prior to the Cut-off Date for any reason, on the next Special
Distribution Date occurring more than 20 days following the date
of such notice (i) the Company shall pay to the Trustee for
deposit in the Special Payments Account, in immediately available
funds, an amount equal to the sum of (A) the interest that would
have accrued on the Postponed Notes designated in such notice at
a rate equal to the interest rate applicable to the Certificates
from and including the Issuance Date (if such Special
Distribution Date shall occur on or prior to the Initial Regular
Distribution Date) or the Initial Regular Distribution Date (if
such Special Distribution Date occurs after the Initial Regular
Distribution Date) to but excluding such Special Distribution
Date and (B) if any such Postponed Notes shall be Delayed
Equipment Notes and shall not be issued for any reason other than
the occurrence of an Event of Loss (as defined in the related
Indenture) with respect to the Aircraft relating to such Delayed
Equipment Notes, 2% of the aggregate principal amount of such
Delayed Equipment Notes and (ii) the Trustee shall transfer an
amount equal to that amount of Escrowed Funds that would have
been used to purchase the Postponed Notes designated in such
notice plus the amount paid by the Company pursuant to the
immediately preceding clause (i) to the Special Payments Account
for distribution as a Special Payment in accordance with the
provisions hereof.
If, on the Cut-off Date, an amount equal to less than
all of the Escrowed Funds (other than Escrowed Funds referred to
in the immediately preceding paragraph) has been used to purchase
Postponed Notes, on the next Special Distribution Date occurring
more than 20 days following the Cut-off Date (i) the Company
shall pay to the Trustee for deposit in the Special Payments
Account, in immediately available funds, an amount equal to the
sum of (A) the interest that would have accrued on Postponed
Notes originally contemplated to be purchased with such unused
Escrowed Funds (other than Escrowed Funds referred to in the
immediately preceding paragraph) but not so purchased at a rate
equal to the interest rate applicable to the Certificates from
and including the Initial Regular Distribution Date to but
excluding such Special Distribution Date and (B) if any such
Postponed Notes shall be Delayed Equipment Notes and shall not
have been purchased for any reason other than the occurrence of
an Event of Loss (as defined in the related Indenture) with
respect to the Aircraft relating to such Delayed Equipment Notes,
19
2% of the aggregate principal amount of such Delayed Equipment
Notes and (ii) the Trustee shall transfer such unused Escrowed
Funds and the amount paid by the Company pursuant to the
immediately preceding clause (i) to the Special Payments Account
for distribution as a Special Payment in accordance with the
provisions hereof.
Section 2.02. Acceptance by Trustee. The Trustee, upon
the execution and delivery of this Agreement, acknowledges its
acceptance of all right, title and interest in and to the
Equipment Notes acquired pursuant to Section 2.01 hereof and the
Financing Agreements and declares that the Trustee holds and will
hold such right, title and interest, together with all other
property constituting the Trust Property, for the benefit of all
then present and future Certificateholders, upon the trusts
herein set forth. Subject to Section 7.14, the Trustee shall take
all actions reasonably necessary to effect the registration of
all such Equipment Notes in the name of the Subordination Agent.
By its payment for and acceptance of each Certificate issued to
it under this Agreement, each initial Certificateholder as
grantor of the Trust thereby joins in the creation and
declaration of the Trust.
Section 2.03. Limitation of Powers. The Trust is
constituted solely for the purpose of making the investment in
the Equipment Notes, and, except as set forth herein, the Trustee
shall not be authorized or empowered to acquire any other
investments or engage in any other activities and, in particular,
the Trustee shall not be authorized or empowered to do anything
that would cause such Trust to fail to qualify as a "grantor
trust" for federal income tax purposes (including as subject to
this restriction, acquiring any Aircraft (as defined in the
respective Indentures) by bidding such Equipment Notes or
otherwise, or taking any action with respect to any such Aircraft
once acquired).
ARTICLE III
THE CERTIFICATES
Section 3.01. Title, Form, Denomination and Execution
of Certificates. (a) The Initial Certificates shall be known as
the "8.56% 1996-2B Initial Pass Through Certificates" and the
Exchange Certificates shall be known as the "8.56% 1996-2B
Exchange Pass Through Certificates", in each case, of the Trust.
Each Certificate will represent a fractional undivided interest
in the Trust and shall be substantially in the form set forth as
Exhibit A hereto, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted
by this Agreement and may have such letters, numbers or other
20
marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be
determined by the officers executing such Certificates, as
evidenced by their execution of the Certificates. Any portion of
the text of any Certificate may be set forth on the reverse
thereof, with an appropriate reference thereto on the face of the
Certificate.
(b) The Initial Certificates shall be issued only in
fully registered form without coupons and only in denominations
of $100,000 or integral multiples of $1,000 in excess thereof,
except that one Certificate may be issued in a denomination of
less than $100,000. The Exchange Certificates will be issued in
denominations of $1,000 or integral multiples thereof. Each
Certificate shall be dated the date of its authentication. The
aggregate Fractional Undivided Interest of Certificates shall not
at any time exceed $35,363,000.
(c) Initial Certificates offered and sold in reliance
on Rule 144A shall be issued initially in the form of a single
permanent global Certificate in registered form, substantially in
the form set forth as Exhibit A hereto (the "U.S. Global
Certificate"), duly executed and authenticated by the Trustee as
hereinafter provided. The U.S. Global Certificate will be
registered in the name of a nominee for the Depositary and
deposited with the Trustee, as custodian for the Depositary. The
aggregate principal amount of the U.S. Global Certificate may
from time to time be increased or decreased by adjustments made
on the records of the Depositary or its nominee, or of the
Trustee, as custodian for the Depositary or its nominee, as
hereinafter provided.
(d) Initial Certificates offered and sold in offshore
transactions in reliance on Regulation S shall be issued
initially in the form of a single temporary global Certificate in
registered form, substantially in the form set forth as Exhibit A
hereto (the "Temporary Offshore Global Certificate") duly
executed and authenticated by the Trustee as hereinafter
provided. The Temporary Offshore Global Certificates will be
registered in the name of a nominee of the Depositary for credit
to the account of the Agent Members acting as depositaries for
Euroclear and Cedel and deposited with the Trustee as custodian
for the Depositary. At any time following June 29, 1996 (the
"Offshore Certificates Exchange Date"), upon receipt by the
Trustee of a certificate substantially in the form of Exhibit B
hereto, a single permanent global Certificate in registered form
substantially in the form set forth in Exhibit A (the "Permanent
Offshore Global Certificate"; and together with the Temporary
Offshore Global Certificate, the "Offshore Global Certificates"),
duly executed and authenticated by the Trustee as hereinafter
21
provided, shall be registered in the name of a nominee for the
Depositary and deposited with the Trustee, as custodian for the
Depositary, and the Registrar shall reflect on its books and
records the date of such transfer and a decrease in the principal
amount of any Temporary Offshore Global Certificate in an amount
equal to the principal amount of the beneficial interest in such
Temporary Offshore Global Certificate transferred. The U.S.
Global Certificate and the Offshore Global Certificates are
sometimes referred to as the "Global Certificates".
(e) Initial Certificates offered and sold to
Institutional Accredited Investors shall be issued in the form of
permanent certificated Certificates in registered form in
substantially the form set forth as Exhibit A hereto (the "U.S.
Physical Certificates"). Certificates issued pursuant to Section
3.05(b) in exchange for interests in any Offshore Global
Certificate shall be in the form of permanent certificated
Certificates in registered form substantially in the form set
forth in Exhibit A (the "Offshore Physical Certificates"). The
Offshore Physical Certificates and U.S. Physical Certificates are
sometimes collectively herein referred to as the "Physical
Certificates".
(f) The definitive Certificates shall be in registered
form and shall be typed, printed, lithographed or engraved or
produced by any combination of these methods or may be produced
in any other manner, all as determined by the officers executing
such Certificates, as evidenced by their execution of such
Certificates.
Section 3.02. Restrictive Legends. (a) Subject to
Section 3.06, unless and until (i) an Initial Certificate is sold
under an effective Registration Statement or (ii) an Initial
Certificate is exchanged for an Exchange Certificate pursuant to
an effective Exchange Offer Registration Statement, in each case
as provided for in the Registration Rights Agreement, each Global
Certificate (other than the Permanent Offshore Global
Certificate) and each U.S. Physical Certificate shall bear the
following legend (the "Private Placement Legend") on the face
thereof:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITU-
TIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
22
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER
THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT WITHIN
THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE
WAS HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY
AFFILIATE OF ANY OF SUCH PERSONS RESELL OR OTHERWISE
TRANSFER THIS CERTIFICATE EXCEPT (A) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (B) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR
MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATE THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE TRUSTEE), (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT 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
WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE
OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS
CERTIFICATE WAS HELD BY CONTINENTAL AIRLINES, INC., THE
TRUSTEE OR ANY AFFILIATE OF ANY OF SUCH PERSONS THE HOLDER
MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE
HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT
THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON"
HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
(b) Each Global Certificate shall also bear the
following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE TRUSTEE 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 HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
23
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR
TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE
PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN.
Section 3.03. Authentication of Certificates. (a) The
Trustee shall duly execute, authenticate and deliver Certificates
in authorized denominations equalling in the aggregate the
aggregate principal amount of the Equipment Notes to be purchased
by the Trustee pursuant to the Financing Agreements and
evidencing the entire ownership of the Trust.
(b) No Certificate shall be entitled to any benefit
under this Agreement or be valid or obligatory for any purpose,
unless there appears on such Certificate a certificate of
authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Certificate
shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder.
Section 3.04. Transfer and Exchange. (a) 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 this
Agreement a register (the "Register") for the Certificates in
which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of the
Certificates and of transfers and exchanges of the Certificates
as herein provided. The Trustee shall initially be the registrar
(the "Registrar") for the purpose of registering the Certificates
and transfers and exchanges of the Certificates as herein
provided. A Certificateholder may transfer a Certificate by
written application to the Registrar stating the name of the
proposed transferee and otherwise complying with the terms of
this Agreement, including providing a written certificate or
other evidence of compliance with any restrictions on transfer.
No such transfer shall be effected until, and such transferee
shall succeed to the rights of a Certificateholder only upon,
final acceptance and registration of the transfer by the
Registrar in the Register. Prior to the registration of any
transfer by a Certificateholder as provided herein, the Trustee
shall treat the person in whose name the Certificate is
registered as the owner thereof for all purposes, and the Trustee
shall not be affected by notice to the contrary. Furthermore,
24
the Depositary shall, by acceptance of a Global Certificate,
agree that transfers of beneficial interests in such Global
Certificate may be effected only through a book-entry system
maintained by the Depositary (or its agent), and that ownership
of a beneficial interest in the Certificate shall be required to
be reflected in a book entry. When Certificates are presented to
the Registrar with a request to register the transfer or to
exchange them for an equal face amount of Certificates of other
authorized denominations, the Registrar shall register the
transfer or make the exchange as requested if its requirements
for such transactions are met. To permit registrations of
transfers and exchanges in accordance with the terms, conditions
and restrictions hereof, the Trustee shall execute and
authenticate Certificates at the Registrar's request. No service
charge shall be made for any registration of transfer or exchange
of the Certificates, but the Trustee may require payment by the
transferor of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith
(other than any such transfer taxes or other similar governmental
charges payable upon exchanges pursuant to Section 3.10 or 9.07).
Section 3.05. Book-Entry Provisions for U.S. Global
Certificate and Offshore Global Certificates. (a) Members of, or
participants in, the Depositary ("Agent Members") shall have no
rights under this Agreement with respect to any Global
Certificate held on their behalf by the Depositary, or the
Trustee as its custodian, and the Depositary may be treated by
the Trustee and any agent of the Trustee as the absolute owner of
such Global Certificate for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the
Trustee or any agent of the Trustee from giving effect to any
written certification, proxy or other authorization furnished by
the Depositary or shall impair, as between the Depositary and its
Agent Members, the operation of customary practices governing the
exercise of the rights of a holder of any Certificate. Upon the
issuance of any Global Certificate, the Registrar or its duly
appointed agent shall record a nominee of the Depositary as the
registered holder of such Global Certificate.
(b) Transfers of any Global Certificate shall be
limited to transfers of such Global Certificate or Offshore
Global Certificate in whole, but not in part, to nominees of the
Depositary, its successor or such successor's nominees.
Beneficial interests in the U.S. Global Certificate and any
Offshore Global Certificate may be transferred in accordance with
the rules and procedures of the Depositary and the provisions of
Section 3.06. Beneficial interests in the U.S. Global Certificate
or an Offshore Global Certificate shall be delivered to all
beneficial owners in the form of U.S. Physical Certificates
or Offshore Physical Certificates, as the case may be, if
25
(i) the Depositary notifies the Trustee that it is unwilling
or unable to continue as Depositary for the U.S. Global
Certificate or such Offshore Global Certificate, as the case may
be, and a successor depositary is not appointed by the Trustee
within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a
request from the Depositary to issue Physical Certificates.
(c) Any beneficial interest in one of the Global
Certificates that is transferred to a Person who takes delivery
in the form of an interest in the other Global Certificate will,
upon such transfer, cease to be an interest in such Global
Certificate and become an interest in the other Global
Certificate and, accordingly, will thereafter be subject to all
transfer restrictions, if any, and other procedures applicable to
beneficial interests in such other Global Certificate for as long
as it remains such an interest.
(d) [Intentionally omitted.]
(e) In connection with the transfer of the entire U.S.
Global Certificate or an entire Offshore Global Certificate to
the beneficial owners thereof pursuant to paragraph (b) of this
Section 3.05, such U.S. Global Certificate or Offshore Global
Certificate, as the case may be, shall be deemed to be
surrendered to the Trustee for cancellation, and the Trustee
shall execute, authenticate and deliver, to each beneficial owner
identified by the Depositary in exchange for its beneficial
interest in such U.S. Global Certificate or Offshore Global
Certificate, as the case may be, an equal aggregate principal
amount of U.S. Physical Certificates or Offshore Physical
Certificates, as the case may be, of authorized denominations.
(f) Any U.S. Physical Certificate delivered in
exchange for an interest in the U.S. Global Certificate pursuant
to paragraph (b) of this Section 3.05 shall, except as otherwise
provided by paragraph (f) of Section 3.06, bear the Private
Placement Legend.
(g) Any Offshore Physical Certificate delivered in
exchange for an interest in an Offshore Global Certificate
pursuant to paragraph (b) of this Section shall, except as
otherwise provided by paragraph (f) of Section 3.06, bear the
applicable legend regarding transfer restrictions set forth in
Section 3.02(a).
(h) The registered holder of the U.S. Global
Certificate or any Offshore Global Certificate may grant proxies
and otherwise authorize any Person, including Agent Members and
Persons that may hold interests through Agent Members, to take
26
any action which a Holder is entitled to take under this
Agreement or the Certificates.
Section 3.06. Special Transfer Provisions. Unless and
until (i) an Initial Certificate is sold under an effective
Registration Statement, or (ii) an Initial Certificate is
exchanged for an Exchange Certificate pursuant to an effective
Exchange Offer Registration Statement, in each case pursuant to
the Registration Rights Agreement, the following provisions shall
apply to such Initial Certificates:
(a) Transfers to Non-QIB Institutional Accredited
Investors. The following provisions shall apply with respect to
the registration of any proposed transfer of a Certificate to any
Institutional Accredited Investor which is not a QIB (excluding
transfers to or by Non-U.S. Persons):
(i) The Registrar shall register the transfer of any
Certificate, whether or not such Certificate bears the
Private Placement Legend, if (x) the requested transfer is
at least three years after the later of the original issue
date of the Certificates and the last date on which such
Certificate was held by the Company or any affiliate of any
such persons or (y) the proposed transferee has delivered
to the Registrar a letter substantially in the form of
Exhibit D hereto and the aggregate principal amount of the
Certificates being transferred is at least $100,000.
(ii) If the proposed transferor is an Agent Member
holding a beneficial interest in the U.S. Global
Certificate, upon receipt by the Registrar of (x) the
documents, if any, required by paragraph (i) and (y)
instructions given in accordance with the Depositary's and
the Registrar's procedures, the Registrar shall reflect on
its books and records the date of the transfer and a
decrease in the principal amount of such U.S. Global
Certificate in an amount equal to the principal amount of
the beneficial interest in such U.S. Global Certificate to
be transferred, and the Company shall execute, and the
Trustee shall authenticate and deliver to the transferor or
at its direction, one or more U.S. Physical Certificates of
like tenor and amount.
(b) Transfers to QIBs. The following provisions shall
apply with respect to the registration of any proposed transfer
of an Initial Certificate to a QIB (excluding Non-U.S. Persons):
(i) If the Certificate to be transferred consists of
U.S. Physical Certificates or an interest in any Temporary
Offshore Global Certificate, the Registrar shall register
the transfer if such transfer is being made by a proposed
27
transferor who has checked the box provided for on the form
of Initial Certificate stating, or has otherwise advised
the Trustee and the Registrar in writing, that the sale has
been made in compliance with the provisions of Rule 144A to
a transferee who has signed the certification provided for
on the form of Initial Certificate stating, or has
otherwise advised the Trustee and the Registrar in writing,
that it is purchasing the Initial Certificate for its own
account or an account with respect to which it exercises
sole investment discretion and that it, or the Person on
whose behalf it is acting with respect to any such account,
is a QIB within the meaning of Rule 144A, and is aware that
the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information
regarding the Trust and/or the Company as it has requested
pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is
relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule
144A.
(ii) Upon receipt by the Registrar of the documents
referred to in clause (i) above and instructions given in
accordance with the Depositary's and the Registrar's
procedures therefor, the Registrar shall reflect on its
books and records the date of such transfer and an increase
in the principal amount of the U.S. Global Certificate in
an amount equal to the principal amount of the U.S.
Physical Certificates or interests in the Temporary
Offshore Global Certificate, as the case may be, being
transferred, and the Trustee shall cancel such Physical
Certificates or decrease the amount of such Temporary
Offshore Global Certificate so transferred.
(c) [intentionally omitted.]
(d) Transfers of Interests in the Permanent Offshore
Global Certificate or Offshore Physical Certificates. The
Registrar shall register any transfer of interests in the
Permanent Offshore Global Certificate or Offshore Physical
Certificates without requiring any additional certification.
(e) Transfers to Non-U.S. Persons at Any Time. The
following provisions shall apply with respect to any registration
of any transfer of an Initial Certificate to a Non-U.S. Person:
(i) Prior to the Offshore Certificates Exchange Date,
the Registrar shall register any proposed transfer of an
Initial Certificate to a Non-U.S. Person upon receipt of a
certificate substantially in the form set forth as Exhibit
C hereto from the proposed transferor.
28
(ii) On and after the Offshore Certificates Exchange
Date, the Registrar shall register any proposed transfer to
any Non-U.S. Person if the Certificate to be transferred is
a U.S. Physical Certificate or an interest in the U.S.
Global Certificate, upon receipt of a certificate
substantially in the form of Exhibit C from the proposed
transferor. The Registrar shall promptly send a copy of
such certificate to the Company.
(iii) Upon receipt by the Registrar of (x) the
documents, if any, required by paragraph (ii) and (y)
instructions in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its
books and records the date of such transfer and a decrease
in the principal amount of such U.S. Global Certificate in
an amount equal to the principal amount of the beneficial
interest in such U.S. Global Certificate to be transferred,
and (B) upon receipt by the Registrar of instructions given
in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of
the Offshore Global Certificate in an amount equal to the
principal amount of the U.S. Physical Certificate or the
U.S. Global Certificate, as the case may be, to be
transferred, and the Trustee shall cancel the Physical
Certificate, if any, so transferred or decrease the amount
of such U.S. Global Certificate.
(f) Private Placement Legend. Upon the transfer,
exchange or replacement of Certificates not bearing the Private
Placement Legend, the Registrar shall deliver Certificates that
do not bear the Private Placement Legend. Upon the transfer,
exchange or replacement of Certificates bearing the Private
Placement Legend, the Registrar shall deliver only Certificates
that bear the Private Placement Legend unless either (i) the
circumstances contemplated by paragraph (a)(i)(x) or (e)(ii) of
this Section 3.06 exist or (ii) there is delivered to the
Registrar an Opinion of Counsel to the effect that neither such
legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the
Securities Act.
(g) General. By its acceptance of any Certificate
bearing the Private Placement Legend, each Holder of such a
Certificate acknowledges the restrictions on transfer of such
Certificate set forth in this Agreement and agrees that it will
transfer such Certificate only as provided in this Agreement. The
Registrar shall not register a transfer of any Certificate unless
such transfer complies with the restrictions on transfer of such
Certificate set forth in this Agreement. In connection with any
transfer of Certificates, each Certificateholder agrees by
29
its acceptance of the Certificates to furnish the Registrar or
the Trustee such certifications, legal opinions or other
information as either of them may reasonably require to confirm
that such transfer is being made pursuant to an exemption from,
or a transaction not subject to, the registration requirements of
the Securities Act; provided that the Registrar shall not be
required to determine the sufficiency of any such certifications,
legal opinions or other information.
Until such time as no Certificates remain Outstanding,
the Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 3.05 or
this Section 3.06. 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.
Section 3.07. Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate is surrendered to
the Registrar or the Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate
and (b) there is delivered to the Registrar and the Trustee such
security, indemnity or bond, as may be required by them to save
each of them harmless, then, in the absence of notice to the
Registrar or the Trustee that such destroyed, lost or stolen
Certificate has been acquired by a bona fide purchaser, and
provided that the requirements of Section 8-405 of the Uniform
Commercial Code in effect in any applicable jurisdiction are met,
the Trustee shall execute, authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate or Certificates, in authorized
denominations and of like Fractional Undivided Interest and
bearing a number not contemporaneously outstanding.
In connection with the issuance of any new Certificate
under this Section 3.07, the Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee and the
Registrar) connected therewith.
Any duplicate Certificate issued pursuant to this
Section 3.07 shall constitute conclusive evidence of the
appropriate Fractional Undivided Interest in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies
30
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Certificates.
Section 3.08. Persons Deemed Owners. Prior to due
presentment of a Certificate for registration of transfer, the
Trustee, the Registrar and any Paying Agent may treat the Person
in whose name any Certificate is registered (as of the day of
determination) as the owner of such Certificate for the purpose
of receiving distributions pursuant to Article IV and for all
other purposes whatsoever, and none of the Trustee, the Registrar
or any Paying Agent shall be affected by any notice to the
contrary.
Section 3.09. Cancellation. All Certificates
surrendered for payment or transfer or exchange shall, if
surrendered to the Trustee or any agent of the Trustee other than
the Registrar, be delivered to the Registrar for cancellation and
shall promptly be cancelled by it. No Certificates shall be
authenticated in lieu of or in exchange for any Certificates
cancelled as provided in this Section, except as expressly
permitted by this Agreement. All cancelled Certificates held by
the Registrar shall be destroyed and a certification of their
destruction delivered to the Trustee.
Section 3.10. Temporary Certificates. Until definitive
Certificates are ready for delivery, the Trustee shall
authenticate temporary Certificates. Temporary Certificates shall
be substantially in the form of definitive Certificates but may
have insertions, substitutions, omissions and other variations
determined to be appropriate by the officers executing the
temporary Certificates, as evidenced by their execution of such
temporary Certificates. If temporary Certificates are issued, the
Trustee will cause definitive Certificates to be prepared without
unreasonable delay. After the preparation of definitive
Certificates, the temporary Certificates shall be exchangeable
for definitive Certificates upon surrender of the temporary
Certificates at the office or agency of the Trustee designated
for such purpose pursuant to Section 7.12, without charge to the
Certificateholder. Upon surrender for cancellation of any one or
more temporary Certificates, the Trustee shall execute,
authenticate and deliver in exchange therefor a like face amount
of definitive Certificates of authorized denominations. Until so
exchanged, the temporary Certificates shall be entitled to the
same benefits under this Agreement as definitive Certificates.
Section 3.11. Limitation of Liability for Payments.
All payments and distributions made to Certificateholders 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
31
of Article IV of this Agreement. Each Certificateholder, by its
acceptance of a Certificate, agrees that it will look solely to
the income and proceeds from the Trust Property for any payment
or distribution due to such Certificateholder pursuant to the
terms of this Agreement and that it will not have any recourse to
the Company, the Trustee, the Loan Trustees, the Liquidity
Providers, the Owner Trustees or the Owner Participants, except
as otherwise expressly provided herein or in the Intercreditor
Agreement.
The Company is a party to this Agreement solely for
purposes of meeting the requirements of the Trust Indenture Act,
and therefore shall not have any right, obligation or liability
hereunder (except as otherwise expressly provided herein).
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS
Section 4.01. Certificate Account and Special Payments
Account. (a) The Trustee shall establish and maintain on behalf
of the Certificateholders a Certificate Account as one or more
non-interest-bearing accounts. The Trustee shall hold the
Certificate Account in trust for the benefit of the
Certificateholders, and shall make or permit withdrawals
therefrom only as provided in this Agreement. On each day when a
Scheduled Payment is made to the Trustee under the Intercreditor
Agreement, the Trustee upon receipt thereof shall immediately
deposit the aggregate amount of such Scheduled Payment in the
Certificate Account.
(b) The Trustee shall establish and maintain on behalf
of the Certificateholders a Special Payments Account as one or
more accounts, which shall be non-interest bearing except as
provided in Section 4.04. The Trustee shall hold the Special
Payments Account in trust for the benefit of the
Certificateholders and shall make or permit withdrawals therefrom
only as provided in this Agreement. On each day when one or more
Special Payments are made to the Trustee, the Trustee, upon
receipt thereof, shall immediately deposit the aggregate amount
of such Special Payments in the Special Payments Account.
(c) The Trustee shall present to the related Loan
Trustee of each Equipment Note such Equipment Note on the date of
its stated final maturity or, in the case of any Equipment Note
which is to be redeemed in whole pursuant to the related
Indenture, on the applicable redemption date under such
Indenture.
32
Section 4.02. Distributions from Certificate Account
and Special Payments Account. (a) On each Regular Distribution
Date or as soon thereafter as the Trustee has confirmed receipt
of the payment of all or any part of the Scheduled Payments due
on such date, the Trustee shall distribute out of the Certificate
Account the entire amount deposited therein pursuant to Section
4.01(a). There shall be so distributed to each Certificateholder
of record on the Record Date with respect to such Regular
Distribution Date (other than as provided in Section 11.01
concerning the final distribution) by check mailed to such
Certificateholder, at the address appearing in the Register, such
Certificateholder's pro rata share (based on the Fractional
Undivided Interest in the Trust held by such Certificateholder)
of the total amount in the Certificate Account, except that, with
respect to Certificates registered on the Record Date in the name
of the nominee of the Depositary (initially, such nominee to be
Cede & Co.), such distribution shall be made by wire transfer in
immediately available funds to the account designated by such
nominee.
(b) 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, 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). There shall be so distributed to each Certificateholder
of record on the Record Date with respect to such Special
Distribution Date (other than as provided in Section 11.01
concerning the final distribution) by check mailed to such
Certificateholder, at the address appearing in the Register, such
Certificateholder's pro rata share (based on the Fractional
Undivided Interest in the Trust held by such Certificateholder)
of the total amount in the Special Payments Account on account of
such Special Payment, except that, with respect to Certificates
registered on the Record Date in the name of the nominee of the
Depositary (initially, such nominee to be Cede & Co.), such
distribution shall be made by wire transfer in immediately
available funds to the account designated by such nominee.
(c) The Trustee shall, at the expense of the Company,
cause notice of each Special Payment to be mailed to each
Certificateholder at his address as it appears in the Register.
In the event of redemption or purchase of Equipment Notes held in
the Trust, such notice shall be mailed not less than 20 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,
33
stating the Special Distribution Date for such Special Payment
which shall occur not less than 20 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),
(ii) the amount of the Special Payment for each $1,000
face amount Certificate (taking into account any payment to
be made by the Company pursuant to Section 2.01(b)) and the
amount thereof constituting principal, premium, 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
Certificate.
If the amount of premium, if any, payable upon the redemption or
purchase of an 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 received will also be
distributed.
If any redemption of the Equipment Notes held in the
Trust is cancelled, the Trustee, as soon as possible after
learning thereof, shall cause notice thereof to be mailed to each
Certificateholder at its address as it appears on the Register.
Section 4.03. Statements to Certificateholders. (a) On
each Distribution Date, the Trustee will include with each
distribution to Certificateholders of a Scheduled Payment or
Special Payment, as the case may be, a statement setting forth
the following information (per $1,000 face amount Certificate as
to (i) and (ii) below):
(i) the amount of such distribution allocable to
principal and the amount allocable to premium, if any;
(ii) the amount of such distribution allocable to
interest; and
(iii) the Pool Balance and the Pool Factor.
With respect to the Certificates registered in the
name of Cede & Co., as nominee for the Depositary, on the Record
Date prior to each Distribution Date, the Trustee will request from
34
the Depositary a Securities Position Listing setting forth the
names of all Agent Members reflected on the Depositary's books as
holding interests in the Certificates on such Record Date. On
each Distribution Date, the Trustee will mail to each such Agent
Member the statement described above and will make available
additional copies as requested by such Agent Member for
forwarding to holders of interests in the 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 a Certificateholder of
record a statement containing the sum of the amounts determined
pursuant to clauses (a)(i) and (a)(ii) above with respect to the
Trust for such calendar year or, in the event such Person was a
Certificateholder of record during a portion of such calendar
year, for such portion of such year, and such other items as are
readily available to the Trustee and which a Certificateholder
shall reasonably request as necessary for the purpose of such
Certificateholder's preparation of its federal income tax
returns. Such statement and such other items shall be prepared on
the basis of information supplied to the Trustee by the Agent
Members and shall be delivered by the Trustee to such Agent
Members to be available for forwarding by such Agent Members to
the holders of interests in the Certificates in the manner
described in Section 4.03(a).
Section 4.04. Investment of Special Payment Moneys.
Any money received by the Trustee pursuant to Section 4.01(b)
representing a Special Payment which is not to be promptly
distributed shall, to the extent practicable, be invested in
Permitted Investments by the Trustee pending distribution of such
Special Payment pursuant to Section 4.02. Any investment made
pursuant to this Section 4.04 shall be in such Permitted
Investments having maturities not later than the date that such
moneys are required to be used to make the payment required under
Section 4.02 on the applicable Special Distribution Date and the
Trustee shall hold any such Permitted Investments until maturity.
The Trustee shall have no liability with respect to any
investment made pursuant to this Section 4.04, other than by
reason of the willful misconduct or negligence of the Trustee.
All income and earnings from such investments shall be
distributed on such Special Distribution Date as part of such
Special Payment.
35
ARTICLE V
THE COMPANY
Section 5.01. Maintenance of Corporate Existence. The
Company, at its own cost and expense, will do or cause to be done
all things necessary to preserve and keep in full force and
effect its corporate existence, rights and franchises, except as
otherwise specifically permitted in Section 5.02; provided,
however, that the Company shall not be required to preserve any
right or franchise if the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the
business of the Company.
Section 5.02. Consolidation, Merger, etc. The Company
shall not consolidate with or merge into any other corporation or
convey, transfer or lease substantially all of its assets as an
entirety to any Person unless:
(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.
ss. 1110), with respect to the Leases;
(b) the corporation formed by such consolidation or
into which the Company is merged or the Person which
acquires by conveyance, transfer or lease substantially all
of the assets of the Company as an entirety shall execute
and deliver to the Trustee a duly authorized, valid,
binding and enforceable agreement in form and substance
reasonably satisfactory to the Trustee containing an
assumption by such successor corporation or Person of the
due and punctual performance and observance of each
covenant and condition of this Agreement, the Other Pass
Through Trust Agreements, the Financing Agreements, and
each other Financing Document to be performed or observed
by the Company; and
(c) the Company shall have delivered to the Trustee an
Officer's Certificate of the Company and an Opinion of
Counsel of the Company reasonably satisfactory to the
Trustee, each stating that such consolidation, merger,
conveyance, transfer or lease and the assumption agreement
mentioned in clause (b) above comply with this Section 5.02
36
and that all conditions precedent herein provided for
relating to such transaction have been complied with.
Upon any consolidation or merger, or any conveyance,
transfer or lease of substantially all of the assets of the
Company as an entirety in accordance with this Section 5.02, the
successor corporation or Person formed by such consolidation or
into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under
this Agreement with the same effect as if such successor
corporation or Person had been named as the Company herein. No
such conveyance, transfer or lease of substantially all of the
assets of the Company as an entirety shall have the effect of
releasing any successor corporation or Person which shall have
become such in the manner prescribed in this Section 5.02 from
its liability in respect of this Agreement and any Financing
Document to which it is a party.
ARTICLE VI
DEFAULT
Section 6.01. Events of Default. (a) Exercise of
Remedies. Upon the occurrence and during the continuation of any
Indenture Default under any Indenture, the Trustee may, to the
extent it is the Controlling Party at such time (as determined
pursuant to the Intercreditor Agreement), direct the exercise of
remedies as provided in the Intercreditor Agreement.
(b) Purchase Rights of Certificateholders. (i) At any
time after the occurrence and during the continuation of a
Triggering Event, each Certificateholder shall have the right to
purchase all, but not less than all, of the Class A Certificates
upon ten days' written notice to the Class A Trustee and each
other Certificateholder, provided that (A) if prior to the end of
such ten-day period any other Certificateholder notifies such
purchasing Certificateholder that such other Certificateholder
wants to participate in such purchase, then such other
Certificateholder may join with the purchasing Certificateholder
to purchase all, but not less than all, of the Class A
Certificates pro rata based on the outstanding principal amount
of the Certificates held by each such Certificateholder and (B)
if prior to the end of such ten-day period any other
Certificateholder fails to notify the purchasing
Certificateholder of such other Certificateholder's desire to
participate in such a purchase, then such other Certificateholder
shall lose its right to purchase the Class A Certificates
pursuant to this Section 6.01(b)(i).
37
(ii) By acceptance of its Certificate, each
Certificateholder agrees that at any time after the occurrence
and during the continuation of a Triggering Event,
(1) each Class C Certificateholder shall have the
right (which shall not expire upon any purchase of the
Class A Certificates pursuant to paragraph (i) above) to
purchase all, but not less than all, of the Class A
Certificates and the Certificates upon ten days' written
notice to the Class A Trustee, the Trustee and each other
Class C Certificateholder, provided that (A) if prior to
the end of such ten-day period any other Class C
Certificateholder notifies such purchasing Class C
Certificateholder that such other Class C Certificateholder
wants to participate in such purchase, then such other
Class C Certificateholder may join with the purchasing
Class C Certificateholder to purchase all, but not less
than all, of the Class A Certificates and the Certificates
pro rata based on the Fractional Undivided Interest in the
Class C Trust held by each such Class C Certificateholder
and (B) if prior to the end of such ten day period any
other Class C Certificateholder fails to notify the
purchasing Class C Certificateholder of such other Class C
Certificateholder's desire to participate in such a
purchase, then such other Class C Certificateholder shall
lose its right to purchase the Certificates pursuant to
this Section 6.01(b); and
(2) each Class D Certificateholder shall have the
right (which shall not expire upon any purchase of the
Class A Certificates pursuant to paragraph (i) above or the
purchase of the Class A Certificates and the Certificates
pursuant to clause (ii)(1) above) to purchase all, but not
less than all, of the Class A Certificates, the
Certificates and the Class C Certificates upon ten days'
written notice to the Class A Trustee, the Trustee, the
Class C Trustee and each other Class D Certificateholder,
provided that (A) if prior to the end of such ten-day
period any other Class D Certificateholder notifies such
purchasing Class D Certificateholder that such other Class
D Certificateholder wants to participate in such purchase,
then such other Class D Certificateholder may join with the
purchasing Certificateholder to purchase all, but not less
than all, of the Class A Certificates, the Certificates and
the Class C Certificates pro rata based on the Fractional
Undivided Interest in the Class D Trust held by each such
Class D Certificateholder and (B) if prior to the end of
such ten day period any other Class D Certificateholder
fails to notify the purchasing Class D Certificateholder of
such other Class D Certificateholder's desire to
participate in such a purchase, then such other Class D
Certificateholder shall lose its right to purchase the
Class A Certificates,
38
the Certificates and the Class C Certificates pursuant to
this Section 6.01(b).
The purchase price with respect to the Certificates
shall be equal to the Pool Balance of the Certificates, together
with accrued and unpaid interest thereon to the date of such
purchase, without premium, but including any other amounts then
due and payable to the Certificateholders under this Agreement,
the Intercreditor Agreement or any other Financing Document or on
or in respect of the Certificates; provided, however, that no
such purchase of Certificates shall be effective unless the
purchaser shall certify to the Trustee that contemporaneously
with such purchase, such purchaser is purchasing, pursuant to the
terms of this Agreement and the Other Pass Through Trust
Agreements, the Class A Certificates, the Certificates and the
Class C Certificates which are senior to the securities held by
such purchaser. Each payment of the purchase price of the
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
6.01(b). Each Certificateholder agrees by its acceptance of its
Certificate that it will, subject to Section 3.04 hereof, upon
payment from such Class C Certificateholder(s) or Class D
Certificateholder(s), as the case may be, of the purchase price
set forth in the first sentence of this paragraph, forthwith
sell, assign, transfer and convey to the purchaser thereof
(without recourse, representation or warranty of any kind except
for its own acts), all of the right, title, interest and
obligation of such Certificateholder in, this Agreement, the
Intercreditor Agreement, the Liquidity Facility, the Financing
Documents and all Certificates held by such 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
Certificateholder's obligations under this Agreement, the
Intercreditor Agreement, the Liquidity Facility and the Financing
Documents. The Certificates will be deemed to be purchased on the
date payment of the purchase price is made notwithstanding the
failure of the Certificateholders to deliver any Certificates
(whether in the form of Physical Certificates or beneficial
interests in Global Certificates) and, upon such a purchase, (i)
the only rights of the Certificateholders will be to deliver the
Certificates to the purchaser and receive the purchase price for
such Certificates and (ii) if the purchaser shall so request,
such Certificateholder will comply with all the provisions of
Section 3.04 hereof to enable new 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 Certificates shall be borne by the purchaser thereof.
39
As used in this Section 6.01(b), the terms
"Certificateholder", "Class", "Class A Certificate", "Class A
Trustee", "Class C Certificate", "Class C Certificateholder",
"Class C Trust", "Class C Trustee", "Class D Certificate", "Class
D Certificateholder", "Class D Trust" and "Class D Trustee",
shall have the respective meanings assigned to such terms in the
Intercreditor Agreement.
Section 6.02. [Intentionally omitted.].
Section 6.03. Judicial Proceedings Instituted by
Trustee; Trustee May Bring Suit. If there shall be a failure to
make payment of the principal of, premium, if any, or interest on
any Equipment Note, or if there shall be any failure to pay Rent
(as defined in the relevant Lease) under any Lease when due and
payable, then the Trustee, in its own name and as trustee of an
express trust, as holder of such Equipment Notes, to the extent
permitted by and in accordance with the terms of the
Intercreditor Agreement and the Financing Documents (subject to
the rights of the applicable Owner Trustee or Owner Participant
to cure any such failure in accordance with Section 4.03 of the
applicable Indenture), shall be entitled and empowered to
institute any suits, actions or proceedings at law, in equity or
otherwise, for the collection of the sums so due and unpaid on
such Equipment Notes or under such Lease and may prosecute any
such claim or proceeding to judgment or final decree with respect
to the whole amount of any such sums so due and unpaid.
Section 6.04. Control by Certificateholders. Subject
to Section 6.03 and the Intercreditor Agreement, the
Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than a majority in
interest in the Trust shall have the right to direct the time,
method and place of conducting any proceeding for any remedy
available to the Trustee with respect to the Trust or pursuant to
the terms of the Intercreditor Agreement, or exercising any trust
or power conferred on the Trustee under this Agreement or the
Intercreditor Agreement, including any right of the Trustee as
Controlling Party under the Intercreditor Agreement or as holder
of the Equipment Notes, provided that
(1) such Direction shall not be in conflict with any
rule of law or with this Agreement and would not involve
the Trustee in personal liability or expense,
(2) the Trustee shall not determine that the action so
directed would be unjustly prejudicial to the
Certificateholders not taking part in such Direction, and
40
(3) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
Direction.
Section 6.05. Waiver of Past Defaults. Subject to the
Intercreditor Agreement, the Certificateholders holding
Certificates evidencing Fractional Undivided Interests
aggregating not less than a majority in interest in the Trust (i)
may on behalf of all of the Certificateholders waive any past
Event of Default hereunder and its consequences or (ii) if the
Trustee is the Controlling Party, may direct the Trustee to
instruct the applicable Loan Trustee to waive, any past Indenture
Default under any Indenture and its consequences, and thereby
annul any Direction given by such Certificateholders or the
Trustee to such Loan Trustee with respect thereto, except a
default:
(1) in the deposit of any Scheduled Payment or Special
Payment under Section 4.01 or in the distribution of any
payment under Section 4.02 on the Certificates, or
(2) in the payment of the principal of (premium, if
any) or interest on the Equipment Notes, or
(3) in respect of a covenant or provision hereof which
under Article X cannot be modified or amended without the
consent of each Certificateholder holding an Outstanding
Certificate affected thereby.
Upon any such waiver, such default shall cease to
exist with respect to the Certificates and any Event of Default
arising therefrom shall be deemed to have been cured for every
purpose and any direction given by the Trustee on behalf of the
Certificateholders to the relevant Loan Trustee shall be annulled
with respect thereto; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any
right consequent thereon. Upon any such waiver, the Trustee shall
vote the Equipment Notes issued under the relevant Indenture to
waive the corresponding Indenture Default.
Section 6.06. Right of Certificateholders to Receive
Payments Not to Be Impaired. Anything in this Agreement to the
contrary notwithstanding, including, without limitation, Section
6.07 hereof, but subject to the Intercreditor Agreement, the
right of any Certificateholder to receive distributions of
payments required pursuant to Section 4.02 hereof on the
Certificates when due, or to institute suit for the enforcement
of any such payment on or after the applicable Regular
Distribution Date or Special Distribution Date, shall not be
impaired or affected without the consent of such
Certificateholder.
41
Section 6.07. Certificateholders May Not Bring Suit
Except Under Certain Conditions. A Certificateholder shall not
have the right to institute any suit, action or proceeding at law
or in equity or otherwise with respect to this Agreement, for the
appointment of a receiver or for the enforcement of any other
remedy under this Agreement, unless:
(1) such Certificateholder previously shall have given
written notice to the Trustee of a continuing Event of
Default;
(2) Certificateholders holding Certificates evidencing
Fractional Undivided Interests aggregating not less than
25% of the Trust shall have requested the Trustee in
writing to institute such action, suit or proceeding and
shall have offered to the Trustee indemnity as provided in
Section 7.03(e);
(3) the Trustee shall have refused or neglected to
institute such an action, suit or proceeding for 60 days
after receipt of such notice, request and offer of
indemnity; and
(4) no direction inconsistent with such written
request shall have been given to the Trustee during such
60- day period by Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust.
It is understood and intended that no one or more of
the Certificateholders shall have any right in any manner
whatsoever hereunder or under the Certificates to (i) surrender,
impair, waive, affect, disturb or prejudice any property in the
Trust Property or the lien of any Indenture on any property
subject thereto, or the rights of the Certificateholders or the
holders of the Equipment Notes, (ii) obtain or seek to obtain
priority over or preference with respect to any other such
Certificateholder or (iii) enforce any right under this
Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all the Certificateholders
subject to the provisions of this Agreement.
Section 6.08. Remedies Cumulative. Every remedy given
hereunder to the Trustee or to any of the Certificateholders
shall not be exclusive of any other remedy or remedies, and every
42
such remedy shall be cumulative and in addition to every other
remedy given hereunder or now or hereafter given by statute, law,
equity or otherwise.
ARTICLE VII
THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities. (a)
Except during the continuance of an Event of Default, the Trustee
undertakes to perform such duties as are specifically set forth
in this Agreement, and no implied covenants or obligations shall
be read into this Agreement against the Trustee.
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of
care and skill in their exercise, as a prudent man would exercise
or use under the circumstances in the conduct of its own affairs.
(c) No provision of this Agreement shall be construed
to relieve the Trustee from liability for its own negligent
action, its own negligent failure to act, or its own wilful
misconduct, except that
(1) this Subsection shall not be construed to limit
the effect of Subsection (a) of this Section; and
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the
Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts.
(d) Whether or not herein expressly so provided, every
provision of this Trust Agreement relating to the conduct or
affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section.
Section 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, the Trustee shall transmit by mail to the Company, the
Owner Trustees, the Owner Participants, the Loan Trustees and the
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 on the
payment of the principal, premium, if any, or interest on any
Equipment Note, the Trustee shall be protected in withholding
such notice if and so long as the board of directors, the
43
executive committee or a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determine that
the withholding of such notice is in the interests of the
Certificateholders. For the purpose of this Section, the term
"default" means any event that is, or after notice or lapse of
time or both would become, an Event of Default.
Section 7.03. Certain Rights of Trustee. Subject to
the provisions of Section 315 of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in
acting or refraining from acting in reliance upon any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture or other paper or document believed by it to be
genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a written
description of the subject matter thereof accompanied by an
Officer's Certificate and an Opinion of Counsel as provided
in Section 1.02 of this Agreement;
(c) whenever in the administration of this Agreement
the Trustee shall deem it desirable that a matter be proved
or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence be
herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officer's Certificate of
the Company, any Owner Trustee or any Loan Trustee;
(d) the Trustee may consult with counsel and the
advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Agreement at the Direction of any of the Certificateholders
pursuant to this Agreement, unless such Certificateholders
shall have offered to the Trustee reasonable security or
indemnity against the cost, expenses and liabilities which
might be incurred by it in compliance with such Direction;
(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture or other paper or document;
44
(g) the Trustee may execute any of the trusts or
powers under this Agreement or perform any duties under
this Agreement either directly or by or through agents or
attorneys, and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or
attorney appointed with due care by it under this
Agreement;
(h) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith
in accordance with the Direction of the Certificateholders
holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest
in the Trust relating to the time, method and place of
conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon
the Trustee, under this Agreement; and
(i) the Trustee shall not be required to expend or
risk its own funds in the performance of any of its duties
under this Agreement, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate
indemnity against such risk is not reasonably assured to
it.
Section 7.04. Not Responsible for Recitals or Issuance
of Certificates. The recitals contained herein and in the
Certificates, except the certificates of authentication, shall
not be taken as the statements of the Trustee, and the Trustee
assumes no responsibility for their correctness. Subject to
Section 7.15, the Trustee makes no representations as to the
validity or sufficiency of this Agreement, any Financing
Agreement, any Equipment Notes, the Certificates or any other
Financing Document, except that the Trustee hereby represents and
warrants that this Agreement has been, and the Intercreditor
Agreement, the Registration Rights Agreement, each Financing
Agreement and each Certificate will be, executed, authenticated
and delivered by one of its officers who is duly authorized to
execute, authenticate and deliver such document on its behalf.
Section 7.05. May Hold Certificates. The Trustee, any
Paying Agent, Registrar or any of their Affiliates or any other
agent in their respective individual or any other capacity may
become the owner or pledgee of Certificates and, subject to
Sections 310(b) and 311 of the Trust Indenture Act, if
applicable, may otherwise deal with the Company, the Owner
Trustees or the Loan Trustees with the same rights it would have
if it were not Trustee, Paying Agent, Registrar or such other
agent.
Section 7.06. Money Held in Trust. Money held by the
Trustee or the Paying Agent in trust hereunder need not be
45
segregated from other funds except to the extent required herein
or by law and neither the Trustee nor the Paying Agent shall have
any liability for interest upon any such moneys except as
provided for herein.
Section 7.07. Compensation and Reimbursement. The
Company agrees:
(1) to pay, or cause to be paid, to the Trustee from
time to time reasonable compensation for all services
rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse, or cause to be reimbursed, the Trustee upon its
request for all reasonable out-of-pocket expenses,
disbursements and advances incurred or made by the Trustee
in accordance with any provision of this Agreement
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to
its negligence, willful misconduct or bad faith or as may
be incurred due to the Trustee's breach of its
representations and warranties set forth in Section 7.15;
and
(3) to indemnify the Trustee pursuant to Section 10.1
of the Participation Agreements (as amended by the
Amendments No. 1 thereto dated as of the date hereof) (as
defined in the Intercreditor Agreement).
The Trustee shall be entitled to reimbursement from,
and shall have a lien prior to the Certificates upon, the Trust
Property for any tax incurred without negligence, bad faith or
willful misconduct, on its part, arising out of or in connection
with the acceptance or administration of such Trust (other than
any tax attributable to the Trustee's compensation for serving as
such), including any costs and expenses incurred in contesting
the imposition of any such tax. If the Trustee reimburses itself
from the Trust Property of such Trust for any such tax, it will
mail a brief report within 30 days setting forth the
circumstances thereof to all Certificateholders as their names
and addresses appear in the Register.
Section 7.08. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
eligible to act as a trustee under Section 310(a) of the Trust
Indenture Act and shall have a combined capital and surplus of at
least $75,000,000 (or a combined capital and surplus in excess of
$5,000,000 and the obligations of which, whether now in existence
or hereafter incurred, are fully and unconditionally guaranteed
46
by a corporation organized and doing business under the laws of
the United States, any state or territory thereof or of the
District of Columbia and having a combined capital and surplus of
at least $75,000,000). If such corporation publishes reports of
conditions at least annually, pursuant to law or to the
requirements of federal, state, territorial or District of
Columbia supervising or examining authority, then for the
purposes of this Section 7.08, the combined capital and surplus
of such corporation shall be deemed to be its combined capital
and surplus as set forth in its most recent report of conditions
so published.
In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 7.08
to act as Trustee, the Trustee shall resign immediately as
Trustee in the manner and with the effect specified in Section
7.09.
Section 7.09. Resignation and Removal; Appointment of
Successor. (a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the
successor Trustee under Section 7.10.
(b) The Trustee may resign at any time as trustee by
giving prior written notice thereof to the Company, the
Authorized Agents, the Owner Trustees and the Loan Trustees. If
an instrument of acceptance by a successor Trustee shall not have
been delivered to the Company, the Authorized Agents, the Owner
Trustees, the Loan Trustees and the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee
may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(c) The Trustee may be removed at any time by
Direction of the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less
than a majority in interest in the Trust delivered to the Trustee
and to the Company, the Owner Trustees and the Loan Trustees.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 310
of the Trust Indenture Act, if applicable, after written
request therefor by the Company or by any Certificateholder
who has been a bona fide Certificateholder for at least six
months; or
(2) the Trustee shall cease to be eligible under
Section 7.08 and shall fail to resign after written request
therefor by the Company or by any such Certificateholder;
or
47
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of
the Trustee or of its property shall be appointed or any
public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any case, (i) the Company may, with the consent of the
Owner Participants, which consent may not be unreasonably
withheld, remove the Trustee or (ii) any Certificateholder who
has been a bona fide Certificateholder for at least six months
may, on behalf of itself and all others similarly situated,
petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
(e) If a Responsible Officer of the Trustee shall
obtain actual knowledge of an Avoidable Tax which has been or is
likely to be asserted, the Trustee shall promptly notify the
Company and shall, within 30 days of such notification, resign
hereunder unless within such 30-day period the Trustee shall have
received notice that the Company has agreed to pay such tax. The
Company shall promptly appoint a successor Trustee in a
jurisdiction where there are no Avoidable Taxes.
(f) If the Trustee shall resign, be removed or become
incapable of acting or if a vacancy shall occur in the office of
the Trustee for any cause, the Company shall promptly appoint a
successor Trustee. If, within one year after such resignation,
removal or incapability, or other occurrence of such vacancy, a
successor Trustee shall be appointed by Direction of the
Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than a majority in
interest in the Trust delivered to the Company, the Owner
Trustees, the Loan Trustees and the retiring Trustee, and the
Company approves such appointment, which approval shall not be
unreasonably withheld, then the successor Trustee so appointed
shall, forthwith upon its acceptance of such appointment, become
the successor Trustee and supersede the successor Trustee
appointed as provided above. If no successor Trustee shall have
been so appointed as provided above and accepted appointment in
the manner hereinafter provided, any Certificateholder who has
been a bona fide Certificateholder for at least six months may,
on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a
successor Trustee.
(g) The successor Trustee shall give notice of the
resignation and removal of the Trustee and appointment of the
successor Trustee by mailing written notice of such event by
first-class mail, postage prepaid, to the Certificateholders as
their names and addresses appear in the Register. Each notice
48
shall include the name of such successor Trustee and the address
of its Corporate Trust Office.
Section 7.10. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute and
deliver to the Company, the Authorized Agents, the Owner Trustees
and the Loan Trustees and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on request of the Company or
the successor Trustee, such retiring Trustee shall execute and
deliver an instrument transferring to such successor Trustee all
such rights, powers and trusts of the retiring Trustee and shall
duly assign, transfer and deliver to such successor Trustee all
Trust Property held by such retiring Trustee hereunder, subject
nevertheless to its lien, if any, provided for in Section 7.07.
Upon request of any such successor Trustee, the Company, the
retiring Trustee and such successor Trustee shall execute and
deliver any and all instruments containing such provisions as
shall be necessary or desirable to transfer and confirm to, and
for more fully and certainly vesting in, such successor Trustee
all such rights, powers and trusts.
No institution shall accept its appointment as a
Trustee hereunder unless at the time of such acceptance such
institution shall be qualified and eligible under this Article
VII.
Section 7.11. Merger, Conversion, Consolidation or
Succession to Business. Any corporation into which the Trustee
may be merged or converted or with which it may be consolidated,
or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor
of the Trustee hereunder, provided such corporation shall be
otherwise qualified and eligible under this Article VII, without
the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Certificates shall
have been executed or authenticated, but not delivered, by the
Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such
execution or authentication and deliver the Certificates so
executed or authenticated with the same effect as if such
successor Trustee had itself executed or authenticated such
Certificates.
Section 7.12. Maintenance of Agencies. (a) There
shall at all times be maintained an office or agency in the
49
location set forth in Section 12.03 where Certificates may be
presented or surrendered for registration of transfer or for
exchange, and for payment thereof and where notices and demands
to or upon the Trustee in respect of such certificates or this
Agreement may be served; provided, however, that, if it shall be
necessary that the Trustee maintain an office or agency in
another location (e.g., the Certificates shall be represented by
Physical Certificates and shall be listed on a national
securities exchange), the Trustee will make all reasonable
efforts to establish such an office or agency. Written notice of
the location of each such other office or agency and of any
change of location thereof shall be given by the Trustee to the
Company, the Owner Trustees, the Loan Trustees (in the case of
any Owner Trustee or Loan Trustee, at its address specified in
the Financing Agreements or such other address as may be notified
to the Trustee) and the Certificateholders. In the event that no
such office or agency shall be maintained or no such notice of
location or of change of location shall be given, presentations
and demands may be made and notices may be served at the
Corporate Trust Office of the Trustee.
(b) There shall at all times be a Registrar and a
Paying Agent hereunder with respect to the Certificates. Each
such Authorized Agent shall be a bank or trust company, shall be
a corporation organized and doing business under the laws of the
United States or any state, with a combined capital and surplus
of at least $75,000,000, or, if the Trustee shall be acting as
the Registrar or Paying Agent hereunder, a corporation having a
combined capital and surplus in excess of $5,000,000, the
obligations of which are guaranteed by a corporation organized
and doing business under the laws of the United States or any
state, with a combined capital and surplus of at least
$75,000,000, and shall be authorized under such laws to exercise
corporate trust powers, subject to supervision by Federal or
state authorities. The Trustee shall initially be the Paying
Agent and, as provided in Section 3.04, Registrar hereunder with
respect to the Certificates. Each Registrar shall furnish to the
Trustee, at stated intervals of not more than six months, and at
such other times as the Trustee may request in writing, a copy of
the Register maintained by such Registrar.
(c) Any corporation into which any Authorized Agent
may be merged or converted or with which it may be consolidated,
or any corporation resulting from any merger, consolidation or
conversion to which any Authorized Agent shall be a party, or any
corporation succeeding to the corporate trust business of any
Authorized Agent, shall be the successor of such Authorized Agent
hereunder, if such successor corporation is otherwise eligible
under this Section, without the execution or filing of any paper
or any further act on the part of the parties hereto or such
Authorized Agent or such successor corporation.
50
(d) Any Authorized Agent may at any time resign by
giving written notice of resignation to the Trustee, the Company,
the Owner Trustees and the Loan Trustees. The Company may, and at
the request of the Trustee shall, at any time terminate the
agency of any Authorized Agent by giving written notice of
termination to such Authorized Agent and to the Trustee. Upon the
resignation or termination of an Authorized Agent or in case at
any time any such Authorized Agent shall cease to be eligible
under this Section (when, in either case, no other Authorized
Agent performing the functions of such Authorized Agent shall
have been appointed), the Company shall promptly appoint one or
more qualified successor Authorized Agents, reasonably
satisfactory to the Trustee, to perform the functions of the
Authorized Agent which has resigned or whose agency has been
terminated or who shall have ceased to be eligible under this
Section. The Company shall give written notice of any such
appointment made by it to the Trustee, the Owner Trustees and the
Loan Trustees; and in each case the Trustee shall mail notice of
such appointment to all Certificateholders as their names and
addresses appear on the Register.
(e) The Company agrees to pay, or cause to be paid,
from time to time to each Authorized Agent reasonable
compensation for its services and to reimburse it for its
reasonable expenses.
Section 7.13. Money for Certificate Payments to Be
Held in Trust. All moneys deposited with any Paying Agent for the
purpose of any payment on Certificates shall be deposited and
held in trust for the benefit of the Certificateholders entitled
to such payment, subject to the provisions of this Section.
Moneys so deposited and held in trust shall constitute a separate
trust fund for the benefit of the Certificateholders with respect
to which such money was deposited.
The Trustee may at any time, for the purpose of
obtaining the satisfaction and discharge of this Agreement or for
any other purpose, direct any Paying Agent to pay to the Trustee
all sums held in trust by such Paying Agent, such sums to be held
by the Trustee upon the same trusts as those upon which such sums
were held by such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released
from all further liability with respect to such money.
Section 7.14. Registration of Equipment Notes in Name
of Subordination Agent. The Trustee agrees that all Equipment
Notes to be purchased by the Trust shall be issued in the name of
the Subordination Agent or its nominee and held by the
Subordination Agent in trust for the benefit of the
Certificateholders, or, if not so held, the Subordination Agent
51
or its nominee shall be reflected as the owner of such Equipment
Notes in the register of the issuer of such Equipment Notes.
Section 7.15. Representations and Warranties of
Trustee. The Trustee hereby represents and warrants that:
(a) the Trustee is a Delaware banking corporation
organized and validly existing in good standing under the
laws of the State of Delaware;
(b) the Trustee has full power, authority and legal
right to execute, deliver, and perform this Agreement, the
Intercreditor Agreement, the Registration Rights Agreement
and the Financing Agreements and has taken all necessary
action to authorize the execution, delivery, and
performance by it of this Agreement, the Intercreditor
Agreement, the Registration Rights Agreement and the
Financing Agreements;
(c) the execution, delivery and performance by the
Trustee of this Agreement, the Intercreditor Agreement, the
Registration Rights Agreement and the Financing Agreements
(i) will not violate any provision of 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, or (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;
(d) the execution, delivery and performance by the
Trustee of this Agreement, the Intercreditor Agreement, the
Registration Rights Agreement and the Financing Agreements
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
52
(e) this Agreement, the Intercreditor Agreement, the
Registration Rights Agreement and the Financing Agreements
have been duly executed and delivered by the Trustee and
constitute the legal, valid, and binding agreements of the
Trustee, enforceable against it in accordance with their
respective terms, provided 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 7.16. Withholding Taxes; Information
Reporting. The Trustee, as trustee of the grantor trust created
by this Agreement, shall exclude and withhold from each
distribution of principal, premium, if any, and interest and
other amounts due under this Agreement or under the Certificates
any and all withholding taxes applicable thereto as required by
law. The Trustee agrees to act as such withholding agent and, in
connection therewith, whenever any present or future taxes or
similar charges are required to be withheld with respect to any
amounts payable in respect of the Certificates, to withhold such
amounts and timely pay the same to the appropriate authority in
the name of and on behalf of the Certificateholders, that it will
file any necessary withholding tax returns or statements when
due, and that, as promptly as possible after the payment thereof,
it will deliver to each such Certificateholder appropriate
documentation showing the payment thereof, together with such
additional documentary evidence as such Certificateholders may
reasonably request from time to time. The Trustee agrees to file
any other information reports as it may be required to file under
United States law.
Section 7.17. Trustee's Liens. The Trustee in its
individual capacity agrees 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 mortgage, pledge, lien, charge,
encumbrance, security interest or claim ("Trustee's Liens") on or
with respect to the Trust Property which is attributable to the
Trustee either (i) in its individual capacity and which is
unrelated to the transactions contemplated by this Agreement, the
Intercreditor Agreement, the Financing Agreements or the
Financing Documents, or (ii) as Trustee hereunder or in its
individual capacity and which arises out of acts or omissions
which are not contemplated by this Agreement.
53
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.01. The Company to Furnish Trustee with
Names and Addresses of Certificateholders. The Company will
furnish to the Trustee within 15 days after each Record Date with
respect to a Scheduled Payment, and at such other times as the
Trustee may request in writing within 30 days after receipt by
the Company of any such request, a list, in such form as the
Trustee may reasonably require, of all information in the
possession or control of the Company as to the names and
addresses of the Certificateholders, in each case as of a date
not more than 15 days prior to the time such list is furnished;
provided, however, that so long as the Trustee is the sole
Registrar, no such list need be furnished; and provided further,
however, that no such list need be furnished for so long as a
copy of the Register is being furnished to the Trustee pursuant
to Section 7.12.
Section 8.02. Preservation of Information;
Communications to Certificateholders. The Trustee shall preserve,
in as current a form as is reasonably practicable, the names and
addresses of Certificateholders contained in the most recent list
furnished to the Trustee as provided in Section 7.12 or Section
8.01, as the case may be, and the names and addresses of
Certificateholders received by the Trustee in its capacity as
Registrar, if so acting. The Trustee may destroy any list
furnished to it as provided in Section 7.12 or Section 8.01, as
the case may be, upon receipt of a new list so furnished.
Section 8.03. Reports by Trustee. Within 60 days after
May 15 of each year commencing with the first full year following
the issuance of the Certificates, the Trustee shall transmit to
the Certificateholders, as provided in Section 313(c) of the
Trust Indenture Act, a brief report dated as of such May 15, if
required by Section 313(a) of the Trust Indenture Act.
Section 8.04. Reports by the Company. The Company
shall:
(a) file with the Trustee, within 30 days after the
Company is required to file the same with the SEC, copies
of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the
foregoing as the SEC may from time to time by rules and
regulations prescribe) which the Company is required to
file with the SEC pursuant to section 13 or section 15(d)
of the Securities Exchange Act of 1934, as amended; or, if
the Company is not required to file information, documents
or reports pursuant to either of such sections, then to
54
file with the Trustee and the SEC, in accordance with rules
and regulations prescribed by the SEC, such of the
supplementary and periodic information, documents and
reports which may be required pursuant to section 13 of the
Securities Exchange Act of 1934, as amended, in respect of
a security listed and registered on a national securities
exchange as may be prescribed in such rules and
regulations;
(b) file with the Trustee and the SEC, in accordance
with the rules and regulations prescribed by the SEC, such
additional information, documents and reports with respect
to compliance by the Company with the conditions and
covenants provided for in this Agreement, as may be
required by such rules and regulations, including, in the
case of annual reports, if required by such rules and
regulations, certificates or opinions of independent public
accountants;
(c) transmit to all Certificateholders, in the manner
and to the extent provided in Section 313(c) of the Trust
Indenture Act such summaries of any information, documents
and reports required to be filed by the Company pursuant to
subsections (a) and (b) of this Section 8.04 as may be
required by rules and regulations prescribed by the SEC;
and
(d) furnish to the Trustee, not less often than
annually, a brief certificate from the principal executive
officer, principal financial officer or principal
accounting officer as to his or her knowledge of the
Company's compliance with all conditions and covenants
under this Agreement (it being understood that for purposes
of this paragraph (d), such compliance shall be determined
without regard to any period of grace or requirement of
notice provided under this Agreement).
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.01. Supplemental Agreements Without Consent
of Certificateholders. Without the consent of the
Certificateholders, the Company may (but will not be required
to), and the Trustee (subject to Section 9.03) shall, at any time
and from time to time, enter into one or more agreements
supplemental hereto or, if applicable, to the Intercreditor
Agreement or the Liquidity Facility in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation
to the Company and the assumption by any such successor of
the covenants of the Company herein contained; or
55
(2) to add to the covenants of the Company for the
benefit of the Certificateholders, or to surrender any right
or power in this Agreement conferred upon the Company; or
(3) to correct or supplement any provision in this
Agreement, the Intercreditor Agreement or the Liquidity
Facility which may be defective or inconsistent with any
other provision herein or to cure any ambiguity or correct
any mistake or to modify any other provision with respect
to matters or questions arising under this Agreement, the
Intercreditor Agreement or the Liquidity Facility, provided
that any such action shall not materially adversely affect
the interests of the Certificateholders; or
(4) to modify, eliminate or add to the provisions of
this Agreement to such extent as shall be necessary to
continue the qualification of this Agreement (including any
supplemental agreement) under the Trust Indenture Act or
under any similar Federal statute hereafter enacted, and to
add to this Agreement such other provisions as may be
expressly permitted by the Trust Indenture Act, excluding,
however, the provisions referred to in Section 316(a)(2) of
the Trust Indenture Act as in effect at the date as of
which this instrument was executed or any corresponding
provision in any similar Federal statute hereafter enacted;
or
(5) to evidence and provide for the acceptance of
appointment under this Agreement by the Trustee of a
successor Trustee and to add to or change any of the
provisions of this Agreement as shall be necessary to
provide for or facilitate the administration of the Trust,
pursuant to the requirements of Section 7.10; or
(6) to provide the information required under
Section 7.12 and Section 12.03 as to the Trustee; or
(7) to modify or eliminate provisions relating to the
transfer or exchange of Exchange Certificates or the
Initial Certificates upon consummation of the Exchange
Offer (as defined in the Registration Rights Agreement) or
effectiveness of the Registration Statement.
Section 9.02. Supplemental Agreements with Consent of
Certificateholders. With the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests
aggregating not less than a majority in interest in the Trust, by
Direction of said Certificateholders delivered to the Company and
the Trustee, the Company may (with the consent of the Owner
Trustees, if any, which consent shall not be unreasonably
withheld), and the Trustee (subject to Section 9.03) shall, enter
into an agreement or agreements for the purpose of adding any
56
provisions to or changing in any manner or eliminating any of the
provisions of this Agreement, the Intercreditor Agreement, the
Liquidity Facility, the Registration Rights Agreement or any
Financing Agreement to the extent applicable to such
Certificateholders or of modifying in any manner the rights and
obligations of such Certificateholders under this Agreement, the
Intercreditor Agreement, the Liquidity Facility, the Registration
Rights Agreement or any Financing Agreement; provided, however,
that no such agreement shall, without the consent of the
Certificateholder of each Outstanding Certificate affected
thereby:
(1) reduce in any manner the amount of, or delay the
timing of, any receipt by the Trustee of payments on the
Equipment Notes held in the Trust or distributions that are
required to be made herein on any Certificate, or change
any date of payment on any Certificate, or change the place
of payment where, or the coin or currency in which, any
Certificate is payable, or impair the right to institute
suit for the enforcement of any such payment or
distribution on or after the Regular Distribution Date or
Special Distribution Date applicable thereto; or
(2) permit the disposition of any Equipment Note
included in the Trust Property except as permitted by this
Agreement, or otherwise deprive such Certificateholder of
the benefit of the ownership of the Equipment Notes in the
Trust; or
(3) reduce the percentage of the aggregate Fractional
Undivided Interests of the Trust which is required for any
such supplemental agreement, or reduce such percentage
required for any waiver of compliance with certain
provisions of this Agreement or certain defaults hereunder
and their consequences provided for in this Agreement; or
(4) waive, amend or modify Section 2.4, 3.2 or 3.3 of
the Intercreditor Agreement in a manner adverse to the
Certificateholders; or
(5) modify any of the provisions of this Section 9.02
or Section 6.05, except to increase any such percentage or
to provide that certain other provisions of this Agreement
cannot be modified or waived without the consent of the
Certificateholder of each Certificate affected thereby.
It shall not be necessary for any Direction of
Certificateholders under this Section to approve the particular
form of any proposed supplemental agreement, but it shall be
sufficient if such Direction shall approve the substance thereof.
57
Section 9.03. Documents Affecting Immunity or
Indemnity. If in the opinion of the Trustee any document required
to be executed by it pursuant to the terms of Section 9.01 or
9.02 affects any interest, right, duty, immunity or indemnity in
favor of the Trustee under this Agreement, the Trustee may in its
discretion decline to execute such document.
Section 9.04. Execution of Supplemental Agreements. In
executing, or accepting the additional trusts created by, any
agreement permitted by this Article or the modifications thereby
of the trusts created by this Agreement, the Trustee shall be
entitled to receive, and shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such
supplemental agreement is authorized or permitted by this
Agreement.
Section 9.05. Effect of Supplemental Agreements. Upon
the execution of any agreement supplemental to this Agreement
under this Article, this Agreement shall be modified in
accordance therewith, and such supplemental agreement shall form
a part of this Agreement for all purposes; and every Holder of a
Certificate theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
Section 9.06. Conformity with Trust Indenture Act.
Every supplemental agreement executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act as
then in effect.
Section 9.07. Reference in Certificates to
Supplemental Agreements. Certificates authenticated and delivered
after the execution of any supplemental agreement pursuant to
this Article may bear a notation in form approved by the Trustee
as to any matter provided for in such supplemental agreement;
and, in such case, suitable notation may be made upon Outstanding
Certificates after proper presentation and demand.
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
Section 10.01. Amendments and Supplements to
Indentures and Other Financing Documents. In the event that the
Trustee, as holder of any Equipment Note in trust for the benefit
of the Certificateholders or as Controlling Party under the
Intercreditor Agreement, receives a request for a consent to any
amendment, modification, waiver or supplement under any Indenture
or other Financing Document, the Trustee shall forthwith send a
notice of such proposed amendment, modification, waiver or
supplement to each Certificateholder registered on the Register
58
as of the date of such notice. The Trustee shall request from the
Certificateholders a Direction as to (a) whether or not to take
or refrain from taking any action which a holder of such
Equipment Note has the option to direct, (b) whether or not to
give or execute any waivers, consents, amendments, modifications
or supplements as a holder of such Equipment Note and (c) how to
vote any Equipment Note if a vote has been called for with
respect thereto. Provided such a request for Certificateholder
Direction shall have been made, in directing any action or
casting any vote or giving any consent as the holder of any
Equipment Note, the Trustee shall vote for or give consent to any
such action with respect to such Equipment Note in the same
proportion as that of (i) the aggregate face amounts of all
Certificates actually voted in favor of or for giving consent to
such action by such Direction of Certificateholders to (ii) the
aggregate face amount of all Outstanding Certificates. For
purposes of the immediately preceding sentence, a Certificate
shall have been "actually voted" if the Holder of such
Certificate has delivered to the Trustee an instrument evidencing
such Holder's consent to such Direction prior to two Business
Days before the Trustee directs such action or casts such vote or
gives such consent. Notwithstanding the foregoing, but subject to
Section 6.04 and the Intercreditor Agreement, the Trustee may, in
its own discretion and at its own direction, consent and notify
the relevant Loan Trustee of such consent to any amendment,
modification, waiver or supplement under the relevant Indenture
or any other Financing Document, if an Event of Default hereunder
shall have occurred and be continuing, or if such amendment,
modification or waiver will not adversely affect the interests of
the Certificateholders.
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust. The
respective obligations and responsibilities of the Company and
the Trustee with respect to the Trust shall terminate upon the
distribution to all Holders of Certificates and the Trustee of
all amounts required to be distributed to them pursuant to this
Agreement and the disposition of all property held as part of the
Trust Property; provided, however, that in no event shall the
Trust continue beyond one hundred ten (110) years following the
date of the earliest execution of this Trust Agreement.
Notice of any termination, specifying the Regular
Distribution Date (or Special Distribution Date, as the case may
be) upon which the Certificateholders may surrender their
Certificates to the Trustee for payment of the final Distribution
Date and cancellation, shall be mailed promptly by the Trustee to
59
Certificateholders not earlier than the 60th day and not later
than the 20th day next preceding such final Distribution Date
specifying (A) the Regular Distribution Date (or Special
Distribution Date, as the case may be) upon which the proposed
final payment of the Certificates will be made upon presentation
and surrender of Certificates at the office or agency of the
Trustee therein specified, (B) the amount of any such proposed
final payment, and (C) that the Record Date otherwise applicable
to such Regular Distribution Date (or Special Distribution Date,
as the case may be) is not applicable, payments being made only
upon presentation and surrender of the Certificates at the office
or agency of the Trustee therein specified. The Trustee shall
give such notice to the Registrar at the time such notice is
given to Certificateholders. Upon presentation and surrender of
the Certificates in accordance with such notice, the Trustee
shall cause to be distributed to Certificateholders such final
payments.
In the event that all of the Certificateholders shall
not surrender their Certificates for cancellation within six
months after the date specified in the above-mentioned written
notice, the Trustee shall give a second written notice to the
remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect
thereto. No additional interest shall accrue on the Certificates
after the Regular Distribution Date (or Special Distribution
Date, as the case may be) specified in the first written notice.
In the event that any money held by the Trustee for the payment
of distributions on the Certificates shall remain unclaimed for
two years (or such lesser time as the Trustee shall be satisfied,
after sixty days' notice from the Company, is one month prior to
the escheat period provided under applicable law) after the final
distribution date with respect thereto, the Trustee shall pay to
each Loan Trustee the appropriate amount of money relating to
such Loan Trustee and shall give written notice thereof to the
related Owner Trustees, the Owner Participants and the Company.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of
Certificateholders. The death or incapacity of any
Certificateholder shall not operate to terminate this Agreement
or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any
action or commence any proceeding in any court for a partition or
winding up of the Trust, nor otherwise affect the rights,
obligations, and liabilities of the parties hereto or any of
them.
60
Section 12.02. Certificates Nonassessable and Fully
Paid. Except as set forth in the last sentence of this Section
12.02, Certificateholders shall not be personally liable for
obligations of the Trust, the Fractional Undivided Interests
represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever, and
Certificates, upon authentication thereof by the Trustee pursuant
to Section 3.03, are and shall be deemed fully paid. No
Certificateholder shall have any right (except as expressly
provided herein) to vote or in any manner otherwise control the
operation and management of the Trust Property, the Trust, or the
obligations of the parties hereto, nor shall anything set forth
herein, or contained in the terms of the Certificates, be
construed so as to constitute the Certificateholders from time to
time as partners or members of an association. Neither the
existence of the Trust nor any provision herein is intended to or
shall limit the liability the Certificateholders would otherwise
incur if the Certificateholders owned Trust Property as
co-owners, or incurred any obligations of the Trust, directly
rather than through the Trust.
Section 12.03. Notices. (a) Unless otherwise
specifically provided herein, all notices required under the
terms and provisions of this Agreement shall be in English and in
writing, and any such notice may be given by United States mail,
courier service or telecopy, and any such notice shall be
effective when delivered or received or, if mailed, three days
after deposit in the United States mail with proper postage for
ordinary mail prepaid,
if to the Company, to:
Continental Airlines, Inc.
2929 Allen Parkway
Houston, TX 77019
Attention: Chief Financial Officer and
General Counsel
Facsimile: (713) 523-2831
if to the Trustee, to:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Department
Facsimile: (302) 651-8882
Telephone: (302) 651-8584
61
(b) The Company or the Trustee, by notice to the
other, may designate additional or different addresses for
subsequent notices or communications.
(c) Any notice or communication to Certificateholders
shall be mailed by first-class mail to the addresses for
Certificateholders shown on the Register kept by the Registrar.
Failure so to mail a notice or communication or any defect in
such notice or communication shall not affect its sufficiency
with respect to other Certificateholders.
(d) If a notice or communication is mailed in the
manner provided above within the time prescribed, it is
conclusively presumed to have been duly given, whether or not the
addressee receives it.
(e) If the Company mails a notice or communication to
the Certificateholders, it shall mail a copy to the Trustee and
to the Paying Agent at the same time.
(f) Notwithstanding the foregoing, all communications
or notices to the Trustee shall be deemed to be given only when
received by a Responsible Officer of the Trustee.
(g) The Trustee shall promptly furnish the Company
with a copy of any demand, notice or written communication
received by the Trustee hereunder from any Certificateholder,
Owner Trustee or Loan Trustee.
Section 12.04. Governing Law. THIS AGREEMENT HAS BEEN
DELIVERED IN THE STATE OF NEW YORK AND THIS AGREEMENT AND THE
CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICTS-OF-LAW PRINCIPLES.
Section 12.05. Severability of Provisions. If any one
or more of the covenants, agreements, provisions or terms of this
Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions, or terms shall be deemed
severable from the remaining covenants, agreements, provisions or
terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or
the Trust, or of the Certificates or the rights of the
Certificateholders thereof.
Section 12.06. Trust Indenture Act Controls. This
Agreement is subject to the provisions of the Trust Indenture Act
and shall, to the extent applicable, be governed by such
provisions.
62
Section 12.07. Effect of Headings and Table of
Contents. The Article and Section headings herein and the Table
of Contents are for convenience only and shall not affect the
construction hereof.
Section 12.08. Successors and Assigns. All covenants,
agreements, representations and warranties in this Agreement by
the Trustee and the Company shall bind and, to the extent
permitted hereby, shall inure to the benefit of and be
enforceable by their respective successors and assigns, whether
so expressed or not.
Section 12.09. Benefits of Agreement. Nothing in this
Agreement or in the Certificates, express or implied, shall give
to any Person, other than the parties hereto and their successors
hereunder, and the Certificateholders, any benefit or any legal
or equitable right, remedy or claim under this Agreement.
Section 12.10. Legal Holidays. In any case where any
Regular Distribution Date or Special Distribution Date relating
to any Certificate shall not be a Business Day, 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 no interest shall accrue during the intervening period.
Section 12.11. Counterparts. For the purpose of
facilitating the execution of this Agreement and for other
purposes, this Agreement may be executed simultaneously in any
number of counterparts, each of which counterparts shall be
deemed to be an original, and all of which counterparts shall
constitute but one and the same instrument.
Section 12.12. Intention of Parties. The parties
hereto intend that the 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. The powers granted and obligations undertaken
pursuant to this Agreement shall be so construed so as to further
such intent.
63
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed by their respective officers
thereunto 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:
64
EXHIBIT A
FORM OF CERTIFICATE
REGISTERED
No. ______________
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER
THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT WITHIN
THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE
WAS HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY
AFFILIATE OF ANY OF SUCH PERSONS RESELL OR OTHERWISE
TRANSFER THIS CERTIFICATE EXCEPT (A) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (B) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR
MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATE THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE TRUSTEE), (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT 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
WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE
OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS
CERTIFICATE WAS HELD BY CONTINENTAL AIRLINES, INC., THE
TRUSTEE OR ANY
AFFILIATE OF ANY OF SUCH PERSONS THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO
THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO
THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.]*
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A)
IT IS NOT A PLAN TRANSFEREE (AS DEFINED IN THE PASS THROUGH
TRUST AGREEMENT) OR (B) IT IS AN INSURANCE COMPANY USING
THE ASSETS OF ITS GENERAL ACCOUNT TO ACQUIRE THIS
CERTIFICATE, AND THE CONDITIONS OF PROHIBITED TRANSACTION
CLASS EXEMPTION 95-60 ISSUED BY THE U.S. DEPARTMENT OF
LABOR HAVE BEEN AND WILL CONTINUE TO BE SATISFIED IN
CONNECTION WITH ITS PURCHASE AND HOLDING OF THIS
CERTIFICATE. THE PASS THROUGH TRUST AGREEMENT CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE TRUSTEE 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 HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
- --------
* Not to be included on the face of the Permanent Offshore
Global Certificate.
A-2
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR
TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE
PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN.]*
- --------
* To be included on the face of each Global Certificate.
A-3
[GLOBAL CERTIFICATE]*
CONTINENTAL AIRLINES 1996-2B PASS THROUGH TRUST
8.56% Continental Airlines [Initial] [Exchange] Pass Through
Certificate
Series 1996-2B
Final Distribution Date: July 2, 2014
evidencing a fractional undivided interest in a trust, the
property of which includes certain equipment notes each secured
by an Aircraft leased to Continental Airlines, Inc.
$ Fractional Undivided Interest
representing . % 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 1996-2B Pass Through Trust (the "Trust") created
pursuant to a Pass Through Trust Agreement, dated as of May 20,
1996 (the "Agreement"), between Wilmington Trust Company (the
"Trustee") and Continental Airlines, Inc., a corporation
incorporated under Delaware law (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 "8.56% Continental Airlines [Initial] [Exchange]
Pass Through Certificates Series 1996-2B" (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 Certificateholder of this
Certificate assents to and agrees to be bound by the provisions
of the Agreement and the Intercreditor Agreement. The property of
the Trust includes certain Equipment Notes and all rights of the
Trust to receive payments under the Intercreditor Agreement and
the Liquidity Facilities (the "Trust Property"). Each issue of
the Equipment Notes is secured by, among other things, a security
interest in the Aircraft leased to or owned by the Company.
The Certificates represent fractional undivided
interests in the Trust and the Trust Property, and have no
- --------
* To be included on the face of each Global Certificate.
A-4
rights, benefits or interest in respect of any assets or property
other than the Trust Property.
Subject to and in accordance with the terms of the
Agreement and the Intercreditor Agreement, from and to the extent
of funds then available to the Trustee, there will be distributed
on each January 2, April 2, July 2 and October 2 (a "Regular
Distribution Date"), commencing on July 2, 1996, 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
Notes 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 Notes 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 Notes, 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 Regular Distribution Date or 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 Regular Distribution Date or
Special Distribution Date and no 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.
[The Holder of this Certificate is entitled to the
benefits of the Registration Rights Agreement, dated as of May
20, 1996, among the Company, the Trustee and the Initial
Purchasers named therein (the "Registration Rights Agreement").
In the event that neither the consummation of the Exchange Offer
nor the declaration by the Commission of a Shelf Registration to
be effective (a "Registration Event") occurs on or prior to the
180th day after the date of the issuance of the Certificates, the
interest rate per annum borne by the Equipment Notes shall be
increased by 0.50%, from and including January 2, 1997, to but
excluding the date on which a Registration Event occurs. In the
event that the Shelf Registration Statement ceases to be
effective at any time during the period specified by the
Registration Rights Agreement for more than 60 days, whether or
not consecutive, during any 12-month period, the interest rate
per annum borne by the Equipment Notes shall be increased by
A-5
0.50% from the 61st day of the applicable 12-month period such
Shelf Registration Statement ceases to be effective until such
time as the Shelf Registration Statement again becomes
effective.]*
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 AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
Reference is hereby made to the further provisions of
this Certificate set forth in the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon has
been executed by the Trustee, by manual signature, this
Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this
Certificate to be duly executed.
Dated: May 20, 1996 CONTINENTAL AIRLINES
1996-2B PASS THROUGH TRUST
By: WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as
Trustee
Attest: By:
Name:
Title:
- --------------------
Authorized Signature
- --------
* To be included only on each Initial Certificate.
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,
not in its individual
capacity but
solely as Trustee
By:
Authorized
Officer
A-7
[REVERSE OF CERTIFICATE]
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 of their affiliates. The
Certificates are limited in right or 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, proceeds, 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 therein set forth, 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, in the Borough of Manhattan, the City of New
York, 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
A-8
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
[$100,000]* [$1,000]** Fractional Undivided Interest and integral
multiples of $1,000 in excess thereof [except that one
Certificate may be in a denomination of less than $100,000]*. 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 by the Holder of a sum sufficient to cover any
tax or governmental charge payable in connection therewith.
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.
* To be included only on each Initial Certificate.
** To be included only on each Exchange Certificate.
A-9
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 Trustee
with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT PERMANENT OFFSHORE GLOBAL AND
OFFSHORE PHYSICAL CERTIFICATES]
In connection with any transfer of this Certificate
occurring prior to the date that is the earlier of the date of an
effective Registration Statement or __________, 1999, the
undersigned confirms that without utilizing any general
solicitation or general advertising that:
[Check One]
[ ] (a) this Certificate is being transferred in
compliance with the exemption from registration under
the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
or
[ ] (b) this Certificate is being transferred other than
in accordance with (a) above and documents are being
furnished that comply with the conditions of transfer
set forth in this Certificate and the Agreement.
If neither of the foregoing boxes is checked, the Trustee or
other 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
A-10
registration set forth herein and in Section 3.06 of the
Agreement 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 IF (a) ABOVE IS CHECKED.
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, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated:
NOTE: To be executed by an
executive officer.
A-11
EXHIBIT B
FORM OF CERTIFICATE FOR UNLEGENDED CERTIFICATES
[Date]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Trustee Administration
Re: Continental Airlines 1996-2B Pass
Through Trust, Class A Pass Through
Trust Certificates
(the "Certificates")
Dear Sirs:
This letter relates to U.S. $__________ Fractional
Undivided Interest of Certificates represented by a Certificate
(the "Legended Certificate") which bears a legend outlining
restrictions upon transfer of such Legended Certificate. Pursuant
to Section 3.01 of the Pass Through Trust Agreement relating to
the Certificates dated as of May 20, 1996 (the "Trust
Agreement"), between Continental Airlines, Inc. ("Continental")
and you, we hereby certify that we are (or we will hold such
securities on behalf of) a person outside the United States to
whom the Certificates could be transferred in accordance with
Rule 904 of Regulation S promulgated under the U.S. Securities
Act of 1933, as amended. Accordingly, you are hereby requested to
exchange the legended certificate for an unlegended certificate
representing an identical principal amount of Certificates, all
in the manner provided for in the Trust Agreement.
You and Continental are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or
legal proceedings or official inquiry with respect to the matters
covered hereby. Terms used in this certificate have the meanings
set forth in Regulation S.
Very truly yours,
[Name of Certificateholder]
By:
Authorized Signature
EXHIBIT C
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS PURSUANT TO REGULATION S
[date]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Trustee Administration
Re: Continental Airlines 1996-2B Pass Through
Trust (the "Trust"), 8.56% Continental
Airlines Pass Through Certificates
Series 1996-2B (the "Certificates")
Sirs:
In connection with our proposed sale of $_______
Fractional Undivided Interest of the Certificates, we confirm
that such sale has been effected pursuant to and in accordance
with Regulation S under the Securities Act of 1933, as amended,
and, accordingly, we represent that:
(1) the offer of the Certificates was not made to a
person in the United States;
(2) either (a) at the time the buy order was
originated, the transferee was outside the United States or
we and any person acting on our behalf reasonably believed
that the transferee was outside the United States or (b)
the transaction was executed in, on or through the
facilities of a designated off-shore securities market and
neither we nor any person acting on our behalf knows that
the transaction has been pre-arranged with a buyer in the
United States;
(3) no directed selling efforts have been made in the
United States in contravention of the requirements of Rule
903(b) or Rule 904(b) of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act.
In addition, if the sale is made during a restricted
period and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of
Regulation S are applicable thereto, we confirm that such sale
has been made in accordance with the applicable provisions of
Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You and Continental Airlines, Inc. are entitled to
rely upon this letter and are irrevocably authorized to produce
this letter or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:_______________________
Authorized Signature
C-2
EXHIBIT D
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
[date]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Trustee Administration
Re: Continental Airlines 1996-2B Pass-
Through Trust (the "Trust"), 8.56%
Continental Airlines Pass Through
Certificates Series 1996-2B
(the "Certificates")
Dear Sirs:
In connection with our proposed purchase of
$_______________ aggregate principal amount of the Certificates,
we confirm that:
1. We understand that any subsequent transfer of the
Certificates is subject to certain restrictions and
conditions set forth in the Pass Through Trust Agreement
dated as of May 20, 1996 relating to the Certificates (the
"Pass Through Trust Agreement") and the undersigned agrees
to be bound by, and not to resell, pledge or otherwise
transfer the Certificates except in compliance with, such
restrictions and conditions and the Securities Act of 1933,
as amended (the "Securities Act").
2. We understand that the Certificates have not been
registered under the Securities Act, and that the
Certificates may not be offered or sold except as permitted
in the following sentence. We agree, on our own behalf and
on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Certificate,
we will do so only (A) in accordance with Rule 144A under
the Securities Act to a "qualified institutional buyer" (as
defined therein), (B) to an institutional "accredited
investor" (as defined below) that, prior to such transfer,
furnishes to you and Continental Airlines, Inc., a signed
letter substantially in the form of this letter, (C)
outside the United States in accordance with Rule 904 of
Regulation S under the Securities Act, (D) pursuant to the
exemption
from registration provided by Rule 144 under the Securities
Act, or (E) pursuant to an effective registration statement
under the Securities Act, and we further agree to provide
to any person purchasing any of the Certificates from us a
notice advising such purchaser that resales of the Notes
are restricted as stated herein. We further understand that
the Certificates purchased by us will bear a legend to the
foregoing effect.
3. We understand that, on any proposed resale of any
Certificates, we will be required to furnish to you and
Continental Airlines, Inc. such certifications, legal
opinions and other information as you and Continental
Airlines, Inc. may reasonably require to confirm that the
proposed sale complies with the foregoing restrictions. We
further understand that the Certificates purchased by us
will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act) and have such knowledge and
experience in financial and business matters as to be
capable of evaluating the merits and risks of our
investment in the Certificates and we and any accounts for
which we are acting are each able to bear the economic risk
of our or its investment.
5. We are acquiring the Certificates purchased by us
for our own account or for one or more accounts (each of
which is an institutional "accredited investor") as to each
of which we exercise sole investment discretion.
You and Continental Airlines, Inc. are entitled to
rely upon this letter and are irrevocably authorized to produce
this letter or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferor]
By:
Authorized Signature
D-2
- -------------------------------------------------------------------
PASS THROUGH TRUST AGREEMENT
Dated as of May 20, 1996
between
CONTINENTAL AIRLINES, INC.
and
WILMINGTON TRUST COMPANY,
as Trustee
Continental Airlines 1996-2C Pass Through Trust
10.22% 1996-2C Initial Pass Through Certificates
10.22% 1996-2C Exchange Pass Through Certificates
- -------------------------------------------------------------------
Reconciliation and tie between Continental Airlines 1996-2C Pass
Through Trust Agreement, dated as of May 20, 1996, and the Trust
Indenture Act of 1939. This reconciliation does not constitute
part of the Pass Through Trust Agreement.
Trust Indenture Act Pass Through Trust
of 1939 Section Agreement Section
- ------------------------ -------------------------
310(a)(1) 7.08
(a)(2) 7.08
312(a) 3.05; 8.01; 8.02
313(a) 8.03
314(a) 8.04(a) - (c)
(a)(4) 8.04(d)
(c)(1) 1.02
(c)(2) 1.02
(d)(1) 7.13; 11.01
(d)(2) 7.13; 11.01
(d)(3) 2.01
(e) 1.02
315(b) 7.02
316(a)(last 1.04(c)
sentence)
(a)(1)(A) 6.04
(a)(1)(B) 6.05
(b) 6.06
(c) 1.04(d)
317(a)(1) 6.03
(b) 7.13
318(a) 12.06
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
1.01. Definitions........................................ 2
1.02. Compliance Certificates and Opinions............... 13
1.03. Form of Documents Delivered to Trustee............. 14
1.04. Directions of Certificateholders................... 14
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES;
ACQUISITION OF EQUIPMENT NOTES
2.01. Issuance of Certificates; Acquisition of
Equipment Notes................................... 16
2.02. Acceptance by Trustee.............................. 18
2.03. Limitation of Powers............................... 19
ARTICLE III
THE CERTIFICATES
3.01. Title, Form, Denomination and Execution of
Certificates...................................... 19
3.02. Restrictive Legends................................ 20
3.03. Authentication of Certificates..................... 22
3.04. Transfer and Exchange.............................. 23
3.05. Book-Entry Provisions for U.S. Global
Certificate and Offshore Global Certificates...... 23
3.06. Special Transfer Provisions........................ 25
3.07. Mutilated, Destroyed, Lost or Stolen
Certificates...................................... 28
3.08. Persons Deemed Owners.............................. 28
3.09. Cancellation....................................... 29
3.10. Temporary Certificates............................. 29
3.11. Limitation of Liability for Payments............... 29
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS
4.01. Certificate Account and Special Payments
Account........................................... 30
ii
Section Page
4.02. Distributions from Certificate Account and
Special Payments Account.......................... 30
4.03. Statements to Certificateholders................... 32
4.04. Investment of Special Payment Moneys............... 33
ARTICLE V
THE COMPANY
5.01. Maintenance of Corporate Existence................. 33
5.02. Consolidation, Merger, etc......................... 33
ARTICLE VI
DEFAULT
6.01. Events of Default.................................. 34
6.02. [Intentionally omitted.]........................... 36
6.03. Judicial Proceedings Instituted by Trustee;
Trustee May Bring Suit............................ 36
6.04. Control by Certificateholders...................... 37
6.05. Waiver of Past Defaults............................ 37
6.06. Right of Certificateholders to Receive Payments
Not to Be Impaired................................ 38
6.07. Certificateholders May Not Bring Suit Except
Under Certain Conditions.......................... 38
6.08. Remedies Cumulative................................ 39
ARTICLE VII
THE TRUSTEE
7.01. Certain Duties and Responsibilities................ 39
7.02. Notice of Defaults................................. 39
7.03. Certain Rights of Trustee.......................... 40
7.04. Not Responsible for Recitals or Issuance of
Certificates...................................... 41
7.05. May Hold Certificates.............................. 41
7.06. Money Held in Trust................................ 42
7.07. Compensation and Reimbursement..................... 42
7.08. Corporate Trustee Required; Eligibility............ 42
7.09. Resignation and Removal; Appointment of
Successor......................................... 43
7.10. Acceptance of Appointment by Successor............. 44
7.11. Merger, Conversion, Consolidation or Succession
to Business....................................... 45
7.12. Maintenance of Agencies............................ 45
7.13. Money for Certificate Payments to Be Held in
Trust............................................. 47
iii
Section Page
7.14. Registration of Equipment Notes in Name of
Subordination Agent............................... 47
7.15. Representations and Warranties of Trustee.......... 47
7.16. Withholding Taxes; Information Reporting........... 48
7.17. Trustee's Liens.................................... 49
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
8.01. The Company to Furnish Trustee with Names and
Addresses of Certificateholders................... 49
8.02. Preservation of Information; Communications to
Certificateholders................................ 49
8.03. Reports by Trustee................................. 49
8.04. Reports by the Company............................. 50
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
9.01. Supplemental Agreements Without Consent of
Certificateholders................................ 51
9.02. Supplemental Agreements with Consent of
Certificateholders................................ 52
9.03. Documents Affecting Immunity or Indemnity.......... 53
9.04. Execution of Supplemental Agreements............... 53
9.05. Effect of Supplemental Agreements.................. 53
9.06. Conformity with Trust Indenture Act................ 53
9.07. Reference in Certificates to Supplemental
Agreements........................................ 53
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
10.01. Amendments and Supplements to Indentures and
Other Financing Documents........................ 54
ARTICLE XI
TERMINATION OF TRUST
11.01. Termination of the Trust.......................... 54
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.01. Limitation on Rights of Certificateholders........ 55
iv
Section Page
12.02. Certificates Nonassessable and Fully Paid......... 56
12.03. Notices........................................... 56
12.04. Governing Law..................................... 57
12.05. Severability of Provisions........................ 57
12.06. Trust Indenture Act Controls...................... 57
12.07. Effect of Headings and Table of Contents.......... 58
12.08. Successors and Assigns............................ 58
12.09. Benefits of Agreement............................. 58
12.10. Legal Holidays.................................... 58
12.11. Counterparts...................................... 58
12.12. Intention of Parties.............................. 58
Schedule 1 - Indentures
Schedule 2 - Financing Agreements
Exhibit A - Form of Certificate
Exhibit B - Form of Certificate for Unlegended
Certificates
Exhibit C - Form of Certificate to Be Delivered in
Connection with Transfers Pursuant to
Regulation S
Exhibit D - Form of Certificate to Be Delivered in
Connection with Transfers to Non-QIB
Accredited Investors
PASS THROUGH TRUST AGREEMENT
This PASS THROUGH TRUST AGREEMENT, dated as of May 20,
1996, between CONTINENTAL AIRLINES, INC., a Delaware corporation,
and WILMINGTON TRUST COMPANY, as Trustee, is made with respect to
the formation of Continental Airlines 1996-2C Pass Through Trust
and the issuance of 10.22% Continental Airlines 1996-2C Pass
Through Certificates representing fractional undivided interests
in the Trust.
WITNESSETH:
WHEREAS, (i) the Company, the Owner Trustees and the
Owner Participants (as such terms and certain other capitalized
terms used herein are defined below) have previously entered into
four separate leveraged lease transactions in connection with the
purchase of four Boeing 757-224 aircraft from the manufacturer
(the "Leased Aircraft") and (ii) the Company has previously
purchased one Boeing 737-524 aircraft from the manufacturer (the
"Owned Aircraft"; together with the Leased Aircraft, the
"Aircraft");
WHEREAS, each Owner Trustee, acting on behalf of the
corresponding Owner Participant, will issue pursuant to an
Indenture, on a non-recourse basis, four series of Equipment
Notes, among other things, to refinance the current indebtedness
of such Owner Trustee originally incurred to finance the purchase
price of the related Leased Aircraft;
WHEREAS, the Company, will issue pursuant to an
Indenture, on a recourse basis, four series of Equipment Notes,
relating to the Owned Aircraft;
WHEREAS, the Trustee, upon execution and delivery of
this Agreement, hereby declares the creation of the Trust for the
benefit of the Certificateholders, and the initial
Certificateholders, as the grantors of the Trust, by their
respective acceptances of the Certificates, join in the creation
of this Trust with the Trustee;
WHEREAS, all Certificates to be issued by the Trust
will evidence fractional undivided interests in the 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 this
Agreement and each of the Financing Agreements to be entered into
by the Trustee simultaneously with the execution and delivery of
this Agreement, the Trustee on behalf of the Trust shall purchase
one or more issues of Equipment Notes having the same interest
rate as, and final maturity dates not later than the final
Regular Distribution Date of, the Certificates issued hereunder
and shall hold such Equipment Notes in trust for the benefit of
the Certificateholders;
WHEREAS, to facilitate the sale of Equipment Notes to,
and the purchase of Equipment Notes by, the Trustee on behalf of
the Trust, the Company has duly authorized the execution and
delivery of this Agreement as the "issuer", as such term is
defined in and solely for purposes of the Securities Act of 1933,
as amended, of the Certificates to be issued pursuant hereto and
as the "obligor", as such term is defined in and solely for
purposes of the Trust Indenture Act of 1939, as amended, with
respect to all such Certificates and is undertaking to perform
certain administrative and ministerial duties hereunder and is
also undertaking to pay the ongoing fees and expenses of the
Trustee;
WHEREAS, all of the conditions and requirements
necessary to make this Agreement, when duly executed and
delivered, a valid, binding and legal instrument, enforceable in
accordance with its terms and for the purposes herein expressed,
have been done, performed and fulfilled, and the execution and
delivery of this Agreement in the form and with the terms hereof
have been in all respects duly authorized; and
WHEREAS, upon issuance of the Exchange Certificates,
if any, or the effectiveness of the Registration Statement, this
Agreement, as amended or supplemented from time to time, will be
subject to the provisions of the Trust Indenture Act of 1939, and
shall, to the extent applicable, be governed by such provisions;
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. Definitions. For all purposes of this
Agreement, except as otherwise expressly provided or unless the
context otherwise requires:
(1) the terms used herein that are defined in this
Article have the meanings assigned to them in this Article,
and include the plural as well as the singular;
(2) all other terms used herein which are defined in
the Trust Indenture Act, either directly or by reference
2
therein, or by the rules promulgated under the Trust
Indenture Act, have the meanings assigned to them therein;
(3) all references in this Agreement to designated
"Articles", "Sections", "Subsections" and other
subdivisions are to the designated Articles, Sections,
Subsections and
other subdivisions of this Agreement;
(4) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section,
Subsection or other subdivision; and
(5) unless the context otherwise requires, whenever
the words "including", "include" or "includes" are used
herein, it shall be deemed to be followed by the phrase
"without limitation".
Affiliate: Means, with respect to any Person, any
other Person directly or indirectly controlling or
controlled by or under common control with such Person,
provided, however, that neither America West Airlines, Inc.
nor any of its subsidiaries shall be deemed to be an
"Affiliate" of the Company for purposes of this Agreement.
For purposes of this definition, "control" means the power,
directly or indirectly, to direct the management and
policies of such Person, whether through the ownership of
voting securities or by contract or otherwise, and the
terms "controlling" and "controlled" have meanings
correlative to the foregoing.
Agent Members: Has the meaning specified in Section
3.05.
Aircraft: Has the meaning specified in the first
recital to this Agreement.
Authorized Agent: Means any Paying Agent or Registrar
for the Certificates.
Avoidable Tax: Means a state or local tax (i) upon (w)
the Trust, (x) the Trust Property, (y) Certificateholders
or (z) the Trustee for which the Trustee is entitled to
seek reimbursement from the Trust Property, and (ii) which
would be avoided if the Trustee were located in another
state, or jurisdiction within a state, within the United
States. A tax shall not be an Avoidable Tax if the Company
or any Owner Trustee shall agree to pay, and shall pay,
such tax.
3
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 Certificate is outstanding, the city and
state in which the Trustee or any Loan Trustee maintains
its Corporate Trust Office or receives and disburses funds.
Cedel: Means Cedel Bank societe anonyme.
Certificate: Means any one of the Initial Certificates
or Exchange Certificates and any such Certificates issued in
exchange therefor or replacement thereof pursuant to this
Agreement.
Certificate Account: Means the account or accounts
created and maintained pursuant to Section 4.01(a).
Certificateholder or Holder: Means the Person in whose
name a Certificate is registered in the Register.
Company: Means Continental Airlines, Inc., a Delaware
corporation, or its successor in interest pursuant to
Section 5.02, or any other obligor (within the meaning of
the Trust Indenture Act) with respect to the Certificates.
Controlling Party: Has the meaning specified in the
Intercreditor Agreement.
Corporate Trust Office: With respect to the Trustee or
any Loan Trustee, means the office of such trustee in the
city at which at any particular time its corporate trust
business shall be principally administered.
Cut-off Date: Means August 2, 1996.
Delayed Equipment Notes: Means the Equipment Notes to
be issued on the applicable Transfer Date in respect of the
two Leased Aircraft bearing Federal Aviation Registration
Marks of N12114 and N14115.
Depositary: Means the Depository Trust Company, its
nominees and their respective successors.
Direction: Has the meaning specified in
Section 1.04(a).
Distribution Date: Means any Regular Distribution Date
or Special Distribution Date.
Equipment Notes: Means the equipment notes issued
under the Indentures.
4
ERISA: Means the Employee Retirement Income Security
Act of 1974, as amended from time to time, or any successor
federal statute.
Escrow Account: Has the meaning specified in
Section 2.01(b).
Escrowed Funds: Has the meaning specified in
Section 2.01(b).
Euroclear: Means the Euroclear System.
Event of Default: Means an Indenture Default under any
Indenture pursuant to which Equipment Notes held by the
Trust were issued.
Exchange Certificates: Means the certificates
substantially in the form of Exhibit A hereto issued in
exchange for the Initial Certificates pursuant to the
Registration Rights Agreement and authenticated hereunder.
Exchange Offer Registration Statement: Means the
Exchange Offer Registration Statement defined in the
Registration Rights Agreement.
Financing Agreements: Means each of the four separate
Refunding Agreements and the Note Purchase Agreement, in
each case, dated the date hereof, listed on Schedule 2
hereto, providing for, among other things, the purchase of
Equipment Notes by the Trustee on behalf of the Trust, as
the same may be amended, supplemented or otherwise modified
from time to time in accordance with its terms.
Financing Documents: With respect to any Equipment
Note, means (i) the related Indenture and Financing
Agreement and (ii) in the case of any Equipment Note
related to a Leased Aircraft, the Lease and the
Participation Agreement relating to such Leased Aircraft.
Fractional Undivided Interest: Means the fractional
undivided interest in the Trust that is evidenced by a
Certificate.
Global Certificates: Has the meaning assigned to such
term in Section 3.01.
Indentures: Means each of the four separate Amended
and Restated Trust Indentures and Mortgages and the Trust
Indenture and Mortgage listed on Schedule 1 hereto, in each
case as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
5
Indenture Default: With respect to any Indenture,
means any Event of Default (as such term is defined in such
Indenture).
Initial Certificates: Means the certificates issued
and authenticated hereunder substantially in the form of
Exhibit A hereto other than the Exchange Certificates.
Initial Purchasers: Means, collectively, Morgan
Stanley & Co. Incorporated, CS First Boston Corporation and
Fieldstone FPCG Services, L.P.
Initial Regular Distribution Date: Means the first
Regular Distribution Date on which a Scheduled Payment is to
be made.
Institutional Accredited Investor: Means an
institutional investor that is an "accredited investor"
within the meaning set forth in Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act.
Intercreditor Agreement: Means the Intercreditor
Agreement dated the date hereof among the Trustee, the
Other Trustees, the Liquidity Provider, the liquidity
provider, if any, relating to the Certificates issued under
(and as defined in) each of the Other Pass Through Trust
Agreements, and Wilmington Trust Company, as Subordination
Agent thereunder, as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
Issuance Date: Means the date of the issuance of the
Initial Certificates.
Lease: Means, with respect to each Leased Aircraft,
the lease between an Owner Trustee, as the lessor, and the
Company, as the lessee, referred to in the related
Indenture, as such lease may be amended, supplemented or
otherwise modified in accordance with its terms.
Leased Aircraft: Has the meaning specified in the
first recital to this Agreement.
Liquidity Facility: Means the Revolving Credit
Agreement dated the date hereof relating to the
Certificates, between the Liquidity Provider and the
Subordination Agent, as amended, replaced, supplemented or
otherwise modified from time to time in accordance with its
terms and the terms of the Intercreditor Agreement.
Liquidity Provider: Means, initially, De Nationale
Investeringsbank N.V., and any replacement or successor
6
therefor appointed in accordance with the Liquidity Facility
and the Intercreditor Agreement.
Loan Trustee: With respect to any Equipment Note or
the Indenture applicable thereto, means the bank or trust
company designated as indenture trustee under such
Indenture, together with any successor to such Loan Trustee
appointed pursuant thereto.
Non-U.S. Person: Means a Person that is not a "U.S.
person", as defined in Regulation S.
Officer's Certificate: Means a certificate signed, (a)
in the case of the Company, by (i) the Chairman or Vice
Chairman of the Board of Directors, the President, any
Executive Vice President, any Senior Vice President or the
Treasurer of the Company, signing alone or (ii) any Vice
President of the Company signing together with the
Secretary, the Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company or, (b) in the case of
an Owner Trustee or a Loan Trustee, a Responsible Officer
of such Owner Trustee or such Loan Trustee, as the case may
be.
Offshore Certificates Exchange Date: Has the meaning
specified in Section 3.01.
Offshore Global Certificates: Has the meaning assigned
to such term in Section 3.01.
Offshore Physical Certificates: Has the meaning
assigned to such term in Section 3.01.
Opinion of Counsel: Means a written opinion of legal
counsel who (a) in the case of counsel for the Company may
be (i) a senior attorney of the Company one of whose
principal duties is furnishing advice as to legal matters,
(ii) Cleary, Gottlieb, Steen & Hamilton, (iii) Hughes
Hubbard & Reed, or (iv) such other counsel designated by
the Company and reasonably acceptable to the Trustee and
(b) in the case of counsel for any Owner Trustee or any
Loan Trustee may be such counsel as may be designated by
any of them whether or not such counsel is an employee of
any of them, and who shall be reasonably acceptable to the
Trustee.
Other Pass Through Trust Agreements: Means each of the
three other Continental Airlines 1996-2 Pass Through Trust
Agreements relating to Continental Airlines 1996-2A Pass
Through Trust, Continental Airlines 1996-2B Pass Through
Trust and Continental Airlines 1996-2D Pass Through Trust,
dated the date hereof.
7
Other Trustees: Means the trustee under the Other Pass
Through Trust Agreements, and any successor or other trustee
appointed as provided therein.
Outstanding: When used with respect to Certificates,
means, as of the date of determination, all Certificates
theretofore authenticated and delivered under this
Agreement, except:
(i) Certificates theretofore cancelled by the
Registrar or delivered to the Trustee or the Registrar
for cancellation;
(ii) Certificates for which money in the full
amount required to make the final distribution with
respect to such Certificates pursuant to Section 11.01
hereof has been theretofore deposited with the Trustee
in trust for the Holders of such Certificates as
provided in Section 4.01 pending distribution of such
money to such Certificateholders pursuant to payment
of such final distribution; and
(iii) Certificates in exchange for or in lieu of
which other Certificates have been authenticated and
delivered pursuant to this Agreement.
Owned Aircraft: Has the meaning specified in the first
recital to this Agreement.
Owner Participant: With respect to any Equipment Note
relating to a Leased Aircraft, means the "Owner
Participant" as referred to in the Indenture pursuant to
which such Equipment Note is issued and any permitted
successor or assign of such Owner Participant; and Owner
Participants at any time of determination means all of the
Owner Participants thus referred to in the Indentures.
Owner Trustee: With respect to any Equipment Note
relating to a Leased Aircraft, means the "Owner Trustee",
as referred to in the Indenture pursuant to which such
Equipment Note is issued, not in its individual capacity
but solely as trustee; and Owner Trustees means all of the
Owner Trustees party to any of the Indentures.
Participation Agreement: With respect to any Leased
Aircraft, means the Participation Agreement referred to in
the related Indenture.
Paying Agent: Means the paying agent maintained and
appointed for the Certificates pursuant to Section 7.12.
8
Permanent Offshore Global Certificates: Has the
meaning specified in Section 3.01.
Permanent Offshore Physical Certificates: Has the
meaning specified in Section 3.01.
Permitted Investments: Means obligations of the United
States of America or agencies or instrumentalities thereof
the payment of which is backed by the full faith and credit
of the United States of America and which mature in not
more than 60 days after the date of acquisition thereof or
such lesser time as is required for the distribution of any
Special Payments on a Special Distribution Date.
Person: Means any person, including any individual,
corporation, partnership, joint venture, association,
joint-stock company, trust, trustee, unincorporated
organization, or government or any agency or political
subdivision thereof.
Physical Certificates: Has the meaning specified in
Section 3.01.
Plan Transferee: Means any Plan or any entity that is
using the assets of any Plan to purchase or hold its
interest in a Certificate. For purposes of this definition,
a "Plan" means any employee benefit plan subject to ERISA
as well as any plan that is not subject to ERISA but which
is subject to Section 4975 of the Internal Revenue Code of
1986, as amended.
Pool Balance: Means, as of any date, (i) the original
aggregate face amount of the Certificates less (ii) the
aggregate amount of all payments made in respect of such
Certificates other than payments made in respect of
interest or premium thereon or reimbursement of any costs
or expenses incurred in connection therewith. The Pool
Balance as of any Distribution Date shall be computed after
giving effect to the payment of principal, if any, on the
Equipment Notes or other Trust Property held in such Trust
and the distribution thereof to be made on such
Distribution Date.
Pool Factor: Means, as of any date, the quotient
(rounded to the seventh decimal place) computed by dividing
(i) the Pool Balance as at such date by (ii) the original
aggregate face amount of the Certificates. The Pool Factor
as of any Distribution Date shall be computed after giving
effect to the payment of principal, if any, on the
Equipment Notes or other Trust Property and the
distribution thereof to be made on such Distribution Date.
9
Postponed Notes: Means (i) the Delayed Equipment Notes
and (ii) the Equipment Notes to be held in the Trust as to
which a Postponement Notice shall have been delivered
pursuant to Section 2.01(b).
Postponement Notice: Means an Officer's Certificate of
the Company (1) requesting that the Trustee temporarily
postpone the purchase pursuant to one or more of the
Financing Agreements of certain of the Equipment Notes to a
date which is later than the Issuance Date, (2) identifying
the amount of the purchase price of each such Equipment
Note and the aggregate purchase price for all such
Equipment Notes, (3) setting forth the reasons for such
postponement and (4) with respect to each such Equipment
Note, either (a) setting or resetting a new Transfer Date
(which shall be on or prior to the applicable Cut-off Date)
for payment by the Trustee of such purchase price and
issuance of the related Equipment Note, or (b) indicating
that such new Transfer Date (which shall be on or prior to
the applicable Cut-off Date) will be set by subsequent
written notice not less than one Business Day prior to such
new Transfer Date.
Private Placement Legend: Has the meaning specified in
Section 3.02.
PTC Event of Default: Means any failure to pay within
10 Business Days of the due date thereof: (i) the
outstanding Pool Balance on January 2, 2016 or (ii)
interest due on the Certificates on any Distribution Date
(unless the Subordination Agent shall have made an Interest
Drawing (as defined in the Intercreditor Agreement) with
respect thereto in an amount sufficient to pay such
interest and shall have distributed such amount to the
Certificateholders).
QIB: Means a qualified institutional buyer as defined
in Rule 144A.
Record Date: Means (i) for Scheduled Payments to be
distributed on any Regular Distribution Date, other than
the final distribution, the 15th day (whether or not a
Business Day) preceding such Regular Distribution Date, and
(ii) for Special Payments to be distributed on any Special
Distribution Date, other than the final distribution, the
15th day (whether or not a Business Day) preceding such
Special Distribution Date.
Refunding Agreements: Has the meaning specified in the
Indentures.
10
Register and Registrar: Mean the register maintained
and the registrar appointed pursuant to Sections 3.04
and 7.12.
Registration Rights Agreement: Means the Registration
Rights Agreement dated May 20, 1996, among the Initial
Purchasers, the Trustee, the Other Trustees and the Company,
as amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Registration Statement: Means the Registration
Statement defined in the Registration Rights Agreement.
Regular Distribution Date: With respect to
distributions of Scheduled Payments in respect of the
Certificates, means each date designated as a Regular
Distribution Date in this Agreement, until payment of all
the Scheduled Payments to be made under the Equipment Notes
held in the Trust have been made; provided, however, that,
if any such day shall not be a Business Day, the related
distribution shall be made on the next succeeding Business
Day without additional interest.
Regulation S: Means Regulation S under the Securities
Act or any successor regulation thereto.
Responsible Officer: With respect to the Trustee, any
Loan Trustee and any Owner Trustee, means any officer in
the Corporate Trust Office of the Trustee, Loan Trustee or
Owner Trustee or any other officer customarily performing
functions similar to those performed by the persons who at
the time shall be such officers, respectively, or to whom
any corporate trust matter is referred because of his
knowledge of and familiarity with a particular subject.
Rule 144A: Means Rule 144A under the Securities Act
and any successor rule thereto.
Scheduled Payment: With respect to any Equipment Note,
means (i) any payment of principal and interest on such
Equipment Note (other than any such payment which is not in
fact received by the Subordination Agent within five days
of the date on which such payment is scheduled to be made)
due from the obligor thereon or (ii) any payment of
interest on the Certificates with funds drawn under the
Liquidity Facility, which payment represents the
installment of principal at the stated maturity of such
installment of principal on such Equipment Note, the
payment of regularly scheduled interest accrued on the
unpaid principal amount of such Equipment Note, or both;
provided that any payment of principal, premium, if any, or
interest resulting from the redemption or purchase of
11
any Equipment Note shall not constitute a Scheduled Payment.
SEC: Means the Securities and Exchange Commission, as
from time to time constituted or created under the
Securities Exchange Act of 1934, as amended, or, if at any
time after the execution of this instrument such Commission
is not existing and performing the duties now assigned to
it under the Trust Indenture Act, then the body performing
such duties on such date.
Securities Act: Means the United States Securities Act
of 1933, as amended from time to time, or any successor
thereto.
Special Distribution Date: Means each date on which a
Special Payment is to be distributed as specified in this
Agreement; provided, however, that, if any such day shall
not be a Business Day, the related distribution shall be
made on the next succeeding Business Day without additional
interest.
Special Payment: Means (i) any payment (other than a
Scheduled Payment) in respect of, or any proceeds of, any
Equipment Note or Trust Indenture Estate (as defined in
each Indenture), (ii) the amounts required to be
distributed pursuant to the last paragraph of Section
2.01(b) or (iii) the amounts required to be distributed
pursuant to the penultimate paragraph of Section 2.01(b).
Special Payments Account: Means the account or
accounts created and maintained pursuant to Section 4.01(b).
Specified Investments: Means, with respect to
investments to be made with Escrowed Funds pursuant to
Section 2.01(b) hereof, (i) obligations of, or guaranteed
by, the United States Government or agencies thereof, (ii)
open market commercial paper of any corporation
incorporated under the laws of the United States of America
or any State thereof rated at least P-2 or its equivalent
by Moody's Investors Service, Inc. or at least A-2 or its
equivalent by Standard & Poor's Ratings Group, (iii)
certificates of deposit issued by commercial banks
organized under the laws of the United States or of any
political subdivision thereof having a combined capital and
surplus in excess of $100,000,000, which banks or their
holding companies have a short-term deposit rating of P1 by
Moody's Investors Service, Inc. or its equivalent by
Standard & Poor's Ratings Group; provided, however, that
the aggregate amount at any one time so invested in certifi-
cates of deposit issued by any one bank shall not exceed 5%
12
of such bank's capital and surplus, (iv) U.S. dollar
denominated offshore certificates of deposit issued by, or
offshore time deposits with, any commercial bank described
in clause (iii) above or any subsidiary thereof and (v)
repurchase agreements with any financial institution having
combined capital and surplus of at least $100,000,000 with
respect to any of the obligations described in clauses (i)
through (iv) above as collateral; provided further that if
all of the above investments are unavailable, all amounts
to be invested may be used to purchase Federal Funds from
an entity described in clause (iii) above.
Subordination Agent: Has the meaning specified in the
Intercreditor Agreement.
Temporary Offshore Global Certificates: Has the
meaning specified in Section 3.01.
Transfer Date: Has the meaning assigned to the term
"Refunding Date" or "Funding Date" in each Financing
Agreement.
Triggering Event: Has the meaning assigned to such
term in the Intercreditor Agreement.
Trust: Means the trust created by this Agreement, the
estate of which consists of the Trust Property.
Trust Indenture Act: Except as otherwise provided in
Section 9.06, means the United States Trust Indenture Act of
1939 as in force at the date hereof.
Trust Property: Means (i) the Equipment Notes held as
the property of the Trust and 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 Escrow
Account, the Certificate Account and the Special Payments
Account, and (iii) all rights of the Trust and the Trustee,
on behalf of the Trust, under the Intercreditor Agreement
and the Liquidity Facility, including, without limitation,
all rights to receive certain payments thereunder, and all
monies paid to the Trustee on behalf of the Trust pursuant
to the Intercreditor Agreement or the Liquidity Facility.
Trustee: Means Wilmington Trust Company, or its
successor in interest, and any successor or other trustee
appointed as provided herein.
Trustee's Lien: Has the meaning specified in Section
7.17.
13
U.S. Global Certificate: Has the meaning specified in
Section 3.01.
U.S. Physical Certificates: Has the meaning specified
in Section 3.01.
Section 1.02. Compliance Certificates and Opinions.
Upon any application or request by the Company, any Owner Trustee
or any Loan Trustee to the Trustee to take any action under any
provision of this Agreement, the Company, such Owner Trustee or
such Loan Trustee, as the case may be, shall furnish to the
Trustee (i) an Officer's Certificate stating that, in the opinion
of the signers, all conditions precedent, if any, provided for in
this Agreement relating to the proposed action have been complied
with and (ii) an Opinion of Counsel stating that in the opinion
of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or
request as to which the furnishing of such documents is
specifically required by any provision of this Agreement relating
to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this
Agreement (other than a certificate provided pursuant to Section
8.04(d)) shall include:
(1) a statement that each individual signing such
certificate or opinion has read such covenant or condition
and the definitions in this Agreement relating thereto;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are
based;
(3) a statement that, in the opinion of each such
individual, he has made such examination or investigation
as is necessary to enable him to express an informed
opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been
complied with.
Section 1.03. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by
14
the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters and any such
Person may certify or give an opinion as to such matters in one
or several documents.
Where any Person is required to make, give or execute
two or more applications, requests, consents, certificates,
statements, opinions or other instruments under this Agreement
or, in respect of the Certificates, this Agreement, they may, but
need not, be consolidated and form one instrument.
Section 1.04. Directions of Certificateholders. (a)
Any direction, consent, request, demand, authorization, notice,
waiver or other action provided by this Agreement to be given or
taken by Certificateholders (a "Direction") may be embodied in
and evidenced by one or more instruments of substantially similar
tenor signed by such Certificateholders in person or by an agent
or proxy duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective
when such instrument or instruments are delivered to the Trustee
and, where it is hereby expressly required pursuant to this
Agreement, to the Company or any Loan Trustee. Proof of execution
of any such instrument or of a writing appointing any such agent
or proxy shall be sufficient for any purpose of this Agreement
and conclusive in favor of the Trustee, the Company and any Loan
Trustee, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person
of any such instrument or writing may be proved by the
certificate of any notary public or other officer of any
jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument
acknowledged to him the execution thereof, or by an affidavit of
a witness to such execution sworn to before any such notary or
such other officer and where such execution is by an officer of a
corporation or association or a member of a partnership, on
behalf of such corporation, association or partnership, such
certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such
instrument or writing, or the authority of the Person executing
the same, may also be proved in any other reasonable manner which
the Trustee deems sufficient.
(c) In determining whether the Certificateholders of
the requisite Fractional Undivided Interests of Certificates
Outstanding have given any Direction under this Agreement,
Certificates owned by the Company or any Affiliate thereof shall
be disregarded and deemed not to be Outstanding for purposes of
any such determination. In determining whether the Trustee shall
15
be protected in relying upon any such Direction, only
Certificates which the Trustee knows to be so owned shall be so
disregarded. Notwithstanding the foregoing, (i) if any such
Person owns 100% of the Certificates Outstanding, such
Certificates shall not be so disregarded, and (ii) if any amount
of Certificates so owned by any such Person have been pledged in
good faith, such Certificates shall not be disregarded if the
pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Certificates and
that the pledgee is not the Company or any Affiliate thereof.
(d) The Company may at its option, by delivery of an
Officer's Certificate to the Trustee, set a record date to
determine the Certificateholders entitled to give any Direction.
Notwithstanding Section 316(c) of the Trust Indenture Act, such
record date shall be the record date specified in such Officer's
Certificate, which shall be a date not more than 30 days prior to
the first solicitation of Certificateholders in connection
therewith. If such a record date is fixed, such Direction may be
given before or after such record date, but only the
Certificateholders of record at the close of business on such
record date shall be deemed to be Certificateholders for the
purposes of determining whether Certificateholders of the
requisite proportion of Outstanding Certificates have authorized
or agreed or consented to such Direction, and for that purpose
the Outstanding Certificates shall be computed as of such record
date; provided that no such Direction by the Certificateholders
on such record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Agreement not
later than one year after such record date.
(e) Any Direction by the Holder of any Certificate
shall bind the Holder of every Certificate issued upon the
transfer thereof or in exchange therefor or in lieu thereof,
whether or not notation of such Direction is made upon such
Certificate.
(f) Except as otherwise provided in Section 1.04(c),
Certificates owned by or pledged to any Person shall have an
equal and proportionate benefit under the provisions of this
Agreement, without preference, priority, or distinction as among
all of the Certificates.
16
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES;
ACQUISITION OF EQUIPMENT NOTES
Section 2.01. Issuance of Certificates; Acquisition of
Equipment Notes. (a) The Trustee is hereby directed to execute
and deliver the Intercreditor Agreement, the Registration Rights
Agreement and each of the Financing Agreements on or prior to the
Issuance Date, each in the form delivered to the Trustee by the
Company. Upon request of the Company and the satisfaction of the
closing conditions specified in each of the Financing Agreements,
the Trustee shall execute, deliver and authenticate Certificates
equalling in the aggregate the aggregate principal amount of the
Equipment Notes to be purchased by the Trustee pursuant to each
of the Financing Agreements on the Transfer Date, and evidencing
the entire ownership interest in the Trust. The Trustee shall
issue and sell such Certificates, in authorized denominations and
in such Fractional Undivided Interests, so as to result in the
receipt by the Trustee of consideration in an amount equal to the
aggregate principal amount of such Equipment Notes and,
concurrently therewith, the Trustee shall purchase, pursuant to
the terms and conditions of the Financing Agreements, the
Equipment Notes at a purchase price equal to the amount of such
consideration so received. Except as provided in Sections 3.04
and 3.07 hereof, the Trustee shall not execute, authenticate or
deliver Certificates in excess of the aggregate amount specified
in this paragraph. The provisions of this Subsection (a) are
subject to the provisions of Subsection (b) below.
(b) On or prior to the Issuance Date, the Company may
deliver to the Trustee a Postponement Notice relating to one or
more Postponed Notes (other than the Delayed Equipment Notes)
(which Postponement Notice may be given by the Company only if
one or more conditions to the purchase of such Postponed Notes by
the Trustee shall not have been satisfied or waived pursuant to
the related Financing Agreement). The Trustee shall postpone the
purchase of the Postponed Notes from the consideration received
from the sale of Certificates and shall promptly deposit funds in
an amount equal to the purchase price of such Postponed Notes
(the "Escrowed Funds") into an escrow account (the "Escrow
Account") with the Trustee to be maintained as a part of the
Trust. The Escrowed Funds so deposited shall be invested by the
Trustee at the direction and risk of the Company in Specified
Investments (i) maturing no later than any scheduled Transfer
Date relating to the Postponed Notes or (ii) if no such Transfer
Date has been scheduled, maturing on the next Business Day, or
(iii) if the Company has given notice to the Trustee that any
Postponed Notes will not be issued, with respect to the portion
of the Escrowed Funds relating to such Postponed Notes, maturing
on the next applicable Special Distribution Date, if such
17
investments are reasonably available for purchase. The Trustee
shall make withdrawals from the Escrow Account only as provided
in this Agreement. Upon request of the Company on one or more
occasions and the satisfaction of the closing conditions
specified in the applicable Financing Agreements on or prior to
the Cut-off Date, the Trustee shall purchase the applicable
Postponed Notes with the Escrowed Funds withdrawn from the Escrow
Account. The purchase price shall equal the principal amount of
such Postponed Notes.
The Trustee shall hold all Specified Investments until
the maturity thereof and will not sell or otherwise transfer
Specified Investments. If Specified Investments held in an Escrow
Account mature prior to any applicable Transfer Date, any
proceeds received on the maturity of such Specified Investments
(other than any earnings thereon) shall be reinvested by the
Trustee at the direction and risk of the Company in Specified
Investments maturing as provided in the preceding paragraph. The
Company shall pay to the Trustee for deposit to the Escrow
Account an amount equal to any losses on such Specified
Investments as incurred.
On the Initial Regular Distribution Date, the Company
will pay (in immediately available funds) to the Trustee an
amount equal to (i) the sum of (A) the interest that would have
accrued on any Postponed Notes purchased on or prior to the
Initial Regular Distribution Date if such Postponed Notes had
been purchased on the Issuance Date, from and including the
Issuance Date to but excluding the date of such purchase and (B)
the interest that would have accrued on any Postponed Notes not
purchased on or prior to the Initial Regular Distribution Date
(other than any Postponed Notes for which a Special Distribution
Date specified in the immediately succeeding paragraph has
occurred on or prior to the Initial Regular Distribution Date) if
such Postponed Notes had been purchased on the Issuance Date,
from and including the Issuance Date to but excluding the Initial
Regular Distribution Date, minus (ii) the earnings on Specified
Investments received by the Trustee from and including the later
of the Issuance Date or the date immediately preceding the
Initial Regular Distribution Date on which an amount has been
paid pursuant to the immediately succeeding paragraph to but
excluding the Initial Regular Distribution Date. On the second
Regular Distribution Date, the Company will pay (in immediately
available funds) to the Trustee an amount equal to the interest
that would have accrued on any Postponed Notes purchased after
the Initial Regular Distribution Date and on or prior to the
Cut-off Date if such Postponed Notes had been purchased on the
Initial Regular Distribution Date, from and including the Initial
Regular Distribution Date to but excluding the date of such
purchase, minus (ii) the earnings on Specified Investments
received by the Trustee from and including the later of
18
the Initial Regular Distribution Date or the date immedi-
ately preceding the second Regular Distribution Date on
which an amount has been paid pursuant to either of the two
succeeding paragraphs to but excluding the second Regular
Distribution Date.
If the Company notifies the Trustee prior to the
Cutoff Date that any Postponed Notes will not be issued on or
prior to the Cut-off Date for any reason, on the next Special
Distribution Date occurring more than 20 days following the date
of such notice (i) the Company shall pay to the Trustee for
deposit in the Special Payments Account, in immediately available
funds, an amount equal to the sum of (A) the interest that would
have accrued on the Postponed Notes designated in such notice at
a rate equal to the interest rate applicable to the Certificates
from and including the Issuance Date (if such Special
Distribution Date shall occur on or prior to the Initial Regular
Distribution Date) or the Initial Regular Distribution Date (if
such Special Distribution Date occurs after the Initial Regular
Distribution Date) to but excluding such Special Distribution
Date and (B) if any such Postponed Notes shall be Delayed
Equipment Notes and shall not be issued for any reason other than
the occurrence of an Event of Loss (as defined in the related
Indenture) with respect to the Aircraft relating to such Delayed
Equipment Notes, 2% of the aggregate principal amount of such
Delayed Equipment Notes and (ii) the Trustee shall transfer an
amount equal to that amount of Escrowed Funds that would have
been used to purchase the Postponed Notes designated in such
notice plus the amount paid by the Company pursuant to the
immediately preceding clause (i) to the Special Payments Account
for distribution as a Special Payment in accordance with the
provisions hereof.
If, on the Cut-off Date, an amount equal to less than
all of the Escrowed Funds (other than Escrowed Funds referred to
in the immediately preceding paragraph) has been used to purchase
Postponed Notes, on the next Special Distribution Date occurring
more than 20 days following the Cut-off Date (i) the Company
shall pay to the Trustee for deposit in the Special Payments
Account, in immediately available funds, an amount equal to the
sum of (A) the interest that would have accrued on Postponed
Notes originally contemplated to be purchased with such unused
Escrowed Funds (other than Escrowed Funds referred to in the
immediately preceding paragraph) but not so purchased at a rate
equal to the interest rate applicable to the Certificates from
and including the Initial Regular Distribution Date to but
excluding such Special Distribution Date and (B) if any such
Postponed Notes shall be Delayed Equipment Notes and shall not
have been purchased for any reason other than the occurrence of
an Event of Loss (as defined in the related Indenture) with
respect to the Aircraft relating to such Delayed Equipment Notes,
19
2% of the aggregate principal amount of such Delayed Equipment
Notes and (ii) the Trustee shall transfer such unused Escrowed
Funds and the amount paid by the Company pursuant to the
immediately preceding clause (i) to the Special Payments Account
for distribution as a Special Payment in accordance with the
provisions hereof.
Section 2.02. Acceptance by Trustee. The Trustee, upon
the execution and delivery of this Agreement, acknowledges its
acceptance of all right, title and interest in and to the
Equipment Notes acquired pursuant to Section 2.01 hereof and the
Financing Agreements and declares that the Trustee holds and will
hold such right, title and interest, together with all other
property constituting the Trust Property, for the benefit of all
then present and future Certificateholders, upon the trusts
herein set forth. Subject to Section 7.14, the Trustee shall take
all actions reasonably necessary to effect the registration of
all such Equipment Notes in the name of the Subordination Agent.
By its payment for and acceptance of each Certificate issued to
it under this Agreement, each initial Certificateholder as
grantor of the Trust thereby joins in the creation and
declaration of the Trust.
Section 2.03. Limitation of Powers. The Trust is
constituted solely for the purpose of making the investment in
the Equipment Notes, and, except as set forth herein, the Trustee
shall not be authorized or empowered to acquire any other
investments or engage in any other activities and, in particular,
the Trustee shall not be authorized or empowered to do anything
that would cause such Trust to fail to qualify as a "grantor
trust" for federal income tax purposes (including as subject to
this restriction, acquiring any Aircraft (as defined in the
respective Indentures) by bidding such Equipment Notes or
otherwise, or taking any action with respect to any such Aircraft
once acquired).
ARTICLE III
THE CERTIFICATES
Section 3.01. Title, Form, Denomination and Execution
of Certificates. (a) The Initial Certificates shall be known as
the "10.22% 1996-2C Initial Pass Through Certificates" and the
Exchange Certificates shall be known as the "10.22% 1996-2C
Exchange Pass Through Certificates", in each case, of the Trust.
Each Certificate will represent a fractional undivided interest
in the Trust and shall be substantially in the form set forth as
Exhibit A hereto, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted
by this Agreement and may have such letters, numbers or other
20
marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be
determined by the officers executing such Certificates, as
evidenced by their execution of the Certificates. Any portion of
the text of any Certificate may be set forth on the reverse
thereof, with an appropriate reference thereto on the face of the
Certificate.
(b) The Initial Certificates shall be issued only in
fully registered form without coupons and only in denominations
of $100,000 or integral multiples of $1,000 in excess thereof,
except that one Certificate may be issued in a denomination of
less than $100,000. The Exchange Certificates will be issued in
denominations of $1,000 or integral multiples thereof. Each
Certificate shall be dated the date of its authentication. The
aggregate Fractional Undivided Interest of Certificates shall not
at any time exceed $35,363,000.
(c) Initial Certificates offered and sold in reliance
on Rule 144A shall be issued initially in the form of a single
permanent global Certificate in registered form, substantially in
the form set forth as Exhibit A hereto (the "U.S. Global
Certificate"), duly executed and authenticated by the Trustee as
hereinafter provided. The U.S. Global Certificate will be
registered in the name of a nominee for the Depositary and
deposited with the Trustee, as custodian for the Depositary. The
aggregate principal amount of the U.S. Global Certificate may
from time to time be increased or decreased by adjustments made
on the records of the Depositary or its nominee, or of the
Trustee, as custodian for the Depositary or its nominee, as
hereinafter provided.
(d) Initial Certificates offered and sold in offshore
transactions in reliance on Regulation S shall be issued
initially in the form of a single temporary global Certificate in
registered form, substantially in the form set forth as Exhibit A
hereto (the "Temporary Offshore Global Certificate") duly
executed and authenticated by the Trustee as hereinafter
provided. The Temporary Offshore Global Certificates will be
registered in the name of a nominee of the Depositary for credit
to the account of the Agent Members acting as depositaries for
Euroclear and Cedel and deposited with the Trustee as custodian
for the Depositary. At any time following June 29, 1996 (the
"Offshore Certificates Exchange Date"), upon receipt by the
Trustee of a certificate substantially in the form of Exhibit B
hereto, a single permanent global Certificate in registered form
substantially in the form set forth in Exhibit A (the "Permanent
Offshore Global Certificate"; and together with the Temporary
Offshore Global Certificate, the "Offshore Global Certificates"),
duly executed and authenticated by the Trustee as hereinafter
21
provided, shall be registered in the name of a nominee for the
Depositary and deposited with the Trustee, as custodian for the
Depositary, and the Registrar shall reflect on its books and
records the date of such transfer and a decrease in the principal
amount of any Temporary Offshore Global Certificate in an amount
equal to the principal amount of the beneficial interest in such
Temporary Offshore Global Certificate transferred. The U.S.
Global Certificate and the Offshore Global Certificates are
sometimes referred to as the "Global Certificates".
(e) Initial Certificates offered and sold to
Institutional Accredited Investors shall be issued in the form of
permanent certificated Certificates in registered form in
substantially the form set forth as Exhibit A hereto (the "U.S.
Physical Certificates"). Certificates issued pursuant to Section
3.05(b) in exchange for interests in any Offshore Global
Certificate shall be in the form of permanent certificated
Certificates in registered form substantially in the form set
forth in Exhibit A (the "Offshore Physical Certificates"). The
Offshore Physical Certificates and U.S. Physical Certificates are
sometimes collectively herein referred to as the "Physical
Certificates".
(f) The definitive Certificates shall be in registered
form and shall be typed, printed, lithographed or engraved or
produced by any combination of these methods or may be produced
in any other manner, all as determined by the officers executing
such Certificates, as evidenced by their execution of such
Certificates.
Section 3.02. Restrictive Legends. (a) Subject to
Section 3.06, unless and until (i) an Initial Certificate is sold
under an effective Registration Statement or (ii) an Initial
Certificate is exchanged for an Exchange Certificate pursuant to
an effective Exchange Offer Registration Statement, in each case
as provided for in the Registration Rights Agreement, each Global
Certificate (other than the Permanent Offshore Global
Certificate) and each U.S. Physical Certificate shall bear the
following legend (the "Private Placement Legend") on the face
thereof:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITU-
TIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
22
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER
THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT WITHIN
THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE
WAS HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY
AFFILIATE OF ANY OF SUCH PERSONS RESELL OR OTHERWISE
TRANSFER THIS CERTIFICATE EXCEPT (A) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (B) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR
MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATE THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE TRUSTEE), (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT 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
WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE
OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS
CERTIFICATE WAS HELD BY CONTINENTAL AIRLINES, INC., THE
TRUSTEE OR ANY AFFILIATE OF ANY OF SUCH PERSONS THE HOLDER
MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE
HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT
THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON"
HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
(b) Each Global Certificate shall also bear the
following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE TRUSTEE 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 HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
23
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR
TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE
PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN.
Section 3.03. Authentication of Certificates. (a) The
Trustee shall duly execute, authenticate and deliver Certificates
in authorized denominations equalling in the aggregate the
aggregate principal amount of the Equipment Notes to be purchased
by the Trustee pursuant to the Financing Agreements and
evidencing the entire ownership of the Trust.
(b) No Certificate shall be entitled to any benefit
under this Agreement or be valid or obligatory for any purpose,
unless there appears on such Certificate a certificate of
authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Certificate
shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder.
Section 3.04. Transfer and Exchange. (a) 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 this
Agreement a register (the "Register") for the Certificates in
which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of the
Certificates and of transfers and exchanges of the Certificates
as herein provided. The Trustee shall initially be the registrar
(the "Registrar") for the purpose of registering the Certificates
and transfers and exchanges of the Certificates as herein
provided. A Certificateholder may transfer a Certificate by
written application to the Registrar stating the name of the
proposed transferee and otherwise complying with the terms of
this Agreement, including providing a written certificate or
other evidence of compliance with any restrictions on transfer.
No such transfer shall be effected until, and such transferee
shall succeed to the rights of a Certificateholder only upon,
final acceptance and registration of the transfer by the
Registrar in the Register. Prior to the registration of any
transfer by a Certificateholder as provided herein, the Trustee
shall treat the person in whose name the Certificate is
registered as the owner thereof for all purposes, and the Trustee
shall not be affected by notice to the contrary. Furthermore,
24
the Depositary shall, by acceptance of a Global Certificate,
agree that transfers of beneficial interests in such Global
Certificate may be effected only through a book-entry system
maintained by the Depositary (or its agent), and that ownership
of a beneficial interest in the Certificate shall be required to
be reflected in a book entry. When Certificates are presented to
the Registrar with a request to register the transfer or to
exchange them for an equal face amount of Certificates of other
authorized denominations, the Registrar shall register the
transfer or make the exchange as requested if its requirements
for such transactions are met. To permit registrations of
transfers and exchanges in accordance with the terms, conditions
and restrictions hereof, the Trustee shall execute and
authenticate Certificates at the Registrar's request. No service
charge shall be made for any registration of transfer or exchange
of the Certificates, but the Trustee may require payment by the
transferor of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith
(other than any such transfer taxes or other similar governmental
charges payable upon exchanges pursuant to Section 3.10 or 9.07).
Section 3.05. Book-Entry Provisions for U.S. Global
Certificate and Offshore Global Certificates. (a) Members of, or
participants in, the Depositary ("Agent Members") shall have no
rights under this Agreement with respect to any Global
Certificate held on their behalf by the Depositary, or the
Trustee as its custodian, and the Depositary may be treated by
the Trustee and any agent of the Trustee as the absolute owner of
such Global Certificate for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the
Trustee or any agent of the Trustee from giving effect to any
written certification, proxy or other authorization furnished by
the Depositary or shall impair, as between the Depositary and its
Agent Members, the operation of customary practices governing the
exercise of the rights of a holder of any Certificate. Upon the
issuance of any Global Certificate, the Registrar or its duly
appointed agent shall record a nominee of the Depositary as the
registered holder of such Global Certificate.
(b) Transfers of any Global Certificate shall be
limited to transfers of such Global Certificate or Offshore
Global Certificate in whole, but not in part, to nominees of the
Depositary, its successor or such successor's nominees.
Beneficial interests in the U.S. Global Certificate and any
Offshore Global Certificate may be transferred in accordance with
the rules and procedures of the Depositary and the provisions of
Section 3.06. Beneficial interests in the U.S. Global Certificate
or an Offshore Global Certificate shall be delivered to all
beneficial owners in the form of U.S. Physical Certificates
or Offshore Physical Certificates, as the case may be, if
25
(i) the Depositary notifies the Trustee that it is unwilling
or unable to continue as Depositary for the U.S. Global
Certificate or such Offshore Global Certificate, as the case may
be, and a successor depositary is not appointed by the Trustee
within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a
request from the Depositary to issue Physical Certificates.
(c) Any beneficial interest in one of the Global
Certificates that is transferred to a Person who takes delivery
in the form of an interest in the other Global Certificate will,
upon such transfer, cease to be an interest in such Global
Certificate and become an interest in the other Global
Certificate and, accordingly, will thereafter be subject to all
transfer restrictions, if any, and other procedures applicable to
beneficial interests in such other Global Certificate for as long
as it remains such an interest.
(d) [Intentionally omitted.]
(e) In connection with the transfer of the entire U.S.
Global Certificate or an entire Offshore Global Certificate to
the beneficial owners thereof pursuant to paragraph (b) of this
Section 3.05, such U.S. Global Certificate or Offshore Global
Certificate, as the case may be, shall be deemed to be
surrendered to the Trustee for cancellation, and the Trustee
shall execute, authenticate and deliver, to each beneficial owner
identified by the Depositary in exchange for its beneficial
interest in such U.S. Global Certificate or Offshore Global
Certificate, as the case may be, an equal aggregate principal
amount of U.S. Physical Certificates or Offshore Physical
Certificates, as the case may be, of authorized denominations.
(f) Any U.S. Physical Certificate delivered in
exchange for an interest in the U.S. Global Certificate pursuant
to paragraph (b) of this Section 3.05 shall, except as otherwise
provided by paragraph (f) of Section 3.06, bear the Private
Placement Legend.
(g) Any Offshore Physical Certificate delivered in
exchange for an interest in an Offshore Global Certificate
pursuant to paragraph (b) of this Section shall, except as
otherwise provided by paragraph (f) of Section 3.06, bear the
applicable legend regarding transfer restrictions set forth in
Section 3.02(a).
(h) The registered holder of the U.S. Global
Certificate or any Offshore Global Certificate may grant proxies
and otherwise authorize any Person, including Agent Members and
Persons that may hold interests through Agent Members, to take
26
any action which a Holder is entitled to take under this
Agreement or the Certificates.
Section 3.06. Special Transfer Provisions. Unless and
until (i) an Initial Certificate is sold under an effective
Registration Statement, or (ii) an Initial Certificate is
exchanged for an Exchange Certificate pursuant to an effective
Exchange Offer Registration Statement, in each case pursuant to
the Registration Rights Agreement, the following provisions shall
apply to such Initial Certificates:
(a) Transfers to Non-QIB Institutional Accredited
Investors. The following provisions shall apply with respect to
the registration of any proposed transfer of a Certificate to any
Institutional Accredited Investor which is not a QIB (excluding
transfers to or by Non-U.S. Persons):
(i) The Registrar shall register the transfer of any
Certificate, whether or not such Certificate bears the
Private Placement Legend, if (x) the requested transfer is
at least three years after the later of the original issue
date of the Certificates and the last date on which such
Certificate was held by the Company or any affiliate of any
such persons or (y) the proposed transferee has delivered
to the Registrar a letter substantially in the form of
Exhibit D hereto and the aggregate principal amount of the
Certificates being transferred is at least $100,000.
(ii) If the proposed transferor is an Agent Member
holding a beneficial interest in the U.S. Global
Certificate, upon receipt by the Registrar of (x) the
documents, if any, required by paragraph (i) and (y)
instructions given in accordance with the Depositary's and
the Registrar's procedures, the Registrar shall reflect on
its books and records the date of the transfer and a
decrease in the principal amount of such U.S. Global
Certificate in an amount equal to the principal amount of
the beneficial interest in such U.S. Global Certificate to
be transferred, and the Company shall execute, and the
Trustee shall authenticate and deliver to the transferor or
at its direction, one or more U.S. Physical Certificates of
like tenor and amount.
(b) Transfers to QIBs. The following provisions shall
apply with respect to the registration of any proposed transfer
of an Initial Certificate to a QIB (excluding Non-U.S. Persons):
(i) If the Certificate to be transferred consists of
U.S. Physical Certificates or an interest in any Temporary
Offshore Global Certificate, the Registrar shall register
the transfer if such transfer is being made by a proposed
27
transferor who has checked the box provided for on the form
of Initial Certificate stating, or has otherwise advised
the Trustee and the Registrar in writing, that the sale has
been made in compliance with the provisions of Rule 144A to
a transferee who has signed the certification provided for
on the form of Initial Certificate stating, or has
otherwise advised the Trustee and the Registrar in writing,
that it is purchasing the Initial Certificate for its own
account or an account with respect to which it exercises
sole investment discretion and that it, or the Person on
whose behalf it is acting with respect to any such account,
is a QIB within the meaning of Rule 144A, and is aware that
the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information
regarding the Trust and/or the Company as it has requested
pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is
relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule
144A.
(ii) Upon receipt by the Registrar of the documents
referred to in clause (i) above and instructions given in
accordance with the Depositary's and the Registrar's
procedures therefor, the Registrar shall reflect on its
books and records the date of such transfer and an increase
in the principal amount of the U.S. Global Certificate in
an amount equal to the principal amount of the U.S.
Physical Certificates or interests in the Temporary
Offshore Global Certificate, as the case may be, being
transferred, and the Trustee shall cancel such Physical
Certificates or decrease the amount of such Temporary
Offshore Global Certificate so transferred.
(c) [intentionally omitted.]
(d) Transfers of Interests in the Permanent Offshore
Global Certificate or Offshore Physical Certificates. The
Registrar shall register any transfer of interests in the
Permanent Offshore Global Certificate or Offshore Physical
Certificates without requiring any additional certification.
(e) Transfers to Non-U.S. Persons at Any Time. The
following provisions shall apply with respect to any registration
of any transfer of an Initial Certificate to a Non-U.S. Person:
(i) Prior to the Offshore Certificates Exchange Date,
the Registrar shall register any proposed transfer of an
Initial Certificate to a Non-U.S. Person upon receipt of a
certificate substantially in the form set forth as Exhibit
C hereto from the proposed transferor.
28
(ii) On and after the Offshore Certificates Exchange
Date, the Registrar shall register any proposed transfer to
any Non-U.S. Person if the Certificate to be transferred is
a U.S. Physical Certificate or an interest in the U.S.
Global Certificate, upon receipt of a certificate
substantially in the form of Exhibit C from the proposed
transferor. The Registrar shall promptly send a copy of
such certificate to the Company.
(iii) Upon receipt by the Registrar of (x) the
documents, if any, required by paragraph (ii) and (y)
instructions in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its
books and records the date of such transfer and a decrease
in the principal amount of such U.S. Global Certificate in
an amount equal to the principal amount of the beneficial
interest in such U.S. Global Certificate to be transferred,
and (B) upon receipt by the Registrar of instructions given
in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of
the Offshore Global Certificate in an amount equal to the
principal amount of the U.S. Physical Certificate or the
U.S. Global Certificate, as the case may be, to be
transferred, and the Trustee shall cancel the Physical
Certificate, if any, so transferred or decrease the amount
of such U.S. Global Certificate.
(f) Private Placement Legend. Upon the transfer,
exchange or replacement of Certificates not bearing the Private
Placement Legend, the Registrar shall deliver Certificates that
do not bear the Private Placement Legend. Upon the transfer,
exchange or replacement of Certificates bearing the Private
Placement Legend, the Registrar shall deliver only Certificates
that bear the Private Placement Legend unless either (i) the
circumstances contemplated by paragraph (a)(i)(x) or (e)(ii) of
this Section 3.06 exist or (ii) there is delivered to the
Registrar an Opinion of Counsel to the effect that neither such
legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the
Securities Act.
(g) General. By its acceptance of any Certificate
bearing the Private Placement Legend, each Holder of such a
Certificate acknowledges the restrictions on transfer of such
Certificate set forth in this Agreement and agrees that it will
transfer such Certificate only as provided in this Agreement. The
Registrar shall not register a transfer of any Certificate unless
such transfer complies with the restrictions on transfer of such
Certificate set forth in this Agreement. In connection with any
transfer of Certificates, each Certificateholder agrees by
29
its acceptance of the Certificates to furnish the Registrar or
the Trustee such certifications, legal opinions or other
information as either of them may reasonably require to confirm
that such transfer is being made pursuant to an exemption from,
or a transaction not subject to, the registration requirements of
the Securities Act; provided that the Registrar shall not be
required to determine the sufficiency of any such certifications,
legal opinions or other information.
Until such time as no Certificates remain Outstanding,
the Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 3.05 or
this Section 3.06. 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.
Section 3.07. Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate is surrendered to
the Registrar or the Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate
and (b) there is delivered to the Registrar and the Trustee such
security, indemnity or bond, as may be required by them to save
each of them harmless, then, in the absence of notice to the
Registrar or the Trustee that such destroyed, lost or stolen
Certificate has been acquired by a bona fide purchaser, and
provided that the requirements of Section 8-405 of the Uniform
Commercial Code in effect in any applicable jurisdiction are met,
the Trustee shall execute, authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate or Certificates, in authorized
denominations and of like Fractional Undivided Interest and
bearing a number not contemporaneously outstanding.
In connection with the issuance of any new Certificate
under this Section 3.07, the Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee and the
Registrar) connected therewith.
Any duplicate Certificate issued pursuant to this
Section 3.07 shall constitute conclusive evidence of the
appropriate Fractional Undivided Interest in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies
30
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Certificates.
Section 3.08. Persons Deemed Owners. Prior to due
presentment of a Certificate for registration of transfer, the
Trustee, the Registrar and any Paying Agent may treat the Person
in whose name any Certificate is registered (as of the day of
determination) as the owner of such Certificate for the purpose
of receiving distributions pursuant to Article IV and for all
other purposes whatsoever, and none of the Trustee, the Registrar
or any Paying Agent shall be affected by any notice to the
contrary.
Section 3.09. Cancellation. All Certificates
surrendered for payment or transfer or exchange shall, if
surrendered to the Trustee or any agent of the Trustee other than
the Registrar, be delivered to the Registrar for cancellation and
shall promptly be cancelled by it. No Certificates shall be
authenticated in lieu of or in exchange for any Certificates
cancelled as provided in this Section, except as expressly
permitted by this Agreement. All cancelled Certificates held by
the Registrar shall be destroyed and a certification of their
destruction delivered to the Trustee.
Section 3.10. Temporary Certificates. Until definitive
Certificates are ready for delivery, the Trustee shall
authenticate temporary Certificates. Temporary Certificates shall
be substantially in the form of definitive Certificates but may
have insertions, substitutions, omissions and other variations
determined to be appropriate by the officers executing the
temporary Certificates, as evidenced by their execution of such
temporary Certificates. If temporary Certificates are issued, the
Trustee will cause definitive Certificates to be prepared without
unreasonable delay. After the preparation of definitive
Certificates, the temporary Certificates shall be exchangeable
for definitive Certificates upon surrender of the temporary
Certificates at the office or agency of the Trustee designated
for such purpose pursuant to Section 7.12, without charge to the
Certificateholder. Upon surrender for cancellation of any one or
more temporary Certificates, the Trustee shall execute,
authenticate and deliver in exchange therefor a like face amount
of definitive Certificates of authorized denominations. Until so
exchanged, the temporary Certificates shall be entitled to the
same benefits under this Agreement as definitive Certificates.
Section 3.11. Limitation of Liability for Payments.
All payments and distributions made to Certificateholders 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
31
of Article IV of this Agreement. Each Certificateholder, by its
acceptance of a Certificate, agrees that it will look solely to
the income and proceeds from the Trust Property for any payment
or distribution due to such Certificateholder pursuant to the
terms of this Agreement and that it will not have any recourse to
the Company, the Trustee, the Loan Trustees, the Liquidity
Providers, the Owner Trustees or the Owner Participants, except
as otherwise expressly provided herein or in the Intercreditor
Agreement.
The Company is a party to this Agreement solely for
purposes of meeting the requirements of the Trust Indenture Act,
and therefore shall not have any right, obligation or liability
hereunder (except as otherwise expressly provided herein).
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS
Section 4.01. Certificate Account and Special Payments
Account. (a) The Trustee shall establish and maintain on behalf
of the Certificateholders a Certificate Account as one or more
non-interest-bearing accounts. The Trustee shall hold the
Certificate Account in trust for the benefit of the
Certificateholders, and shall make or permit withdrawals
therefrom only as provided in this Agreement. On each day when a
Scheduled Payment is made to the Trustee under the Intercreditor
Agreement, the Trustee upon receipt thereof shall immediately
deposit the aggregate amount of such Scheduled Payment in the
Certificate Account.
(b) The Trustee shall establish and maintain on behalf
of the Certificateholders a Special Payments Account as one or
more accounts, which shall be non-interest bearing except as
provided in Section 4.04. The Trustee shall hold the Special
Payments Account in trust for the benefit of the
Certificateholders and shall make or permit withdrawals therefrom
only as provided in this Agreement. On each day when one or more
Special Payments are made to the Trustee, the Trustee, upon
receipt thereof, shall immediately deposit the aggregate amount
of such Special Payments in the Special Payments Account.
(c) The Trustee shall present to the related Loan
Trustee of each Equipment Note such Equipment Note on the date of
its stated final maturity or, in the case of any Equipment Note
which is to be redeemed in whole pursuant to the related
Indenture, on the applicable redemption date under such
Indenture.
32
Section 4.02. Distributions from Certificate Account
and Special Payments Account. (a) On each Regular Distribution
Date or as soon thereafter as the Trustee has confirmed receipt
of the payment of all or any part of the Scheduled Payments due
on such date, the Trustee shall distribute out of the Certificate
Account the entire amount deposited therein pursuant to Section
4.01(a). There shall be so distributed to each Certificateholder
of record on the Record Date with respect to such Regular
Distribution Date (other than as provided in Section 11.01
concerning the final distribution) by check mailed to such
Certificateholder, at the address appearing in the Register, such
Certificateholder's pro rata share (based on the Fractional
Undivided Interest in the Trust held by such Certificateholder)
of the total amount in the Certificate Account, except that, with
respect to Certificates registered on the Record Date in the name
of the nominee of the Depositary (initially, such nominee to be
Cede & Co.), such distribution shall be made by wire transfer in
immediately available funds to the account designated by such
nominee.
(b) 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, 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). There shall be so distributed to each Certificateholder
of record on the Record Date with respect to such Special
Distribution Date (other than as provided in Section 11.01
concerning the final distribution) by check mailed to such
Certificateholder, at the address appearing in the Register, such
Certificateholder's pro rata share (based on the Fractional
Undivided Interest in the Trust held by such Certificateholder)
of the total amount in the Special Payments Account on account of
such Special Payment, except that, with respect to Certificates
registered on the Record Date in the name of the nominee of the
Depositary (initially, such nominee to be Cede & Co.), such
distribution shall be made by wire transfer in immediately
available funds to the account designated by such nominee.
(c) The Trustee shall, at the expense of the Company,
cause notice of each Special Payment to be mailed to each
Certificateholder at his address as it appears in the Register.
In the event of redemption or purchase of Equipment Notes held in
the Trust, such notice shall be mailed not less than 20 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,
33
stating the Special Distribution Date for such Special Payment
which shall occur not less than 20 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),
(ii) the amount of the Special Payment for each $1,000
face amount Certificate (taking into account any payment to
be made by the Company pursuant to Section 2.01(b)) and the
amount thereof constituting principal, premium, 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
Certificate.
If the amount of premium, if any, payable upon the redemption or
purchase of an 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 received will also be
distributed.
If any redemption of the Equipment Notes held in the
Trust is cancelled, the Trustee, as soon as possible after
learning thereof, shall cause notice thereof to be mailed to each
Certificateholder at its address as it appears on the Register.
Section 4.03. Statements to Certificateholders. (a) On
each Distribution Date, the Trustee will include with each
distribution to Certificateholders of a Scheduled Payment or
Special Payment, as the case may be, a statement setting forth
the following information (per $1,000 face amount Certificate as
to (i) and (ii) below):
(i) the amount of such distribution allocable to
principal and the amount allocable to premium, if any;
(ii) the amount of such distribution allocable to
interest; and
(iii) the Pool Balance and the Pool Factor.
With respect to the Certificates registered in the
name of Cede & Co., as nominee for the Depositary, on the Record
Date prior to each Distribution Date, the Trustee will request
34
from the Depositary a Securities Position Listing setting forth the
names of all Agent Members reflected on the Depositary's books as
holding interests in the Certificates on such Record Date. On
each Distribution Date, the Trustee will mail to each such Agent
Member the statement described above and will make available
additional copies as requested by such Agent Member for
forwarding to holders of interests in the 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 a Certificateholder of
record a statement containing the sum of the amounts determined
pursuant to clauses (a)(i) and (a)(ii) above with respect to the
Trust for such calendar year or, in the event such Person was a
Certificateholder of record during a portion of such calendar
year, for such portion of such year, and such other items as are
readily available to the Trustee and which a Certificateholder
shall reasonably request as necessary for the purpose of such
Certificateholder's preparation of its federal income tax
returns. Such statement and such other items shall be prepared on
the basis of information supplied to the Trustee by the Agent
Members and shall be delivered by the Trustee to such Agent
Members to be available for forwarding by such Agent Members to
the holders of interests in the Certificates in the manner
described in Section 4.03(a).
Section 4.04. Investment of Special Payment Moneys.
Any money received by the Trustee pursuant to Section 4.01(b)
representing a Special Payment which is not to be promptly
distributed shall, to the extent practicable, be invested in
Permitted Investments by the Trustee pending distribution of such
Special Payment pursuant to Section 4.02. Any investment made
pursuant to this Section 4.04 shall be in such Permitted
Investments having maturities not later than the date that such
moneys are required to be used to make the payment required under
Section 4.02 on the applicable Special Distribution Date and the
Trustee shall hold any such Permitted Investments until maturity.
The Trustee shall have no liability with respect to any
investment made pursuant to this Section 4.04, other than by
reason of the willful misconduct or negligence of the Trustee.
All income and earnings from such investments shall be
distributed on such Special Distribution Date as part of such
Special Payment.
35
ARTICLE V
THE COMPANY
Section 5.01. Maintenance of Corporate Existence. The
Company, at its own cost and expense, will do or cause to be done
all things necessary to preserve and keep in full force and
effect its corporate existence, rights and franchises, except as
otherwise specifically permitted in Section 5.02; provided,
however, that the Company shall not be required to preserve any
right or franchise if the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the
business of the Company.
Section 5.02. Consolidation, Merger, etc. The Company
shall not consolidate with or merge into any other corporation or
convey, transfer or lease substantially all of its assets as an
entirety to any Person unless:
(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.
ss. 1110), with respect to the Leases;
(b) the corporation formed by such consolidation or
into which the Company is merged or the Person which
acquires by conveyance, transfer or lease substantially all
of the assets of the Company as an entirety shall execute
and deliver to the Trustee a duly authorized, valid,
binding and enforceable agreement in form and substance
reasonably satisfactory to the Trustee containing an
assumption by such successor corporation or Person of the
due and punctual performance and observance of each
covenant and condition of this Agreement, the Other Pass
Through Trust Agreements, the Financing Agreements, and
each other Financing Document to be performed or observed
by the Company; and
(c) the Company shall have delivered to the Trustee an
Officer's Certificate of the Company and an Opinion of
Counsel of the Company reasonably satisfactory to the
Trustee, each stating that such consolidation, merger,
conveyance, transfer or lease and the assumption agreement
mentioned in clause (b) above comply with this Section 5.02
36
and that all conditions precedent herein provided for
relating to such transaction have been complied with.
Upon any consolidation or merger, or any conveyance,
transfer or lease of substantially all of the assets of the
Company as an entirety in accordance with this Section 5.02, the
successor corporation or Person formed by such consolidation or
into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under
this Agreement with the same effect as if such successor
corporation or Person had been named as the Company herein. No
such conveyance, transfer or lease of substantially all of the
assets of the Company as an entirety shall have the effect of
releasing any successor corporation or Person which shall have
become such in the manner prescribed in this Section 5.02 from
its liability in respect of this Agreement and any Financing
Document to which it is a party.
ARTICLE VI
DEFAULT
Section 6.01. Events of Default. (a) Exercise of
Remedies. Upon the occurrence and during the continuation of any
Indenture Default under any Indenture, the Trustee may, to the
extent it is the Controlling Party at such time (as determined
pursuant to the Intercreditor Agreement), direct the exercise of
remedies as provided in the Intercreditor Agreement.
(b) Purchase Rights of Certificateholders. (i) At any
time after the occurrence and during the continuation of a
Triggering Event, each Certificateholder shall have the right
(which shall not expire upon any purchase of the Class A
Certificates pursuant to Section 6.01(b)(i) of the Class B Trust
Agreement) to purchase all, but not less than all, of the Class A
Certificates and the Class B Certificates upon ten days' written
notice to the Class A Trustee, the Class B Trustee and each other
Certificateholder, provided that (A) if prior to the end of such
ten day period any other Certificateholder notifies such
purchasing Certificateholder that such other Certificateholder
wants to participate in such purchase, then such other
Certificateholder may join with the purchasing Certificateholder
to purchase all, but not less than all, of the Class A
Certificates and the Class B Certificates pro rata based on the
outstanding principal amount of the Certificates held by each
such Certificateholder and (B) if prior to the end of such ten
day period any other Certificateholder fails to notify the
purchasing Certificateholder of such other Certificateholder's
desire to participate in such a purchase, then such other
37
Certificateholder shall lost its right to purchase the Class A
Certificates and the Class B Certificates pursuant to this
Section 6.01(b)(i).
(ii) By acceptance of its Certificate, each
Certificateholder agrees that at any time after the
occurrence and during the continuation of a Triggering
Event, each Class D Certificateholder shall have the right
(which shall not expire upon any purchase of the Class A
Certificates pursuant to Section 6.01(b)(i) of the Class B
Trust Agreement or the purchase of the Class A Certificates
and the Class B Certificates pursuant to paragraph (i)
above) to purchase all, but not less than all, of the Class
A Certificates, the Class B Certificates and the
Certificates upon ten days' written notice to the Class A
Trustee, the Class B Trustee, the Trustee and each other
Class D Certificateholder, provided that (A) if prior to
the end of such ten-day period any other Class D
Certificateholder notifies such purchasing Class D
Certificateholder that such other Class D Certificateholder
wants to participate in such purchase, then such other
Class D Certificateholder may join with the purchasing
Certificateholder to purchase all, but not less than all,
of the Class A Certificates, the Class B Certificates and
the Certificates pro rata based on the Fractional Undivided
Interest in the Class D Trust held by each such Class D
Certificateholder and (B) if prior to the end of such ten
day period any other Class D Certificateholder fails to
notify the purchasing Class D Certificateholder of such
other Class D Certificateholder's desire to participate in
such a purchase, then such other Class D Certificateholder
shall lose its right to purchase the Class A Certificates,
the Class B Certificates and the Certificates pursuant to
this Section 6.01(b).
The purchase price with respect to the Certificates
shall be equal to the Pool Balance of the Certificates, together
with accrued and unpaid interest thereon to the date of such
purchase, without premium, but including any other amounts then
due and payable to the Certificateholders under this Agreement,
the Intercreditor Agreement or any other Financing Document or on
or in respect of the Certificates; provided, however, that no
such purchase of Certificates shall be effective unless the
purchaser shall certify to the Trustee that contemporaneously
with such purchase, such purchaser is purchasing, pursuant to the
terms of this Agreement and the Other Pass Through Trust
Agreements, the Class A Certificates, the Class B Certificates
and the Certificates. Each payment of the purchase price of the
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
38
6.01(b). Each Certificateholder agrees by its acceptance of its
Certificate that it will, subject to Section 3.04 hereof, upon
payment from such Class D Certificateholder(s), as the case may
be, of the purchase price set forth in the first sentence of this
paragraph, forthwith sell, assign, transfer and convey to the
purchaser thereof (without recourse, representation or warranty
of any kind except for its own acts), all of the right, title,
interest and obligation of such Certificateholder in, this
Agreement, the Intercreditor Agreement, the Liquidity Facility,
the Financing Documents and all Certificates held by such
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
Certificateholder's obligations under this Agreement, the
Intercreditor Agreement, the Liquidity Facility and the Refunding
Documents. The Certificates will be deemed to be purchased on the
date payment of the purchase price is made notwithstanding the
failure of the Certificateholders to deliver any Certificates
(whether in the form of Physical Certificates or beneficial
interests in Global Certificates) and, upon such a purchase, (i)
the only rights of the Certificateholders will be to deliver the
Certificates to the purchaser and receive the purchase price for
such Certificates and (ii) if the purchaser shall so request,
such Certificateholder will comply with all the provisions of
Section 3.04 hereof to enable new 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 Certificates shall be borne by the purchaser thereof.
As used in this Section 6.01(b), the terms
"Certificateholder", "Class", "Class A Certificate", "Class A
Certificateholder", "Class A Trust", "Class A Trustee", "Class B
Certificate", "Class B Certificateholder", "Class B Trust",
"Class B Trustee", "Class D Certificate", "Class D
Certificateholder", "Class D Trust" and "Class D Trustee", shall
have the respective meanings assigned to such terms in the
Intercreditor Agreement.
Section 6.02. [Intentionally omitted.].
Section 6.03. Judicial Proceedings Instituted by
Trustee; Trustee May Bring Suit. If there shall be a failure to
make payment of the principal of, premium, if any, or interest on
any Equipment Note, or if there shall be any failure to pay Rent
(as defined in the relevant Lease) under any Lease when due and
payable, then the Trustee, in its own name and as trustee of an
express trust, as holder of such Equipment Notes, to the extent
permitted by and in accordance with the terms of the
Intercreditor Agreement and the Financing Documents (subject to
the rights of the applicable Owner Trustee or Owner Participant
39
to cure any such failure in accordance with Section 4.03 of the
applicable Indenture), shall be entitled and empowered to
institute any suits, actions or proceedings at law, in equity or
otherwise, for the collection of the sums so due and unpaid on
such Equipment Notes or under such Lease and may prosecute any
such claim or proceeding to judgment or final decree with respect
to the whole amount of any such sums so due and unpaid.
Section 6.04. Control by Certificateholders. Subject
to Section 6.03 and the Intercreditor Agreement, the
Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than a majority in
interest in the Trust shall have the right to direct the time,
method and place of conducting any proceeding for any remedy
available to the Trustee with respect to the Trust or pursuant to
the terms of the Intercreditor Agreement, or exercising any trust
or power conferred on the Trustee under this Agreement or the
Intercreditor Agreement, including any right of the Trustee as
Controlling Party under the Intercreditor Agreement or as holder
of the Equipment Notes, provided that
(1) such Direction shall not be in conflict with any
rule of law or with this Agreement and would not involve
the Trustee in personal liability or expense,
(2) the Trustee shall not determine that the action so
directed would be unjustly prejudicial to the
Certificateholders not taking part in such Direction, and
(3) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
Direction.
Section 6.05. Waiver of Past Defaults. Subject to the
Intercreditor Agreement, the Certificateholders holding
Certificates evidencing Fractional Undivided Interests
aggregating not less than a majority in interest in the Trust (i)
may on behalf of all of the Certificateholders waive any past
Event of Default hereunder and its consequences or (ii) if the
Trustee is the Controlling Party, may direct the Trustee to
instruct the applicable Loan Trustee to waive, any past Indenture
Default under any Indenture and its consequences, and thereby
annul any Direction given by such Certificateholders or the
Trustee to such Loan Trustee with respect thereto, except a
default:
(1) in the deposit of any Scheduled Payment or Special
Payment under Section 4.01 or in the distribution of any
payment under Section 4.02 on the Certificates, or
40
(2) in the payment of the principal of (premium, if
any) or interest on the Equipment Notes, or
(3) in respect of a covenant or provision hereof which
under Article X cannot be modified or amended without the
consent of each Certificateholder holding an Outstanding
Certificate affected thereby.
Upon any such waiver, such default shall cease to
exist with respect to the Certificates and any Event of Default
arising therefrom shall be deemed to have been cured for every
purpose and any direction given by the Trustee on behalf of the
Certificateholders to the relevant Loan Trustee shall be annulled
with respect thereto; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any
right consequent thereon. Upon any such waiver, the Trustee shall
vote the Equipment Notes issued under the relevant Indenture to
waive the corresponding Indenture Default.
Section 6.06. Right of Certificateholders to Receive
Payments Not to Be Impaired. Anything in this Agreement to the
contrary notwithstanding, including, without limitation, Section
6.07 hereof, but subject to the Intercreditor Agreement, the
right of any Certificateholder to receive distributions of
payments required pursuant to Section 4.02 hereof on the
Certificates when due, or to institute suit for the enforcement
of any such payment on or after the applicable Regular
Distribution Date or Special Distribution Date, shall not be
impaired or affected without the consent of such
Certificateholder.
Section 6.07. Certificateholders May Not Bring Suit
Except Under Certain Conditions. A Certificateholder shall not
have the right to institute any suit, action or proceeding at law
or in equity or otherwise with respect to this Agreement, for the
appointment of a receiver or for the enforcement of any other
remedy under this Agreement, unless:
(1) such Certificateholder previously shall have given
written notice to the Trustee of a continuing Event of
Default;
(2) Certificateholders holding Certificates evidencing
Fractional Undivided Interests aggregating not less than
25% of the Trust shall have requested the Trustee in
writing to institute such action, suit or proceeding and
shall have offered to the Trustee indemnity as provided in
Section 7.03(e);
(3) the Trustee shall have refused or neglected to
institute such an action, suit or proceeding for 60 days
41
after receipt of such notice, request and offer of
indemnity; and
(4) no direction inconsistent with such written
request shall have been given to the Trustee during such
60- day period by Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust.
It is understood and intended that no one or more of
the Certificateholders shall have any right in any manner
whatsoever hereunder or under the Certificates to (i) surrender,
impair, waive, affect, disturb or prejudice any property in the
Trust Property or the lien of any Indenture on any property
subject thereto, or the rights of the Certificateholders or the
holders of the Equipment Notes, (ii) obtain or seek to obtain
priority over or preference with respect to any other such
Certificateholder or (iii) enforce any right under this
Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all the Certificateholders
subject to the provisions of this Agreement.
Section 6.08. Remedies Cumulative. Every remedy given
hereunder to the Trustee or to any of the Certificateholders
shall not be exclusive of any other remedy or remedies, and every
such remedy shall be cumulative and in addition to every other
remedy given hereunder or now or hereafter given by statute, law,
equity or otherwise.
ARTICLE VII
THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities. (a)
Except during the continuance of an Event of Default, the Trustee
undertakes to perform such duties as are specifically set forth
in this Agreement, and no implied covenants or obligations shall
be read into this Agreement against the Trustee.
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of
care and skill in their exercise, as a prudent man would exercise
or use under the circumstances in the conduct of its own affairs.
(c) No provision of this Agreement shall be construed
to relieve the Trustee from liability for its own negligent
action, its own negligent failure to act, or its own wilful
misconduct, except that
42
(1) this Subsection shall not be construed to limit
the effect of Subsection (a) of this Section; and
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the
Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts.
(d) Whether or not herein expressly so provided, every
provision of this Trust Agreement relating to the conduct or
affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section.
Section 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, the Trustee shall transmit by mail to the Company, the
Owner Trustees, the Owner Participants, the Loan Trustees and the
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 on the
payment of the principal, premium, if any, or interest on any
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 determine that
the withholding of such notice is in the interests of the
Certificateholders. For the purpose of this Section, the term
"default" means any event that is, or after notice or lapse of
time or both would become, an Event of Default.
Section 7.03. Certain Rights of Trustee. Subject to
the provisions of Section 315 of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in
acting or refraining from acting in reliance upon any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture or other paper or document believed by it to be
genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a written
description of the subject matter thereof accompanied by an
Officer's Certificate and an Opinion of Counsel as provided
in Section 1.02 of this Agreement;
(c) whenever in the administration of this Agreement
the Trustee shall deem it desirable that a matter be proved
43
or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence be
herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officer's Certificate of
the Company, any Owner Trustee or any Loan Trustee;
(d) the Trustee may consult with counsel and the
advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Agreement at the Direction of any of the Certificateholders
pursuant to this Agreement, unless such Certificateholders
shall have offered to the Trustee reasonable security or
indemnity against the cost, expenses and liabilities which
might be incurred by it in compliance with such Direction;
(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture or other paper or document;
(g) the Trustee may execute any of the trusts or
powers under this Agreement or perform any duties under
this Agreement either directly or by or through agents or
attorneys, and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or
attorney appointed with due care by it under this
Agreement;
(h) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith
in accordance with the Direction of the Certificateholders
holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest
in the Trust relating to the time, method and place of
conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon
the Trustee, under this Agreement; and
(i) the Trustee shall not be required to expend or
risk its own funds in the performance of any of its duties
under this Agreement, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate
indemnity against such risk is not reasonably assured to
it.
44
Section 7.04. Not Responsible for Recitals or Issuance
of Certificates. The recitals contained herein and in the
Certificates, except the certificates of authentication, shall
not be taken as the statements of the Trustee, and the Trustee
assumes no responsibility for their correctness. Subject to
Section 7.15, the Trustee makes no representations as to the
validity or sufficiency of this Agreement, any Financing
Agreement, any Equipment Notes, the Certificates or any other
Financing Document, except that the Trustee hereby represents and
warrants that this Agreement has been, and the Intercreditor
Agreement, the Registration Rights Agreement, each Financing
Agreement and each Certificate will be, executed, authenticated
and delivered by one of its officers who is duly authorized to
execute, authenticate and deliver such document on its behalf.
Section 7.05. May Hold Certificates. The Trustee, any
Paying Agent, Registrar or any of their Affiliates or any other
agent in their respective individual or any other capacity may
become the owner or pledgee of Certificates and, subject to
Sections 310(b) and 311 of the Trust Indenture Act, if
applicable, may otherwise deal with the Company, the Owner
Trustees or the Loan Trustees with the same rights it would have
if it were not Trustee, Paying Agent, Registrar or such other
agent.
Section 7.06. Money Held in Trust. Money held by the
Trustee or the Paying Agent in trust hereunder need not be
segregated from other funds except to the extent required herein
or by law and neither the Trustee nor the Paying Agent shall have
any liability for interest upon any such moneys except as
provided for herein.
Section 7.07. Compensation and Reimbursement. The
Company agrees:
(1) to pay, or cause to be paid, to the Trustee from
time to time reasonable compensation for all services
rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse, or cause to be reimbursed, the Trustee upon its
request for all reasonable out-of-pocket expenses,
disbursements and advances incurred or made by the Trustee
in accordance with any provision of this Agreement
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to
its negligence, willful misconduct or bad faith or as may be
45
incurred due to the Trustee's breach of its representations
and warranties set forth in Section 7.15; and
(3) to indemnify the Trustee pursuant to Section 10.1
of the Participation Agreements (as amended by the
Amendments No. 1 thereto dated as of the date hereof) (as
defined in the Intercreditor Agreement).
The Trustee shall be entitled to reimbursement from,
and shall have a lien prior to the Certificates upon, the Trust
Property for any tax incurred without negligence, bad faith or
willful misconduct, on its part, arising out of or in connection
with the acceptance or administration of such Trust (other than
any tax attributable to the Trustee's compensation for serving as
such), including any costs and expenses incurred in contesting
the imposition of any such tax. If the Trustee reimburses itself
from the Trust Property of such Trust for any such tax, it will
mail a brief report within 30 days setting forth the
circumstances thereof to all Certificateholders as their names
and addresses appear in the Register.
Section 7.08. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
eligible to act as a trustee under Section 310(a) of the Trust
Indenture Act and shall have a combined capital and surplus of at
least $75,000,000 (or a combined capital and surplus in excess of
$5,000,000 and the obligations of which, whether now in existence
or hereafter incurred, are fully and unconditionally guaranteed
by a corporation organized and doing business under the laws of
the United States, any state or territory thereof or of the
District of Columbia and having a combined capital and surplus of
at least $75,000,000). If such corporation publishes reports of
conditions at least annually, pursuant to law or to the
requirements of federal, state, territorial or District of
Columbia supervising or examining authority, then for the
purposes of this Section 7.08, the combined capital and surplus
of such corporation shall be deemed to be its combined capital
and surplus as set forth in its most recent report of conditions
so published.
In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 7.08
to act as Trustee, the Trustee shall resign immediately as
Trustee in the manner and with the effect specified in Section
7.09.
Section 7.09. Resignation and Removal; Appointment of
Successor. (a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the
successor Trustee under Section 7.10.
46
(b) The Trustee may resign at any time as trustee by
giving prior written notice thereof to the Company, the
Authorized Agents, the Owner Trustees and the Loan Trustees. If
an instrument of acceptance by a successor Trustee shall not have
been delivered to the Company, the Authorized Agents, the Owner
Trustees, the Loan Trustees and the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee
may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(c) The Trustee may be removed at any time by
Direction of the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less
than a majority in interest in the Trust delivered to the Trustee
and to the Company, the Owner Trustees and the Loan Trustees.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 310
of the Trust Indenture Act, if applicable, after written
request therefor by the Company or by any Certificateholder
who has been a bona fide Certificateholder for at least six
months; or
(2) the Trustee shall cease to be eligible under
Section 7.08 and shall fail to resign after written request
therefor by the Company or by any such Certificateholder;
or
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of
the Trustee or of its property shall be appointed or any
public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any case, (i) the Company may, with the consent of the
Owner Participants, which consent may not be unreasonably
withheld, remove the Trustee or (ii) any Certificateholder who
has been a bona fide Certificateholder for at least six months
may, on behalf of itself and all others similarly situated,
petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
(e) If a Responsible Officer of the Trustee shall
obtain actual knowledge of an Avoidable Tax which has been or is
likely to be asserted, the Trustee shall promptly notify the
Company and shall, within 30 days of such notification, resign
hereunder unless within such 30-day period the Trustee shall have
received notice that the Company has agreed to pay such tax. The
Company shall promptly appoint a successor Trustee in a
jurisdiction where there are no Avoidable Taxes.
47
(f) If the Trustee shall resign, be removed or become
incapable of acting or if a vacancy shall occur in the office of
the Trustee for any cause, the Company shall promptly appoint a
successor Trustee. If, within one year after such resignation,
removal or incapability, or other occurrence of such vacancy, a
successor Trustee shall be appointed by Direction of the
Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than a majority in
interest in the Trust delivered to the Company, the Owner
Trustees, the Loan Trustees and the retiring Trustee, and the
Company approves such appointment, which approval shall not be
unreasonably withheld, then the successor Trustee so appointed
shall, forthwith upon its acceptance of such appointment, become
the successor Trustee and supersede the successor Trustee
appointed as provided above. If no successor Trustee shall have
been so appointed as provided above and accepted appointment in
the manner hereinafter provided, any Certificateholder who has
been a bona fide Certificateholder for at least six months may,
on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a
successor Trustee.
(g) The successor Trustee shall give notice of the
resignation and removal of the Trustee and appointment of the
successor Trustee by mailing written notice of such event by
first-class mail, postage prepaid, to the Certificateholders as
their names and addresses appear in the Register. Each notice
shall include the name of such successor Trustee and the address
of its Corporate Trust Office.
Section 7.10. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute and
deliver to the Company, the Authorized Agents, the Owner Trustees
and the Loan Trustees and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on request of the Company or
the successor Trustee, such retiring Trustee shall execute and
deliver an instrument transferring to such successor Trustee all
such rights, powers and trusts of the retiring Trustee and shall
duly assign, transfer and deliver to such successor Trustee all
Trust Property held by such retiring Trustee hereunder, subject
nevertheless to its lien, if any, provided for in Section 7.07.
Upon request of any such successor Trustee, the Company, the
retiring Trustee and such successor Trustee shall execute and
deliver any and all instruments containing such provisions as
shall be necessary or desirable to transfer and confirm to, and
for more fully and certainly vesting in, such successor Trustee
all such rights, powers and trusts.
48
No institution shall accept its appointment as a
Trustee hereunder unless at the time of such acceptance such
institution shall be qualified and eligible under this Article
VII.
Section 7.11. Merger, Conversion, Consolidation or
Succession to Business. Any corporation into which the Trustee
may be merged or converted or with which it may be consolidated,
or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor
of the Trustee hereunder, provided such corporation shall be
otherwise qualified and eligible under this Article VII, without
the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Certificates shall
have been executed or authenticated, but not delivered, by the
Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such
execution or authentication and deliver the Certificates so
executed or authenticated with the same effect as if such
successor Trustee had itself executed or authenticated such
Certificates.
Section 7.12. Maintenance of Agencies. (a) There shall
at all times be maintained an office or agency in the location
set forth in Section 12.03 where Certificates may be presented or
surrendered for registration of transfer or for exchange, and for
payment thereof and where notices and demands to or upon the
Trustee in respect of such certificates or this Agreement may be
served; provided, however, that, if it shall be necessary that
the Trustee maintain an office or agency in another location
(e.g., the Certificates shall be represented by Physical
Certificates and shall be listed on a national securities
exchange), the Trustee will make all reasonable efforts to
establish such an office or agency. Written notice of the
location of each such other office or agency and of any change of
location thereof shall be given by the Trustee to the Company,
the Owner Trustees, the Loan Trustees (in the case of any Owner
Trustee or Loan Trustee, at its address specified in the
Financing Agreements or such other address as may be notified to
the Trustee) and the Certificateholders. In the event that no
such office or agency shall be maintained or no such notice of
location or of change of location shall be given, presentations
and demands may be made and notices may be served at the
Corporate Trust Office of the Trustee.
(b) There shall at all times be a Registrar and a
Paying Agent hereunder with respect to the Certificates. Each
such Authorized Agent shall be a bank or trust company, shall be
a corporation organized and doing business under the laws of the
49
United States or any state, with a combined capital and surplus
of at least $75,000,000, or, if the Trustee shall be acting as
the Registrar or Paying Agent hereunder, a corporation having a
combined capital and surplus in excess of $5,000,000, the
obligations of which are guaranteed by a corporation organized
and doing business under the laws of the United States or any
state, with a combined capital and surplus of at least
$75,000,000, and shall be authorized under such laws to exercise
corporate trust powers, subject to supervision by Federal or
state authorities. The Trustee shall initially be the Paying
Agent and, as provided in Section 3.04, Registrar hereunder with
respect to the Certificates. Each Registrar shall furnish to the
Trustee, at stated intervals of not more than six months, and at
such other times as the Trustee may request in writing, a copy of
the Register maintained by such Registrar.
(c) Any corporation into which any Authorized Agent
may be merged or converted or with which it may be consolidated,
or any corporation resulting from any merger, consolidation or
conversion to which any Authorized Agent shall be a party, or any
corporation succeeding to the corporate trust business of any
Authorized Agent, shall be the successor of such Authorized Agent
hereunder, if such successor corporation is otherwise eligible
under this Section, without the execution or filing of any paper
or any further act on the part of the parties hereto or such
Authorized Agent or such successor corporation.
(d) Any Authorized Agent may at any time resign by
giving written notice of resignation to the Trustee, the Company,
the Owner Trustees and the Loan Trustees. The Company may, and at
the request of the Trustee shall, at any time terminate the
agency of any Authorized Agent by giving written notice of
termination to such Authorized Agent and to the Trustee. Upon the
resignation or termination of an Authorized Agent or in case at
any time any such Authorized Agent shall cease to be eligible
under this Section (when, in either case, no other Authorized
Agent performing the functions of such Authorized Agent shall
have been appointed), the Company shall promptly appoint one or
more qualified successor Authorized Agents, reasonably
satisfactory to the Trustee, to perform the functions of the
Authorized Agent which has resigned or whose agency has been
terminated or who shall have ceased to be eligible under this
Section. The Company shall give written notice of any such
appointment made by it to the Trustee, the Owner Trustees and the
Loan Trustees; and in each case the Trustee shall mail notice of
such appointment to all Certificateholders as their names and
addresses appear on the Register.
(e) The Company agrees to pay, or cause to be paid,
from time to time to each Authorized Agent reasonable
50
compensation for its services and to reimburse it for its
reasonable expenses.
Section 7.13. Money for Certificate Payments to Be
Held in Trust. All moneys deposited with any Paying Agent for the
purpose of any payment on Certificates shall be deposited and
held in trust for the benefit of the Certificateholders entitled
to such payment, subject to the provisions of this Section.
Moneys so deposited and held in trust shall constitute a separate
trust fund for the benefit of the Certificateholders with respect
to which such money was deposited.
The Trustee may at any time, for the purpose of
obtaining the satisfaction and discharge of this Agreement or for
any other purpose, direct any Paying Agent to pay to the Trustee
all sums held in trust by such Paying Agent, such sums to be held
by the Trustee upon the same trusts as those upon which such sums
were held by such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released
from all further liability with respect to such money.
Section 7.14. Registration of Equipment Notes in Name
of Subordination Agent. The Trustee agrees that all Equipment
Notes to be purchased by the Trust shall be issued in the name of
the Subordination Agent or its nominee and held by the
Subordination Agent in trust for the benefit of the
Certificateholders, or, if not so held, the Subordination Agent
or its nominee shall be reflected as the owner of such Equipment
Notes in the register of the issuer of such Equipment Notes.
Section 7.15. Representations and Warranties of
Trustee. The Trustee hereby represents and warrants that:
(a) the Trustee is a Delaware banking corporation
organized and validly existing in good standing under the
laws of the State of Delaware;
(b) the Trustee has full power, authority and legal
right to execute, deliver, and perform this Agreement, the
Intercreditor Agreement, the Registration Rights Agreement
and the Financing Agreements and has taken all necessary
action to authorize the execution, delivery, and
performance by it of this Agreement, the Intercreditor
Agreement, the Registration Rights Agreement and the
Financing Agreements;
(c) the execution, delivery and performance by the
Trustee of this Agreement, the Intercreditor Agreement, the
Registration Rights Agreement and the Financing Agreements
(i) will not violate any provision of 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
51
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, or (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;
(d) the execution, delivery and performance by the
Trustee of this Agreement, the Intercreditor Agreement, the
Registration Rights Agreement and the Financing Agreements
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
(e) this Agreement, the Intercreditor Agreement, the
Registration Rights Agreement and the Financing Agreements
have been duly executed and delivered by the Trustee and
constitute the legal, valid, and binding agreements of the
Trustee, enforceable against it in accordance with their
respective terms, provided 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 7.16. Withholding Taxes; Information
Reporting. The Trustee, as trustee of the grantor trust created
by this Agreement, shall exclude and withhold from each
distribution of principal, premium, if any, and interest and
other amounts due under this Agreement or under the Certificates
any and all withholding taxes applicable thereto as required by
law. The Trustee agrees to act as such withholding agent and, in
connection therewith, whenever any present or future taxes or
similar charges are required to be withheld with respect to any
amounts payable in respect of the Certificates, to withhold such
amounts and timely pay the same to the appropriate authority in
the name of and on behalf of the Certificateholders, that it will
file any necessary withholding tax returns or statements when
52
due, and that, as promptly as possible after the payment thereof,
it will deliver to each such Certificateholder appropriate
documentation showing the payment thereof, together with such
additional documentary evidence as such Certificateholders may
reasonably request from time to time. The Trustee agrees to file
any other information reports as it may be required to file under
United States law.
Section 7.17. Trustee's Liens. The Trustee in its
individual capacity agrees 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 mortgage, pledge, lien, charge,
encumbrance, security interest or claim ("Trustee's Liens") on or
with respect to the Trust Property which is attributable to the
Trustee either (i) in its individual capacity and which is
unrelated to the transactions contemplated by this Agreement, the
Intercreditor Agreement, the Financing Agreements or the
Financing Documents, or (ii) as Trustee hereunder or in its
individual capacity and which arises out of acts or omissions
which are not contemplated by this Agreement.
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.01. The Company to Furnish Trustee with
Names and Addresses of Certificateholders. The Company will
furnish to the Trustee within 15 days after each Record Date with
respect to a Scheduled Payment, and at such other times as the
Trustee may request in writing within 30 days after receipt by
the Company of any such request, a list, in such form as the
Trustee may reasonably require, of all information in the
possession or control of the Company as to the names and
addresses of the Certificateholders, in each case as of a date
not more than 15 days prior to the time such list is furnished;
provided, however, that so long as the Trustee is the sole
Registrar, no such list need be furnished; and provided further,
however, that no such list need be furnished for so long as a
copy of the Register is being furnished to the Trustee pursuant
to Section 7.12.
Section 8.02. Preservation of Information;
Communications to Certificateholders. The Trustee shall preserve,
in as current a form as is reasonably practicable, the names and
addresses of Certificateholders contained in the most recent list
furnished to the Trustee as provided in Section 7.12 or Section
8.01, as the case may be, and the names and addresses of
Certificateholders received by the Trustee in its capacity as
Registrar, if so acting. The Trustee may destroy any list
53
furnished to it as provided in Section 7.12 or Section 8.01, as
the case may be, upon receipt of a new list so furnished.
Section 8.03. Reports by Trustee. Within 60 days after
May 15 of each year commencing with the first full year following
the issuance of the Certificates, the Trustee shall transmit to
the Certificateholders, as provided in Section 313(c) of the
Trust Indenture Act, a brief report dated as of such May 15, if
required by Section 313(a) of the Trust Indenture Act.
Section 8.04. Reports by the Company. The Company
shall:
(a) file with the Trustee, within 30 days after the
Company is required to file the same with the SEC, copies
of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the
foregoing as the SEC may from time to time by rules and
regulations prescribe) which the Company is required to
file with the SEC pursuant to section 13 or section 15(d)
of the Securities Exchange Act of 1934, as amended; or, if
the Company is not required to file information, documents
or reports pursuant to either of such sections, then to
file with the Trustee and the SEC, in accordance with rules
and regulations prescribed by the SEC, such of the
supplementary and periodic information, documents and
reports which may be required pursuant to section 13 of the
Securities Exchange Act of 1934, as amended, in respect of
a security listed and registered on a national securities
exchange as may be prescribed in such rules and
regulations;
(b) file with the Trustee and the SEC, in accordance
with the rules and regulations prescribed by the SEC, such
additional information, documents and reports with respect
to compliance by the Company with the conditions and
covenants provided for in this Agreement, as may be
required by such rules and regulations, including, in the
case of annual reports, if required by such rules and
regulations, certificates or opinions of independent public
accountants;
(c) transmit to all Certificateholders, in the manner
and to the extent provided in Section 313(c) of the Trust
Indenture Act such summaries of any information, documents
and reports required to be filed by the Company pursuant to
subsections (a) and (b) of this Section 8.04 as may be
required by rules and regulations prescribed by the SEC;
and
(d) furnish to the Trustee, not less often than
annually, a brief certificate from the principal executive
officer, principal financial officer or principal accounting
officer as to his or her knowledge of the Company's
54
compliance with all conditions and covenants under this
Agreement (it being understood that for purposes of this
paragraph (d), such compliance shall be determined without
regard to any period of grace or requirement of notice
provided under this Agreement).
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.01. Supplemental Agreements Without Consent
of Certificateholders. Without the consent of the
Certificateholders, the Company may (but will not be required
to), and the Trustee (subject to Section 9.03) shall, at any time
and from time to time, enter into one or more agreements
supplemental hereto or, if applicable, to the Intercreditor
Agreement or the Liquidity Facility in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation
to the Company and the assumption by any such successor of
the covenants of the Company herein contained; or
(2) to add to the covenants of the Company for the
benefit of the Certificateholders, or to surrender any right
or power in this Agreement conferred upon the Company; or
(3) to correct or supplement any provision in this
Agreement, the Intercreditor Agreement or the Liquidity
Facility which may be defective or inconsistent with any
other provision herein or to cure any ambiguity or correct
any mistake or to modify any other provision with respect
to matters or questions arising under this Agreement, the
Intercreditor Agreement or the Liquidity Facility, provided
that any such action shall not materially adversely affect
the interests of the Certificateholders; or
(4) to modify, eliminate or add to the provisions of
this Agreement to such extent as shall be necessary to
continue the qualification of this Agreement (including any
supplemental agreement) under the Trust Indenture Act or
under any similar Federal statute hereafter enacted, and to
add to this Agreement such other provisions as may be
expressly permitted by the Trust Indenture Act, excluding,
however, the provisions referred to in Section 316(a)(2) of
the Trust Indenture Act as in effect at the date as of
which this instrument was executed or any corresponding
provision in any similar Federal statute hereafter enacted;
or
55
(5) to evidence and provide for the acceptance of
appointment under this Agreement by the Trustee of a
successor Trustee and to add to or change any of the
provisions of this Agreement as shall be necessary to
provide for or facilitate the administration of the Trust,
pursuant to the requirements of Section 7.10; or
(6) to provide the information required under
Section 7.12 and Section 12.03 as to the Trustee; or
(7) to modify or eliminate provisions relating to the
transfer or exchange of Exchange Certificates or the
Initial Certificates upon consummation of the Exchange
Offer (as defined in the Registration Rights Agreement) or
effectiveness of the Registration Statement.
Section 9.02. Supplemental Agreements with Consent of
Certificateholders. With the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests
aggregating not less than a majority in interest in the Trust, by
Direction of said Certificateholders delivered to the Company and
the Trustee, the Company may (with the consent of the Owner
Trustees, if any, which consent shall not be unreasonably
withheld), and the Trustee (subject to Section 9.03) shall, enter
into an agreement or agreements for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
provisions of this Agreement, the Intercreditor Agreement, the
Liquidity Facility, the Registration Rights Agreement or any
Financing Agreement to the extent applicable to such
Certificateholders or of modifying in any manner the rights and
obligations of such Certificateholders under this Agreement, the
Intercreditor Agreement, the Liquidity Facility, the Registration
Rights Agreement or any Financing Agreement; provided, however,
that no such agreement shall, without the consent of the
Certificateholder of each Outstanding Certificate affected
thereby:
(1) reduce in any manner the amount of, or delay the
timing of, any receipt by the Trustee of payments on the
Equipment Notes held in the Trust or distributions that are
required to be made herein on any Certificate, or change
any date of payment on any Certificate, or change the place
of payment where, or the coin or currency in which, any
Certificate is payable, or impair the right to institute
suit for the enforcement of any such payment or
distribution on or after the Regular Distribution Date or
Special Distribution Date applicable thereto; or
(2) permit the disposition of any Equipment Note
included in the Trust Property except as permitted by this
Agreement, or otherwise deprive such Certificateholder of
56
the benefit of the ownership of the Equipment Notes in the
Trust; or
(3) reduce the percentage of the aggregate Fractional
Undivided Interests of the Trust which is required for any
such supplemental agreement, or reduce such percentage
required for any waiver of compliance with certain
provisions of this Agreement or certain defaults hereunder
and their consequences provided for in this Agreement; or
(4) waive, amend or modify Section 2.4, 3.2 or 3.3 of
the Intercreditor Agreement in a manner adverse to the
Certificateholders; or
(5) modify any of the provisions of this Section 9.02
or Section 6.05, except to increase any such percentage or
to provide that certain other provisions of this Agreement
cannot be modified or waived without the consent of the
Certificateholder of each Certificate affected thereby.
It shall not be necessary for any Direction of
Certificateholders under this Section to approve the particular
form of any proposed supplemental agreement, but it shall be
sufficient if such Direction shall approve the substance thereof.
Section 9.03. Documents Affecting Immunity or
Indemnity. If in the opinion of the Trustee any document required
to be executed by it pursuant to the terms of Section 9.01 or
9.02 affects any interest, right, duty, immunity or indemnity in
favor of the Trustee under this Agreement, the Trustee may in its
discretion decline to execute such document.
Section 9.04. Execution of Supplemental Agreements. In
executing, or accepting the additional trusts created by, any
agreement permitted by this Article or the modifications thereby
of the trusts created by this Agreement, the Trustee shall be
entitled to receive, and shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such
supplemental agreement is authorized or permitted by this
Agreement.
Section 9.05. Effect of Supplemental Agreements. Upon
the execution of any agreement supplemental to this Agreement
under this Article, this Agreement shall be modified in
accordance therewith, and such supplemental agreement shall form
a part of this Agreement for all purposes; and every Holder of a
Certificate theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
Section 9.06. Conformity with Trust Indenture Act.
Every supplemental agreement executed pursuant to this Article
57
shall conform to the requirements of the Trust Indenture Act as
then in effect.
Section 9.07. Reference in Certificates to
Supplemental Agreements. Certificates authenticated and delivered
after the execution of any supplemental agreement pursuant to
this Article may bear a notation in form approved by the Trustee
as to any matter provided for in such supplemental agreement;
and, in such case, suitable notation may be made upon Outstanding
Certificates after proper presentation and demand.
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
Section 10.01. Amendments and Supplements to
Indentures and Other Financing Documents. In the event that the
Trustee, as holder of any Equipment Note in trust for the benefit
of the Certificateholders or as Controlling Party under the
Intercreditor Agreement, receives a request for a consent to any
amendment, modification, waiver or supplement under any Indenture
or other Financing Document, the Trustee shall forthwith send a
notice of such proposed amendment, modification, waiver or
supplement to each Certificateholder registered on the Register
as of the date of such notice. The Trustee shall request from the
Certificateholders a Direction as to (a) whether or not to take
or refrain from taking any action which a holder of such
Equipment Note has the option to direct, (b) whether or not to
give or execute any waivers, consents, amendments, modifications
or supplements as a holder of such Equipment Note and (c) how to
vote any Equipment Note if a vote has been called for with
respect thereto. Provided such a request for Certificateholder
Direction shall have been made, in directing any action or
casting any vote or giving any consent as the holder of any
Equipment Note, the Trustee shall vote for or give consent to any
such action with respect to such Equipment Note in the same
proportion as that of (i) the aggregate face amounts of all
Certificates actually voted in favor of or for giving consent to
such action by such Direction of Certificateholders to (ii) the
aggregate face amount of all Outstanding Certificates. For
purposes of the immediately preceding sentence, a Certificate
shall have been "actually voted" if the Holder of such
Certificate has delivered to the Trustee an instrument evidencing
such Holder's consent to such Direction prior to two Business
Days before the Trustee directs such action or casts such vote or
gives such consent. Notwithstanding the foregoing, but subject to
Section 6.04 and the Intercreditor Agreement, the Trustee may, in
its own discretion and at its own direction, consent and notify
the relevant Loan Trustee of such consent to any amendment,
modification, waiver or supplement under the relevant
58
Indenture or any other Financing Document, if an Event of Default
hereunder shall have occurred and be continuing, or if such
amendment, modification or waiver will not adversely affect the
interests of the Certificateholders.
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust. The
respective obligations and responsibilities of the Company and
the Trustee with respect to the Trust shall terminate upon the
distribution to all Holders of Certificates and the Trustee of
all amounts required to be distributed to them pursuant to this
Agreement and the disposition of all property held as part of the
Trust Property; provided, however, that in no event shall the
Trust continue beyond one hundred ten (110) years following the
date of the earliest execution of this Trust Agreement.
Notice of any termination, specifying the Regular
Distribution Date (or Special Distribution Date, as the case may
be) upon which the Certificateholders may surrender their
Certificates to the Trustee for payment of the final Distribution
Date and cancellation, shall be mailed promptly by the Trustee to
Certificateholders not earlier than the 60th day and not later
than the 20th day next preceding such final Distribution Date
specifying (A) the Regular Distribution Date (or Special
Distribution Date, as the case may be) upon which the proposed
final payment of the Certificates will be made upon presentation
and surrender of Certificates at the office or agency of the
Trustee therein specified, (B) the amount of any such proposed
final payment, and (C) that the Record Date otherwise applicable
to such Regular Distribution Date (or Special Distribution Date,
as the case may be) is not applicable, payments being made only
upon presentation and surrender of the Certificates at the office
or agency of the Trustee therein specified. The Trustee shall
give such notice to the Registrar at the time such notice is
given to Certificateholders. Upon presentation and surrender of
the Certificates in accordance with such notice, the Trustee
shall cause to be distributed to Certificateholders such final
payments.
In the event that all of the Certificateholders shall
not surrender their Certificates for cancellation within six
months after the date specified in the above-mentioned written
notice, the Trustee shall give a second written notice to the
remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect
thereto. No additional interest shall accrue on the Certificates
after the Regular Distribution Date (or Special Distribution
59
Date, as the case may be) specified in the first written notice.
In the event that any money held by the Trustee for the payment
of distributions on the Certificates shall remain unclaimed for
two years (or such lesser time as the Trustee shall be satisfied,
after sixty days' notice from the Company, is one month prior to
the escheat period provided under applicable law) after the final
distribution date with respect thereto, the Trustee shall pay to
each Loan Trustee the appropriate amount of money relating to
such Loan Trustee and shall give written notice thereof to the
related Owner Trustees, the Owner Participants and the Company.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of
Certificateholders. The death or incapacity of any
Certificateholder shall not operate to terminate this Agreement
or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any
action or commence any proceeding in any court for a partition or
winding up of the Trust, nor otherwise affect the rights,
obligations, and liabilities of the parties hereto or any of
them.
Section 12.02. Certificates Nonassessable and Fully
Paid. Except as set forth in the last sentence of this Section
12.02, Certificateholders shall not be personally liable for
obligations of the Trust, the Fractional Undivided Interests
represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever, and
Certificates, upon authentication thereof by the Trustee pursuant
to Section 3.03, are and shall be deemed fully paid. No
Certificateholder shall have any right (except as expressly
provided herein) to vote or in any manner otherwise control the
operation and management of the Trust Property, the Trust, or the
obligations of the parties hereto, nor shall anything set forth
herein, or contained in the terms of the Certificates, be
construed so as to constitute the Certificateholders from time to
time as partners or members of an association. Neither the
existence of the Trust nor any provision herein is intended to or
shall limit the liability the Certificateholders would otherwise
incur if the Certificateholders owned Trust Property as
co-owners, or incurred any obligations of the Trust, directly
rather than through the Trust.
Section 12.03. Notices. (a) Unless otherwise
specifically provided herein, all notices required under the
terms and provisions of this Agreement shall be in English and in
writing, and any such notice may be given by United States mail,
60
courier service or telecopy, and any such notice shall be
effective when delivered or received or, if mailed, three days
after deposit in the United States mail with proper postage for
ordinary mail prepaid,
if to the Company, to:
Continental Airlines, Inc.
2929 Allen Parkway
Houston, TX 77019
Attention: Chief Financial Officer and
General Counsel
Facsimile: (713) 523-2831
if to the Trustee, to:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Department
Facsimile: (302) 651-8882
Telephone: (302) 651-8584
(b) The Company or the Trustee, by notice to the
other, may designate additional or different addresses for
subsequent notices or communications.
(c) Any notice or communication to Certificateholders
shall be mailed by first-class mail to the addresses for
Certificateholders shown on the Register kept by the Registrar.
Failure so to mail a notice or communication or any defect in
such notice or communication shall not affect its sufficiency
with respect to other Certificateholders.
(d) If a notice or communication is mailed in the
manner provided above within the time prescribed, it is
conclusively presumed to have been duly given, whether or not the
addressee receives it.
(e) If the Company mails a notice or communication to
the Certificateholders, it shall mail a copy to the Trustee and
to the Paying Agent at the same time.
(f) Notwithstanding the foregoing, all communications
or notices to the Trustee shall be deemed to be given only when
received by a Responsible Officer of the Trustee.
(g) The Trustee shall promptly furnish the Company
with a copy of any demand, notice or written communication
61
received by the Trustee hereunder from any Certificateholder,
Owner Trustee or Loan Trustee.
Section 12.04. Governing Law. THIS AGREEMENT HAS BEEN
DELIVERED IN THE STATE OF NEW YORK AND THIS AGREEMENT AND THE
CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICTS-OF-LAW PRINCIPLES.
Section 12.05. Severability of Provisions. If any one
or more of the covenants, agreements, provisions or terms of this
Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions, or terms shall be deemed
severable from the remaining covenants, agreements, provisions or
terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or
the Trust, or of the Certificates or the rights of the
Certificateholders thereof.
Section 12.06. Trust Indenture Act Controls. This
Agreement is subject to the provisions of the Trust Indenture Act
and shall, to the extent applicable, be governed by such
provisions.
Section 12.07. Effect of Headings and Table of
Contents. The Article and Section headings herein and the Table
of Contents are for convenience only and shall not affect the
construction hereof.
Section 12.08. Successors and Assigns. All covenants,
agreements, representations and warranties in this Agreement by
the Trustee and the Company shall bind and, to the extent
permitted hereby, shall inure to the benefit of and be
enforceable by their respective successors and assigns, whether
so expressed or not.
Section 12.09. Benefits of Agreement. Nothing in this
Agreement or in the Certificates, express or implied, shall give
to any Person, other than the parties hereto and their successors
hereunder, and the Certificateholders, any benefit or any legal
or equitable right, remedy or claim under this Agreement.
Section 12.10. Legal Holidays. In any case where any
Regular Distribution Date or Special Distribution Date relating
to any Certificate shall not be a Business Day, 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 no interest shall accrue during the intervening period.
62
Section 12.11. Counterparts. For the purpose of
facilitating the execution of this Agreement and for other
purposes, this Agreement may be executed simultaneously in any
number of counterparts, each of which counterparts shall be
deemed to be an original, and all of which counterparts shall
constitute but one and the same instrument.
Section 12.12. Intention of Parties. The parties
hereto intend that the 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. The powers granted and obligations undertaken
pursuant to this Agreement shall be so construed so as to further
such intent.
63
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed by their respective officers
thereunto 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:
64
EXHIBIT A
FORM OF CERTIFICATE
REGISTERED
No. ______________
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER
THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT WITHIN
THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE
WAS HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY
AFFILIATE OF ANY OF SUCH PERSONS RESELL OR OTHERWISE
TRANSFER THIS CERTIFICATE EXCEPT (A) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (B) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR
MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATE THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE TRUSTEE), (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT 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
WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE
OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS
CERTIFICATE WAS HELD BY CONTINENTAL AIRLINES, INC., THE
TRUSTEE OR ANY
AFFILIATE OF ANY OF SUCH PERSONS THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO
THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO
THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.]*
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A)
IT IS NOT A PLAN TRANSFEREE (AS DEFINED IN THE PASS THROUGH
TRUST AGREEMENT) OR (B) IT IS AN INSURANCE COMPANY USING
THE ASSETS OF ITS GENERAL ACCOUNT TO ACQUIRE THIS
CERTIFICATE, AND THE CONDITIONS OF PROHIBITED TRANSACTION
CLASS EXEMPTION 95-60 ISSUED BY THE U.S. DEPARTMENT OF
LABOR HAVE BEEN AND WILL CONTINUE TO BE SATISFIED IN
CONNECTION WITH ITS PURCHASE AND HOLDING OF THIS
CERTIFICATE. THE PASS THROUGH TRUST AGREEMENT CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE TRUSTEE 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 HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
- --------
* Not to be included on the face of the Permanent Offshore
Global Certificate.
A-2
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR
TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE
PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN.]*
- --------
* To be included on the face of each Global Certificate.
A-3
[GLOBAL CERTIFICATE]*
CONTINENTAL AIRLINES 1996-2C PASS THROUGH TRUST
10.22% Continental Airlines [Initial] [Exchange] Pass Through
Certificate
Series 1996-2C
Final Distribution Date: July 2, 2014
evidencing a fractional undivided interest in a trust, the
property of which includes certain equipment notes each secured
by an Aircraft leased to Continental Airlines, Inc.
$ Fractional Undivided Interest
representing . % 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 1996-2C Pass Through Trust (the "Trust") created
pursuant to a Pass Through Trust Agreement, dated as of May 20,
1996 (the "Agreement"), between Wilmington Trust Company (the
"Trustee") and Continental Airlines, Inc., a corporation
incorporated under Delaware law (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 "10.22% Continental Airlines [Initial] [Exchange]
Pass Through Certificates Series 1996-2C" (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 Certificateholder of this
Certificate assents to and agrees to be bound by the provisions
of the Agreement and the Intercreditor Agreement. The property of
the Trust includes certain Equipment Notes and all rights of the
Trust to receive payments under the Intercreditor Agreement and
the Liquidity Facilities (the "Trust Property"). Each issue of
the Equipment Notes is secured by, among other things, a security
interest in the Aircraft leased to or owned by the Company.
The Certificates represent fractional undivided
interests in the Trust and the Trust Property, and have no
- --------
* To be included on the face of each Global Certificate.
A-4
rights, benefits or interest in respect of any assets or property
other than the Trust Property.
Subject to and in accordance with the terms of the
Agreement and the Intercreditor Agreement, from and to the extent
of funds then available to the Trustee, there will be distributed
on each January 2, April 2, July 2 and October 2 (a "Regular
Distribution Date"), commencing on July 2, 1996, 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
Notes 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 Notes 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 Notes, 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 Regular Distribution Date or 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 Regular Distribution Date or
Special Distribution Date and no 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.
[The Holder of this Certificate is entitled to the
benefits of the Registration Rights Agreement, dated as of May
20, 1996, among the Company, the Trustee and the Initial
Purchasers named therein (the "Registration Rights Agreement").
In the event that neither the consummation of the Exchange Offer
nor the declaration by the Commission of a Shelf Registration to
be effective (a "Registration Event") occurs on or prior to the
180th day after the date of the issuance of the Certificates, the
interest rate per annum borne by the Equipment Notes shall be
increased by 0.50%, from and including January 2, 1997, to but
excluding the date on which a Registration Event occurs. In the
event that the Shelf Registration Statement ceases to be
effective at any time during the period specified by the
Registration Rights Agreement for more than 60 days, whether or
not consecutive, during any 12-month period, the interest rate
per annum borne by the Equipment Notes shall be increased by
A-5
0.50% from the 61st day of the applicable 12-month period such
Shelf Registration Statement ceases to be effective until such
time as the Shelf Registration Statement again becomes
effective.]*
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 AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
Reference is hereby made to the further provisions of
this Certificate set forth in the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon has
been executed by the Trustee, by manual signature, this
Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this
Certificate to be duly executed.
Dated: May 20, 1996 CONTINENTAL AIRLINES
1996-2C PASS THROUGH TRUST
By: WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as
Trustee
Attest: By:_______________________
Name:
Title:
- --------------------
Authorized Signature
- --------
* To be included only on each Initial Certificate.
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,
not in its individual
capacity but
solely as Trustee
By:__________________________
Authorized Officer
A-7
[REVERSE OF CERTIFICATE]
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 of their affiliates. The
Certificates are limited in right or 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, proceeds, 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 therein set forth, 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, in the Borough of Manhattan, the City of New
York, 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
A-8
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
[$100,000]* [$1,000]** Fractional Undivided Interest and integral
multiples of $1,000 in excess thereof [except that one
Certificate may be in a denomination of less than $100,000]*. 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 by the Holder of a sum sufficient to cover any
tax or governmental charge payable in connection therewith.
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.
* To be included only on each Initial Certificate.
** To be included only on each Exchange Certificate.
A-9
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 Trustee
with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT PERMANENT OFFSHORE GLOBAL AND
OFFSHORE PHYSICAL CERTIFICATES]
In connection with any transfer of this Certificate
occurring prior to the date that is the earlier of the date of an
effective Registration Statement or __________, 1999, the
undersigned confirms that without utilizing any general
solicitation or general advertising that:
[Check One]
[ ] (a) this Certificate is being transferred in
compliance with the exemption from registration under
the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
or
[ ] (b) this Certificate is being transferred other than
in accordance with (a) above and documents are being
furnished that comply with the conditions of transfer
set forth in this Certificate and the Agreement.
If neither of the foregoing boxes is checked, the Trustee or
other 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
A-10
registration set forth herein and in Section 3.06 of the
Agreement 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 IF (a) ABOVE IS CHECKED.
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, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated:
NOTE: To be executed by an
executive officer.
A-11
EXHIBIT B
FORM OF CERTIFICATE FOR UNLEGENDED CERTIFICATES
[Date]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Trustee Administration
Re: Continental Airlines 1996-2C Pass
Through Trust, Class A Pass Through
Trust Certificates
(the "Certificates")
Dear Sirs:
This letter relates to U.S. $__________ Fractional
Undivided Interest of Certificates represented by a Certificate
(the "Legended Certificate") which bears a legend outlining
restrictions upon transfer of such Legended Certificate. Pursuant
to Section 3.01 of the Pass Through Trust Agreement relating to
the Certificates dated as of May 20, 1996 (the "Trust
Agreement"), between Continental Airlines, Inc. ("Continental")
and you, we hereby certify that we are (or we will hold such
securities on behalf of) a person outside the United States to
whom the Certificates could be transferred in accordance with
Rule 904 of Regulation S promulgated under the U.S. Securities
Act of 1933, as amended. Accordingly, you are hereby requested to
exchange the legended certificate for an unlegended certificate
representing an identical principal amount of Certificates, all
in the manner provided for in the Trust Agreement.
You and Continental are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or
legal proceedings or official inquiry with respect to the matters
covered hereby. Terms used in this certificate have the meanings
set forth in Regulation S.
Very truly yours,
[Name of Certificateholder]
By:_________________________
Authorized Signature
EXHIBIT C
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS PURSUANT TO REGULATION S
[date]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Trustee Administration
Re: Continental Airlines 1996-2C Pass Through
Trust (the "Trust"), 10.22% Continental
Airlines Pass Through Certificates
Series 1996-2C (the "Certificates")
Sirs:
In connection with our proposed sale of $_______
Fractional Undivided Interest of the Certificates, we confirm
that such sale has been effected pursuant to and in accordance
with Regulation S under the Securities Act of 1933, as amended,
and, accordingly, we represent that:
(1) the offer of the Certificates was not made to a
person in the United States;
(2) either (a) at the time the buy order was
originated, the transferee was outside the United States or
we and any person acting on our behalf reasonably believed
that the transferee was outside the United States or (b)
the transaction was executed in, on or through the
facilities of a designated off-shore securities market and
neither we nor any person acting on our behalf knows that
the transaction has been pre-arranged with a buyer in the
United States;
(3) no directed selling efforts have been made in the
United States in contravention of the requirements of Rule
903(b) or Rule 904(b) of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act.
In addition, if the sale is made during a restricted
period and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of
Regulation S are applicable thereto, we confirm that such sale
has been made in accordance with the applicable provisions of
Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You and Continental Airlines, Inc. are entitled to
rely upon this letter and are irrevocably authorized to produce
this letter or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:_______________________
Authorized Signature
C-2
EXHIBIT D
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
[date]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Trustee Administration
Re: Continental Airlines 1996-2C Pass-
Through Trust (the "Trust"), 10.22%
Continental Airlines Pass Through
Certificates Series 1996-2C
(the "Certificates")
Dear Sirs:
In connection with our proposed purchase of
$_______________ aggregate principal amount of the Certificates,
we confirm that:
1. We understand that any subsequent transfer of the
Certificates is subject to certain restrictions and
conditions set forth in the Pass Through Trust Agreement
dated as of May 20, 1996 relating to the Certificates (the
"Pass Through Trust Agreement") and the undersigned agrees
to be bound by, and not to resell, pledge or otherwise
transfer the Certificates except in compliance with, such
restrictions and conditions and the Securities Act of 1933,
as amended (the "Securities Act").
2. We understand that the Certificates have not been
registered under the Securities Act, and that the
Certificates may not be offered or sold except as permitted
in the following sentence. We agree, on our own behalf and
on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Certificate,
we will do so only (A) in accordance with Rule 144A under
the Securities Act to a "qualified institutional buyer" (as
defined therein), (B) to an institutional "accredited
investor" (as defined below) that, prior to such transfer,
furnishes to you and Continental Airlines, Inc., a signed
letter substantially in the form of this letter, (C)
outside the United States in accordance with Rule 904 of
Regulation S under the Securities Act, (D) pursuant to the
exemption
from registration provided by Rule 144 under the Securities
Act, or (E) pursuant to an effective registration statement
under the Securities Act, and we further agree to provide
to any person purchasing any of the Certificates from us a
notice advising such purchaser that resales of the Notes
are restricted as stated herein. We further understand that
the Certificates purchased by us will bear a legend to the
foregoing effect.
3. We understand that, on any proposed resale of any
Certificates, we will be required to furnish to you and
Continental Airlines, Inc. such certifications, legal
opinions and other information as you and Continental
Airlines, Inc. may reasonably require to confirm that the
proposed sale complies with the foregoing restrictions. We
further understand that the Certificates purchased by us
will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act) and have such knowledge and
experience in financial and business matters as to be
capable of evaluating the merits and risks of our
investment in the Certificates and we and any accounts for
which we are acting are each able to bear the economic risk
of our or its investment.
5. We are acquiring the Certificates purchased by us
for our own account or for one or more accounts (each of
which is an institutional "accredited investor") as to each
of which we exercise sole investment discretion.
You and Continental Airlines, Inc. are entitled to
rely upon this letter and are irrevocably authorized to produce
this letter or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferor]
By:___________________________
Authorized Signature
D-2
- -------------------------------------------------------------------
PASS THROUGH TRUST AGREEMENT
Dated as of May 20, 1996
between
CONTINENTAL AIRLINES, INC.
and
WILMINGTON TRUST COMPANY,
as Trustee
Continental Airlines 1996-2D Pass Through Trust
11.50% 1996-2D Initial Pass Through Certificates
11.50% 1996-2D Exchange Pass Through Certificates
- -------------------------------------------------------------------
Reconciliation and tie between Continental Airlines 1996-2D Pass
Through Trust Agreement, dated as of May 20, 1996, and the Trust
Indenture Act of 1939. This reconciliation does not constitute
part of the Pass Through Trust Agreement.
Trust Indenture Act Pass Through Trust
of 1939 Section Agreement Section
- ------------------------ -------------------------
310(a)(1) 7.08
(a)(2) 7.08
312(a) 3.05; 8.01; 8.02
313(a) 8.03
314(a) 8.04(a) - (c)
(a)(4) 8.04(d)
(c)(1) 1.02
(c)(2) 1.02
(d)(1) 7.13; 11.01
(d)(2) 7.13; 11.01
(d)(3) 2.01
(e) 1.02
315(b) 7.02
316(a)(last 1.04(c)
sentence)
(a)(1)(A) 6.04
(a)(1)(B) 6.05
(b) 6.06
(c) 1.04(d)
317(a)(1) 6.03
(b) 7.13
318(a) 12.06
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
1.01. Definitions........................................ 2
1.02. Compliance Certificates and Opinions............... 13
1.03. Form of Documents Delivered to Trustee............. 14
1.04. Directions of Certificateholders................... 14
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES;
ACQUISITION OF EQUIPMENT NOTES
2.01. Issuance of Certificates; Acquisition of
Equipment Notes................................... 16
2.02. Acceptance by Trustee.............................. 18
2.03. Limitation of Powers............................... 19
ARTICLE III
THE CERTIFICATES
3.01. Title, Form, Denomination and Execution of
Certificates...................................... 19
3.02. Restrictive Legends................................ 20
3.03. Authentication of Certificates..................... 22
3.04. Transfer and Exchange.............................. 23
3.05. Book-Entry Provisions for U.S. Global
Certificate and Offshore Global Certificates...... 23
3.06. Special Transfer Provisions........................ 25
3.07. Mutilated, Destroyed, Lost or Stolen
Certificates...................................... 28
3.08. Persons Deemed Owners.............................. 28
3.09. Cancellation....................................... 29
3.10. Temporary Certificates............................. 29
3.11. Limitation of Liability for Payments............... 29
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS
4.01. Certificate Account and Special Payments
Account........................................... 30
ii
Section Page
4.02. Distributions from Certificate Account and
Special Payments Account.......................... 30
4.03. Statements to Certificateholders................... 32
4.04. Investment of Special Payment Moneys............... 33
ARTICLE V
THE COMPANY
5.01. Maintenance of Corporate Existence................. 33
5.02. Consolidation, Merger, etc......................... 33
ARTICLE VI
DEFAULT
6.01. Events of Default.................................. 34
6.02. [Intentionally omitted.]........................... 36
6.03. Judicial Proceedings Instituted by Trustee;
Trustee May Bring Suit............................ 36
6.04. Control by Certificateholders...................... 36
6.05. Waiver of Past Defaults............................ 36
6.06. Right of Certificateholders to Receive Payments
Not to Be Impaired................................ 37
6.07. Certificateholders May Not Bring Suit Except
Under Certain Conditions.......................... 37
6.08. Remedies Cumulative................................ 38
ARTICLE VII
THE TRUSTEE
7.01. Certain Duties and Responsibilities................ 38
7.02. Notice of Defaults................................. 39
7.03. Certain Rights of Trustee.......................... 39
7.04. Not Responsible for Recitals or Issuance of
Certificates...................................... 41
7.05. May Hold Certificates.............................. 41
7.06. Money Held in Trust................................ 41
7.07. Compensation and Reimbursement..................... 41
7.08. Corporate Trustee Required; Eligibility............ 42
7.09. Resignation and Removal; Appointment of
Successor......................................... 42
7.10. Acceptance of Appointment by Successor............. 44
7.11. Merger, Conversion, Consolidation or Succession
to Business....................................... 44
7.12. Maintenance of Agencies............................ 45
7.13. Money for Certificate Payments to Be Held in
Trust............................................. 46
iii
Section Page
7.14. Registration of Equipment Notes in Name of
Subordination Agent............................... 46
7.15. Representations and Warranties of Trustee.......... 46
7.16. Withholding Taxes; Information Reporting........... 48
7.17. Trustee's Liens.................................... 48
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
8.01. The Company to Furnish Trustee with Names and
Addresses of Certificateholders................... 48
8.02. Preservation of Information; Communications to
Certificateholders................................ 49
8.03. Reports by Trustee................................. 49
8.04. Reports by the Company............................. 49
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
9.01. Supplemental Agreements Without Consent of
Certificateholders................................ 50
9.02. Supplemental Agreements with Consent of
Certificateholders................................ 51
9.03. Documents Affecting Immunity or Indemnity.......... 52
9.04. Execution of Supplemental Agreements............... 52
9.05. Effect of Supplemental Agreements.................. 52
9.06. Conformity with Trust Indenture Act................ 52
9.07. Reference in Certificates to Supplemental
Agreements........................................ 53
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
10.01. Amendments and Supplements to Indentures and
Other Financing Documents......................... 53
ARTICLE XI
TERMINATION OF TRUST
11.01. Termination of the Trust.......................... 54
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.01. Limitation on Rights of Certificateholders........ 55
iv
Section Page
12.02. Certificates Nonassessable and Fully Paid......... 55
12.03. Notices........................................... 55
12.04. Governing Law..................................... 56
12.05. Severability of Provisions........................ 57
12.06. Trust Indenture Act Controls...................... 57
12.07. Effect of Headings and Table of Contents.......... 57
12.08. Successors and Assigns............................ 57
12.09. Benefits of Agreement............................. 57
12.10. Legal Holidays.................................... 57
12.11. Counterparts...................................... 57
12.12. Intention of Parties.............................. 58
Schedule 1 - Indentures
Schedule 2 - Financing Agreements
Exhibit A - Form of Certificate
Exhibit B - Form of Certificate for Unlegended
Certificates
Exhibit C - Form of Certificate to Be Delivered in
Connection with Transfers Pursuant to
Regulation S
Exhibit D - Form of Certificate to Be Delivered in
Connection with Transfers to Non-QIB
Accredited Investors
PASS THROUGH TRUST AGREEMENT
This PASS THROUGH TRUST AGREEMENT, dated as of May 20,
1996, between CONTINENTAL AIRLINES, INC., a Delaware corporation,
and WILMINGTON TRUST COMPANY, as Trustee, is made with respect to
the formation of Continental Airlines 1996-2D Pass Through Trust
and the issuance of 11.50% Continental Airlines 1996-2D Pass
Through Certificates representing fractional undivided interests
in the Trust.
WITNESSETH:
WHEREAS, (i) the Company, the Owner Trustees and the
Owner Participants (as such terms and certain other capitalized
terms used herein are defined below) have previously entered into
four separate leveraged lease transactions in connection with the
purchase of four Boeing 757-224 aircraft from the manufacturer
(the "Leased Aircraft") and (ii) the Company has previously
purchased one Boeing 737-524 aircraft from the manufacturer (the
"Owned Aircraft"; together with the Leased Aircraft, the
"Aircraft");
WHEREAS, each Owner Trustee, acting on behalf of the
corresponding Owner Participant, will issue pursuant to an
Indenture, on a non-recourse basis, four series of Equipment
Notes, among other things, to refinance the current indebtedness
of such Owner Trustee originally incurred to finance the purchase
price of the related Leased Aircraft;
WHEREAS, the Company, will issue pursuant to an
Indenture, on a recourse basis, four series of Equipment Notes,
relating to the Owned Aircraft;
WHEREAS, the Trustee, upon execution and delivery of
this Agreement, hereby declares the creation of the Trust for the
benefit of the Certificateholders, and the initial
Certificateholders, as the grantors of the Trust, by their
respective acceptances of the Certificates, join in the creation
of this Trust with the Trustee;
WHEREAS, all Certificates to be issued by the Trust
will evidence fractional undivided interests in the 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 this
Agreement and each of the Financing Agreements to be entered into
by the Trustee simultaneously with the execution and delivery of
this Agreement, the Trustee on behalf of the Trust shall purchase
one or more issues of Equipment Notes having the same interest
rate as, and final maturity dates not later than the final
Regular Distribution Date of, the Certificates issued hereunder
and shall hold such Equipment Notes in trust for the benefit of
the Certificateholders;
WHEREAS, to facilitate the sale of Equipment Notes to,
and the purchase of Equipment Notes by, the Trustee on behalf of
the Trust, the Company has duly authorized the execution and
delivery of this Agreement as the "issuer", as such term is
defined in and solely for purposes of the Securities Act of 1933,
as amended, of the Certificates to be issued pursuant hereto and
as the "obligor", as such term is defined in and solely for
purposes of the Trust Indenture Act of 1939, as amended, with
respect to all such Certificates and is undertaking to perform
certain administrative and ministerial duties hereunder and is
also undertaking to pay the ongoing fees and expenses of the
Trustee;
WHEREAS, all of the conditions and requirements
necessary to make this Agreement, when duly executed and
delivered, a valid, binding and legal instrument, enforceable in
accordance with its terms and for the purposes herein expressed,
have been done, performed and fulfilled, and the execution and
delivery of this Agreement in the form and with the terms hereof
have been in all respects duly authorized; and
WHEREAS, upon issuance of the Exchange Certificates,
if any, or the effectiveness of the Registration Statement, this
Agreement, as amended or supplemented from time to time, will be
subject to the provisions of the Trust Indenture Act of 1939, and
shall, to the extent applicable, be governed by such provisions;
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. Definitions. For all purposes of this
Agreement, except as otherwise expressly provided or unless the
context otherwise requires:
(1) the terms used herein that are defined in this
Article have the meanings assigned to them in this Article,
and include the plural as well as the singular;
(2) all other terms used herein which are defined in
the Trust Indenture Act, either directly or by reference
2
therein, or by the rules promulgated under the Trust
Indenture Act, have the meanings assigned to them therein;
(3) all references in this Agreement to designated
"Articles", "Sections", "Subsections" and other
subdivisions are to the designated Articles, Sections,
Subsections and
other subdivisions of this Agreement;
(4) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section,
Subsection or other subdivision; and
(5) unless the context otherwise requires, whenever
the words "including", "include" or "includes" are used
herein, it shall be deemed to be followed by the phrase
"without limitation".
Affiliate: Means, with respect to any Person, any
other Person directly or indirectly controlling or
controlled by or under common control with such Person,
provided, however, that neither America West Airlines, Inc.
nor any of its subsidiaries shall be deemed to be an
"Affiliate" of the Company for purposes of this Agreement.
For purposes of this definition, "control" means the power,
directly or indirectly, to direct the management and
policies of such Person, whether through the ownership of
voting securities or by contract or otherwise, and the
terms "controlling" and "controlled" have meanings
correlative to the foregoing.
Agent Members: Has the meaning specified in Section
3.05.
Aircraft: Has the meaning specified in the first
recital to this Agreement.
Authorized Agent: Means any Paying Agent or Registrar
for the Certificates.
Avoidable Tax: Means a state or local tax (i) upon (w)
the Trust, (x) the Trust Property, (y) Certificateholders
or (z) the Trustee for which the Trustee is entitled to
seek reimbursement from the Trust Property, and (ii) which
would be avoided if the Trustee were located in another
state, or jurisdiction within a state, within the United
States. A tax shall not be an Avoidable Tax if the Company
or any Owner Trustee shall agree to pay, and shall pay,
such tax.
3
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 Certificate is outstanding, the city and
state in which the Trustee or any Loan Trustee maintains
its Corporate Trust Office or receives and disburses funds.
Cedel: Means Cedel Bank societe anonyme.
Certificate: Means any one of the Initial Certificates
or Exchange Certificates and any such Certificates issued in
exchange therefor or replacement thereof pursuant to this
Agreement.
Certificate Account: Means the account or accounts
created and maintained pursuant to Section 4.01(a).
Certificateholder or Holder: Means the Person in whose
name a Certificate is registered in the Register.
Company: Means Continental Airlines, Inc., a Delaware
corporation, or its successor in interest pursuant to
Section 5.02, or any other obligor (within the meaning of
the Trust Indenture Act) with respect to the Certificates.
Controlling Party: Has the meaning specified in the
Intercreditor Agreement.
Corporate Trust Office: With respect to the Trustee or
any Loan Trustee, means the office of such trustee in the
city at which at any particular time its corporate trust
business shall be principally administered.
Cut-off Date: Means August 2, 1996.
Delayed Equipment Notes: Means the Equipment Notes to
be issued on the applicable Transfer Date in respect of the
two Leased Aircraft bearing Federal Aviation Registration
Marks of N12114 and N14115.
Depositary: Means the Depository Trust Company, its
nominees and their respective successors.
Direction: Has the meaning specified in
Section 1.04(a).
Distribution Date: Means any Regular Distribution Date
or Special Distribution Date.
Equipment Notes: Means the equipment notes issued
under the Indentures.
4
ERISA: Means the Employee Retirement Income Security
Act of 1974, as amended from time to time, or any successor
federal statute.
Escrow Account: Has the meaning specified in
Section 2.01(b).
Escrowed Funds: Has the meaning specified in
Section 2.01(b).
Euroclear: Means the Euroclear System.
Event of Default: Means an Indenture Default under any
Indenture pursuant to which Equipment Notes held by the
Trust were issued.
Exchange Certificates: Means the certificates
substantially in the form of Exhibit A hereto issued in
exchange for the Initial Certificates pursuant to the
Registration Rights Agreement and authenticated hereunder.
Exchange Offer Registration Statement: Means the
Exchange Offer Registration Statement defined in the
Registration Rights Agreement.
Financing Agreements: Means each of the four separate
Refunding Agreements and the Note Purchase Agreement, in
each case, dated the date hereof, listed on Schedule 2
hereto, providing for, among other things, the purchase of
Equipment Notes by the Trustee on behalf of the Trust, as
the same may be amended, supplemented or otherwise modified
from time to time in accordance with its terms.
Financing Documents: With respect to any Equipment
Note, means (i) the related Indenture and Financing
Agreement and (ii) in the case of any Equipment Note
related to a Leased Aircraft, the Lease and the
Participation Agreement relating to such Leased Aircraft.
Fractional Undivided Interest: Means the fractional
undivided interest in the Trust that is evidenced by a
Certificate.
Global Certificates: Has the meaning assigned to such
term in Section 3.01.
Indentures: Means each of the four separate Amended
and Restated Trust Indentures and Mortgages and the Trust
Indenture and Mortgage listed on Schedule 1 hereto, in each
case as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
5
Indenture Default: With respect to any Indenture,
means any Event of Default (as such term is defined in such
Indenture).
Initial Certificates: Means the certificates issued
and authenticated hereunder substantially in the form of
Exhibit A hereto other than the Exchange Certificates.
Initial Purchasers: Means, collectively, Morgan
Stanley & Co. Incorporated, CS First Boston Corporation and
Fieldstone FPCG Services, L.P.
Initial Regular Distribution Date: Means the first
Regular Distribution Date on which a Scheduled Payment is to
be made.
Institutional Accredited Investor: Means an
institutional investor that is an "accredited investor"
within the meaning set forth in Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act.
Intercreditor Agreement: Means the Intercreditor
Agreement dated the date hereof among the Trustee, the
Other Trustees, the Liquidity Provider, the liquidity
provider, if any, relating to the Certificates issued under
(and as defined in) each of the Other Pass Through Trust
Agreements, and Wilmington Trust Company, as Subordination
Agent thereunder, as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
Issuance Date: Means the date of the issuance of the
Initial Certificates.
Lease: Means, with respect to each Leased Aircraft,
the lease between an Owner Trustee, as the lessor, and the
Company, as the lessee, referred to in the related
Indenture, as such lease may be amended, supplemented or
otherwise modified in accordance with its terms.
Leased Aircraft: Has the meaning specified in the
first recital to this Agreement.
Liquidity Facility: Means the Revolving Credit
Agreement dated the date hereof relating to the
Certificates, between the Liquidity Provider and the
Subordination Agent, as amended, replaced, supplemented or
otherwise modified from time to time in accordance with its
terms and the terms of the Intercreditor Agreement.
Liquidity Provider: Means, initially, De Nationale
Investeringsbank N.V., and any replacement or successor
6
therefor appointed in accordance with the Liquidity Facility
and the Intercreditor Agreement.
Loan Trustee: With respect to any Equipment Note or
the Indenture applicable thereto, means the bank or trust
company designated as indenture trustee under such
Indenture, together with any successor to such Loan Trustee
appointed pursuant thereto.
Non-U.S. Person: Means a Person that is not a "U.S.
person", as defined in Regulation S.
Officer's Certificate: Means a certificate signed, (a)
in the case of the Company, by (i) the Chairman or Vice
Chairman of the Board of Directors, the President, any
Executive Vice President, any Senior Vice President or the
Treasurer of the Company, signing alone or (ii) any Vice
President of the Company signing together with the
Secretary, the Assistant Secretary, the Treasurer or any
Assistant Treasurer of the Company or, (b) in the case of
an Owner Trustee or a Loan Trustee, a Responsible Officer
of such Owner Trustee or such Loan Trustee, as the case may
be.
Offshore Certificates Exchange Date: Has the meaning
specified in Section 3.01.
Offshore Global Certificates: Has the meaning assigned
to such term in Section 3.01.
Offshore Physical Certificates: Has the meaning
assigned to such term in Section 3.01.
Opinion of Counsel: Means a written opinion of legal
counsel who (a) in the case of counsel for the Company may
be (i) a senior attorney of the Company one of whose
principal duties is furnishing advice as to legal matters,
(ii) Cleary, Gottlieb, Steen & Hamilton, (iii) Hughes
Hubbard & Reed, or (iv) such other counsel designated by
the Company and reasonably acceptable to the Trustee and
(b) in the case of counsel for any Owner Trustee or any
Loan Trustee may be such counsel as may be designated by
any of them whether or not such counsel is an employee of
any of them, and who shall be reasonably acceptable to the
Trustee.
Other Pass Through Trust Agreements: Means each of the
three other Continental Airlines 1996-2 Pass Through Trust
Agreements relating to Continental Airlines 1996-2A Pass
Through Trust, Continental Airlines 1996-2B Pass Through
Trust and Continental Airlines 1996-2C Pass Through Trust,
dated the date hereof.
7
Other Trustees: Means the trustee under the Other Pass
Through Trust Agreements, and any successor or other trustee
appointed as provided therein.
Outstanding: When used with respect to Certificates,
means, as of the date of determination, all Certificates
theretofore authenticated and delivered under this
Agreement, except:
(i) Certificates theretofore cancelled by the
Registrar or delivered to the Trustee or the Registrar
for cancellation;
(ii) Certificates for which money in the full
amount required to make the final distribution with
respect to such Certificates pursuant to Section 11.01
hereof has been theretofore deposited with the Trustee
in trust for the Holders of such Certificates as
provided in Section 4.01 pending distribution of such
money to such Certificateholders pursuant to payment
of such final distribution; and
(iii) Certificates in exchange for or in lieu of
which other Certificates have been authenticated and
delivered pursuant to this Agreement.
Owned Aircraft: Has the meaning specified in the first
recital to this Agreement.
Owner Participant: With respect to any Equipment Note
relating to a Leased Aircraft, means the "Owner
Participant" as referred to in the Indenture pursuant to
which such Equipment Note is issued and any permitted
successor or assign of such Owner Participant; and Owner
Participants at any time of determination means all of the
Owner Participants thus referred to in the Indentures.
Owner Trustee: With respect to any Equipment Note
relating to a Leased Aircraft, means the "Owner Trustee",
as referred to in the Indenture pursuant to which such
Equipment Note is issued, not in its individual capacity
but solely as trustee; and Owner Trustees means all of the
Owner Trustees party to any of the Indentures.
Participation Agreement: With respect to any Leased
Aircraft, means the Participation Agreement referred to in
the related Indenture.
Paying Agent: Means the paying agent maintained and
appointed for the Certificates pursuant to Section 7.12.
8
Permanent Offshore Global Certificates: Has the
meaning specified in Section 3.01.
Permanent Offshore Physical Certificates: Has the
meaning specified in Section 3.01.
Permitted Investments: Means obligations of the United
States of America or agencies or instrumentalities thereof
the payment of which is backed by the full faith and credit
of the United States of America and which mature in not
more than 60 days after the date of acquisition thereof or
such lesser time as is required for the distribution of any
Special Payments on a Special Distribution Date.
Person: Means any person, including any individual,
corporation, partnership, joint venture, association,
joint-stock company, trust, trustee, unincorporated
organization, or government or any agency or political
subdivision thereof.
Physical Certificates: Has the meaning specified in
Section 3.01.
Plan Transferee: Means any Plan or any entity that is
using the assets of any Plan to purchase or hold its
interest in a Certificate. For purposes of this definition,
a "Plan" means any employee benefit plan subject to ERISA
as well as any plan that is not subject to ERISA but which
is subject to Section 4975 of the Internal Revenue Code of
1986, as amended.
Pool Balance: Means, as of any date, (i) the original
aggregate face amount of the Certificates less (ii) the
aggregate amount of all payments made in respect of such
Certificates other than payments made in respect of
interest or premium thereon or reimbursement of any costs
or expenses incurred in connection therewith. The Pool
Balance as of any Distribution Date shall be computed after
giving effect to the payment of principal, if any, on the
Equipment Notes or other Trust Property held in such Trust
and the distribution thereof to be made on such
Distribution Date.
Pool Factor: Means, as of any date, the quotient
(rounded to the seventh decimal place) computed by dividing
(i) the Pool Balance as at such date by (ii) the original
aggregate face amount of the Certificates. The Pool Factor
as of any Distribution Date shall be computed after giving
effect to the payment of principal, if any, on the
Equipment Notes or other Trust Property and the
distribution thereof to be made on such Distribution Date.
9
Postponed Notes: Means (i) the Delayed Equipment Notes
and (ii) the Equipment Notes to be held in the Trust as to
which a Postponement Notice shall have been delivered
pursuant to Section 2.01(b).
Postponement Notice: Means an Officer's Certificate of
the Company (1) requesting that the Trustee temporarily
postpone the purchase pursuant to one or more of the
Financing Agreements of certain of the Equipment Notes to a
date which is later than the Issuance Date, (2) identifying
the amount of the purchase price of each such Equipment
Note and the aggregate purchase price for all such
Equipment Notes, (3) setting forth the reasons for such
postponement and (4) with respect to each such Equipment
Note, either (a) setting or resetting a new Transfer Date
(which shall be on or prior to the applicable Cut-off Date)
for payment by the Trustee of such purchase price and
issuance of the related Equipment Note, or (b) indicating
that such new Transfer Date (which shall be on or prior to
the applicable Cut-off Date) will be set by subsequent
written notice not less than one Business Day prior to such
new Transfer Date.
Private Placement Legend: Has the meaning specified in
Section 3.02.
PTC Event of Default: Means any failure to pay within
10 Business Days of the due date thereof: (i) the
outstanding Pool Balance on January 2, 2016 or (ii)
interest due on the Certificates on any Distribution Date
(unless the Subordination Agent shall have made an Interest
Drawing (as defined in the Intercreditor Agreement) with
respect thereto in an amount sufficient to pay such
interest and shall have distributed such amount to the
Certificateholders).
QIB: Means a qualified institutional buyer as defined
in Rule 144A.
Record Date: Means (i) for Scheduled Payments to be
distributed on any Regular Distribution Date, other than
the final distribution, the 15th day (whether or not a
Business Day) preceding such Regular Distribution Date, and
(ii) for Special Payments to be distributed on any Special
Distribution Date, other than the final distribution, the
15th day (whether or not a Business Day) preceding such
Special Distribution Date.
Refunding Agreements: Has the meaning specified in the
Indentures.
10
Register and Registrar: Mean the register maintained
and the registrar appointed pursuant to Sections 3.04
and 7.12.
Registration Rights Agreement: Means the Registration
Rights Agreement dated May 20, 1996, among the Initial
Purchasers, the Trustee, the Other Trustees and the Company,
as amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Registration Statement: Means the Registration
Statement defined in the Registration Rights Agreement.
Regular Distribution Date: With respect to
distributions of Scheduled Payments in respect of the
Certificates, means each date designated as a Regular
Distribution Date in this Agreement, until payment of all
the Scheduled Payments to be made under the Equipment Notes
held in the Trust have been made; provided, however, that,
if any such day shall not be a Business Day, the related
distribution shall be made on the next succeeding Business
Day without additional interest.
Regulation S: Means Regulation S under the Securities
Act or any successor regulation thereto.
Responsible Officer: With respect to the Trustee, any
Loan Trustee and any Owner Trustee, means any officer in
the Corporate Trust Office of the Trustee, Loan Trustee or
Owner Trustee or any other officer customarily performing
functions similar to those performed by the persons who at
the time shall be such officers, respectively, or to whom
any corporate trust matter is referred because of his
knowledge of and familiarity with a particular subject.
Rule 144A: Means Rule 144A under the Securities Act
and any successor rule thereto.
Scheduled Payment: With respect to any Equipment Note,
means (i) any payment of principal and interest on such
Equipment Note (other than any such payment which is not in
fact received by the Subordination Agent within five days
of the date on which such payment is scheduled to be made)
due from the obligor thereon or (ii) any payment of
interest on the Certificates with funds drawn under the
Liquidity Facility, which payment represents the
installment of principal at the stated maturity of such
installment of principal on such Equipment Note, the
payment of regularly scheduled interest accrued on the
unpaid principal amount of such Equipment Note, or both;
provided that any payment of principal, premium, if any, or
interest resulting from the redemption or purchase of
11
any Equipment Note shall not constitute a Scheduled Payment.
SEC: Means the Securities and Exchange Commission, as
from time to time constituted or created under the
Securities Exchange Act of 1934, as amended, or, if at any
time after the execution of this instrument such Commission
is not existing and performing the duties now assigned to
it under the Trust Indenture Act, then the body performing
such duties on such date.
Securities Act: Means the United States Securities Act
of 1933, as amended from time to time, or any successor
thereto.
Special Distribution Date: Means each date on which a
Special Payment is to be distributed as specified in this
Agreement; provided, however, that, if any such day shall
not be a Business Day, the related distribution shall be
made on the next succeeding Business Day without additional
interest.
Special Payment: Means (i) any payment (other than a
Scheduled Payment) in respect of, or any proceeds of, any
Equipment Note or Trust Indenture Estate (as defined in
each Indenture), (ii) the amounts required to be
distributed pursuant to the last paragraph of Section
2.01(b) or (iii) the amounts required to be distributed
pursuant to the penultimate paragraph of Section 2.01(b).
Special Payments Account: Means the account or
accounts created and maintained pursuant to Section 4.01(b).
Specified Investments: Means, with respect to
investments to be made with Escrowed Funds pursuant to
Section 2.01(b) hereof, (i) obligations of, or guaranteed
by, the United States Government or agencies thereof, (ii)
open market commercial paper of any corporation
incorporated under the laws of the United States of America
or any State thereof rated at least P-2 or its equivalent
by Moody's Investors Service, Inc. or at least A-2 or its
equivalent by Standard & Poor's Ratings Group, (iii)
certificates of deposit issued by commercial banks
organized under the laws of the United States or of any
political subdivision thereof having a combined capital and
surplus in excess of $100,000,000, which banks or their
holding companies have a short-term deposit rating of P1 by
Moody's Investors Service, Inc. or its equivalent by
Standard & Poor's Ratings Group; provided, however, that
the aggregate amount at any one time so invested in certifi-
cates of deposit issued by any one bank shall not exceed 5% of
12
such bank's capital and surplus, (iv) U.S. dollar
denominated offshore certificates of deposit issued by, or
offshore time deposits with, any commercial bank described
in clause (iii) above or any subsidiary thereof and (v)
repurchase agreements with any financial institution having
combined capital and surplus of at least $100,000,000 with
respect to any of the obligations described in clauses (i)
through (iv) above as collateral; provided further that if
all of the above investments are unavailable, all amounts
to be invested may be used to purchase Federal Funds from
an entity described in clause (iii) above.
Subordination Agent: Has the meaning specified in the
Intercreditor Agreement.
Temporary Offshore Global Certificates: Has the
meaning specified in Section 3.01.
Transfer Date: Has the meaning assigned to the term
"Refunding Date" or "Funding Date" in each Financing
Agreement.
Triggering Event: Has the meaning assigned to such
term in the Intercreditor Agreement.
Trust: Means the trust created by this Agreement, the
estate of which consists of the Trust Property.
Trust Indenture Act: Except as otherwise provided in
Section 9.06, means the United States Trust Indenture Act of
1939 as in force at the date hereof.
Trust Property: Means (i) the Equipment Notes held as
the property of the Trust and 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 Escrow
Account, the Certificate Account and the Special Payments
Account, and (iii) all rights of the Trust and the Trustee,
on behalf of the Trust, under the Intercreditor Agreement
and the Liquidity Facility, including, without limitation,
all rights to receive certain payments thereunder, and all
monies paid to the Trustee on behalf of the Trust pursuant
to the Intercreditor Agreement or the Liquidity Facility.
Trustee: Means Wilmington Trust Company, or its
successor in interest, and any successor or other trustee
appointed as provided herein.
Trustee's Lien: Has the meaning specified in Section
7.17.
13
U.S. Global Certificate: Has the meaning specified in
Section 3.01.
U.S. Physical Certificates: Has the meaning specified
in Section 3.01.
Section 1.02. Compliance Certificates and Opinions.
Upon any application or request by the Company, any Owner Trustee
or any Loan Trustee to the Trustee to take any action under any
provision of this Agreement, the Company, such Owner Trustee or
such Loan Trustee, as the case may be, shall furnish to the
Trustee (i) an Officer's Certificate stating that, in the opinion
of the signers, all conditions precedent, if any, provided for in
this Agreement relating to the proposed action have been complied
with and (ii) an Opinion of Counsel stating that in the opinion
of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or
request as to which the furnishing of such documents is
specifically required by any provision of this Agreement relating
to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this
Agreement (other than a certificate provided pursuant to Section
8.04(d)) shall include:
(1) a statement that each individual signing such
certificate or opinion has read such covenant or condition
and the definitions in this Agreement relating thereto;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are
based;
(3) a statement that, in the opinion of each such
individual, he has made such examination or investigation
as is necessary to enable him to express an informed
opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been
complied with.
Section 1.03. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by
14
the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters and any such
Person may certify or give an opinion as to such matters in one
or several documents.
Where any Person is required to make, give or execute
two or more applications, requests, consents, certificates,
statements, opinions or other instruments under this Agreement
or, in respect of the Certificates, this Agreement, they may, but
need not, be consolidated and form one instrument.
Section 1.04. Directions of Certificateholders. (a)
Any direction, consent, request, demand, authorization, notice,
waiver or other action provided by this Agreement to be given or
taken by Certificateholders (a "Direction") may be embodied in
and evidenced by one or more instruments of substantially similar
tenor signed by such Certificateholders in person or by an agent
or proxy duly appointed in writing; and, except as herein
otherwise expressly provided, such action shall become effective
when such instrument or instruments are delivered to the Trustee
and, where it is hereby expressly required pursuant to this
Agreement, to the Company or any Loan Trustee. Proof of execution
of any such instrument or of a writing appointing any such agent
or proxy shall be sufficient for any purpose of this Agreement
and conclusive in favor of the Trustee, the Company and any Loan
Trustee, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person
of any such instrument or writing may be proved by the
certificate of any notary public or other officer of any
jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument
acknowledged to him the execution thereof, or by an affidavit of
a witness to such execution sworn to before any such notary or
such other officer and where such execution is by an officer of a
corporation or association or a member of a partnership, on
behalf of such corporation, association or partnership, such
certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such
instrument or writing, or the authority of the Person executing
the same, may also be proved in any other reasonable manner which
the Trustee deems sufficient.
(c) In determining whether the Certificateholders of
the requisite Fractional Undivided Interests of Certificates
Outstanding have given any Direction under this Agreement,
Certificates owned by the Company or any Affiliate thereof shall
be disregarded and deemed not to be Outstanding for purposes of
any such determination. In determining whether the Trustee shall
15
be protected in relying upon any such Direction, only
Certificates which the Trustee knows to be so owned shall be so
disregarded. Notwithstanding the foregoing, (i) if any such
Person owns 100% of the Certificates Outstanding, such
Certificates shall not be so disregarded, and (ii) if any amount
of Certificates so owned by any such Person have been pledged in
good faith, such Certificates shall not be disregarded if the
pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Certificates and
that the pledgee is not the Company or any Affiliate thereof.
(d) The Company may at its option, by delivery of an
Officer's Certificate to the Trustee, set a record date to
determine the Certificateholders entitled to give any Direction.
Notwithstanding Section 316(c) of the Trust Indenture Act, such
record date shall be the record date specified in such Officer's
Certificate, which shall be a date not more than 30 days prior to
the first solicitation of Certificateholders in connection
therewith. If such a record date is fixed, such Direction may be
given before or after such record date, but only the
Certificateholders of record at the close of business on such
record date shall be deemed to be Certificateholders for the
purposes of determining whether Certificateholders of the
requisite proportion of Outstanding Certificates have authorized
or agreed or consented to such Direction, and for that purpose
the Outstanding Certificates shall be computed as of such record
date; provided that no such Direction by the Certificateholders
on such record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Agreement not
later than one year after such record date.
(e) Any Direction by the Holder of any Certificate
shall bind the Holder of every Certificate issued upon the
transfer thereof or in exchange therefor or in lieu thereof,
whether or not notation of such Direction is made upon such
Certificate.
(f) Except as otherwise provided in Section 1.04(c),
Certificates owned by or pledged to any Person shall have an
equal and proportionate benefit under the provisions of this
Agreement, without preference, priority, or distinction as among
all of the Certificates.
16
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES;
ACQUISITION OF EQUIPMENT NOTES
Section 2.01. Issuance of Certificates; Acquisition of
Equipment Notes. (a) The Trustee is hereby directed to execute
and deliver the Intercreditor Agreement, the Registration Rights
Agreement and each of the Financing Agreements on or prior to the
Issuance Date, each in the form delivered to the Trustee by the
Company. Upon request of the Company and the satisfaction of the
closing conditions specified in each of the Financing Agreements,
the Trustee shall execute, deliver and authenticate Certificates
equalling in the aggregate the aggregate principal amount of the
Equipment Notes to be purchased by the Trustee pursuant to each
of the Financing Agreements on the Transfer Date, and evidencing
the entire ownership interest in the Trust. The Trustee shall
issue and sell such Certificates, in authorized denominations and
in such Fractional Undivided Interests, so as to result in the
receipt by the Trustee of consideration in an amount equal to the
aggregate principal amount of such Equipment Notes and,
concurrently therewith, the Trustee shall purchase, pursuant to
the terms and conditions of the Financing Agreements, the
Equipment Notes at a purchase price equal to the amount of such
consideration so received. Except as provided in Sections 3.04
and 3.07 hereof, the Trustee shall not execute, authenticate or
deliver Certificates in excess of the aggregate amount specified
in this paragraph. The provisions of this Subsection (a) are
subject to the provisions of Subsection (b) below.
(b) On or prior to the Issuance Date, the Company may
deliver to the Trustee a Postponement Notice relating to one or
more Postponed Notes (other than the Delayed Equipment Notes)
(which Postponement Notice may be given by the Company only if
one or more conditions to the purchase of such Postponed Notes by
the Trustee shall not have been satisfied or waived pursuant to
the related Financing Agreement). The Trustee shall postpone the
purchase of the Postponed Notes from the consideration received
from the sale of Certificates and shall promptly deposit funds in
an amount equal to the purchase price of such Postponed Notes
(the "Escrowed Funds") into an escrow account (the "Escrow
Account") with the Trustee to be maintained as a part of the
Trust. The Escrowed Funds so deposited shall be invested by the
Trustee at the direction and risk of the Company in Specified
Investments (i) maturing no later than any scheduled Transfer
Date relating to the Postponed Notes or (ii) if no such Transfer
Date has been scheduled, maturing on the next Business Day, or
(iii) if the Company has given notice to the Trustee that any
Postponed Notes will not be issued, with respect to the portion
of the Escrowed Funds relating to such Postponed Notes, maturing
on the next applicable Special Distribution Date, if such
17
investments are reasonably available for purchase. The Trustee
shall make withdrawals from the Escrow Account only as provided
in this Agreement. Upon request of the Company on one or more
occasions and the satisfaction of the closing conditions
specified in the applicable Financing Agreements on or prior to
the Cut-off Date, the Trustee shall purchase the applicable
Postponed Notes with the Escrowed Funds withdrawn from the Escrow
Account. The purchase price shall equal the principal amount of
such Postponed Notes.
The Trustee shall hold all Specified Investments until
the maturity thereof and will not sell or otherwise transfer
Specified Investments. If Specified Investments held in an Escrow
Account mature prior to any applicable Transfer Date, any
proceeds received on the maturity of such Specified Investments
(other than any earnings thereon) shall be reinvested by the
Trustee at the direction and risk of the Company in Specified
Investments maturing as provided in the preceding paragraph. The
Company shall pay to the Trustee for deposit to the Escrow
Account an amount equal to any losses on such Specified
Investments as incurred.
On the Initial Regular Distribution Date, the Company
will pay (in immediately available funds) to the Trustee an
amount equal to (i) the sum of (A) the interest that would have
accrued on any Postponed Notes purchased on or prior to the
Initial Regular Distribution Date if such Postponed Notes had
been purchased on the Issuance Date, from and including the
Issuance Date to but excluding the date of such purchase and (B)
the interest that would have accrued on any Postponed Notes not
purchased on or prior to the Initial Regular Distribution Date
(other than any Postponed Notes for which a Special Distribution
Date specified in the immediately succeeding paragraph has
occurred on or prior to the Initial Regular Distribution Date) if
such Postponed Notes had been purchased on the Issuance Date,
from and including the Issuance Date to but excluding the Initial
Regular Distribution Date, minus (ii) the earnings on Specified
Investments received by the Trustee from and including the later
of the Issuance Date or the date immediately preceding the
Initial Regular Distribution Date on which an amount has been
paid pursuant to the immediately succeeding paragraph to but
excluding the Initial Regular Distribution Date. On the second
Regular Distribution Date, the Company will pay (in immediately
available funds) to the Trustee an amount equal to the interest
that would have accrued on any Postponed Notes purchased after
the Initial Regular Distribution Date and on or prior to the
Cut-off Date if such Postponed Notes had been purchased on the
Initial Regular Distribution Date, from and including the Initial
Regular Distribution Date to but excluding the date of such
purchase, minus (ii) the earnings on Specified Investments
received by the Trustee from and including the later of
18
the Initial Regular Distribution Date or the date immedi-
ately preceding the second Regular Distribution Date on
which an amount has been paid pursuant to either of the two
succeeding paragraphs to but excluding the second Regular
Distribution Date.
If the Company notifies the Trustee prior to the
Cutoff Date that any Postponed Notes will not be issued on or
prior to the Cut-off Date for any reason, on the next Special
Distribution Date occurring more than 20 days following the date
of such notice (i) the Company shall pay to the Trustee for
deposit in the Special Payments Account, in immediately available
funds, an amount equal to the sum of (A) the interest that would
have accrued on the Postponed Notes designated in such notice at
a rate equal to the interest rate applicable to the Certificates
from and including the Issuance Date (if such Special
Distribution Date shall occur on or prior to the Initial Regular
Distribution Date) or the Initial Regular Distribution Date (if
such Special Distribution Date occurs after the Initial Regular
Distribution Date) to but excluding such Special Distribution
Date and (B) if any such Postponed Notes shall be Delayed
Equipment Notes and shall not be issued for any reason other than
the occurrence of an Event of Loss (as defined in the related
Indenture) with respect to the Aircraft relating to such Delayed
Equipment Notes, 2% of the aggregate principal amount of such
Delayed Equipment Notes and (ii) the Trustee shall transfer an
amount equal to that amount of Escrowed Funds that would have
been used to purchase the Postponed Notes designated in such
notice plus the amount paid by the Company pursuant to the
immediately preceding clause (i) to the Special Payments Account
for distribution as a Special Payment in accordance with the
provisions hereof.
If, on the Cut-off Date, an amount equal to less than
all of the Escrowed Funds (other than Escrowed Funds referred to
in the immediately preceding paragraph) has been used to purchase
Postponed Notes, on the next Special Distribution Date occurring
more than 20 days following the Cut-off Date (i) the Company
shall pay to the Trustee for deposit in the Special Payments
Account, in immediately available funds, an amount equal to the
sum of (A) the interest that would have accrued on Postponed
Notes originally contemplated to be purchased with such unused
Escrowed Funds (other than Escrowed Funds referred to in the
immediately preceding paragraph) but not so purchased at a rate
equal to the interest rate applicable to the Certificates from
and including the Initial Regular Distribution Date to but
excluding such Special Distribution Date and (B) if any such
Postponed Notes shall be Delayed Equipment Notes and shall not
have been purchased for any reason other than the occurrence of
an Event of Loss (as defined in the related Indenture) with
respect to the Aircraft relating to such Delayed Equipment Notes,
19
2% of the aggregate principal amount of such Delayed Equipment
Notes and (ii) the Trustee shall transfer such unused Escrowed
Funds and the amount paid by the Company pursuant to the
immediately preceding clause (i) to the Special Payments Account
for distribution as a Special Payment in accordance with the
provisions hereof.
Section 2.02. Acceptance by Trustee. The Trustee, upon
the execution and delivery of this Agreement, acknowledges its
acceptance of all right, title and interest in and to the
Equipment Notes acquired pursuant to Section 2.01 hereof and the
Financing Agreements and declares that the Trustee holds and will
hold such right, title and interest, together with all other
property constituting the Trust Property, for the benefit of all
then present and future Certificateholders, upon the trusts
herein set forth. Subject to Section 7.14, the Trustee shall take
all actions reasonably necessary to effect the registration of
all such Equipment Notes in the name of the Subordination Agent.
By its payment for and acceptance of each Certificate issued to
it under this Agreement, each initial Certificateholder as
grantor of the Trust thereby joins in the creation and
declaration of the Trust.
Section 2.03. Limitation of Powers. The Trust is
constituted solely for the purpose of making the investment in
the Equipment Notes, and, except as set forth herein, the Trustee
shall not be authorized or empowered to acquire any other
investments or engage in any other activities and, in particular,
the Trustee shall not be authorized or empowered to do anything
that would cause such Trust to fail to qualify as a "grantor
trust" for federal income tax purposes (including as subject to
this restriction, acquiring any Aircraft (as defined in the
respective Indentures) by bidding such Equipment Notes or
otherwise, or taking any action with respect to any such Aircraft
once acquired).
ARTICLE III
THE CERTIFICATES
Section 3.01. Title, Form, Denomination and Execution
of Certificates. (a) The Initial Certificates shall be known as
the "11.50% 1996-2D Initial Pass Through Certificates" and the
Exchange Certificates shall be known as the "11.50% 1996-2D
Exchange Pass Through Certificates", in each case, of the Trust.
Each Certificate will represent a fractional undivided interest
in the Trust and shall be substantially in the form set forth as
Exhibit A hereto, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted
by this Agreement and may have such letters, numbers or other
20
marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be
determined by the officers executing such Certificates, as
evidenced by their execution of the Certificates. Any portion of
the text of any Certificate may be set forth on the reverse
thereof, with an appropriate reference thereto on the face of the
Certificate.
(b) The Initial Certificates shall be issued only in
fully registered form without coupons and only in denominations
of $100,000 or integral multiples of $1,000 in excess thereof,
except that one Certificate may be issued in a denomination of
less than $100,000. The Exchange Certificates will be issued in
denominations of $1,000 or integral multiples thereof. Each
Certificate shall be dated the date of its authentication. The
aggregate Fractional Undivided Interest of Certificates shall not
at any time exceed $18,510,000.
(c) Initial Certificates offered and sold in reliance
on Rule 144A shall be issued initially in the form of a single
permanent global Certificate in registered form, substantially in
the form set forth as Exhibit A hereto (the "U.S. Global
Certificate"), duly executed and authenticated by the Trustee as
hereinafter provided. The U.S. Global Certificate will be
registered in the name of a nominee for the Depositary and
deposited with the Trustee, as custodian for the Depositary. The
aggregate principal amount of the U.S. Global Certificate may
from time to time be increased or decreased by adjustments made
on the records of the Depositary or its nominee, or of the
Trustee, as custodian for the Depositary or its nominee, as
hereinafter provided.
(d) Initial Certificates offered and sold in offshore
transactions in reliance on Regulation S shall be issued
initially in the form of a single temporary global Certificate in
registered form, substantially in the form set forth as Exhibit A
hereto (the "Temporary Offshore Global Certificate") duly
executed and authenticated by the Trustee as hereinafter
provided. The Temporary Offshore Global Certificates will be
registered in the name of a nominee of the Depositary for credit
to the account of the Agent Members acting as depositaries for
Euroclear and Cedel and deposited with the Trustee as custodian
for the Depositary. At any time following June 29, 1996 (the
"Offshore Certificates Exchange Date"), upon receipt by the
Trustee of a certificate substantially in the form of Exhibit B
hereto, a single permanent global Certificate in registered form
substantially in the form set forth in Exhibit A (the "Permanent
Offshore Global Certificate"; and together with the Temporary
Offshore Global Certificate, the "Offshore Global Certificates"),
duly executed and authenticated by the Trustee as hereinafter
21
provided, shall be registered in the name of a nominee for the
Depositary and deposited with the Trustee, as custodian for the
Depositary, and the Registrar shall reflect on its books and
records the date of such transfer and a decrease in the principal
amount of any Temporary Offshore Global Certificate in an amount
equal to the principal amount of the beneficial interest in such
Temporary Offshore Global Certificate transferred. The U.S.
Global Certificate and the Offshore Global Certificates are
sometimes referred to as the "Global Certificates".
(e) Initial Certificates offered and sold to
Institutional Accredited Investors shall be issued in the form of
permanent certificated Certificates in registered form in
substantially the form set forth as Exhibit A hereto (the "U.S.
Physical Certificates"). Certificates issued pursuant to Section
3.05(b) in exchange for interests in any Offshore Global
Certificate shall be in the form of permanent certificated
Certificates in registered form substantially in the form set
forth in Exhibit A (the "Offshore Physical Certificates"). The
Offshore Physical Certificates and U.S. Physical Certificates are
sometimes collectively herein referred to as the "Physical
Certificates".
(f) The definitive Certificates shall be in registered
form and shall be typed, printed, lithographed or engraved or
produced by any combination of these methods or may be produced
in any other manner, all as determined by the officers executing
such Certificates, as evidenced by their execution of such
Certificates.
Section 3.02. Restrictive Legends. (a) Subject to
Section 3.06, unless and until (i) an Initial Certificate is sold
under an effective Registration Statement or (ii) an Initial
Certificate is exchanged for an Exchange Certificate pursuant to
an effective Exchange Offer Registration Statement, in each case
as provided for in the Registration Rights Agreement, each Global
Certificate (other than the Permanent Offshore Global
Certificate) and each U.S. Physical Certificate shall bear the
following legend (the "Private Placement Legend") on the face
thereof:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN
THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT
(A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITU-
TIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
22
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER
THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT WITHIN
THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE
WAS HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY
AFFILIATE OF ANY OF SUCH PERSONS RESELL OR OTHERWISE
TRANSFER THIS CERTIFICATE EXCEPT (A) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (B) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR
MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATE THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE TRUSTEE), (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT 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
WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE
OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS
CERTIFICATE WAS HELD BY CONTINENTAL AIRLINES, INC., THE
TRUSTEE OR ANY AFFILIATE OF ANY OF SUCH PERSONS THE HOLDER
MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE
HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT
THIS CERTIFICATE TO THE TRUSTEE. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON"
HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
(b) Each Global Certificate shall also bear the
following legend on the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE TRUSTEE 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 HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
23
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR
TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE
PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN.
Section 3.03. Authentication of Certificates. (a) The
Trustee shall duly execute, authenticate and deliver Certificates
in authorized denominations equalling in the aggregate the
aggregate principal amount of the Equipment Notes to be purchased
by the Trustee pursuant to the Financing Agreements and
evidencing the entire ownership of the Trust.
(b) No Certificate shall be entitled to any benefit
under this Agreement or be valid or obligatory for any purpose,
unless there appears on such Certificate a certificate of
authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Certificate
shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder.
Section 3.04. Transfer and Exchange. (a) 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 this
Agreement a register (the "Register") for the Certificates in
which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of the
Certificates and of transfers and exchanges of the Certificates
as herein provided. The Trustee shall initially be the registrar
(the "Registrar") for the purpose of registering the Certificates
and transfers and exchanges of the Certificates as herein
provided. A Certificateholder may transfer a Certificate by
written application to the Registrar stating the name of the
proposed transferee and otherwise complying with the terms of
this Agreement, including providing a written certificate or
other evidence of compliance with any restrictions on transfer.
No such transfer shall be effected until, and such transferee
shall succeed to the rights of a Certificateholder only upon,
final acceptance and registration of the transfer by the
Registrar in the Register. Prior to the registration of any
transfer by a Certificateholder as provided herein, the Trustee
shall treat the person in whose name the Certificate is
registered as the owner thereof for all purposes, and the Trustee
shall not be affected by notice to the contrary. Furthermore,
24
the Depositary shall, by acceptance of a Global Certificate,
agree that transfers of beneficial interests in such Global
Certificate may be effected only through a book-entry system
maintained by the Depositary (or its agent), and that ownership
of a beneficial interest in the Certificate shall be required to
be reflected in a book entry. When Certificates are presented to
the Registrar with a request to register the transfer or to
exchange them for an equal face amount of Certificates of other
authorized denominations, the Registrar shall register the
transfer or make the exchange as requested if its requirements
for such transactions are met. To permit registrations of
transfers and exchanges in accordance with the terms, conditions
and restrictions hereof, the Trustee shall execute and
authenticate Certificates at the Registrar's request. No service
charge shall be made for any registration of transfer or exchange
of the Certificates, but the Trustee may require payment by the
transferor of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith
(other than any such transfer taxes or other similar governmental
charges payable upon exchanges pursuant to Section 3.10 or 9.07).
Section 3.05. Book-Entry Provisions for U.S. Global
Certificate and Offshore Global Certificates. (a) Members of, or
participants in, the Depositary ("Agent Members") shall have no
rights under this Agreement with respect to any Global
Certificate held on their behalf by the Depositary, or the
Trustee as its custodian, and the Depositary may be treated by
the Trustee and any agent of the Trustee as the absolute owner of
such Global Certificate for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the
Trustee or any agent of the Trustee from giving effect to any
written certification, proxy or other authorization furnished by
the Depositary or shall impair, as between the Depositary and its
Agent Members, the operation of customary practices governing the
exercise of the rights of a holder of any Certificate. Upon the
issuance of any Global Certificate, the Registrar or its duly
appointed agent shall record a nominee of the Depositary as the
registered holder of such Global Certificate.
(b) Transfers of any Global Certificate shall be
limited to transfers of such Global Certificate or Offshore
Global Certificate in whole, but not in part, to nominees of the
Depositary, its successor or such successor's nominees.
Beneficial interests in the U.S. Global Certificate and any
Offshore Global Certificate may be transferred in accordance with
the rules and procedures of the Depositary and the provisions of
Section 3.06. Beneficial interests in the U.S. Global Certificate
or an Offshore Global Certificate shall be delivered to all
beneficial owners in the form of U.S. Physical Certificates or
Offshore Physical Certificates, as the case may be, if
25
(i) the Depositary notifies the Trustee that it is unwilling
or unable to continue as Depositary for the U.S. Global
Certificate or such Offshore Global Certificate, as the case may
be, and a successor depositary is not appointed by the Trustee
within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a
request from the Depositary to issue Physical Certificates.
(c) Any beneficial interest in one of the Global
Certificates that is transferred to a Person who takes delivery
in the form of an interest in the other Global Certificate will,
upon such transfer, cease to be an interest in such Global
Certificate and become an interest in the other Global
Certificate and, accordingly, will thereafter be subject to all
transfer restrictions, if any, and other procedures applicable to
beneficial interests in such other Global Certificate for as long
as it remains such an interest.
(d) [Intentionally omitted.]
(e) In connection with the transfer of the entire U.S.
Global Certificate or an entire Offshore Global Certificate to
the beneficial owners thereof pursuant to paragraph (b) of this
Section 3.05, such U.S. Global Certificate or Offshore Global
Certificate, as the case may be, shall be deemed to be
surrendered to the Trustee for cancellation, and the Trustee
shall execute, authenticate and deliver, to each beneficial owner
identified by the Depositary in exchange for its beneficial
interest in such U.S. Global Certificate or Offshore Global
Certificate, as the case may be, an equal aggregate principal
amount of U.S. Physical Certificates or Offshore Physical
Certificates, as the case may be, of authorized denominations.
(f) Any U.S. Physical Certificate delivered in
exchange for an interest in the U.S. Global Certificate pursuant
to paragraph (b) of this Section 3.05 shall, except as otherwise
provided by paragraph (f) of Section 3.06, bear the Private
Placement Legend.
(g) Any Offshore Physical Certificate delivered in
exchange for an interest in an Offshore Global Certificate
pursuant to paragraph (b) of this Section shall, except as
otherwise provided by paragraph (f) of Section 3.06, bear the
applicable legend regarding transfer restrictions set forth in
Section 3.02(a).
(h) The registered holder of the U.S. Global
Certificate or any Offshore Global Certificate may grant proxies
and otherwise authorize any Person, including Agent Members and
Persons that may hold interests through Agent Members, to take
26
any action which a Holder is entitled to take under this
Agreement or the Certificates.
Section 3.06. Special Transfer Provisions. Unless and
until (i) an Initial Certificate is sold under an effective
Registration Statement, or (ii) an Initial Certificate is
exchanged for an Exchange Certificate pursuant to an effective
Exchange Offer Registration Statement, in each case pursuant to
the Registration Rights Agreement, the following provisions shall
apply to such Initial Certificates:
(a) Transfers to Non-QIB Institutional Accredited
Investors. The following provisions shall apply with respect to
the registration of any proposed transfer of a Certificate to any
Institutional Accredited Investor which is not a QIB (excluding
transfers to or by Non-U.S. Persons):
(i) The Registrar shall register the transfer of any
Certificate, whether or not such Certificate bears the
Private Placement Legend, if (x) the requested transfer is
at least three years after the later of the original issue
date of the Certificates and the last date on which such
Certificate was held by the Company or any affiliate of any
such persons or (y) the proposed transferee has delivered
to the Registrar a letter substantially in the form of
Exhibit D hereto and the aggregate principal amount of the
Certificates being transferred is at least $100,000.
(ii) If the proposed transferor is an Agent Member
holding a beneficial interest in the U.S. Global
Certificate, upon receipt by the Registrar of (x) the
documents, if any, required by paragraph (i) and (y)
instructions given in accordance with the Depositary's and
the Registrar's procedures, the Registrar shall reflect on
its books and records the date of the transfer and a
decrease in the principal amount of such U.S. Global
Certificate in an amount equal to the principal amount of
the beneficial interest in such U.S. Global Certificate to
be transferred, and the Company shall execute, and the
Trustee shall authenticate and deliver to the transferor or
at its direction, one or more U.S. Physical Certificates of
like tenor and amount.
(b) Transfers to QIBs. The following provisions shall
apply with respect to the registration of any proposed transfer
of an Initial Certificate to a QIB (excluding Non-U.S. Persons):
(i) If the Certificate to be transferred consists of
U.S. Physical Certificates or an interest in any Temporary
Offshore Global Certificate, the Registrar shall register
the transfer if such transfer is being made by a proposed
27
transferor who has checked the box provided for on the form
of Initial Certificate stating, or has otherwise advised
the Trustee and the Registrar in writing, that the sale has
been made in compliance with the provisions of Rule 144A to
a transferee who has signed the certification provided for
on the form of Initial Certificate stating, or has
otherwise advised the Trustee and the Registrar in writing,
that it is purchasing the Initial Certificate for its own
account or an account with respect to which it exercises
sole investment discretion and that it, or the Person on
whose behalf it is acting with respect to any such account,
is a QIB within the meaning of Rule 144A, and is aware that
the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information
regarding the Trust and/or the Company as it has requested
pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is
relying upon its foregoing representations in order to
claim the exemption from registration provided by Rule
144A.
(ii) Upon receipt by the Registrar of the documents
referred to in clause (i) above and instructions given in
accordance with the Depositary's and the Registrar's
procedures therefor, the Registrar shall reflect on its
books and records the date of such transfer and an increase
in the principal amount of the U.S. Global Certificate in
an amount equal to the principal amount of the U.S.
Physical Certificates or interests in the Temporary
Offshore Global Certificate, as the case may be, being
transferred, and the Trustee shall cancel such Physical
Certificates or decrease the amount of such Temporary
Offshore Global Certificate so transferred.
(c) [intentionally omitted.]
(d) Transfers of Interests in the Permanent Offshore
Global Certificate or Offshore Physical Certificates. The
Registrar shall register any transfer of interests in the
Permanent Offshore Global Certificate or Offshore Physical
Certificates without requiring any additional certification.
(e) Transfers to Non-U.S. Persons at Any Time. The
following provisions shall apply with respect to any registration
of any transfer of an Initial Certificate to a Non-U.S. Person:
(i) Prior to the Offshore Certificates Exchange Date,
the Registrar shall register any proposed transfer of an
Initial Certificate to a Non-U.S. Person upon receipt of a
certificate substantially in the form set forth as Exhibit
C hereto from the proposed transferor.
28
(ii) On and after the Offshore Certificates Exchange
Date, the Registrar shall register any proposed transfer to
any Non-U.S. Person if the Certificate to be transferred is
a U.S. Physical Certificate or an interest in the U.S.
Global Certificate, upon receipt of a certificate
substantially in the form of Exhibit C from the proposed
transferor. The Registrar shall promptly send a copy of
such certificate to the Company.
(iii) Upon receipt by the Registrar of (x) the
documents, if any, required by paragraph (ii) and (y)
instructions in accordance with the Depositary's and the
Registrar's procedures, the Registrar shall reflect on its
books and records the date of such transfer and a decrease
in the principal amount of such U.S. Global Certificate in
an amount equal to the principal amount of the beneficial
interest in such U.S. Global Certificate to be transferred,
and (B) upon receipt by the Registrar of instructions given
in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and
records the date and an increase in the principal amount of
the Offshore Global Certificate in an amount equal to the
principal amount of the U.S. Physical Certificate or the
U.S. Global Certificate, as the case may be, to be
transferred, and the Trustee shall cancel the Physical
Certificate, if any, so transferred or decrease the amount
of such U.S. Global Certificate.
(f) Private Placement Legend. Upon the transfer,
exchange or replacement of Certificates not bearing the Private
Placement Legend, the Registrar shall deliver Certificates that
do not bear the Private Placement Legend. Upon the transfer,
exchange or replacement of Certificates bearing the Private
Placement Legend, the Registrar shall deliver only Certificates
that bear the Private Placement Legend unless either (i) the
circumstances contemplated by paragraph (a)(i)(x) or (e)(ii) of
this Section 3.06 exist or (ii) there is delivered to the
Registrar an Opinion of Counsel to the effect that neither such
legend nor the related restrictions on transfer are required in
order to maintain compliance with the provisions of the
Securities Act.
(g) General. By its acceptance of any Certificate
bearing the Private Placement Legend, each Holder of such a
Certificate acknowledges the restrictions on transfer of such
Certificate set forth in this Agreement and agrees that it will
transfer such Certificate only as provided in this Agreement. The
Registrar shall not register a transfer of any Certificate unless
such transfer complies with the restrictions on transfer of such
Certificate set forth in this Agreement. In connection with any
transfer of Certificates, each Certificateholder agrees by
29
its acceptance of the Certificates to furnish the Registrar or
the Trustee such certifications, legal opinions or other
information as either of them may reasonably require to confirm
that such transfer is being made pursuant to an exemption from,
or a transaction not subject to, the registration requirements of
the Securities Act; provided that the Registrar shall not be
required to determine the sufficiency of any such certifications,
legal opinions or other information.
Until such time as no Certificates remain Outstanding,
the Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 3.05 or
this Section 3.06. 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.
Section 3.07. Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate is surrendered to
the Registrar or the Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate
and (b) there is delivered to the Registrar and the Trustee such
security, indemnity or bond, as may be required by them to save
each of them harmless, then, in the absence of notice to the
Registrar or the Trustee that such destroyed, lost or stolen
Certificate has been acquired by a bona fide purchaser, and
provided that the requirements of Section 8-405 of the Uniform
Commercial Code in effect in any applicable jurisdiction are met,
the Trustee shall execute, authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate or Certificates, in authorized
denominations and of like Fractional Undivided Interest and
bearing a number not contemporaneously outstanding.
In connection with the issuance of any new Certificate
under this Section 3.07, the Trustee may require the payment of a
sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses
(including the fees and expenses of the Trustee and the
Registrar) connected therewith.
Any duplicate Certificate issued pursuant to this
Section 3.07 shall constitute conclusive evidence of the
appropriate Fractional Undivided Interest in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies
30
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Certificates.
Section 3.08. Persons Deemed Owners. Prior to due
presentment of a Certificate for registration of transfer, the
Trustee, the Registrar and any Paying Agent may treat the Person
in whose name any Certificate is registered (as of the day of
determination) as the owner of such Certificate for the purpose
of receiving distributions pursuant to Article IV and for all
other purposes whatsoever, and none of the Trustee, the Registrar
or any Paying Agent shall be affected by any notice to the
contrary.
Section 3.09. Cancellation. All Certificates
surrendered for payment or transfer or exchange shall, if
surrendered to the Trustee or any agent of the Trustee other than
the Registrar, be delivered to the Registrar for cancellation and
shall promptly be cancelled by it. No Certificates shall be
authenticated in lieu of or in exchange for any Certificates
cancelled as provided in this Section, except as expressly
permitted by this Agreement. All cancelled Certificates held by
the Registrar shall be destroyed and a certification of their
destruction delivered to the Trustee.
Section 3.10. Temporary Certificates. Until definitive
Certificates are ready for delivery, the Trustee shall
authenticate temporary Certificates. Temporary Certificates shall
be substantially in the form of definitive Certificates but may
have insertions, substitutions, omissions and other variations
determined to be appropriate by the officers executing the
temporary Certificates, as evidenced by their execution of such
temporary Certificates. If temporary Certificates are issued, the
Trustee will cause definitive Certificates to be prepared without
unreasonable delay. After the preparation of definitive
Certificates, the temporary Certificates shall be exchangeable
for definitive Certificates upon surrender of the temporary
Certificates at the office or agency of the Trustee designated
for such purpose pursuant to Section 7.12, without charge to the
Certificateholder. Upon surrender for cancellation of any one or
more temporary Certificates, the Trustee shall execute,
authenticate and deliver in exchange therefor a like face amount
of definitive Certificates of authorized denominations. Until so
exchanged, the temporary Certificates shall be entitled to the
same benefits under this Agreement as definitive Certificates.
Section 3.11. Limitation of Liability for Payments.
All payments and distributions made to Certificateholders 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
31
of Article IV of this Agreement. Each Certificateholder, by its
acceptance of a Certificate, agrees that it will look solely to
the income and proceeds from the Trust Property for any payment
or distribution due to such Certificateholder pursuant to the
terms of this Agreement and that it will not have any recourse to
the Company, the Trustee, the Loan Trustees, the Liquidity
Providers, the Owner Trustees or the Owner Participants, except
as otherwise expressly provided herein or in the Intercreditor
Agreement.
The Company is a party to this Agreement solely for
purposes of meeting the requirements of the Trust Indenture Act,
and therefore shall not have any right, obligation or liability
hereunder (except as otherwise expressly provided herein).
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS
Section 4.01. Certificate Account and Special Payments
Account. (a) The Trustee shall establish and maintain on behalf
of the Certificateholders a Certificate Account as one or more
non-interest-bearing accounts. The Trustee shall hold the
Certificate Account in trust for the benefit of the
Certificateholders, and shall make or permit withdrawals
therefrom only as provided in this Agreement. On each day when a
Scheduled Payment is made to the Trustee under the Intercreditor
Agreement, the Trustee upon receipt thereof shall immediately
deposit the aggregate amount of such Scheduled Payment in the
Certificate Account.
(b) The Trustee shall establish and maintain on behalf
of the Certificateholders a Special Payments Account as one or
more accounts, which shall be non-interest bearing except as
provided in Section 4.04. The Trustee shall hold the Special
Payments Account in trust for the benefit of the
Certificateholders and shall make or permit withdrawals therefrom
only as provided in this Agreement. On each day when one or more
Special Payments are made to the Trustee, the Trustee, upon
receipt thereof, shall immediately deposit the aggregate amount
of such Special Payments in the Special Payments Account.
(c) The Trustee shall present to the related Loan
Trustee of each Equipment Note such Equipment Note on the date of
its stated final maturity or, in the case of any Equipment Note
which is to be redeemed in whole pursuant to the related
Indenture, on the applicable redemption date under such
Indenture.
32
Section 4.02. Distributions from Certificate Account
and Special Payments Account. (a) On each Regular Distribution
Date or as soon thereafter as the Trustee has confirmed receipt
of the payment of all or any part of the Scheduled Payments due
on such date, the Trustee shall distribute out of the Certificate
Account the entire amount deposited therein pursuant to Section
4.01(a). There shall be so distributed to each Certificateholder
of record on the Record Date with respect to such Regular
Distribution Date (other than as provided in Section 11.01
concerning the final distribution) by check mailed to such
Certificateholder, at the address appearing in the Register, such
Certificateholder's pro rata share (based on the Fractional
Undivided Interest in the Trust held by such Certificateholder)
of the total amount in the Certificate Account, except that, with
respect to Certificates registered on the Record Date in the name
of the nominee of the Depositary (initially, such nominee to be
Cede & Co.), such distribution shall be made by wire transfer in
immediately available funds to the account designated by such
nominee.
(b) 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, 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). There shall be so distributed to each Certificateholder
of record on the Record Date with respect to such Special
Distribution Date (other than as provided in Section 11.01
concerning the final distribution) by check mailed to such
Certificateholder, at the address appearing in the Register, such
Certificateholder's pro rata share (based on the Fractional
Undivided Interest in the Trust held by such Certificateholder)
of the total amount in the Special Payments Account on account of
such Special Payment, except that, with respect to Certificates
registered on the Record Date in the name of the nominee of the
Depositary (initially, such nominee to be Cede & Co.), such
distribution shall be made by wire transfer in immediately
available funds to the account designated by such nominee.
(c) The Trustee shall, at the expense of the Company,
cause notice of each Special Payment to be mailed to each
Certificateholder at his address as it appears in the Register.
In the event of redemption or purchase of Equipment Notes held in
the Trust, such notice shall be mailed not less than 20 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,
33
stating the Special Distribution Date for such Special Payment
which shall occur not less than 20 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),
(ii) the amount of the Special Payment for each $1,000
face amount Certificate (taking into account any payment to
be made by the Company pursuant to Section 2.01(b)) and the
amount thereof constituting principal, premium, 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
Certificate.
If the amount of premium, if any, payable upon the redemption or
purchase of an 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 received will also be
distributed.
If any redemption of the Equipment Notes held in the
Trust is cancelled, the Trustee, as soon as possible after
learning thereof, shall cause notice thereof to be mailed to each
Certificateholder at its address as it appears on the Register.
Section 4.03. Statements to Certificateholders. (a) On
each Distribution Date, the Trustee will include with each
distribution to Certificateholders of a Scheduled Payment or
Special Payment, as the case may be, a statement setting forth
the following information (per $1,000 face amount Certificate as
to (i) and (ii) below):
(i) the amount of such distribution allocable to
principal and the amount allocable to premium, if any;
(ii) the amount of such distribution allocable to
interest; and
(iii) the Pool Balance and the Pool Factor.
With respect to the Certificates registered in the
name of Cede & Co., as nominee for the Depositary, on the Record
Date prior to each Distribution Date, the Trustee will request from
34
the Depositary a Securities Position Listing setting forth the
names of all Agent Members reflected on the Depositary's books as
holding interests in the Certificates on such Record Date. On
each Distribution Date, the Trustee will mail to each such Agent
Member the statement described above and will make available
additional copies as requested by such Agent Member for
forwarding to holders of interests in the 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 a Certificateholder of
record a statement containing the sum of the amounts determined
pursuant to clauses (a)(i) and (a)(ii) above with respect to the
Trust for such calendar year or, in the event such Person was a
Certificateholder of record during a portion of such calendar
year, for such portion of such year, and such other items as are
readily available to the Trustee and which a Certificateholder
shall reasonably request as necessary for the purpose of such
Certificateholder's preparation of its federal income tax
returns. Such statement and such other items shall be prepared on
the basis of information supplied to the Trustee by the Agent
Members and shall be delivered by the Trustee to such Agent
Members to be available for forwarding by such Agent Members to
the holders of interests in the Certificates in the manner
described in Section 4.03(a).
Section 4.04. Investment of Special Payment Moneys.
Any money received by the Trustee pursuant to Section 4.01(b)
representing a Special Payment which is not to be promptly
distributed shall, to the extent practicable, be invested in
Permitted Investments by the Trustee pending distribution of such
Special Payment pursuant to Section 4.02. Any investment made
pursuant to this Section 4.04 shall be in such Permitted
Investments having maturities not later than the date that such
moneys are required to be used to make the payment required under
Section 4.02 on the applicable Special Distribution Date and the
Trustee shall hold any such Permitted Investments until maturity.
The Trustee shall have no liability with respect to any
investment made pursuant to this Section 4.04, other than by
reason of the willful misconduct or negligence of the Trustee.
All income and earnings from such investments shall be
distributed on such Special Distribution Date as part of such
Special Payment.
35
ARTICLE V
THE COMPANY
Section 5.01. Maintenance of Corporate Existence. The
Company, at its own cost and expense, will do or cause to be done
all things necessary to preserve and keep in full force and
effect its corporate existence, rights and franchises, except as
otherwise specifically permitted in Section 5.02; provided,
however, that the Company shall not be required to preserve any
right or franchise if the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the
business of the Company.
Section 5.02. Consolidation, Merger, etc. The Company
shall not consolidate with or merge into any other corporation or
convey, transfer or lease substantially all of its assets as an
entirety to any Person unless:
(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. ss. 1110), with respect to the Leases;
(b) the corporation formed by such consolidation or
into which the Company is merged or the Person which
acquires by conveyance, transfer or lease substantially all
of the assets of the Company as an entirety shall execute
and deliver to the Trustee a duly authorized, valid,
binding and enforceable agreement in form and substance
reasonably satisfactory to the Trustee containing an
assumption by such successor corporation or Person of the
due and punctual performance and observance of each
covenant and condition of this Agreement, the Other Pass
Through Trust Agreements, the Financing Agreements, and
each other Financing Document to be performed or observed
by the Company; and
(c) the Company shall have delivered to the Trustee an
Officer's Certificate of the Company and an Opinion of
Counsel of the Company reasonably satisfactory to the
Trustee, each stating that such consolidation, merger,
conveyance, transfer or lease and the assumption agreement
mentioned in clause (b) above comply with this Section 5.02
36
and that all conditions precedent herein provided for
relating to such transaction have been complied with.
Upon any consolidation or merger, or any conveyance,
transfer or lease of substantially all of the assets of the
Company as an entirety in accordance with this Section 5.02, the
successor corporation or Person formed by such consolidation or
into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under
this Agreement with the same effect as if such successor
corporation or Person had been named as the Company herein. No
such conveyance, transfer or lease of substantially all of the
assets of the Company as an entirety shall have the effect of
releasing any successor corporation or Person which shall have
become such in the manner prescribed in this Section 5.02 from
its liability in respect of this Agreement and any Financing
Document to which it is a party.
ARTICLE VI
DEFAULT
Section 6.01. Events of Default. (a) Exercise of
Remedies. Upon the occurrence and during the continuation of any
Indenture Default under any Indenture, the Trustee may, to the
extent it is the Controlling Party at such time (as determined
pursuant to the Intercreditor Agreement), direct the exercise of
remedies as provided in the Intercreditor Agreement.
(b) Purchase Rights of Certificateholders. At any time
after the occurrence and during the continuation of a Triggering
Event each Certificateholder shall have the right (which shall
not expire upon any purchase of the Class A Certificates pursuant
to Section 6.01(b)(i) of the Class B Trust Agreement or any
purchase of the Class A Certificates and the Class B Certificates
pursuant to Section 6.01(b)(i) of the Class C Trust Agreement) to
purchase all, but not less than all, of the Class A Certificates,
the Class B Certificates and the Class C Certificates by
notifying in writing each of the Other Trustees and each other
Certificateholder of such Certificateholder's intention to
purchase the Class A Certificates, the Class B Certificates and
the Class C Certificates ten days after the date of such
notification, provided that (A) if prior to the end of such
ten-day period any other Certificateholder notifies such
purchasing Certificateholder that such other Certificateholder
wants to participate in such purchase, then such other
Certificateholder may join with the purchasing Certificateholder
to purchase all, but not less than all, of the Class A
Certificates, the Class B Certificates and the Class C
37
Certificates pro rata based on the principal amount of the
Certificates held by each such Certificateholder and (B) if prior
to the end of such ten-day period any other Certificateholder
fails to notify the purchasing Certificateholder of such other
Certificateholder's desire to participate in such a purchase,
then such other Certificateholder shall lose its right to
purchase the Class A Certificates, the Class B Certificates and
the Class C Certificates pursuant to this Section 6.01(b).
The purchase price with respect to each Class of
Certificates shall be equal to the Pool Balance of such Class of
Certificates, together with accrued and unpaid interest thereon
to the date of such purchase, without premium, but including any
other amounts then due and payable to the Certificateholders of
such Class under the Other Pass Through Trust Agreement for such
Class, the Intercreditor Agreement or any other Refunding
Document or on or in respect of the Certificates of such Class;
provided, however, that no such purchase of Certificates of any
Class shall be effective unless the purchaser shall certify to
the Other Trustee for such Class that contemporaneously with such
purchase, such purchaser is purchasing, pursuant to the terms of
this Agreement and the Other Pass Through Trust Agreements, the
Class A Certificates, the Class B Certificates and the Class C
Certificates. Each payment of the purchase price of the
Certificates of any Class referred to in the first sentence
hereof shall be made to an account or accounts designated by the
Other Trustee for such Class and each such purchase shall be
subject to the terms of this Section 6.01(b). The Class A
Certificates, the Class B Certificates and the Class C
Certificates will be deemed to be purchased on the date payment
of the purchase price is made notwithstanding the failure of the
Certificateholders of any Class to deliver any Certificates of
such Class (whether in the form of Physical Certificates or
beneficial interests in Global Certificates (as defined in the
Other Pass Through Trust Agreement for such Class) and, upon such
a purchase, (i) the only rights of the Certificateholders of such
Class will be to deliver the Certificates of such Class to the
purchaser and receive the purchase price for such Certificates of
such Class and (ii) if the purchaser shall so request, such
Certificateholder will comply with all the provisions of Section
3.04 of the Other Pass Through Trust Agreement for such Class to
enable new Certificates of such Class 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
Certificates of any Class shall be borne by the purchaser
thereof.
As used in this Section 6.01(b), the terms
"Certificateholder", "Class", "Class A Certificate", "Class B
Certificate" and "Class C Certificate", shall have the respective
meanings assigned to such terms in the Intercreditor Agreement.
38
Section 6.02. [Intentionally omitted.].
Section 6.03. Judicial Proceedings Instituted by
Trustee; Trustee May Bring Suit. If there shall be a failure to
make payment of the principal of, premium, if any, or interest on
any Equipment Note, or if there shall be any failure to pay Rent
(as defined in the relevant Lease) under any Lease when due and
payable, then the Trustee, in its own name and as trustee of an
express trust, as holder of such Equipment Notes, to the extent
permitted by and in accordance with the terms of the
Intercreditor Agreement and the Financing Documents (subject to
the rights of the applicable Owner Trustee or Owner Participant
to cure any such failure in accordance with Section 4.03 of the
applicable Indenture), shall be entitled and empowered to
institute any suits, actions or proceedings at law, in equity or
otherwise, for the collection of the sums so due and unpaid on
such Equipment Notes or under such Lease and may prosecute any
such claim or proceeding to judgment or final decree with respect
to the whole amount of any such sums so due and unpaid.
Section 6.04. Control by Certificateholders. Subject
to Section 6.03 and the Intercreditor Agreement, the
Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than a majority in
interest in the Trust shall have the right to direct the time,
method and place of conducting any proceeding for any remedy
available to the Trustee with respect to the Trust or pursuant to
the terms of the Intercreditor Agreement, or exercising any trust
or power conferred on the Trustee under this Agreement or the
Intercreditor Agreement, including any right of the Trustee as
Controlling Party under the Intercreditor Agreement or as holder
of the Equipment Notes, provided that
(1) such Direction shall not be in conflict with any
rule of law or with this Agreement and would not involve
the Trustee in personal liability or expense,
(2) the Trustee shall not determine that the action so
directed would be unjustly prejudicial to the
Certificateholders not taking part in such Direction, and
(3) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
Direction.
Section 6.05. Waiver of Past Defaults. Subject to the
Intercreditor Agreement, the Certificateholders holding
Certificates evidencing Fractional Undivided Interests
aggregating not less than a majority in interest in the Trust (i)
may on behalf of all of the Certificateholders waive any past
Event of Default hereunder and its consequences or (ii) if the
39
Trustee is the Controlling Party, may direct the Trustee to
instruct the applicable Loan Trustee to waive, any past Indenture
Default under any Indenture and its consequences, and thereby
annul any Direction given by such Certificateholders or the
Trustee to such Loan Trustee with respect thereto, except a
default:
(1) in the deposit of any Scheduled Payment or Special
Payment under Section 4.01 or in the distribution of any
payment under Section 4.02 on the Certificates, or
(2) in the payment of the principal of (premium, if
any) or interest on the Equipment Notes, or
(3) in respect of a covenant or provision hereof which
under Article X cannot be modified or amended without the
consent of each Certificateholder holding an Outstanding
Certificate affected thereby.
Upon any such waiver, such default shall cease to
exist with respect to the Certificates and any Event of Default
arising therefrom shall be deemed to have been cured for every
purpose and any direction given by the Trustee on behalf of the
Certificateholders to the relevant Loan Trustee shall be annulled
with respect thereto; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any
right consequent thereon. Upon any such waiver, the Trustee shall
vote the Equipment Notes issued under the relevant Indenture to
waive the corresponding Indenture Default.
Section 6.06. Right of Certificateholders to Receive
Payments Not to Be Impaired. Anything in this Agreement to the
contrary notwithstanding, including, without limitation, Section
6.07 hereof, but subject to the Intercreditor Agreement, the
right of any Certificateholder to receive distributions of
payments required pursuant to Section 4.02 hereof on the
Certificates when due, or to institute suit for the enforcement
of any such payment on or after the applicable Regular
Distribution Date or Special Distribution Date, shall not be
impaired or affected without the consent of such
Certificateholder.
Section 6.07. Certificateholders May Not Bring Suit
Except Under Certain Conditions. A Certificateholder shall not
have the right to institute any suit, action or proceeding at law
or in equity or otherwise with respect to this Agreement, for the
appointment of a receiver or for the enforcement of any other
remedy under this Agreement, unless:
40
(1) such Certificateholder previously shall have given
written notice to the Trustee of a continuing Event of
Default;
(2) Certificateholders holding Certificates evidencing
Fractional Undivided Interests aggregating not less than
25% of the Trust shall have requested the Trustee in
writing to institute such action, suit or proceeding and
shall have offered to the Trustee indemnity as provided in
Section 7.03(e);
(3) the Trustee shall have refused or neglected to
institute such an action, suit or proceeding for 60 days
after receipt of such notice, request and offer of
indemnity; and
(4) no direction inconsistent with such written
request shall have been given to the Trustee during such
60-day period by Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust.
It is understood and intended that no one or more of
the Certificateholders shall have any right in any manner
whatsoever hereunder or under the Certificates to (i) surrender,
impair, waive, affect, disturb or prejudice any property in the
Trust Property or the lien of any Indenture on any property
subject thereto, or the rights of the Certificateholders or the
holders of the Equipment Notes, (ii) obtain or seek to obtain
priority over or preference with respect to any other such
Certificateholder or (iii) enforce any right under this
Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all the Certificateholders
subject to the provisions of this Agreement.
Section 6.08. Remedies Cumulative. Every remedy given
hereunder to the Trustee or to any of the Certificateholders
shall not be exclusive of any other remedy or remedies, and every
such remedy shall be cumulative and in addition to every other
remedy given hereunder or now or hereafter given by statute, law,
equity or otherwise.
ARTICLE VII
THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default, the
Trustee undertakes to perform such duties as are specifically set
41
forth in this Agreement, and no implied covenants or obligations
shall be read into this Agreement against the Trustee.
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of
care and skill in their exercise, as a prudent man would exercise
or use under the circumstances in the conduct of its own affairs.
(c) No provision of this Agreement shall be construed
to relieve the Trustee from liability for its own negligent
action, its own negligent failure to act, or its own wilful
misconduct, except that
(1) this Subsection shall not be construed to limit
the effect of Subsection (a) of this Section; and
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the
Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts.
(d) Whether or not herein expressly so provided, every
provision of this Trust Agreement relating to the conduct or
affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section.
Section 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, the Trustee shall transmit by mail to the Company, the
Owner Trustees, the Owner Participants, the Loan Trustees and the
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 on the
payment of the principal, premium, if any, or interest on any
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 determine that
the withholding of such notice is in the interests of the
Certificateholders. For the purpose of this Section, the term
"default" means any event that is, or after notice or lapse of
time or both would become, an Event of Default.
Section 7.03. Certain Rights of Trustee. Subject to
the provisions of Section 315 of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in
acting or refraining from acting in reliance upon any
42
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture or other paper or document believed by it to be
genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a written
description of the subject matter thereof accompanied by an
Officer's Certificate and an Opinion of Counsel as provided
in Section 1.02 of this Agreement;
(c) whenever in the administration of this Agreement
the Trustee shall deem it desirable that a matter be proved
or established prior to taking, suffering or omitting any
action hereunder, the Trustee (unless other evidence be
herein specifically prescribed) may, in the absence of bad
faith on its part, rely upon an Officer's Certificate of
the Company, any Owner Trustee or any Loan Trustee;
(d) the Trustee may consult with counsel and the
advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Agreement at the Direction of any of the Certificateholders
pursuant to this Agreement, unless such Certificateholders
shall have offered to the Trustee reasonable security or
indemnity against the cost, expenses and liabilities which
might be incurred by it in compliance with such Direction;
(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture or other paper or document;
(g) the Trustee may execute any of the trusts or
powers under this Agreement or perform any duties under
this Agreement either directly or by or through agents or
attorneys, and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or
attorney appointed with due care by it under this
Agreement;
(h) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith
in accordance with the Direction of the Certificateholders
holding Certificates evidencing Fractional Undivided
43
Interests aggregating not less than a majority in interest
in the Trust relating to the time, method and place of
conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon
the Trustee, under this Agreement; and
(i) the Trustee shall not be required to expend or
risk its own funds in the performance of any of its duties
under this Agreement, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate
indemnity against such risk is not reasonably assured to
it.
Section 7.04. Not Responsible for Recitals or Issuance
of Certificates. The recitals contained herein and in the
Certificates, except the certificates of authentication, shall
not be taken as the statements of the Trustee, and the Trustee
assumes no responsibility for their correctness. Subject to
Section 7.15, the Trustee makes no representations as to the
validity or sufficiency of this Agreement, any Financing
Agreement, any Equipment Notes, the Certificates or any other
Financing Document, except that the Trustee hereby represents and
warrants that this Agreement has been, and the Intercreditor
Agreement, the Registration Rights Agreement, each Financing
Agreement and each Certificate will be, executed, authenticated
and delivered by one of its officers who is duly authorized to
execute, authenticate and deliver such document on its behalf.
Section 7.05. May Hold Certificates. The Trustee, any
Paying Agent, Registrar or any of their Affiliates or any other
agent in their respective individual or any other capacity may
become the owner or pledgee of Certificates and, subject to
Sections 310(b) and 311 of the Trust Indenture Act, if
applicable, may otherwise deal with the Company, the Owner
Trustees or the Loan Trustees with the same rights it would have
if it were not Trustee, Paying Agent, Registrar or such other
agent.
Section 7.06. Money Held in Trust. Money held by the
Trustee or the Paying Agent in trust hereunder need not be
segregated from other funds except to the extent required herein
or by law and neither the Trustee nor the Paying Agent shall have
any liability for interest upon any such moneys except as
provided for herein.
Section 7.07. Compensation and Reimbursement. The
Company agrees:
(1) to pay, or cause to be paid, to the Trustee from
time to time reasonable compensation for all services
rendered by it hereunder (which compensation shall not be
44
limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse, or cause to be reimbursed, the Trustee upon its
request for all reasonable out-of-pocket expenses,
disbursements and advances incurred or made by the Trustee
in accordance with any provision of this Agreement
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to
its negligence, willful misconduct or bad faith or as may
be incurred due to the Trustee's breach of its
representations and warranties set forth in Section 7.15;
and
(3) to indemnify the Trustee pursuant to Section 10.1
of the Participation Agreements (as amended by the
Amendments No. 1 thereto dated as of the date hereof) (as
defined in the Intercreditor Agreement).
The Trustee shall be entitled to reimbursement from,
and shall have a lien prior to the Certificates upon, the Trust
Property for any tax incurred without negligence, bad faith or
willful misconduct, on its part, arising out of or in connection
with the acceptance or administration of such Trust (other than
any tax attributable to the Trustee's compensation for serving as
such), including any costs and expenses incurred in contesting
the imposition of any such tax. If the Trustee reimburses itself
from the Trust Property of such Trust for any such tax, it will
mail a brief report within 30 days setting forth the
circumstances thereof to all Certificateholders as their names
and addresses appear in the Register.
Section 7.08. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be
eligible to act as a trustee under Section 310(a) of the Trust
Indenture Act and shall have a combined capital and surplus of at
least $75,000,000 (or a combined capital and surplus in excess of
$5,000,000 and the obligations of which, whether now in existence
or hereafter incurred, are fully and unconditionally guaranteed
by a corporation organized and doing business under the laws of
the United States, any state or territory thereof or of the
District of Columbia and having a combined capital and surplus of
at least $75,000,000). If such corporation publishes reports of
conditions at least annually, pursuant to law or to the
requirements of federal, state, territorial or District of
Columbia supervising or examining authority, then for the
purposes of this Section 7.08, the combined capital and surplus
of such corporation shall be deemed to be its combined capital
and surplus as set forth in its most recent report of conditions
so published.
45
In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 7.08
to act as Trustee, the Trustee shall resign immediately as
Trustee in the manner and with the effect specified in Section
7.09.
Section 7.09. Resignation and Removal; Appointment of
Successor. (a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the
successor Trustee under Section 7.10.
(b) The Trustee may resign at any time as trustee by
giving prior written notice thereof to the Company, the
Authorized Agents, the Owner Trustees and the Loan Trustees. If
an instrument of acceptance by a successor Trustee shall not have
been delivered to the Company, the Authorized Agents, the Owner
Trustees, the Loan Trustees and the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee
may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(c) The Trustee may be removed at any time by
Direction of the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less
than a majority in interest in the Trust delivered to the Trustee
and to the Company, the Owner Trustees and the Loan Trustees.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 310
of the Trust Indenture Act, if applicable, after written
request therefor by the Company or by any Certificateholder
who has been a bona fide Certificateholder for at least six
months; or
(2) the Trustee shall cease to be eligible under
Section 7.08 and shall fail to resign after written request
therefor by the Company or by any such Certificateholder;
or
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of
the Trustee or of its property shall be appointed or any
public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any case, (i) the Company may, with the consent of the
Owner Participants, which consent may not be unreasonably
withheld, remove the Trustee or (ii) any Certificateholder who
has been a bona fide Certificateholder for at least six months
46
may, on behalf of itself and all others similarly situated,
petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
(e) If a Responsible Officer of the Trustee shall
obtain actual knowledge of an Avoidable Tax which has been or is
likely to be asserted, the Trustee shall promptly notify the
Company and shall, within 30 days of such notification, resign
hereunder unless within such 30-day period the Trustee shall have
received notice that the Company has agreed to pay such tax. The
Company shall promptly appoint a successor Trustee in a
jurisdiction where there are no Avoidable Taxes.
(f) If the Trustee shall resign, be removed or become
incapable of acting or if a vacancy shall occur in the office of
the Trustee for any cause, the Company shall promptly appoint a
successor Trustee. If, within one year after such resignation,
removal or incapability, or other occurrence of such vacancy, a
successor Trustee shall be appointed by Direction of the
Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than a majority in
interest in the Trust delivered to the Company, the Owner
Trustees, the Loan Trustees and the retiring Trustee, and the
Company approves such appointment, which approval shall not be
unreasonably withheld, then the successor Trustee so appointed
shall, forthwith upon its acceptance of such appointment, become
the successor Trustee and supersede the successor Trustee
appointed as provided above. If no successor Trustee shall have
been so appointed as provided above and accepted appointment in
the manner hereinafter provided, any Certificateholder who has
been a bona fide Certificateholder for at least six months may,
on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a
successor Trustee.
(g) The successor Trustee shall give notice of the
resignation and removal of the Trustee and appointment of the
successor Trustee by mailing written notice of such event by
first-class mail, postage prepaid, to the Certificateholders as
their names and addresses appear in the Register. Each notice
shall include the name of such successor Trustee and the address
of its Corporate Trust Office.
Section 7.10. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute and
deliver to the Company, the Authorized Agents, the Owner Trustees
and the Loan Trustees and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and
47
duties of the retiring Trustee; but, on request of the Company or
the successor Trustee, such retiring Trustee shall execute and
deliver an instrument transferring to such successor Trustee all
such rights, powers and trusts of the retiring Trustee and shall
duly assign, transfer and deliver to such successor Trustee all
Trust Property held by such retiring Trustee hereunder, subject
nevertheless to its lien, if any, provided for in Section 7.07.
Upon request of any such successor Trustee, the Company, the
retiring Trustee and such successor Trustee shall execute and
deliver any and all instruments containing such provisions as
shall be necessary or desirable to transfer and confirm to, and
for more fully and certainly vesting in, such successor Trustee
all such rights, powers and trusts.
No institution shall accept its appointment as a
Trustee hereunder unless at the time of such acceptance such
institution shall be qualified and eligible under this Article
VII.
Section 7.11. Merger, Conversion, Consolidation or
Succession to Business. Any corporation into which the Trustee
may be merged or converted or with which it may be consolidated,
or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor
of the Trustee hereunder, provided such corporation shall be
otherwise qualified and eligible under this Article VII, without
the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Certificates shall
have been executed or authenticated, but not delivered, by the
Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such
execution or authentication and deliver the Certificates so
executed or authenticated with the same effect as if such
successor Trustee had itself executed or authenticated such
Certificates.
Section 7.12. Maintenance of Agencies. (a) There shall
at all times be maintained an office or agency in the location
set forth in Section 12.03 where Certificates may be presented or
surrendered for registration of transfer or for exchange, and for
payment thereof and where notices and demands to or upon the
Trustee in respect of such certificates or this Agreement may be
served; provided, however, that, if it shall be necessary that
the Trustee maintain an office or agency in another location
(e.g., the Certificates shall be represented by Physical
Certificates and shall be listed on a national securities
exchange), the Trustee will make all reasonable efforts to
establish such an office or agency. Written notice of the
location of each such other office or agency and of any
48
change of location thereof shall be given by the Trustee to the
Company, the Owner Trustees, the Loan Trustees (in the case of
any Owner Trustee or Loan Trustee, at its address specified in
the Financing Agreements or such other address as may be notified
to the Trustee) and the Certificateholders. In the event that no
such office or agency shall be maintained or no such notice of
location or of change of location shall be given, presentations
and demands may be made and notices may be served at the
Corporate Trust Office of the Trustee.
(b) There shall at all times be a Registrar and a
Paying Agent hereunder with respect to the Certificates. Each
such Authorized Agent shall be a bank or trust company, shall be
a corporation organized and doing business under the laws of the
United States or any state, with a combined capital and surplus
of at least $75,000,000, or, if the Trustee shall be acting as
the Registrar or Paying Agent hereunder, a corporation having a
combined capital and surplus in excess of $5,000,000, the
obligations of which are guaranteed by a corporation organized
and doing business under the laws of the United States or any
state, with a combined capital and surplus of at least
$75,000,000, and shall be authorized under such laws to exercise
corporate trust powers, subject to supervision by Federal or
state authorities. The Trustee shall initially be the Paying
Agent and, as provided in Section 3.04, Registrar hereunder with
respect to the Certificates. Each Registrar shall furnish to the
Trustee, at stated intervals of not more than six months, and at
such other times as the Trustee may request in writing, a copy of
the Register maintained by such Registrar.
(c) Any corporation into which any Authorized Agent
may be merged or converted or with which it may be consolidated,
or any corporation resulting from any merger, consolidation or
conversion to which any Authorized Agent shall be a party, or any
corporation succeeding to the corporate trust business of any
Authorized Agent, shall be the successor of such Authorized Agent
hereunder, if such successor corporation is otherwise eligible
under this Section, without the execution or filing of any paper
or any further act on the part of the parties hereto or such
Authorized Agent or such successor corporation.
(d) Any Authorized Agent may at any time resign by
giving written notice of resignation to the Trustee, the Company,
the Owner Trustees and the Loan Trustees. The Company may, and at
the request of the Trustee shall, at any time terminate the
agency of any Authorized Agent by giving written notice of
termination to such Authorized Agent and to the Trustee. Upon the
resignation or termination of an Authorized Agent or in case at
any time any such Authorized Agent shall cease to be eligible
under this Section (when, in either case, no other Authorized
Agent performing the functions of such Authorized Agent shall
49
have been appointed), the Company shall promptly appoint one or
more qualified successor Authorized Agents, reasonably
satisfactory to the Trustee, to perform the functions of the
Authorized Agent which has resigned or whose agency has been
terminated or who shall have ceased to be eligible under this
Section. The Company shall give written notice of any such
appointment made by it to the Trustee, the Owner Trustees and the
Loan Trustees; and in each case the Trustee shall mail notice of
such appointment to all Certificateholders as their names and
addresses appear on the Register.
(e) The Company agrees to pay, or cause to be paid,
from time to time to each Authorized Agent reasonable
compensation for its services and to reimburse it for its
reasonable expenses.
Section 7.13. Money for Certificate Payments to Be
Held in Trust. All moneys deposited with any Paying Agent for the
purpose of any payment on Certificates shall be deposited and
held in trust for the benefit of the Certificateholders entitled
to such payment, subject to the provisions of this Section.
Moneys so deposited and held in trust shall constitute a separate
trust fund for the benefit of the Certificateholders with respect
to which such money was deposited.
The Trustee may at any time, for the purpose of
obtaining the satisfaction and discharge of this Agreement or for
any other purpose, direct any Paying Agent to pay to the Trustee
all sums held in trust by such Paying Agent, such sums to be held
by the Trustee upon the same trusts as those upon which such sums
were held by such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released
from all further liability with respect to such money.
Section 7.14. Registration of Equipment Notes in Name
of Subordination Agent. The Trustee agrees that all Equipment
Notes to be purchased by the Trust shall be issued in the name of
the Subordination Agent or its nominee and held by the
Subordination Agent in trust for the benefit of the
Certificateholders, or, if not so held, the Subordination Agent
or its nominee shall be reflected as the owner of such Equipment
Notes in the register of the issuer of such Equipment Notes.
Section 7.15. Representations and Warranties of
Trustee. The Trustee hereby represents and warrants that:
(a) the Trustee is a Delaware banking corporation
organized and validly existing in good standing under the
laws of the State of Delaware;
50
(b) the Trustee has full power, authority and legal
right to execute, deliver, and perform this Agreement, the
Intercreditor Agreement, the Registration Rights Agreement
and the Financing Agreements and has taken all necessary
action to authorize the execution, delivery, and
performance by it of this Agreement, the Intercreditor
Agreement, the Registration Rights Agreement and the
Financing Agreements;
(c) the execution, delivery and performance by the
Trustee of this Agreement, the Intercreditor Agreement, the
Registration Rights Agreement and the Financing Agreements
(i) will not violate any provision of 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, or (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;
(d) the execution, delivery and performance by the
Trustee of this Agreement, the Intercreditor Agreement, the
Registration Rights Agreement and the Financing Agreements
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
(e) this Agreement, the Intercreditor Agreement, the
Registration Rights Agreement and the Financing Agreements
have been duly executed and delivered by the Trustee and
constitute the legal, valid, and binding agreements of the
Trustee, enforceable against it in accordance with their
respective terms, provided 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.
51
Section 7.16. Withholding Taxes; Information
Reporting. The Trustee, as trustee of the grantor trust created
by this Agreement, shall exclude and withhold from each
distribution of principal, premium, if any, and interest and
other amounts due under this Agreement or under the Certificates
any and all withholding taxes applicable thereto as required by
law. The Trustee agrees to act as such withholding agent and, in
connection therewith, whenever any present or future taxes or
similar charges are required to be withheld with respect to any
amounts payable in respect of the Certificates, to withhold such
amounts and timely pay the same to the appropriate authority in
the name of and on behalf of the Certificateholders, that it will
file any necessary withholding tax returns or statements when
due, and that, as promptly as possible after the payment thereof,
it will deliver to each such Certificateholder appropriate
documentation showing the payment thereof, together with such
additional documentary evidence as such Certificateholders may
reasonably request from time to time. The Trustee agrees to file
any other information reports as it may be required to file under
United States law.
Section 7.17. Trustee's Liens. The Trustee in its
individual capacity agrees 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 mortgage, pledge, lien, charge,
encumbrance, security interest or claim ("Trustee's Liens") on or
with respect to the Trust Property which is attributable to the
Trustee either (i) in its individual capacity and which is
unrelated to the transactions contemplated by this Agreement, the
Intercreditor Agreement, the Financing Agreements or the
Financing Documents, or (ii) as Trustee hereunder or in its
individual capacity and which arises out of acts or omissions
which are not contemplated by this Agreement.
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.01. The Company to Furnish Trustee with
Names and Addresses of Certificateholders. The Company will
furnish to the Trustee within 15 days after each Record Date with
respect to a Scheduled Payment, and at such other times as the
Trustee may request in writing within 30 days after receipt by
the Company of any such request, a list, in such form as the
Trustee may reasonably require, of all information in the
possession or control of the Company as to the names and
addresses of the Certificateholders, in each case as of a date
not more than 15 days prior to the time such list is furnished;
provided, however, that so long as the Trustee is the sole
Registrar, no such list need be furnished; and provided further,
52
however, that no such list need be furnished for so long as a
copy of the Register is being furnished to the Trustee pursuant
to Section 7.12.
Section 8.02. Preservation of Information;
Communications to Certificateholders. The Trustee shall preserve,
in as current a form as is reasonably practicable, the names and
addresses of Certificateholders contained in the most recent list
furnished to the Trustee as provided in Section 7.12 or Section
8.01, as the case may be, and the names and addresses of
Certificateholders received by the Trustee in its capacity as
Registrar, if so acting. The Trustee may destroy any list
furnished to it as provided in Section 7.12 or Section 8.01, as
the case may be, upon receipt of a new list so furnished.
Section 8.03. Reports by Trustee. Within 60 days after
May 15 of each year commencing with the first full year following
the issuance of the Certificates, the Trustee shall transmit to
the Certificateholders, as provided in Section 313(c) of the
Trust Indenture Act, a brief report dated as of such May 15, if
required by Section 313(a) of the Trust Indenture Act.
Section 8.04. Reports by the Company. The Company
shall:
(a) file with the Trustee, within 30 days after the
Company is required to file the same with the SEC, copies
of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the
foregoing as the SEC may from time to time by rules and
regulations prescribe) which the Company is required to
file with the SEC pursuant to section 13 or section 15(d)
of the Securities Exchange Act of 1934, as amended; or, if
the Company is not required to file information, documents
or reports pursuant to either of such sections, then to
file with the Trustee and the SEC, in accordance with rules
and regulations prescribed by the SEC, such of the
supplementary and periodic information, documents and
reports which may be required pursuant to section 13 of the
Securities Exchange Act of 1934, as amended, in respect of
a security listed and registered on a national securities
exchange as may be prescribed in such rules and
regulations;
(b) file with the Trustee and the SEC, in accordance
with the rules and regulations prescribed by the SEC, such
additional information, documents and reports with respect
to compliance by the Company with the conditions and
covenants provided for in this Agreement, as may be
required by such rules and regulations, including, in the
case of annual reports, if required by such rules and
regulations, certificates or opinions of independent public
accountants;
53
(c) transmit to all Certificateholders, in the manner
and to the extent provided in Section 313(c) of the Trust
Indenture Act such summaries of any information, documents
and reports required to be filed by the Company pursuant to
subsections (a) and (b) of this Section 8.04 as may be
required by rules and regulations prescribed by the SEC;
and
(d) furnish to the Trustee, not less often than
annually, a brief certificate from the principal executive
officer, principal financial officer or principal
accounting officer as to his or her knowledge of the
Company's compliance with all conditions and covenants
under this Agreement (it being understood that for purposes
of this paragraph (d), such compliance shall be determined
without regard to any period of grace or requirement of
notice provided under this Agreement).
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.01. Supplemental Agreements Without Consent
of Certificateholders. Without the consent of the
Certificateholders, the Company may (but will not be required
to), and the Trustee (subject to Section 9.03) shall, at any time
and from time to time, enter into one or more agreements
supplemental hereto or, if applicable, to the Intercreditor
Agreement or the Liquidity Facility in form satisfactory to the
Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation
to the Company and the assumption by any such successor of
the covenants of the Company herein contained; or
(2) to add to the covenants of the Company for the
benefit of the Certificateholders, or to surrender any right
or power in this Agreement conferred upon the Company; or
(3) to correct or supplement any provision in this
Agreement, the Intercreditor Agreement or the Liquidity
Facility which may be defective or inconsistent with any
other provision herein or to cure any ambiguity or correct
any mistake or to modify any other provision with respect
to matters or questions arising under this Agreement, the
Intercreditor Agreement or the Liquidity Facility, provided
that any such action shall not materially adversely affect
the interests of the Certificateholders; or
(4) to modify, eliminate or add to the provisions of
this Agreement to such extent as shall be necessary to
54
continue the qualification of this Agreement (including any
supplemental agreement) under the Trust Indenture Act or
under any similar Federal statute hereafter enacted, and to
add to this Agreement such other provisions as may be
expressly permitted by the Trust Indenture Act, excluding,
however, the provisions referred to in Section 316(a)(2) of
the Trust Indenture Act as in effect at the date as of
which this instrument was executed or any corresponding
provision in any similar Federal statute hereafter enacted;
or
(5) to evidence and provide for the acceptance of
appointment under this Agreement by the Trustee of a
successor Trustee and to add to or change any of the
provisions of this Agreement as shall be necessary to
provide for or facilitate the administration of the Trust,
pursuant to the requirements of Section 7.10; or
(6) to provide the information required under
Section 7.12 and Section 12.03 as to the Trustee; or
(7) to modify or eliminate provisions relating to the
transfer or exchange of Exchange Certificates or the
Initial Certificates upon consummation of the Exchange
Offer (as defined in the Registration Rights Agreement) or
effectiveness of the Registration Statement.
Section 9.02. Supplemental Agreements with Consent of
Certificateholders. With the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests
aggregating not less than a majority in interest in the Trust, by
Direction of said Certificateholders delivered to the Company and
the Trustee, the Company may (with the consent of the Owner
Trustees, if any, which consent shall not be unreasonably
withheld), and the Trustee (subject to Section 9.03) shall, enter
into an agreement or agreements for the purpose of adding any
provisions to or changing in any manner or eliminating any of the
provisions of this Agreement, the Intercreditor Agreement, the
Liquidity Facility, the Registration Rights Agreement or any
Financing Agreement to the extent applicable to such
Certificateholders or of modifying in any manner the rights and
obligations of such Certificateholders under this Agreement, the
Intercreditor Agreement, the Liquidity Facility, the Registration
Rights Agreement or any Financing Agreement; provided, however,
that no such agreement shall, without the consent of the
Certificateholder of each Outstanding Certificate affected
thereby:
(1) reduce in any manner the amount of, or delay the
timing of, any receipt by the Trustee of payments on the
Equipment Notes held in the Trust or distributions that are
required to be made herein on any Certificate, or change any
55
date of payment on any Certificate, or change the place of
payment where, or the coin or currency in which, any
Certificate is payable, or impair the right to institute
suit for the enforcement of any such payment or
distribution on or after the Regular Distribution Date or
Special Distribution Date applicable thereto; or
(2) permit the disposition of any Equipment Note
included in the Trust Property except as permitted by this
Agreement, or otherwise deprive such Certificateholder of
the benefit of the ownership of the Equipment Notes in the
Trust; or
(3) reduce the percentage of the aggregate Fractional
Undivided Interests of the Trust which is required for any
such supplemental agreement, or reduce such percentage
required for any waiver of compliance with certain
provisions of this Agreement or certain defaults hereunder
and their consequences provided for in this Agreement; or
(4) waive, amend or modify Section 2.4, 3.2 or 3.3 of
the Intercreditor Agreement in a manner adverse to the
Certificateholders; or
(5) modify any of the provisions of this Section 9.02
or Section 6.05, except to increase any such percentage or
to provide that certain other provisions of this Agreement
cannot be modified or waived without the consent of the
Certificateholder of each Certificate affected thereby.
It shall not be necessary for any Direction of
Certificateholders under this Section to approve the particular
form of any proposed supplemental agreement, but it shall be
sufficient if such Direction shall approve the substance thereof.
Section 9.03. Documents Affecting Immunity or
Indemnity. If in the opinion of the Trustee any document required
to be executed by it pursuant to the terms of Section 9.01 or
9.02 affects any interest, right, duty, immunity or indemnity in
favor of the Trustee under this Agreement, the Trustee may in its
discretion decline to execute such document.
Section 9.04. Execution of Supplemental Agreements. In
executing, or accepting the additional trusts created by, any
agreement permitted by this Article or the modifications thereby
of the trusts created by this Agreement, the Trustee shall be
entitled to receive, and shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such
supplemental agreement is authorized or permitted by this
Agreement.
56
Section 9.05. Effect of Supplemental Agreements. Upon
the execution of any agreement supplemental to this Agreement
under this Article, this Agreement shall be modified in
accordance therewith, and such supplemental agreement shall form
a part of this Agreement for all purposes; and every Holder of a
Certificate theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
Section 9.06. Conformity with Trust Indenture Act.
Every supplemental agreement executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act as
then in effect.
Section 9.07. Reference in Certificates to
Supplemental Agreements. Certificates authenticated and delivered
after the execution of any supplemental agreement pursuant to
this Article may bear a notation in form approved by the Trustee
as to any matter provided for in such supplemental agreement;
and, in such case, suitable notation may be made upon Outstanding
Certificates after proper presentation and demand.
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
Section 10.01. Amendments and Supplements to
Indentures and Other Financing Documents. In the event that the
Trustee, as holder of any Equipment Note in trust for the benefit
of the Certificateholders or as Controlling Party under the
Intercreditor Agreement, receives a request for a consent to any
amendment, modification, waiver or supplement under any Indenture
or other Financing Document, the Trustee shall forthwith send a
notice of such proposed amendment, modification, waiver or
supplement to each Certificateholder registered on the Register
as of the date of such notice. The Trustee shall request from the
Certificateholders a Direction as to (a) whether or not to take
or refrain from taking any action which a holder of such
Equipment Note has the option to direct, (b) whether or not to
give or execute any waivers, consents, amendments, modifications
or supplements as a holder of such Equipment Note and (c) how to
vote any Equipment Note if a vote has been called for with
respect thereto. Provided such a request for Certificateholder
Direction shall have been made, in directing any action or
casting any vote or giving any consent as the holder of any
Equipment Note, the Trustee shall vote for or give consent to any
such action with respect to such Equipment Note in the same
proportion as that of (i) the aggregate face amounts of all
Certificates actually voted in favor of or for giving consent to
such action by such Direction of Certificateholders to (ii) the
aggregate face amount of all Outstanding Certificates. For
57
purposes of the immediately preceding sentence, a Certificate
shall have been "actually voted" if the Holder of such
Certificate has delivered to the Trustee an instrument evidencing
such Holder's consent to such Direction prior to two Business
Days before the Trustee directs such action or casts such vote or
gives such consent. Notwithstanding the foregoing, but subject to
Section 6.04 and the Intercreditor Agreement, the Trustee may, in
its own discretion and at its own direction, consent and notify
the relevant Loan Trustee of such consent to any amendment,
modification, waiver or supplement under the relevant Indenture
or any other Financing Document, if an Event of Default hereunder
shall have occurred and be continuing, or if such amendment,
modification or waiver will not adversely affect the interests of
the Certificateholders.
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust. The
respective obligations and responsibilities of the Company and
the Trustee with respect to the Trust shall terminate upon the
distribution to all Holders of Certificates and the Trustee of
all amounts required to be distributed to them pursuant to this
Agreement and the disposition of all property held as part of the
Trust Property; provided, however, that in no event shall the
Trust continue beyond one hundred ten (110) years following the
date of the earliest execution of this Trust Agreement.
Notice of any termination, specifying the Regular
Distribution Date (or Special Distribution Date, as the case may
be) upon which the Certificateholders may surrender their
Certificates to the Trustee for payment of the final Distribution
Date and cancellation, shall be mailed promptly by the Trustee to
Certificateholders not earlier than the 60th day and not later
than the 20th day next preceding such final Distribution Date
specifying (A) the Regular Distribution Date (or Special
Distribution Date, as the case may be) upon which the proposed
final payment of the Certificates will be made upon presentation
and surrender of Certificates at the office or agency of the
Trustee therein specified, (B) the amount of any such proposed
final payment, and (C) that the Record Date otherwise applicable
to such Regular Distribution Date (or Special Distribution Date,
as the case may be) is not applicable, payments being made only
upon presentation and surrender of the Certificates at the office
or agency of the Trustee therein specified. The Trustee shall
give such notice to the Registrar at the time such notice is
given to Certificateholders. Upon presentation and surrender of
the Certificates in accordance with such notice, the Trustee
58
shall cause to be distributed to Certificateholders such final
payments.
In the event that all of the Certificateholders shall
not surrender their Certificates for cancellation within six
months after the date specified in the above-mentioned written
notice, the Trustee shall give a second written notice to the
remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect
thereto. No additional interest shall accrue on the Certificates
after the Regular Distribution Date (or Special Distribution
Date, as the case may be) specified in the first written notice.
In the event that any money held by the Trustee for the payment
of distributions on the Certificates shall remain unclaimed for
two years (or such lesser time as the Trustee shall be satisfied,
after sixty days' notice from the Company, is one month prior to
the escheat period provided under applicable law) after the final
distribution date with respect thereto, the Trustee shall pay to
each Loan Trustee the appropriate amount of money relating to
such Loan Trustee and shall give written notice thereof to the
related Owner Trustees, the Owner Participants and the Company.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of
Certificateholders. The death or incapacity of any
Certificateholder shall not operate to terminate this Agreement
or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any
action or commence any proceeding in any court for a partition or
winding up of the Trust, nor otherwise affect the rights,
obligations, and liabilities of the parties hereto or any of
them.
Section 12.02. Certificates Nonassessable and Fully
Paid. Except as set forth in the last sentence of this Section
12.02, Certificateholders shall not be personally liable for
obligations of the Trust, the Fractional Undivided Interests
represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever, and
Certificates, upon authentication thereof by the Trustee pursuant
to Section 3.03, are and shall be deemed fully paid. No
Certificateholder shall have any right (except as expressly
provided herein) to vote or in any manner otherwise control the
operation and management of the Trust Property, the Trust, or the
obligations of the parties hereto, nor shall anything set forth
herein, or contained in the terms of the Certificates, be
construed so as to constitute the Certificateholders from time to
59
time as partners or members of an association. Neither the
existence of the Trust nor any provision herein is intended to or
shall limit the liability the Certificateholders would otherwise
incur if the Certificateholders owned Trust Property as
co-owners, or incurred any obligations of the Trust, directly
rather than through the Trust.
Section 12.03. Notices. (a) Unless otherwise
specifically provided herein, all notices required under the
terms and provisions of this Agreement shall be in English and in
writing, and any such notice may be given by United States mail,
courier service or telecopy, and any such notice shall be
effective when delivered or received or, if mailed, three days
after deposit in the United States mail with proper postage for
ordinary mail prepaid,
if to the Company, to:
Continental Airlines, Inc.
2929 Allen Parkway
Houston, TX 77019
Attention: Chief Financial Officer and
General Counsel
Facsimile: (713) 523-2831
if to the Trustee, to:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Department
Facsimile: (302) 651-8882
Telephone: (302) 651-8584
(b) The Company or the Trustee, by notice to the
other, may designate additional or different addresses for
subsequent notices or communications.
(c) Any notice or communication to Certificateholders
shall be mailed by first-class mail to the addresses for
Certificateholders shown on the Register kept by the Registrar.
Failure so to mail a notice or communication or any defect in
such notice or communication shall not affect its sufficiency
with respect to other Certificateholders.
(d) If a notice or communication is mailed in the
manner provided above within the time prescribed, it is
conclusively presumed to have been duly given, whether or not the
addressee receives it.
60
(e) If the Company mails a notice or communication to
the Certificateholders, it shall mail a copy to the Trustee and
to the Paying Agent at the same time.
(f) Notwithstanding the foregoing, all communications
or notices to the Trustee shall be deemed to be given only when
received by a Responsible Officer of the Trustee.
(g) The Trustee shall promptly furnish the Company
with a copy of any demand, notice or written communication
received by the Trustee hereunder from any Certificateholder,
Owner Trustee or Loan Trustee.
Section 12.04. Governing Law. THIS AGREEMENT HAS BEEN
DELIVERED IN THE STATE OF NEW YORK AND THIS AGREEMENT AND THE
CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
CONFLICTS-OF-LAW PRINCIPLES.
Section 12.05. Severability of Provisions. If any one
or more of the covenants, agreements, provisions or terms of this
Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions, or terms shall be deemed
severable from the remaining covenants, agreements, provisions or
terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or
the Trust, or of the Certificates or the rights of the
Certificateholders thereof.
Section 12.06. Trust Indenture Act Controls. This
Agreement is subject to the provisions of the Trust Indenture Act
and shall, to the extent applicable, be governed by such
provisions.
Section 12.07. Effect of Headings and Table of
Contents. The Article and Section headings herein and the Table
of Contents are for convenience only and shall not affect the
construction hereof.
Section 12.08. Successors and Assigns. All covenants,
agreements, representations and warranties in this Agreement by
the Trustee and the Company shall bind and, to the extent
permitted hereby, shall inure to the benefit of and be
enforceable by their respective successors and assigns, whether
so expressed or not.
Section 12.09. Benefits of Agreement. Nothing in this
Agreement or in the Certificates, express or implied, shall give
to any Person, other than the parties hereto and their successors
hereunder, and the Certificateholders, any benefit or any legal
or equitable right, remedy or claim under this Agreement.
61
Section 12.10. Legal Holidays. In any case where any
Regular Distribution Date or Special Distribution Date relating
to any Certificate shall not be a Business Day, 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 no interest shall accrue during the intervening period.
Section 12.11. Counterparts. For the purpose of
facilitating the execution of this Agreement and for other
purposes, this Agreement may be executed simultaneously in any
number of counterparts, each of which counterparts shall be
deemed to be an original, and all of which counterparts shall
constitute but one and the same instrument.
Section 12.12. Intention of Parties. The parties
hereto intend that the 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. The powers granted and obligations undertaken
pursuant to this Agreement shall be so construed so as to further
such intent.
62
IN WITNESS WHEREOF, the parties have caused this
Agreement to be duly executed by their respective officers
thereunto 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:
63
EXHIBIT A
FORM OF CERTIFICATE
REGISTERED
No. ______________
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY
PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A)
IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT), (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A
U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER
THE SECURITIES ACT; (2) AGREES THAT IT WILL NOT WITHIN
THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE
WAS HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY
AFFILIATE OF ANY OF SUCH PERSONS RESELL OR OTHERWISE
TRANSFER THIS CERTIFICATE EXCEPT (A) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (B) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING $100,000 OR
MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATE THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS
CERTIFICATE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM
THE TRUSTEE), (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE
SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT 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
WITHIN THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE
OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFI-
CATE WAS HELD BY CONTINENTAL AIRLINES, INC., THE TRUSTEE OR ANY
AFFILIATE OF ANY OF SUCH PERSONS THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO
THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO
THE TRUSTEE. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE
MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF
THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.]*
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A)
IT IS NOT A PLAN TRANSFEREE (AS DEFINED IN THE PASS THROUGH
TRUST AGREEMENT) OR (B) IT IS AN INSURANCE COMPANY USING
THE ASSETS OF ITS GENERAL ACCOUNT TO ACQUIRE THIS
CERTIFICATE, AND THE CONDITIONS OF PROHIBITED TRANSACTION
CLASS EXEMPTION 95-60 ISSUED BY THE U.S. DEPARTMENT OF
LABOR HAVE BEEN AND WILL CONTINUE TO BE SATISFIED IN
CONNECTION WITH ITS PURCHASE AND HOLDING OF THIS
CERTIFICATE. THE PASS THROUGH TRUST AGREEMENT CONTAINS A
PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE TRUSTEE 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 HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
- --------
* Not to be included on the face of the Permanent Offshore
Global Certificate.
A-2
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR
TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND
TRANSFERS OF PORTIONS OF THIS GLOBAL CERTIFICATE SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE
PASS THROUGH TRUST AGREEMENT REFERRED TO HEREIN.]*
- --------
* To be included on the face of each Global Certificate.
A-3
[GLOBAL CERTIFICATE]*
CONTINENTAL AIRLINES 1996-2D PASS THROUGH TRUST
11.50% Continental Airlines [Initial] [Exchange] Pass Through
Certificate Series 1996-2D
Final Distribution Date: April 2, 2008
evidencing a fractional undivided interest in a trust, the
property of which includes certain equipment notes each secured
by an Aircraft leased to Continental Airlines, Inc.
$ Fractional Undivided Interest
representing . % 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 1996-2D Pass Through Trust (the "Trust") created
pursuant to a Pass Through Trust Agreement, dated as of May 20,
1996 (the "Agreement"), between Wilmington Trust Company (the
"Trustee") and Continental Airlines, Inc., a corporation
incorporated under Delaware law (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 "11.50% Continental Airlines [Initial] [Exchange]
Pass Through Certificates Series 1996-2D" (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 Certificateholder of this
Certificate assents to and agrees to be bound by the provisions
of the Agreement and the Intercreditor Agreement. The property of
the Trust includes certain Equipment Notes and all rights of the
Trust to receive payments under the Intercreditor Agreement and
the Liquidity Facilities (the "Trust Property"). Each issue of
the Equipment Notes is secured by, among other things, a security
interest in the Aircraft leased to or owned by the Company.
The Certificates represent fractional undivided
interests in the Trust and the Trust Property, and have no
- --------
* To be included on the face of each Global Certificate.
A-4
rights, benefits or interest in respect of any assets or property
other than the Trust Property.
Subject to and in accordance with the terms of the
Agreement and the Intercreditor Agreement, from and to the extent
of funds then available to the Trustee, there will be distributed
on each January 2, April 2, July 2 and October 2 (a "Regular
Distribution Date"), commencing on July 2, 1996, 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
Notes 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 Notes 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 Notes, 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 Regular Distribution Date or 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 Regular Distribution Date or
Special Distribution Date and no 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.
[The Holder of this Certificate is entitled to the
benefits of the Registration Rights Agreement, dated as of May
20, 1996, among the Company, the Trustee and the Initial
Purchasers named therein (the "Registration Rights Agreement").
In the event that neither the consummation of the Exchange Offer
nor the declaration by the Commission of a Shelf Registration to
be effective (a "Registration Event") occurs on or prior to the
180th day after the date of the issuance of the Certificates, the
interest rate per annum borne by the Equipment Notes shall be
increased by 0.50%, from and including January 2, 1997, to but
excluding the date on which a Registration Event occurs. In the
event that the Shelf Registration Statement ceases to be
effective at any time during the period specified by the
Registration Rights Agreement for more than 60 days, whether or
not consecutive, during any 12-month period, the interest rate
per annum borne by the Equipment Notes shall be increased by
A-5
0.50% from the 61st day of the applicable 12-month period such
Shelf Registration Statement ceases to be effective until such
time as the Shelf Registration Statement again becomes
effective.]*
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 AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
Reference is hereby made to the further provisions of
this Certificate set forth in the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon has
been executed by the Trustee, by manual signature, this
Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this
Certificate to be duly executed.
Dated: May 20, 1996 CONTINENTAL AIRLINES
1996-2D PASS THROUGH TRUST
By: WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as
Trustee
Attest: By: ______________________
Name:
Title:
_____________________
Authorized Signature
- --------
* To be included only on each Initial Certificate.
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,
not in its individual
capacity but
solely as Trustee
By: ____________________
Authorized Officer
A-7
[REVERSE OF CERTIFICATE]
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 of their affiliates. The
Certificates are limited in right or 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, proceeds, 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 therein set forth, 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, in the Borough of Manhattan, the City of New
York, 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
A-8
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
[$100,000]* [$1,000]** Fractional Undivided Interest and integral
multiples of $1,000 in excess thereof [except that one
Certificate may be in a denomination of less than $100,000]*. 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 by the Holder of a sum sufficient to cover any
tax or governmental charge payable in connection therewith.
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.
- --------------
* To be included only on each Initial Certificate.
** To be included only on each Exchange Certificate.
A-9
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 Trustee
with full power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT PERMANENT OFFSHORE GLOBAL AND
OFFSHORE PHYSICAL CERTIFICATES]
In connection with any transfer of this Certificate
occurring prior to the date that is the earlier of the date of an
effective Registration Statement or __________, 1999, the
undersigned confirms that without utilizing any general
solicitation or general advertising that:
[Check One]
[ ] (a) this Certificate is being transferred in
compliance with the exemption from registration under
the Securities Act of 1933, as amended, provided by
Rule 144A thereunder.
or
[ ] (b) this Certificate is being transferred other than
in accordance with (a) above and documents are being
furnished that comply with the conditions of transfer
set forth in this Certificate and the Agreement.
If neither of the foregoing boxes is checked, the Trustee or
other 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
A-10
registration set forth herein and in Section 3.06 of the
Agreement 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 IF (a) ABOVE IS CHECKED.
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, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has
requested pursuant to Rule 144A or has determined not to request
such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order
to claim the exemption from registration provided by Rule 144A.
Dated: _____________ _____________________________
NOTE: To be executed by an
executive officer.
A-11
EXHIBIT B
FORM OF CERTIFICATE FOR UNLEGENDED CERTIFICATES
[Date]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Trustee Administration
Re: Continental Airlines 1996-2D Pass
Through Trust, Class A Pass Through
Trust Certificates
(the "Certificates")
Dear Sirs:
This letter relates to U.S. $__________ Fractional
Undivided Interest of Certificates represented by a Certificate
(the "Legended Certificate") which bears a legend outlining
restrictions upon transfer of such Legended Certificate. Pursuant
to Section 3.01 of the Pass Through Trust Agreement relating to
the Certificates dated as of May 20, 1996 (the "Trust
Agreement"), between Continental Airlines, Inc. ("Continental")
and you, we hereby certify that we are (or we will hold such
securities on behalf of) a person outside the United States to
whom the Certificates could be transferred in accordance with
Rule 904 of Regulation S promulgated under the U.S. Securities
Act of 1933, as amended. Accordingly, you are hereby requested to
exchange the legended certificate for an unlegended certificate
representing an identical principal amount of Certificates, all
in the manner provided for in the Trust Agreement.
You and Continental are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or
legal proceedings or official inquiry with respect to the matters
covered hereby. Terms used in this certificate have the meanings
set forth in Regulation S.
Very truly yours,
[Name of Certificateholder]
By:______________________
Authorized Signature
EXHIBIT C
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS PURSUANT TO REGULATION S
[date]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Trustee Administration
Re: Continental Airlines 1996-2D Pass Through
Trust (the "Trust"), 11.50% Continental
Airlines Pass Through Certificates
Series 1996-2D (the "Certificates")
Sirs:
In connection with our proposed sale of $_______
Fractional Undivided Interest of the Certificates, we confirm
that such sale has been effected pursuant to and in accordance
with Regulation S under the Securities Act of 1933, as amended,
and, accordingly, we represent that:
(1) the offer of the Certificates was not made to a
person in the United States;
(2) either (a) at the time the buy order was
originated, the transferee was outside the United States or
we and any person acting on our behalf reasonably believed
that the transferee was outside the United States or (b)
the transaction was executed in, on or through the
facilities of a designated off-shore securities market and
neither we nor any person acting on our behalf knows that
the transaction has been pre-arranged with a buyer in the
United States;
(3) no directed selling efforts have been made in the
United States in contravention of the requirements of Rule
903(b) or Rule 904(b) of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act.
In addition, if the sale is made during a restricted
period and the provisions of Rule 903(c)(3) or Rule 904(c)(1) of
Regulation S are applicable thereto, we confirm that such sale
has been made in accordance with the applicable provisions of
Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You and Continental Airlines, Inc. are entitled to
rely upon this letter and are irrevocably authorized to produce
this letter or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:_______________________
Authorized Signature
C-2
EXHIBIT D
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
[date]
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Trustee Administration
Re: Continental Airlines 1996-2D Pass-
Through Trust (the "Trust"), 11.50%
Continental Airlines Pass Through
Certificates Series 1996-2D
(the "Certificates")
Dear Sirs:
In connection with our proposed purchase of
$_______________ aggregate principal amount of the Certificates,
we confirm that:
1. We understand that any subsequent transfer of the
Certificates is subject to certain restrictions and
conditions set forth in the Pass Through Trust Agreement
dated as of May 20, 1996 relating to the Certificates (the
"Pass Through Trust Agreement") and the undersigned agrees
to be bound by, and not to resell, pledge or otherwise
transfer the Certificates except in compliance with, such
restrictions and conditions and the Securities Act of 1933,
as amended (the "Securities Act").
2. We understand that the Certificates have not been
registered under the Securities Act, and that the
Certificates may not be offered or sold except as permitted
in the following sentence. We agree, on our own behalf and
on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Certificate,
we will do so only (A) in accordance with Rule 144A under
the Securities Act to a "qualified institutional buyer" (as
defined therein), (B) to an institutional "accredited inves-
tor" (as defined below) that, prior to such transfer, fur-
nishes to you and Continental Airlines, Inc., a signed letter
substantially in the form of this letter, (C) outside the
United States in accordance with Rule 904 of Regulation S
under the Securities Act, (D) pursuant to the exemption
from registration provided by Rule 144 under the Securities
Act, or (E) pursuant to an effective registration statement
under the Securities Act, and we further agree to provide
to any person purchasing any of the Certificates from us a
notice advising such purchaser that resales of the Notes
are restricted as stated herein. We further understand that
the Certificates purchased by us will bear a legend to the
foregoing effect.
3. We understand that, on any proposed resale of any
Certificates, we will be required to furnish to you and
Continental Airlines, Inc. such certifications, legal
opinions and other information as you and Continental
Airlines, Inc. may reasonably require to confirm that the
proposed sale complies with the foregoing restrictions. We
further understand that the Certificates purchased by us
will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act) and have such knowledge and
experience in financial and business matters as to be
capable of evaluating the merits and risks of our
investment in the Certificates and we and any accounts for
which we are acting are each able to bear the economic risk
of our or its investment.
5. We are acquiring the Certificates purchased by us
for our own account or for one or more accounts (each of
which is an institutional "accredited investor") as to each
of which we exercise sole investment discretion.
You and Continental Airlines, Inc. are entitled to
rely upon this letter and are irrevocably authorized to produce
this letter or a copy hereof to any interested party in any
administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferor]
By: _________________________
Authorized Signature
D-2
- ------------------------------------------------------------------------------
REVOLVING CREDIT AGREEMENT
Dated as of May 20, 1996
between
WILMINGTON TRUST COMPANY,
as Subordination Agent,
as agent and trustee for the
Continental Airlines 1996-2A Pass Through Trust,
as Borrower
and
De NATIONALE INVESTERINGSBANK N.V.,
as Liquidity Provider
- ------------------------------------------------------------------------------
Relating to
Continental Airlines 1996-2A Pass Through Trust
7.75% Continental Airlines Pass Through Certificates,
Series 1996-2A
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Page
Section 1.01. Certain Defined Terms........................................1
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01. The Advances................................................ 6
Section 2.02. Making the Advances......................................... 6
Section 2.03. Fees........................................................ 8
Section 2.04. Adjustments or Termination of the Commitment................ 8
Section 2.05. Repayments of Interest Advances or the Final Advance........ 8
Section 2.06. Repayments of Downgrade Advances............................ 9
Section 2.07. Payments to the Liquidity Provider Under the
Intercreditor Agreement..................................10
Section 2.08. Book Entries................................................10
Section 2.09. Payments from Available Funds Only..........................10
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs.............................................10
Section 3.02. Capital Adequacy............................................11
Section 3.03. Payments Free of Deductions.................................12
Section 3.04. Payments....................................................12
Section 3.05. Computations................................................13
Section 3.06. Payment on Non-Business Days................................13
Section 3.07. Interest....................................................13
Section 3.08. Replacement of Borrower.....................................14
Section 3.09. Funding Loss Indemnification................................14
Section 3.10. Illegality..................................................14
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to Effectiveness of Section 2.01.......15
Section 4.02. Conditions Precedent to Borrowing...........................17
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the Borrower.......................17
Section 5.02. Negative Covenants of the Borrower..........................17
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT
Section 6.01. Liquidity Events of Default.................................18
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc.............................................18
Section 7.02. Notices, Etc................................................18
Section 7.03. No Waiver; Remedies.........................................19
Section 7.04. Further Assurances..........................................19
Section 7.05. Indemnification; Survival of Certain Provisions.............19
Section 7.06. Liability of the Liquidity Provider.........................20
Section 7.07. Costs, Expenses and Taxes...................................20
Section 7.08. Binding Effect; Participations..............................21
Section 7.09. Severability................................................22
Section 7.10. GOVERNING LAW...............................................22
Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial; Waiver
of Immunity............................................22
Section 7.12. Execution in Counterparts...................................23
Section 7.13. Entirety....................................................24
Section 7.14. Headings....................................................24
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE
ADVANCES.................................................24
ANNEX I Interest Advance Notice of Borrowing
ANNEX II Downgrade Advance Notice of Borrowing
ANNEX III Final Advance Notice of Borrowing
ANNEX IV Notice of Termination
ANNEX V Notice of Replacement Subordination Agent
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of May
20, 1996, between WILMINGTON TRUST COMPANY, a Delaware
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 A Trust (as
defined below) (the "Borrower"), and De NATIONALE
INVESTERINGSBANK N.V., a bank organized under the laws of The
Netherlands ("DNIB" or the "Liquidity Provider").
W I T N E S S E T H :
WHEREAS, pursuant to the Class A 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 A Trust is issuing the Class A
Certificates; and
WHEREAS, the Borrower, in order to support the
timely payment of a portion of the interest on the Class A
Certificates in accordance with their terms, has requested the
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
premises, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. (a) Definitions. As
used in this Agreement and unless otherwise 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 Cost" has the meaning assigned to such term
in Section 3.01.
"Advance" means an Interest Advance, a Final
Advance, a Downgrade Advance, an Applied Downgrade
Advance or an Unpaid Advance, as the case may be.
"Applicable Liquidity Rate" has the meaning assigned to
such term in Section 3.07(c).
"Applicable Margin" means (w) with respect to
any Unpaid Advance (including an Applied Downgrade
Advance) that is a LIBOR Advance, 1.75%, (x) with
respect to any Unpaid Advance (including an Applied
Downgrade Advance) that is a Base Rate Advance, 1.75%,
(y) with respect to any Downgrade Advance (other than an
Applied Downgrade Advance) that is a LIBOR Advance,
0.60%, and (z) with respect to any Downgrade Advance
(other than an Applied Downgrade Advance) that is a Base
Rate Advance, 0.60%.
"Applied Downgrade Advance" has the meaning assigned to
such term in Section 2.06(a).
"Available Commitment" means, at any time of
determination, an amount equal to (i) the Commitment at
such time less (ii) subject to the proviso contained in
the third sentence of Section 2.02(a), the aggregate
amount of each Interest Advance outstanding at such
time; provided that following a Downgrade Advance or a
Final Advance, the Available Commitment shall be zero.
"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 Liquidity Provider from three Federal funds
brokers of recognized standing selected by it, plus (b)
three-tenths of one percent (0.30)%.
"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 or Sunday or a day on which commercial banks
are required or authorized to close in Houston, Texas,
New York, New York, Amsterdam, The Netherlands or, so
long as any Class A Certificate is outstanding, the city
and state in which the Class A Trustee 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.
"Commitment" means, initially, $9,592,136, as
the same may be reduced or increased from time to time
in accordance with Section 2.04(a).
"Downgrade Advance" means an Advance made pursuant
to Section 2.02(b).
"Effective Date" has the meaning specified in Section 4.01.
"Excluded Taxes" means (i) any Taxes imposed
on, based on, or measured by the overall net income,
capital, franchises, or receipts (other than Taxes which
are or are in the nature of sales or use Taxes or value
added Taxes) of the Liquidity Provider or any of its
Lending Offices, (ii) withholding Taxes imposed under
laws in effect on the date hereof by the United States
on payments to a recipient in the jurisdiction in which
the Liquidity Provider's initial Lending Office is
located, and (iii) withholding Taxes imposed by the
United States on payments to a recipient in any other
jurisdiction to which such Lending Office is moved if,
under the laws in effect at the time of such move, such
laws would require greater withholding Taxes than the
laws applicable to the jurisdiction from which such
Lending Office was moved.
"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).
"Expiry Date" means January 17, 2016.
"Final Advance" means an Advance made pursuant to
Section 2.02(c).
"Intercreditor Agreement" means the
Intercreditor Agreement dated the date hereof, among the
Trustees, the Liquidity Provider, the liquidity provider
under each Liquidity Facility (other than this
Agreement) 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 the Liquidity Provider's receipt of the
Notice of Borrowing for such LIBOR Advance and 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
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 Liquidity Provider, presently located at The Hague,
The Netherlands, or such other lending office as the
Liquidity Provider from time to time shall notify the
Borrower as its lending office hereunder.
"LIBOR Advance" means an Advance bearing
interest at a rate based upon the LIBOR Rate.
"LIBOR Rate" means, with respect to any
Interest Period, the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the rates
per annum at which deposits in dollars are offered to
major banks 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 amount of
the Advance to which such Interest Period is to apply
and for a period of time 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 Liquidity
Provider, (ii) the directors, officers, employees and
agents of the Liquidity Provider, and (iii) the
successors and permitted assigns of the persons
described in clauses (i) and (ii), inclusive.
"Liquidity Provider" has the meaning assigned
to such term in the recital of parties to this
Agreement.
"Non-Excluded Tax" has the meaning specified
in Section 3.03.
"Notice of Borrowing" has the meaning specified
in Section 2.02(d).
"Notice of Replacement Borrower" has the meaning
specified in Section 3.08.
"Offering Memorandum" means the Offering
Memorandum dated May 9, 1996 relating to the
Certificates, as such Offering Memorandum may be amended
or supplemented.
"Performing Note Deficiency" means any time
that less than 65% of the then aggregate outstanding
principal amount of all Equipment Notes are Performing
Equipment Notes.
"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 Stated Interest Rate for the
Class A Certificates, that would be payable on the Class
A Certificates on each of the six successive quarterly
Regular Distribution Dates immediately following such
day or, if such day is a Regular Distribution Date, on
such day and the succeeding five quarterly Regular
Distribution Dates, in each case calculated on the basis
of the Pool Balance of the Class A Certificates on such
day and without regard to expected future payments of
principal on the Class A Certificates.
"Termination Date" means the earliest to occur
of the following: (i) the Expiry Date; (ii) the date on
which the Borrower delivers to the Liquidity Provider a
certificate, signed by a Responsible Officer of the
Borrower, certifying that all of the Class A
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 Liquidity Provider a certificate, signed by a
Responsible Officer of the Borrower, certifying that a
Replacement Liquidity Facility has been substituted for
this Agreement in full pursuant to Section 3.6(e) of the
Intercreditor Agreement; (iv) the fifth Business Day
following the receipt by the Borrower of a Termination
Notice from the Liquidity Provider pursuant to Section
6.01 hereof; and (v) the date on which no Advance is or
may (including by reason of reinstatement as herein
provided) become available for a Borrowing hereunder.
"Termination Notice" means the Notice of
Termination substantially in the form of Annex IV to
this Agreement.
"Transferee" has the meaning assigned to such term
in Section 7.08(b).
"Unpaid Advance" has the meaning assigned to such
term in Section 2.05.
(b) Terms Defined in the Intercreditor Agreement.
For all purposes of this Agreement, the following terms shall have the
respective meanings assigned to such terms in the Intercreditor Agreement:
"Certificates", "Class A Certificates", "Class A
Certificateholders", "Class A Cash Collateral Account",
"Class A Trust", "Class A Trust Agreement", "Class A
Trustee", "Class B Certificates", "Class C
Certificates", "Class D Certificates", "Closing Date",
"Continental", "Continental Bankruptcy Event",
"Controlling Party", "Corporate Trust Office",
"Distribution Date", "Equipment Notes", "Fee Letter",
"Financing Agreement", "Indenture", "Initial
Purchasers", "Liquidity Facility", "Moody's", "Note
Purchase Agreement", "Operative Agreements",
"Participation Agreements", "Performing Equipment Note",
"Person", "Pool Balance", "Purchase Agreement","Rating
Agency", "Registration Rights Agreement", "Regular
Distribution Date", "Replacement Liquidity Facility",
"Responsible Officer", "Scheduled Payment", "Special
Payment", "Standard & Poor's", "Stated Interest Rate",
"Subordination Agent", "Taxes", "Threshold Rating",
"Triggering Event", "Trust Agreements", "Trustee" and
"Written Notice".
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01. The Advances. The 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 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 Commitment.
Section 2.02. Making the Advances. (a) Interest
Advances shall be made in one or more Borrowings by delivery to
the 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 Available Commitment at such time
and shall be used solely for the payment when due of interest on
the Class A Certificates at the Stated Interest Rate therefor in
accordance with Section 3.6(a) of the Intercreditor Agreement.
Each Interest Advance made hereunder shall automatically reduce
the 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 Liquidity Provider in full of
the amount of any Interest Advance made pursuant to this Section
2.02(a), together with accrued interest thereon (as provided
herein), the Available Commitment shall be reinstated by the
amount of such repaid Interest Advance, but not to exceed the
Required Amount; provided, however, that the Available Commitment
shall not be so reinstated at any time if (i) a Triggering Event
shall have occurred and be continuing and (ii) there is a
Performing Note Deficiency.
(b) A Downgrade Advance shall be made in a
single Borrowing upon a downgrading of the Liquidity Provider's
short-term unsecured debt rating issued by either Rating Agency
(or, so long as DNIB is the Liquidity Provider and does not have
a published short-term unsecured debt rating issued by Standard &
Poor's, the long-term unsecured debt rating of DNIB issued by
Standard & Poor's) below the Threshold Rating (as provided for in
Section 3.6(c) of the Intercreditor Agreement) unless a
Replacement Liquidity Facility shall have been delivered to the
Borrower in accordance with said Section 3.6(c), by delivery to
the 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 Available Commitment at such time, and shall be used
to fund the Class A Cash Collateral Account in accordance with
said Section 3.6(c).
(c) A Final Advance shall be made in a single
Borrowing upon the receipt by the Borrower of a Termination
Notice from the Liquidity Provider pursuant to Section 6.01
hereof by delivery to the 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 Available Commitment at such
time, and shall be used to fund the Class A Cash Collateral
Account (in accordance with Section 3.6(i) of the Intercreditor
Agreement).
(d) 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) or 2.02(c), as the case may
be, given not later than 12:00 Noon (New York City time) on the
second Business Day prior to the day of the proposed Borrowing by
the Borrower to the Liquidity Provider. Upon satisfaction of the
conditions precedent set forth in Section 4.02 with respect to a
requested Borrowing, the Liquidity Provider shall, before 12:00
Noon (New York City time) on the date of such Borrowing or on
such later Business Day specified by the Borrower in such Notice
of Borrowing, make available for the account of its Lending
Office, in U.S. dollars and in immediately available funds, the
amount of such Borrowing to be paid to the Borrower in accordance
with its payment instructions. If a Notice of Borrowing is
delivered by the Borrower in respect of any Borrowing after 12:00
Noon (New York City time) on a Business Day, the Liquidity
Provider shall, before 12:00 Noon (New York City time) on the
third 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, make available to the
Borrower, in accordance with its payment instructions, in U.S.
dollars and in immediately available funds, the amount of such
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 Liquidity Provider for
such purpose. Each Notice of Borrowing shall be irrevocable and
binding on the Borrower.
(e) Upon the making of any Advance requested
pursuant to a Notice of Borrowing, in accordance with the
Borrower's payment instructions, the Liquidity Provider shall be
fully discharged of its obligation hereunder with respect to such
Notice of Borrowing, and the 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 (including the holder of any Class A Certificate or
the Class A Trustee) who makes to the Class A Trustee or the
Borrower a demand for payment with respect to any Class A
Certificate. Following the making of any Advance pursuant to
Section 2.02(b) or (c) hereof to fund the Class A Cash Collateral
Account, the Liquidity Provider shall have no interest in or
rights to the Class A Cash Collateral Account, such Advance or
any other amounts from time to time on deposit in the Class A
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 3.6(e) or (f) 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 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 Liquidity Provider the fees set forth in the Fee Letter.
Section 2.04. Adjustments or Termination of the
Commitment. (a) Automatic Adjustments. Promptly following each
date on which the Required Amount is (1) reduced as a result of a
reduction in the Pool Balance of the Class A Certificates or
otherwise, (2) increased as a result of an increase in the Stated
Interest Rate, or (3) subsequent to such an increase, reduced
pursuant to the definition of "Stated Interest Rate", the
Commitment shall automatically be reduced or increased, as the
case may be, to an amount equal to such reduced or increased
Required Amount (as calculated by the Borrower). The Borrower
shall give notice of any such automatic reduction or increase of
the Commitment to the Liquidity Provider within two Business Days
thereof. The failure by the Borrower to furnish any such notice
shall not affect such automatic reduction or increase of the
Commitment.
(b) Termination. Upon the making of any
Downgrade Advance or Final Advance hereunder or the occurrence of
the Termination Date, the obligation of the 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 2.07 and 2.09 hereof,
the Borrower hereby agrees to pay, or to cause to be paid, to the
Liquidity Provider on each date on which the 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"), plus (b)
interest on the amount of each such Unpaid Advance as provided in
Section 3.07 hereof. Subject to Sections 2.06, 2.07 and 2.09
hereof, unless otherwise waived by the Liquidity Provider, the
Borrower shall be obligated, without notice of an Advance or
demand for repayment from the Liquidity Provider (which notice
and demand are hereby waived by the Borrower), to repay the
Liquidity Provider for all Advances on the same day as made. The
Borrower and the 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 Liquidity Provider.
Section 2.06. Repayments of Downgrade Advances.
(a) Amounts advanced hereunder in respect of a Downgrade Advance
shall be deposited in the Class A Cash Collateral Account,
invested and withdrawn from the Class A Cash Collateral Account
as set forth in Sections 3.6(c) and (f) of the Intercreditor
Agreement. The Borrower agrees to pay to the Liquidity Provider,
on each Regular Distribution Date, commencing on the first
Regular Distribution Date after the making of a Downgrade
Advance, interest on the principal amount of any such Downgrade
Advance as provided in Section 3.07; provided, however, that
amounts in respect of a Downgrade Advance withdrawn from the
Class A Cash Collateral Account for the purpose of paying
interest on the Class A Certificates in accordance with Section
3.6(f) of the Intercreditor Agreement (the amount of any such
withdrawal being, an "Applied Downgrade Advance") shall 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 Downgrade Advance, the Liquidity Provider delivers a
Termination Notice to the Borrower pursuant to Section 6.01
hereof, such Downgrade Advance shall thereafter be treated as a
Final Advance under this Agreement for purposes of determining
the Applicable Liquidity Rate for interest payable thereon.
Immediately upon the withdrawal of any amounts from the Class A
Cash Collateral Account on account of a reduction in the Required
Amount, the Borrower shall repay the Downgrade Advances in a
principal amount equal to the amount of such reduction, plus
interest on the principal amount prepaid as provided in Section
3.07 hereof.
(b) At any time when an Applied Downgrade
Advance (or any portion thereof) is outstanding, upon the deposit
in the Class A Cash Collateral Account of any amount pursuant to
clause "third" of Section 3.2 of the Intercreditor Agreement (any
such amount being a "Replenishment Amount") for the purpose of
replenishing the balance thereof up to the Required Amount at
such time, (i) the aggregate outstanding principal amount of all
Applied Downgrade Advances shall be automatically reduced by the
amount of such Replenishment Amount and (ii) the principal amount
of the outstanding Downgrade Advance shall be automatically
increased by the amount of such Replenishment Amount.
(c) Upon the provision of a Replacement
Liquidity Facility in replacement of this Agreement in accordance
with Section 3.6(e) of the Intercreditor Agreement, amounts
remaining on deposit in the Class A Cash Collateral Account after
giving effect to any application of funds therefrom to any
payment of interest on the Class A Certificates on the date of
such replacement shall be reimbursed to the Liquidity Provider,
but only to the extent such amounts are necessary to repay in
full to the Liquidity Provider all amounts owing to it hereunder.
Section 2.07. Payments to the Liquidity
Provider Under the Intercreditor Agreement. In order to provide
for payment or repayment to the 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 Liquidity
Provider pursuant to the terms of the Intercreditor Agreement
(including, without limitation, Section 3.6(f) of the
Intercreditor Agreement), shall be paid to the Liquidity Provider
in accordance with the terms thereof. Amounts so paid to the
Liquidity Provider shall be applied by the Liquidity Provider in
the order of priority required by the applicable provisions of
Articles II and III of the Intercreditor Agreement.
Section 2.08. Book Entries. The 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 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 shall be made only from amounts received by it that
constitute Scheduled Payments, Special Payments or payments under
Section 10.1 of the Participation Agreements and Section 10.1 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 Liquidity Provider
agrees that it will look solely to such amounts 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 any Participation Agreement. Amounts on deposit in the Class A
Cash Collateral Account shall be available to the Borrower to
make payments only to the extent and for the purposes expressly
contemplated in Section 3.6(f) of the Intercreditor Agreement.
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs. The Borrower
shall pay to the Liquidity Provider from time to time such
amounts as may be necessary to compensate the Liquidity Provider
for any costs incurred by the 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 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), 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 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 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 Liquidity Provider under this
Agreement in respect of any such Advances (other than Excluded
Taxes or any taxes described in Section 3.03); 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 Liquidity
Provider (including any such Advances or any deposits referred to
in the definition of LIBOR Rate or related definitions). The
Liquidity Provider agrees to use reasonable efforts (consistent
with applicable legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would
avoid the need for, or reduce the amount of, any amount payable
under this Section that may thereafter accrue and would not, in
the reasonable judgment of the Liquidity Provider, be otherwise
disadvantageous to the Liquidity Provider.
The Liquidity Provider will notify the Borrower
of any event occurring after the date of this Agreement that will
entitle the 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
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 Liquidity Provider in respect of any Additional Costs, shall
be prima facie evidence of the amount owed under this Section.
Section 3.02. Capital Adequacy. If (1)
compliance with any judicial, administrative, or other
governmental interpretation of any law or regulation or (2)
compliance by the Liquidity Provider or any corporation
controlling the Liquidity Provider with any guideline or request
from any central bank or other governmental authority (whether or
not having the force of law) has the effect of requiring an
increase in the amount of capital required or expected to be
maintained by the Liquidity Provider or any corporation
controlling the Liquidity Provider, and such increase is based
upon the Liquidity Provider's obligations hereunder, and other
similar obligations, the Borrower shall pay to the Liquidity
Provider such additional amount as shall be reasonably allocable
to the Liquidity Provider's obligations to the Borrower
hereunder. The Liquidity Provider agrees to use reasonable
efforts (consistent with applicable legal and regulatory
restrictions) to change the jurisdiction of its Lending Office if
making such change would avoid the need for, or reduce the amount
of, any amount payable under this Section that may thereafter
accrue and would not, in the reasonable judgment of the Liquidity
Provider, be otherwise disadvantageous to the Liquidity Provider.
The Liquidity Provider will notify the Borrower
of any event occurring after the date of this Agreement that will
entitle the 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
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 bank and of the amount allocable to the
Liquidity Provider's obligations to the Borrower hereunder shall
be prima facie evidence of the amounts owed under this Section.
Section 3.03. Payments Free of Deductions. All
payments made by the Borrower under this Agreement shall be made
free and clear of, and without reduction for or on account of,
any Taxes, excluding Excluded Taxes (such non-excluded taxes
being referred to herein, collectively, as "Non-Excluded Taxes").
If any Non-Excluded Taxes are required to be withheld or deducted
from any amounts payable to the Liquidity Provider under this
Agreement, the Borrower shall (a) within the time prescribed
therefor by applicable law pay to the appropriate governmental or
taxing authority the full amount of any such Non-Excluded Taxes
(and any additional Non-Excluded Taxes in respect of the payment
required under clause (b) hereof) and make such reports or
returns in connection therewith at the time or times and in the
manner prescribed by applicable law, and (b) pay to the Liquidity
Provider an additional amount which (after deduction of all such
Non-Excluded Taxes) will be sufficient to yield to the Liquidity
Provider the full amount which would have been received by it had
no such withholding or deduction been made. Within 30 days after
the date of each payment hereunder, the Borrower shall furnish to
the Liquidity Provider the original or a certified copy of (or
other documentary evidence of) the payment of the Non-Excluded
Taxes applicable to such payment. The Liquidity Provider agrees
to use reasonable efforts (consistent with applicable legal and
regulatory restrictions) to change the jurisdiction of its
Lending Office if making such change would avoid the need for, or
reduce the amount of, any such additional amounts that may
thereafter accrue and would not, in the reasonable judgment of
the Liquidity Provider, be otherwise materially disadvantageous
to the Liquidity Provider or require the Liquidity Provider to
incur any costs or expenses for which it is not indemnified by
the Borrower. The Liquidity Provider shall deliver to the
Borrower such certificates and documents as may be reasonably
requested by the Borrower and required by applicable law to
establish that payments hereunder are exempt from (or entitled to
a reduced rate of) withholding Tax.
Section 3.04. Payments. The Borrower shall make
or cause to be made each payment to the Liquidity Provider under
this Agreement so as to cause the same to be received by the
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
lawful money of the United States of America, to the Liquidity
Provider in immediately available funds, by wire transfer to the
office of Morgan Guaranty Trust Company of New York, New York
City, for credit to DNIB, Account No. 650.01.919.
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) The Borrower shall
pay, or shall cause to be paid, 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 Downgrade Advance,
from and including the date on which the amount thereof was
withdrawn from the Class A Cash Collateral Account to pay
interest on the Class A Certificates) to but excluding the date
such principal amount shall be paid in full and (ii) any other
amount due hereunder (whether fees, commissions, expenses or
other amounts or, to the extent permitted by law, installments of
interest on Advances or any such other amount) which is not paid
when due (whether at stated maturity, by acceleration or
otherwise) from and including the due date thereof to but
excluding the date such amount is paid in full, in each such
case, at a fluctuating interest rate per annum for each day equal
to the Applicable Liquidity Rate (as defined below) for such
Advance or such other amount as in effect for such day, but in no
event at a rate per annum greater than the maximum rate permitted
by applicable law; provided, however, that, if at any time the
otherwise applicable interest rate as set forth in this Section
3.07 shall exceed the maximum rate permitted by applicable law,
then any subsequent reduction in such interest rate will not
reduce the rate of interest payable pursuant to this Section 3.07
below the maximum rate permitted by applicable law until the
total amount of interest accrued equals the amount of interest
that would have accrued if such otherwise applicable interest
rate as set forth in this Section 3.07 had at all times been in
effect. Nothing contained in this Section 3.07 shall require the
Borrower to pay any amount under this Section 3.07 other than to
the extent the Borrower shall have funds available therefor.
(b) Each Advance will be a LIBOR Advance,
except as provided in Section 3.10.
(c) Each LIBOR Advance shall bear interest
during each Interest Period at the LIBOR Rate for such Interest
Period plus the Applicable Margin for such LIBOR Advance, payable
in arrears on the last day of such Interest Period and, in the
event of the payment of principal of such LIBOR Advance on a day
other than such last day, on the date of such payment (to the
extent of interest accrued on the amount of principal repaid).
Each Base Rate Advance shall bear interest at
the Base Rate plus the Applicable Margin for such Base Rate
Advance, payable in arrears on each Regular Distribution Date
and, in the event of the payment of principal of such Base Rate
Advance on a day other than a Regular Distribution Date, on the
date of such payment (to the extent of interest accrued on the
amount of principal repaid).
Each amount not paid when due hereunder
(whether fees, commissions, expenses or other amounts or, to the
extent permitted by applicable law, installments of interest on
Advances) shall bear interest at the Base Rate.
Each change in the Base Rate shall become
effective immediately. The rates of interest specified in this
Section 3.07(c) with respect to any Advance or other amount shall
be referred to as the "Applicable Liquidity Rate".
Section 3.08. Replacement of Borrower. From
time to time and subject to the successor Borrower's meeting the
eligibility requirements set forth in Section 6.9 of the
Intercreditor Agreement applicable to the Subordination Agent,
upon the effective date and time specified in a written and
completed Notice of Replacement Borrower in substantially the
form of Annex V attached hereto (a "Notice of Replacement
Borrower") delivered to the Liquidity Provider by the then
Borrower, the successor Borrower designated therein shall be
substituted for as the Borrower for all purposes hereunder.
Section 3.09. Funding Loss Indemnification. The
Borrower shall pay to the Liquidity Provider, upon the request of
the Liquidity Provider, such amount or amounts as shall be
sufficient (in the reasonable opinion of the Liquidity Provider)
to compensate it for any loss, cost, or expense incurred as a
result of:
(1) Any payment of a LIBOR Advance on a date
other than the last day of the Interest Period for such Advance; or
(2) Any failure by the Borrower to borrow a
LIBOR Advance on the date for borrowing specified in the
relevant notice under Section 2.02.
Section 3.10. Illegality. Notwithstanding any
other provision in this Agreement, if any change in any
applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the
Liquidity Provider (or its Lending Office) with any request or
directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it
unlawful or impossible for the Liquidity Provider (or its Lending
Office) to maintain or fund its LIBOR Advances, then upon notice
to the Borrower by the Liquidity Provider, the outstanding
principal amount of the LIBOR Advances shall be converted to Base
Rate Advances (a) immediately upon demand of the Liquidity
Provider, if such change or compliance with such request, in the
judgment of the Liquidity Provider, requires immediate repayment;
or (b) at the expiration of the last Interest Period to expire
before the effective date of any such change or request.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to
Effectiveness of Section 2.01. Section 2.01 of this Agreement
shall become effective on and as of the first date (the
"Effective Date") on which the following conditions precedent
have been satisfied or waived:
(a) The Liquidity Provider shall have received
on or before the Closing Date each of the following,
each dated such date, and in the case of each document
delivered pursuant to paragraphs (i), (ii) and (iii),
each in form and substance satisfactory to the Liquidity
Provider:
(i) This Agreement duly executed on
behalf of the Borrower;
(ii) The Intercreditor Agreement duly
executed on behalf of each of the parties thereto;
(iii) Fully executed copies of each of the
Operative Agreements (other than this Agreement and the
Intercreditor Agreement);
(iv) A copy of the Offering Memorandum and
specimen copies of the Class A Certificates;
(v) An executed copy of each opinion
delivered pursuant to the Class A Trust
Agreement, the Intercreditor Agreement, the
Refunding Agreements and the other Operative
Agreements (together with, in the case of each
such opinion, other than the opinion of counsel
for the Initial Purchasers, a letter from the
counsel rendering such opinion to the effect
that the Liquidity Provider is entitled to rely
on such opinion as if it were addressed to the
Liquidity Provider);
(vi) Evidence that there shall have
been made and shall be in full force and
effect, all filings, recordings and/or
registrations, and there shall have been given
or taken any notice or other similar action as
may be reasonably necessary or, to the extent
reasonably requested by the Liquidity Provider,
reasonably advisable, in order to establish,
perfect, protect and preserve the right, title
and interest, remedies, powers, privileges,
liens and security interests of, or for the
benefit of, the Trustees and the Liquidity
Provider created by the Operative Agreements;
(vii) An agreement from Continental,
pursuant to which (i) Continental agrees to
provide copies of quarterly financial
statements and audited annual financial
statements to the Liquidity Provider, and such
other information as the Liquidity Provider
shall reasonably request with respect to the
transactions contemplated by the Operative
Agreements, in each case, only to the extent
that Continental is obligated to provide such
information pursuant to Section 8.2 of the
Leases to the parties thereto and (ii)
Continental agrees to allow the Liquidity
Provider to inspect Continental's books and
records regarding such transactions, and to
discuss such transactions with officers and
employees of Continental, and
(viii) Such other documents,
instruments, opinions and approvals as the
Liquidity Provider shall have reasonably
requested.
(b) The following statements shall be true on and as
of the Effective Date:
(i) The representations and warranties in
each Refunding Agreement are true and correct on and
as of the Effective Date as though made on and as
of the Effective Date;
(ii) No event has occurred and is
continuing, or would result from the entering
into of this Agreement or the making of any
Advance, which constitutes a Liquidity Event of
Default; and
(iii) There has been no material
adverse change in the financial condition,
property or results of operations of
Continental since March 31, 1995.
(c) The Liquidity Provider shall have received
payment in full of all fees and other sums required to
be paid to or for the account of the Liquidity Provider
on or prior to the Effective Date.
(d) All conditions precedent to the issuance of
the Certificates under the Trust Agreements shall have
been satisfied, all conditions precedent to the
effectiveness of the other Liquidity Facilities shall
have been satisfied, and all conditions precedent to the
purchase of the Certificates by the Initial Purchasers
under the Purchase Agreement shall have been satisfied
(unless any of such conditions precedent shall have been
waived by the Initial Purchasers).
Section 4.02. Conditions Precedent to
Borrowing. The obligation of the Liquidity Provider to make an
Advance on the occasion of each Borrowing shall be subject to the
conditions precedent that the Effective Date shall have occurred
and, prior to the date of such Borrowing, the Borrower shall have
delivered a Notice of Borrowing which conforms to the terms and
conditions of this Agreement and has been completed as may be
required by the relevant form of the Notice of Borrowing for the
type of Advances requested.
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the
Borrower. So long as any Advance shall remain unpaid or the
Liquidity Provider shall have any Commitment hereunder or the
Borrower shall have any obligation to pay any amount to the
Liquidity Provider hereunder, the Borrower will, unless the
Liquidity Provider shall otherwise consent in writing:
(a) Performance of This and Other Agreements.
Punctually pay or cause to be paid all amounts payable
by it under this Agreement and the other Operative
Agreements and observe and perform in all material
respects the conditions, covenants and requirements
applicable to it contained in this Agreement and the
other Operative Agreements.
(b) Reporting Requirements. Furnish to the
Liquidity Provider with reasonable promptness, such
other information and data with respect to the
transactions contemplated by the Operative Agreements as
from time to time may be reasonably requested by the
Liquidity Provider; and permit the Liquidity Provider,
upon reasonable notice, to inspect the Borrower's books
and records with respect to such transactions and to
meet with officers and employees of the Borrower to
discuss such transactions.
Section 5.02. Negative Covenants of the
Borrower. So long as any Advance shall remain unpaid or the
Liquidity Provider shall have any Commitment hereunder or the
Borrower shall have any obligation to pay any amount to the
Liquidity Provider hereunder, the Borrower will not appoint or
permit or suffer to be appointed any successor Borrower without
the written consent of the Liquidity Provider, which consent
shall not be unreasonably withheld or delayed.
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT
Section 6.01. Liquidity Events of Default. If
(a) any Liquidity Event of Default occurs hereunder and (b) there
is a Performing Note Deficiency, the Liquidity Provider may, in
its discretion, deliver to the Borrower a Termination Notice, the
effect of which shall be to cause (i) this Agreement to expire on
the fifth Business Day after the date on which such Termination
Notice is received by the Borrower, (ii) the Borrower to promptly
request, and the Liquidity Provider to promptly make, a Final
Advance in accordance with Section 2.02(c) hereof and Section
3.6(i) of the Intercreditor Agreement, (iii) all other
outstanding Advances to be automatically converted into Final
Advances for purposes of determining the Applicable Liquidity
Rate for interest payable thereon, and (iv) subject to Sections
2.07 and 2.09 hereof, all Advances, any accrued interest thereon
and any other amounts outstanding hereunder to become immediately
due and payable to the Liquidity Provider.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc. No amendment or
waiver of any provision of this Agreement, nor consent to any
departure by the Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by the
Liquidity Provider, and, in the case of an amendment, the
Borrower, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which
given.
Section 7.02. Notices, Etc. Except as otherwise
expressly provided herein, all notices and other communications
provided for hereunder shall be in writing (including telecopier
and mailed or delivered or sent by telecopier):
Borrower: WILMINGTON TRUST COMPANY
Rodney Square North
1100 North Market Square
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telephone: (302) 651-1000
Telecopy: (302) 651-8882
Liquidity Provider: De NATIONALE INVESTERINGSBANK N.V.
4 Carnegieplein
P.O. Box 380
2501 BH The Hague
The Netherlands
Attention: Aerospace Department
Telephone: 011-31-70-342-54-25
Telecopy: 011-31-365-10-71
or, as to each of the foregoing, at such other address as shall
be designated by such Person in a written notice to the others.
All such notices and communications shall be effective (i) if
given by telecopier, when transmitted to the telecopier number
specified above, (ii) if given by mail, when deposited in the
mails addressed as specified above, and (iii) if given by other
means, when delivered at the address specified above, except that
written notices to the Liquidity Provider pursuant to the
provisions of Articles II and III hereof shall not be effective
until received by the Liquidity Provider. A copy of all notices
delivered hereunder to either party shall in addition be
delivered to each of the parties to the Participation Agreements
at their respective addresses set forth therein.
Section 7.03. No Waiver; Remedies. No failure
on the part of the Liquidity Provider to exercise, and no delay
in exercising, any right under this Agreement shall operate as a
waiver thereof; nor shall any single or partial exercise of any
right under this Agreement preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies
provided by law.
Section 7.04. Further Assurances. The Borrower
agrees to do such further acts and things and to execute and
deliver to the Liquidity Provider such additional assignments,
agreements, powers and instruments as the Liquidity Provider may
reasonably require or deem advisable to carry into effect the
purposes of this Agreement and the other Operative Agreements or
to better assure and confirm unto the Liquidity Provider its
rights, powers and remedies hereunder and under the other
Operative Agreements.
Section 7.05. Indemnification; Survival of
Certain Provisions. The Liquidity Provider shall be indemnified
hereunder to the extent and in the manner described in Section
10.1 of the Participation Agreements and Section 10.1 of the Note
Purchase Agreement. In addition, the Borrower agrees to
indemnify, protect, defend and hold harmless the Liquidity
Provider from, against and in respect of, and shall pay on
demand, all Expenses of any kind or nature whatsoever, whether
arising before, on or after the date hereof, that may be imposed,
incurred by or asserted against any Liquidity Indemnitee, in any
way relating to, resulting from, or arising out of or in
connection with, this Agreement, the Fee Letter, the
Intercreditor Agreement or any Financing Agreement; provided,
however, that the Borrower shall not be required to indemnify,
protect, defend and hold harmless any Liquidity Indemnitee in
respect of any Expense of such Liquidity Indemnitee (i) to the
extent such Expense is attributable to the gross negligence or
willful misconduct of such Liquidity Indemnitee or any other
Liquidity Indemnitee, (ii) that is ordinary and usual operating
overhead expense, (iii) to the extent such Expense is
attributable to the failure by such Liquidity Indemnitee or any
other Liquidity Indemnitee to perform or observe any agreement,
covenant or condition on its part to be performed or observed in
any Operative Agreement. The indemnities contained in such
Section 10.1, and the provisions of Sections 3.01, 3.02, 3.03,
7.05 and 7.07 hereof, shall survive the termination of this
Agreement.
Section 7.06. Liability of the Liquidity
Provider. (a) Neither the Liquidity Provider nor any of its
officers or directors shall be liable or responsible for: (i) the
use which may be made of the Advances or any acts or omissions of
the Borrower or any beneficiary or transferee in connection
therewith; (ii) the validity, sufficiency or genuineness of
documents, or of any endorsement thereon, even if such documents
should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; or (iii) the making of Advances by the
Liquidity Provider against delivery of a Notice of Borrowing and
other documents which do not comply with the terms hereof;
provided, however, that the Borrower shall have a claim against
the Liquidity Provider, and the Liquidity Provider shall be
liable to the Borrower, to the extent of any damages suffered by
the Borrower which were the result of (A) the Liquidity
Provider's willful misconduct or negligence in determining
whether documents presented hereunder comply with the terms
hereof, or (B) any breach by the Liquidity Provider of any of the
terms of this Agreement, including, but not limited to, the
Liquidity Provider's failure to make lawful payment hereunder
after the delivery to it by the Borrower of a Notice of Borrowing
strictly complying with the terms and conditions hereof.
(b) The Liquidity Provider shall not be liable
or responsible in any respect for (i) any error, omission,
interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted, in connection with
this Agreement or any Notice of Borrowing delivered hereunder, or
(ii) any action, inaction or omission which may be taken by it in
good faith, absent willful misconduct or negligence (in which
event the extent of the Liquidity Provider's potential liability
to the Borrower shall be limited as set forth in the immediately
preceding paragraph), in connection with this Agreement or any
Notice of Borrowing.
Section 7.07. Costs, Expenses and Taxes. The
Borrower agrees to pay, or cause to be paid (A) on the Effective
Date and on such later date or dates on which the Liquidity
Provider shall make demand, all reasonable out-of-pocket costs
and expenses of the Liquidity Provider in connection with the
preparation, negotiation, execution, delivery, filing and
recording of this Agreement, any other Operative Agreement and
any other documents which may be delivered in connection with
this Agreement, including, without limitation, the reasonable
fees and expenses of outside counsel for the Liquidity Provider
and (B) on demand, all reasonable costs and expenses of the
Liquidity Provider (including reasonable counsel fees and
expenses) in connection with (i) the enforcement of this
Agreement or any other Operative Agreement, (ii) the modification
or amendment of, or supplement to, this Agreement or any other
Operative Agreement or such other documents which may be
delivered in connection herewith or therewith (whether or not the
same shall become effective) or (iii) any action or proceeding
relating to any order, injunction, or other process or decree
restraining or seeking to restrain the Liquidity Provider from
paying any amount under this Agreement, the Intercreditor
Agreement or any other Operative Agreement or otherwise affecting
the application of funds in the Cash Collateral Accounts. In
addition, the Borrower shall pay any and all recording, stamp and
other similar taxes and fees payable or determined to be payable
in connection with the execution, delivery, filing and recording
of this Agreement any other Operative Agreement and such other
documents, and agrees to save the Liquidity Provider harmless
from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes
or fees.
Section 7.08. Binding Effect; Participations.
(a) This Agreement shall be binding upon and inure to the benefit
of the Borrower and the Liquidity Provider and their respective
successors and assigns, except that neither the Liquidity
Provider (except as otherwise provided in this Section 7.08) nor
the Borrower shall have the right to assign its rights hereunder
or any interest herein without the prior written consent of the
other party, subject to the requirement of Section 7.08(b). The
Liquidity Provider may grant participations herein or in any of
its rights or security hereunder and under the other Operative
Agreements to such Persons as the Liquidity Provider may in its
sole discretion select, subject to the requirement of Section
7.08(b). No such participation by the Liquidity Provider,
however, will relieve the Liquidity Provider of its obligations
hereunder. In connection with any participation or any proposed
participation, the Liquidity Provider may disclose to the
participant or the proposed participant any information that the
Borrower is required to deliver or to disclose to the Liquidity
Provider pursuant to this Agreement. The Borrower acknowledges
and agrees that the Liquidity Provider's source of funds may
derive in part from its participants (other than Continental).
Accordingly, references in this Agreement and the other Operative
Agreements to determinations, reserve and capital adequacy
requirements, increased costs, reduced receipts and the like as
they pertain to the Liquidity Provider shall be deemed also to
include those of each of its participants (subject, in each case,
to the maximum amount that would have been incurred by or
attributable to the Liquidity Provider directly if the Liquidity
Provider, rather than the participant, had held the interest
participated).
(b) If, pursuant to subsection (a) above, the
Liquidity Provider sells any participation or transfers any
interest in this Agreement to any bank or other entity (each, a
"Transferee"), then, concurrently with the effectiveness of such
transfer, the Transferee shall (i) represent to the Liquidity
Provider (for the benefit of the Liquidity Provider and the
Borrower) either (A) that it is incorporated under the laws of
the United States or a state thereof or (B) that under applicable
law and treaties, no taxes will be required to be withheld with
respect to any payments to be made to such Transferee in respect
of this Agreement, (ii) furnish to the Liquidity Provider and the
Borrower either (x) a statement that it is incorporated under the
laws of the United States or a state thereof or (y) if it is not
so incorporated, two copies of a properly completed United States
Internal Revenue Service Form 4224 or Form 1001, as appropriate,
or other applicable form, certificate or document prescribed by
the Internal Revenue Service certifying, in each case, such
Transferee's entitlement to a complete exemption from United
States federal withholding tax in respect to any and all payments
to be made hereunder, and (iii) agree (for the benefit of the
Liquidity Provider and the Borrower) to provide the Liquidity
Provider and the Borrower a new Form 4224 or Form 1001, as
appropriate, (A) on or before the date that any such form expires
or becomes obsolete or (B) after the occurrence of any event
requiring a change in the most recent form previously delivered
by it and prior to the immediately following due date of any
payment by the Borrower hereunder, certifying in the case of a
Form 1001 or Form 4224 that such Transferee is entitled to a
complete exemption from United States federal withholding tax on
payments under this Agreement. Unless the Borrower has received
forms or other documents reasonably satisfactory to it (and
required by applicable law) indicating that payments hereunder
are not subject to United States federal withholding tax, the
Borrower will withhold taxes as required by law from such
payments at the applicable statutory rate without any obligation
to make additional payments under Section 3.03 hereof (other than
in respect of Non-Excluded Taxes).
(c) Notwithstanding the other provisions of
this Section 7.08, the Liquidity Provider may assign and pledge
all or any portion of the Advances owing to it to any Federal
Reserve Bank or the United States Treasury as collateral security
pursuant to Regulation A of the Board of Governors of the Federal
Reserve System and any Operating Circular issued by such Federal
Reserve Bank, provided that any payment in respect of such
assigned Advances made by the Borrower to the Liquidity Provider
in accordance with the terms of this Agreement shall satisfy the
Borrower's obligations hereunder in respect of such assigned
Advance to the extent of such payment. No such assignment shall
release the Liquidity Provider from its obligations hereunder.
Section 7.09. Severability. Any provision of
this Agreement which is prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition, unenforceability
or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or
legality of such provision in any other jurisdiction.
Section 7.10. GOVERNING LAW. THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF NEW YORK.
Section 7.11. Submission to Jurisdiction; Waiver of
Jury Trial; Waiver of Immunity.
(a) Each of the parties hereto hereby
irrevocably and unconditionally:
(i) submits for itself and its
property in any legal action or proceeding
relating to this Agreement or any other
Operative Agreement, or for recognition and
enforcement of any judgment in respect hereof
or thereof, to the non-exclusive general
jurisdiction of the courts of the State of New
York, the courts of the United States of
America for the Southern District of New York,
and the appellate courts from any thereof;
(ii) consents that any such action or
proceeding may be brought in such courts, and
waives any objection that it may now or
hereafter have to the venue of any such action
or proceeding in any such court or that such
action or proceeding was brought in an
inconvenient court and agrees not to plead or
claim the same;
(iii) agrees that service of process
in any such action or proceeding may be
effected by mailing a copy thereof by
registered or certified mail (or any
substantially similar form and mail), postage
prepaid, to each party hereto at its address
set forth in Section 7.02 hereof, or at such
other address of which the Liquidity Provider
shall have been notified pursuant thereto; and
(iv) agrees that nothing herein shall
affect the right to effect service of process
in any other manner permitted by law or shall
limit the right to sue in any other
jurisdiction.
(b) THE BORROWER AND THE LIQUIDITY PROVIDER
EACH HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE
SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS
BEING ESTABLISHED, including, without limitation, contract
claims, tort claims, breach of duty claims and all other common
law and statutory claims. The Borrower and the Liquidity Provider
each warrant and represent that it has reviewed this waiver with
its legal counsel, and that it knowingly and voluntarily waives
its jury trial rights following consultation with such legal
counsel. THIS WAIVER IS IRREVOCABLE, AND CANNOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT.
(c) The Liquidity Provider hereby waives any
immunity it may have from the jurisdiction of the courts of the
United States or of any State and waives any immunity any of its
properties located in the United States may have from attachment
or execution upon a judgement entered by any such court under the
United States Foreign Sovereign Immunities Act of 1976 or any
similar successor legislation.
Section 7.12. Execution in Counterparts. This
Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together,
shall constitute but one and the same Agreement.
Section 7.13. Entirety. This Agreement and the
other Operative Agreements constitute the entire agreement of the
parties hereto with respect to the subject matter hereof and
supersedes all prior understandings and agreements of such
parties.
Section 7.14. Headings. Section headings in this
Agreement are included herein for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose.
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION
TO MAKE ADVANCES. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, THE OBLIGATIONS OF THE LIQUIDITY PROVIDER TO MAKE
ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO DELIVER NOTICES
OF BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL
BE UNCONDITIONAL AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED,
IN EACH CASE STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS
AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date
first set forth above.
WILMINGTON TRUST COMPANY, not in
its individual capacity but solely as
Subordination Agent and Trustee,
as Borrower
By:_____________________________
Name:
Title:
De NATIONALE INVESTERINGSBANK N.V.,
as Liquidity Provider
By:______________________________
Name:
Title:
By:_____________________________
Name:
Title:
Annex I to
Revolving Credit Agreement
INTEREST ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of
the undersigned borrower (the "Borrower"), hereby certifies to De
NATIONALE INVESTERINGSBANK N.V. (the "Liquidity Provider"), with
reference to the Revolving Credit Agreement dated as of May 20,
1996, between the Borrower and the Liquidity Provider (the
"Liquidity Agreement"; the terms defined therein and not
otherwise defined herein being used herein as therein defined or
referenced), that:
(1) The Borrower is the Subordination
Agent under the Intercreditor Agreement.
(2) The Borrower is delivering this
Notice of Borrowing for the making of an
Interest Advance by the Liquidity Provider to
be used for the payment of interest on the
Class A Certificates which was payable on
__________, ____ in accordance with the
terms and provisions of the Class A Trust
Agreement and the Class A Certificates pursuant
to clause fourth of Section 3.2 of the
Intercreditor Agreement or clause sixth of
Section 3.3 of the Intercreditor Agreement,
which Advance is requested to be made on
___________, _____.
(3) The amount of the Interest Advance
requested hereby (i) is $__________.____, to
be applied in respect of the payment of
interest which was due and payable on the Class
A Certificates on such Distribution Date, (ii)
does not include any amount with respect to the
payment of principal of, or premium on, the
Class A Certificates, the Class B Certificates,
the Class C Certificates or the Class D
Certificates, or interest on the Class B
Certificates, the Class C Certificates or the
Class D Certificates, (iii) was computed in
accordance with the provisions of the Class A
Certificates, the Class A Trust Agreement and
the Intercreditor Agreement (a copy of which
computation is attached hereto as Schedule I),
(iv) does not exceed the Available Commitment
on the date hereof, and (v) has not been and is
not the subject of a prior or contemporaneous
Notice of Borrowing.
(4) Upon receipt by or on behalf of
the Borrower of the amount requested hereby,
(a) the Borrower will apply the same in
accordance with the terms of Section 3.2 or 3.3
of the Intercreditor Agreement, as the case may
be, (b) no portion of such amount shall be
applied by the Borrower for any other purpose
and (c) no portion of such amount until so
applied shall be commingled with other funds
held by the Borrower.
The Borrower hereby acknowledges that, pursuant
to the Liquidity Agreement, the making of the Interest Advance as
requested by this Notice of Borrowing shall automatically reduce,
subject to reinstatement in accordance with the terms of the
Liquidity Agreement, the Available Commitment by an amount equal
to the amount of the Interest Advance requested to be made hereby
as set forth in clause (i) of paragraph (3) of this Certificate
and such reduction shall automatically result in corresponding
reductions in the amounts available to be borrowed pursuant to a
subsequent Advance.
IN WITNESS WHEREOF, the Borrower has executed
and delivered this Notice of Borrowing as of the _____ day of
________, ____.
WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
as Subordination Agent, as Borrower
By:----------------------------
Name:
Title:
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with Interest
Advance Notice of Borrowing]
Annex II to
Revolving Credit Agreement
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of
the undersigned subordination agent (the "Borrower"), hereby
certifies to De NATIONALE INVESTERINGSBANK N.V. (the "Liquidity
Provider"), with reference to the Revolving Credit Agreement
dated as of May 20, 1996, between the Borrower and the Liquidity
Provider (the "Liquidity Agreement"; the terms defined therein
and not otherwise defined herein being used herein as therein
defined or referenced), that:
(1) The Borrower is the Subordination Agent
under the Intercreditor Agreement.
(2) The Borrower is delivering this
Notice of Borrowing for the making of the
Downgrade Advance by the Liquidity Provider to
be used for the funding of the Class A Cash
Collateral Account in accordance with Section
3.6(c) of the Intercreditor Agreement by reason
of the downgrading of the short-term unsecured
debt rating of the Liquidity Provider issued by
either Rating Agency below the Threshold
Rating, which Advance is requested to be made
on ________________, ____.
(3) The amount of the Downgrade
Advance requested hereby (i) is
$__________.____, which equals the Available
Commitment on the date hereof and is to be
applied in respect of the funding of the Class
A Cash Collateral Account in accordance with
Section 3.6(c) of the Intercreditor Agreement,
(ii) does not include any amount with respect
to the payment of the principal of, or premium
on, the Class A Certificates, or principal of,
or interest or premium on, the Class B
Certificates, the Class C Certificates or the
Class D Certificates, (iii) was computed in
accordance with the provisions of the Class A
Certificates, the Class A Trust Agreement and
the Intercreditor Agreement (a copy of which
computation is attached hereto as Schedule I),
and (iv) has not been and is not the subject of
a prior or contemporaneous Notice of Borrowing
under the Liquidity Agreement.
(4) Upon receipt by or on behalf of
the Borrower of the amount requested hereby,
(a) the Borrower will deposit such amount in
the Class A Cash Collateral Account and apply
the same in accordance with the terms of
Section 3.6(c) of the Intercreditor Agreement,
(b) no portion of such amount shall be applied
by the Borrower for any other purpose and (c)
no portion of such amount until so applied
shall be commingled with other funds held by
the Borrower.
The Borrower hereby acknowledges that, pursuant
to the Liquidity Agreement, (A) the making of the Downgrade
Advance as requested by this Notice of Borrowing shall
automatically and irrevocably terminate the obligation of the
Liquidity Provider to make further Advances under the Liquidity
Agreement; and (B) following the making by the Liquidity Provider
of the Downgrade Advance requested by this Notice of Borrowing,
the Borrower shall not be entitled to request any further
Advances under the Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed
and delivered this Notice of Borrowing as of the ____ day of
__________, ____.
WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
as Subordination Agent, as Borrower
By: -----------------------------
Name:
Title:
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with Downgrade
Advance Notice of Borrowing]
Annex III to
Revolving Credit Agreement
FINAL ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of
the undersigned borrower (the "Borrower"), hereby certifies to De
NATIONALE INVESTERINGSBANK N.V. (the "Liquidity Provider"), with
reference to the Revolving Credit Agreement dated as of May 20,
1996, between the Borrower and the Liquidity Provider (the
"Liquidity Agreement"; the terms defined therein and not
otherwise defined herein being used herein as therein defined or
referenced), that:
(1) The Borrower is the Subordination
Agent under the Intercreditor Agreement.
(2) The Borrower is delivering this
Notice of Borrowing for the making of the Final
Advance by the Liquidity Provider to be used
for the funding of the Class A Cash Collateral
Account in accordance with Section 3.6(i) of
the Intercreditor Agreement by reason of the
receipt by the Borrower of a Termination Notice
from the Liquidity Provider with respect to the
Liquidity Agreement, which Advance is requested
to be made on _________, ____.
(3) The amount of the Final Advance
requested hereby (i) is $__________.____,
which equals the Available Commitment on the
date hereof and is to be applied in respect of
the funding of the Class A Cash Collateral
Account in accordance with Section 3.6(i) of
the Intercreditor Agreement upon receipt by the
Borrower of a Termination Notice from the
Liquidity Provider in respect of the Liquidity
Agreement, (ii) does not include any amount
with respect to the payment of principal of, or
premium on, the Class A Certificates, or
principal of, or interest or premium on, the
Class B Certificates, the Class C Certificates
or the Class D Certificates, (iii) was computed
in accordance with the provisions of the Class
A Certificates, the Class A Trust Agreement and
the Intercreditor Agreement (a copy of which
computation is attached hereto as Schedule I),
and (iv) has not been and is not the subject of
a prior or contemporaneous Notice of Borrowing.
(4) Upon receipt by or on behalf of
the Borrower of the amount requested hereby,
(a) the Borrower will deposit such amount in
the Class A Cash Collateral Account and apply
the same in accordance with the terms of
Section 3.6(i) of the Intercreditor Agreement,
(b) no portion of such amount shall be applied
by the Borrower for any other purpose and (c)
no portion of such amount until so applied
shall be commingled with other funds held by
the Borrower.
The Borrower hereby acknowledges that, pursuant
to the Liquidity Agreement, (A) the making of the Final Advance
as requested by this Notice of Borrowing shall automatically and
irrevocably terminate the obligation of the Liquidity Provider to
make further Advances under the Liquidity Agreement; and (B)
following the making by the Liquidity Provider of the Final
Advance requested by this Notice of Borrowing, the Borrower shall
not be entitled to request any further Advances under the
Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed
and delivered this Notice of Borrowing as of the ____ day of
___________, ____.
WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
as Subordination Agent, as Borrower
By: ------------------------------
Name:
Title:
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Final Advance Notice of Borrowing]
Annex IV to
Revolving Credit Agreement
NOTICE OF TERMINATION
[Date]
Wilmington Trust Company,
as Subordination Agent, as Borrower
Rodney Square North
1100 North Market Square
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Revolving Credit Agreement dated as of
May 20, 1996, between Wilmington Trust
Company, as Subordination Agent, as
agent and
trustee for the Continental Airlines Pass Through
Trust 1996-2A, as Borrower, and
De Nationale Investeringsbank N.V.
(the "Liquidity Agreement")
-------------------------------------------------------
Ladies and Gentlemen:
You are hereby notified that pursuant to
Section 6.01 of the Liquidity Agreement, by reason of the
occurrence of a Liquidity Event of Default and a Performing Note
Deficiency (each as defined therein) or other event specified
therein, we are giving this notice to you in order to cause (i)
our obligations to make Advances (as defined therein) under such
Liquidity Agreement to terminate on the fifth Business Day after
the date on which you receive this notice and (ii) you to request
a Final Advance under the Liquidity Agreement pursuant to Section
3.6(i) of the Intercreditor Agreement (as defined in the
Liquidity Agreement) as a consequence of your receipt of this
notice.
THIS NOTICE IS THE "NOTICE OF TERMINATION" PROVIDED FOR UNDER THE
LIQUIDITY AGREEMENT. OUR OBLIGATIONS TO MAKE ADVANCES UNDER THE LIQUIDITY
AGREEMENT WILL TERMINATE ON THE FIFTH BUSINESS DAY AFTER THE DATE ON WHICH
YOU RECEIVE THIS NOTICE.
Very truly yours,
De NATIONALE INVESTERINGSBANK N.V.
By:-----------------------------
Name:
Title:
cc: Wilmington Trust Company,
as Class A Trustee
Annex V to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of
May 20, 1996, between Wilmington Trust
Company, as Subordination Agent, as
agent and
trustee for the Continental Airlines 1996-2A
Pass Through Trust, as Borrower, and
De Nationale Investeringsbank N.V.
(the "Liquidity Agreement")
---------------------------------------------------
Ladies and Gentlemen:
For value received, the undersigned beneficiary
hereby irrevocably transfers to:
-----------------------------
[Name of Transferee]
-----------------------------
[Address of Transferee]
all rights of the undersigned as Borrower under the Liquidity
Agreement referred to above. The transferee has succeeded the
undersigned as Subordination Agent under the Intercreditor
Agreement referred to in the first paragraph of the Liquidity
Agreement, pursuant to the terms of Section 8.1 of the
Intercreditor Agreement.
By this transfer, all rights of the undersigned
as Borrower under the Liquidity Agreement are transferred to the
transferee and the transferee shall hereafter have the sole
rights as Borrower thereunder. The undersigned shall pay any
costs and expenses of such transfer, including, but not limited
to, transfer taxes or governmental charges.
We ask that this transfer be effective as of ______, ____.
WILMINGTON TRUST COMPANY, not in
its individual capacity but
solely as Subordination Agent,
as Borrower
By:------------------------------
Name:
Title:
- -----------------------------------------------------------------
REVOLVING CREDIT AGREEMENT
Dated as of May 20, 1996
between
WILMINGTON TRUST COMPANY,
as Subordination Agent,
as agent and trustee for the
Continental Airlines 1996-2B Pass Through Trust,
as Borrower
and
De NATIONALE INVESTERINGSBANK N.V.,
as Liquidity Provider
-----------------------------------------------------------------
Relating to
Continental Airlines 1996-2B Pass Through Trust
8.56% Continental Airlines Pass Through Certificates,
Series 1996-2B
3
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Page
Section 1.01. Certain Defined Terms.......................................1
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01. The Advances............................................... 6
Section 2.02. Making the Advances........................................ 6
Section 2.03. Fees....................................................... 8
Section 2.04. Adjustments or Termination of the Commitment............... 8
Section 2.05. Repayments of Interest Advances or the Final
Advance................................................................... 8
Section 2.06. Repayments of Downgrade Advances........................... 9
Section 2.07. Payments to the Liquidity Provider Under the
Intercreditor Agreement.................................10
Section 2.08. Book Entries...............................................10
Section 2.09. Payments from Available Funds Only.........................10
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs.............................................10
Section 3.02. Capital Adequacy...........................................11
Section 3.03. Payments Free of Deductions................................12
Section 3.04. Payments...................................................12
Section 3.05. Computations...............................................13
Section 3.06. Payment on Non-Business Days...............................13
Section 3.07. Interest...................................................13
Section 3.08. Replacement of Borrower....................................14
Section 3.09. Funding Loss Indemnification...............................14
Section 3.10. Illegality.................................................14
i
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to Effectiveness of Section 2.01......15
Section 4.02. Conditions Precedent to Borrowing..........................17
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the Borrower......................17
Section 5.02. Negative Covenants of the Borrower.........................17
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT
Section 6.01. Liquidity Events of Default................................18
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc............................................18
Section 7.02. Notices, Etc...............................................18
Section 7.03. No Waiver; Remedies........................................19
Section 7.04. Further Assurances.........................................19
Section 7.05. Indemnification; Survival of Certain Provisions............19
Section 7.06. Liability of the Liquidity Provider........................20
Section 7.07. Costs, Expenses and Taxes..................................20
Section 7.08. Binding Effect; Participations.............................21
Section 7.09. Severability...............................................22
Section 7.10. GOVERNING LAW..............................................22
Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial; Waiver
of Immunity.............................................22
Section 7.12. Execution in Counterparts..................................23
Section 7.13. Entirety...................................................24
Section 7.14. Headings...................................................24
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE
ADVANCES................................................24
ii
ANNEX I Interest Advance Notice of Borrowing
ANNEX II Downgrade Advance Notice of Borrowing
ANNEX III Final Advance Notice of Borrowing
ANNEX IV Notice of Termination
ANNEX V Notice of Replacement Subordination Agent
iii
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of May
20, 1996, between WILMINGTON TRUST COMPANY, a Delaware
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 B Trust (as
defined below) (the "Borrower"), and De NATIONALE
INVESTERINGSBANK N.V., a bank organized under the laws of The
Netherlands ("DNIB" or the "Liquidity Provider").
W I T N E S S E T H :
WHEREAS, pursuant to the Class B 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 B Trust is issuing the Class B
Certificates; and
WHEREAS, the Borrower, in order to support the
timely payment of a portion of the interest on the Class B
Certificates in accordance with their terms, has requested the
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
premises, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms.
(a) Definitions. As used in this Agreement and unless otherwise
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 Cost" has the meaning assigned to such term
in Section 3.01.
"Advance" means an Interest Advance, a Final Advance, a
Downgrade Advance, an Applied Downgrade Advance or an Unpaid
Advance, as the case may be.
"Applicable Liquidity Rate" has the meaning assigned to
such term in Section 3.07(c).
"Applicable Margin" means (w) with respect to
any Unpaid Advance (including an Applied Downgrade
Advance) that is a LIBOR Advance, 1.75%, (x) with
respect to any Unpaid Advance (including an Applied
Downgrade Advance) that is a Base Rate Advance, 1.75%,
(y) with respect to any Downgrade Advance (other than an
Applied Downgrade Advance) that is a LIBOR Advance,
0.60%, and (z) with respect to any Downgrade
1
Advance (other than an Applied Downgrade Advance) that
is a Base Rate Advance, 0.60%.
"Applied Downgrade Advance" has the meaning assigned to
such term in Section 2.06(a).
"Available Commitment" means, at any time of
determination, an amount equal to (i) the Commitment at
such time less (ii) subject to the proviso contained in
the third sentence of Section 2.02(a), the aggregate
amount of each Interest Advance outstanding at such
time; provided that following a Downgrade Advance or a
Final Advance, the Available Commitment shall be zero.
"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 Liquidity Provider from three Federal funds
brokers of recognized standing selected by it, plus (b)
three-tenths of one percent (0.30)%.
"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 or Sunday or a day on which commercial banks
are required or authorized to close in Houston, Texas,
New York, New York, Amsterdam, The Netherlands or, so
long as any Class B Certificate is outstanding, the city
and state in which the Class B Trustee 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.
"Commitment" means, initially, $4,540,609, as
the same may be reduced or increased from time to time
in accordance with Section 2.04(a).
"Downgrade Advance" means an Advance made pursuant to
Section 2.02(b).
"Effective Date" has the meaning specified in
Section 4.01.
2
"Excluded Taxes" means (i) any Taxes imposed
on, based on, or measured by the overall net income,
capital, franchises, or receipts (other than Taxes which
are or are in the nature of sales or use Taxes or value
added Taxes) of the Liquidity Provider or any of its
Lending Offices, (ii) withholding Taxes imposed under
laws in effect on the date hereof by the United States
on payments to a recipient in the jurisdiction in which
the Liquidity Provider's initial Lending Office is
located, and (iii) withholding Taxes imposed by the
United States on payments to a recipient in any other
jurisdiction to which such Lending Office is moved if,
under the laws in effect at the time of such move, such
laws would require greater withholding Taxes than the
laws applicable to the jurisdiction from which such
Lending Office was moved.
"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).
"Expiry Date" means January 17, 2016.
"Final Advance" means an Advance made pursuant to
Section 2.02(c).
"Intercreditor Agreement" means the
Intercreditor Agreement dated the date hereof, among the
Trustees, the Liquidity Provider, the liquidity provider
under each Liquidity Facility (other than this
Agreement) 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 the Liquidity Provider's receipt of the
Notice of Borrowing for such LIBOR Advance and 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
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
3
clause (y) above).
"Lending Office" means the lending office of
the Liquidity Provider, presently located at The Hague,
The Netherlands, or such other lending office as the
Liquidity Provider from time to time shall notify the
Borrower as its lending office hereunder.
"LIBOR Advance" means an Advance bearing
interest at a rate based upon the LIBOR Rate.
"LIBOR Rate" means, with respect to any
Interest Period, the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the rates
per annum at which deposits in dollars are offered to
major banks 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 amount of
the Advance to which such Interest Period is to apply
and for a period of time 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 Liquidity
Provider, (ii) the directors, officers, employees and
agents of the Liquidity Provider, and (iii) the
successors and permitted assigns of the persons
described in clauses (i) and (ii), inclusive.
"Liquidity Provider" has the meaning assigned
to such term in the recital of parties to this
Agreement.
"Non-Excluded Tax" has the meaning specified in
Section 3.03.
"Notice of Borrowing" has the meaning specified in
Section 2.02(d).
"Notice of Replacement Borrower" has the meaning
specified in Section 3.08.
"Offering Memorandum" means the Offering
Memorandum dated May 9, 1996 relating to the
Certificates, as such Offering Memorandum may be amended
or supplemented.
"Performing Note Deficiency" means any time
that less than 65% of the then aggregate outstanding
principal amount of all Equipment Notes are Performing
Equipment Notes.
"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).
4
"Required Amount" means, for any day, the sum
of the aggregate amount of interest, calculated at the
rate per annum equal to the Stated Interest Rate for the
Class B Certificates, that would be payable on the Class
B Certificates on each of the six successive quarterly
Regular Distribution Dates immediately following such
day or, if such day is a Regular Distribution Date, on
such day and the succeeding five quarterly Regular
Distribution Dates, in each case calculated on the basis
of the Pool Balance of the Class B Certificates on such
day and without regard to expected future payments of
principal on the Class B Certificates.
"Termination Date" means the earliest to occur
of the following: (i) the Expiry Date; (ii) the date on
which the Borrower delivers to the Liquidity Provider a
certificate, signed by a Responsible Officer of the
Borrower, certifying that all of the Class B
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 Liquidity Provider a certificate, signed by a
Responsible Officer of the Borrower, certifying that a
Replacement Liquidity Facility has been substituted for
this Agreement in full pursuant to Section 3.6(e) of the
Intercreditor Agreement; (iv) the fifth Business Day
following the receipt by the Borrower of a Termination
Notice from the Liquidity Provider pursuant to Section
6.01 hereof; and (v) the date on which no Advance is or
may (including by reason of reinstatement as herein
provided) become available for a Borrowing hereunder.
"Termination Notice" means the Notice of
Termination substantially in the form of Annex IV to
this Agreement.
"Transferee" has the meaning assigned to such term in
Section 7.08(b).
"Unpaid Advance" has the meaning assigned to such term
in Section 2.05.
(b) Terms Defined in the Intercreditor Agreement. For
all purposes of this Agreement, the following terms shall have
the respective meanings assigned to such terms in the
Intercreditor Agreement:
"Certificates", "Class B Certificates", "Class B
Certificateholders", "Class B Cash Collateral Account",
"Class B Trust", "Class B Trust Agreement", "Class B
Trustee", "Class A Certificates", "Class C
Certificates", "Class D Certificates", "Closing Date",
"Continental", "Continental Bankruptcy Event",
"Controlling Party", "Corporate Trust Office",
"Distribution Date", "Equipment Notes", "Fee Letter",
"Financing Agreement", "Indenture", "Initial
Purchasers", "Liquidity Facility", "Moody's", "Note
Purchase Agreement", "Operative Agreements",
"Participation Agreements", "Performing Equipment Note",
"Person", "Pool
5
Balance", "Purchase Agreement","Rating Agency",
"Registration Rights Agreement", "Regular Distribution
Date", "Replacement Liquidity Facility", "Responsible
Officer", "Scheduled Payment", "Special Payment",
"Standard & Poor's", "Stated Interest Rate",
"Subordination Agent", "Taxes", "Threshold Rating",
"Triggering Event", "Trust Agreements", "Trustee" and
"Written Notice".
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01. The Advances. The 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 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 Commitment.
Section 2.02. Making the Advances. (a) Interest
Advances shall be made in one or more Borrowings by delivery to
the 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 Available Commitment at such time
and shall be used solely for the payment when due of interest on
the Class B Certificates at the Stated Interest Rate therefor in
accordance with Section 3.6(a) of the Intercreditor Agreement.
Each Interest Advance made hereunder shall automatically reduce
the 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 Liquidity Provider in full of
the amount of any Interest Advance made pursuant to this Section
2.02(a), together with accrued interest thereon (as provided
herein), the Available Commitment shall be reinstated by the
amount of such repaid Interest Advance, but not to exceed the
Required Amount; provided, however, that the Available Commitment
shall not be so reinstated at any time if (i) a Triggering Event
shall have occurred and be continuing and (ii) there is a
Performing Note Deficiency.
(b) A Downgrade Advance shall be made in a
single Borrowing upon a downgrading of the Liquidity Provider's
short-term unsecured debt rating issued by either Rating Agency
(or, so long as DNIB is the Liquidity Provider and does not have
a published short-term unsecured debt rating issued by Standard &
Poor's, the long-term unsecured debt rating of DNIB issued by
Standard & Poor's) below the Threshold Rating (as provided for in
Section 3.6(c) of the Intercreditor Agreement) unless a
Replacement Liquidity Facility shall have been delivered to the
Borrower in accordance with said Section 3.6(c), by delivery to
the 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
6
equal to the Available Commitment at such time, and shall be used
to fund the Class B Cash Collateral Account in accordance with
said Section 3.6(c).
(c) A Final Advance shall be made in a single
Borrowing upon the receipt by the Borrower of a Termination
Notice from the Liquidity Provider pursuant to Section 6.01
hereof by delivery to the 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 Available Commitment at such
time, and shall be used to fund the Class B Cash Collateral
Account (in accordance with Section 3.6(i) of the Intercreditor
Agreement).
(d) 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) or 2.02(c), as the case may
be, given not later than 12:00 Noon (New York City time) on the
second Business Day prior to the day of the proposed Borrowing by
the Borrower to the Liquidity Provider. Upon satisfaction of the
conditions precedent set forth in Section 4.02 with respect to a
requested Borrowing, the Liquidity Provider shall, before 12:00
Noon (New York City time) on the date of such Borrowing or on
such later Business Day specified by the Borrower in such Notice
of Borrowing, make available for the account of its Lending
Office, in U.S. dollars and in immediately available funds, the
amount of such Borrowing to be paid to the Borrower in accordance
with its payment instructions. If a Notice of Borrowing is
delivered by the Borrower in respect of any Borrowing after 12:00
Noon (New York City time) on a Business Day, the Liquidity
Provider shall, before 12:00 Noon (New York City time) on the
third 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, make available to the
Borrower, in accordance with its payment instructions, in U.S.
dollars and in immediately available funds, the amount of such
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 Liquidity Provider for
such purpose. Each Notice of Borrowing shall be irrevocable and
binding on the Borrower.
(e) Upon the making of any Advance requested
pursuant to a Notice of Borrowing, in accordance with the
Borrower's payment instructions, the Liquidity Provider shall be
fully discharged of its obligation hereunder with respect to such
Notice of Borrowing, and the 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 (including the holder of any Class B Certificate or
the Class B Trustee) who makes to the Class B Trustee or the
Borrower a demand for payment with respect to any Class B
Certificate. Following the making of any Advance pursuant to
Section 2.02(b) or (c) hereof to fund the Class B Cash Collateral
Account, the Liquidity Provider shall have no interest in or
rights to the Class B Cash Collateral Account, such Advance or
7
any other amounts from time to time on deposit in the Class B
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 3.6(e) or (f) 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 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
Liquidity Provider the fees set forth in the Fee Letter.
Section 2.04. Adjustments or Termination of the
Commitment. (a) Automatic Adjustments. Promptly following each
date on which the Required Amount is (1) reduced as a result of a
reduction in the Pool Balance of the Class B Certificates or
otherwise, (2) increased as a result of an increase in the Stated
Interest Rate, or (3) subsequent to such an increase, reduced
pursuant to the definition of "Stated Interest Rate", the
Commitment shall automatically be reduced or increased, as the
case may be, to an amount equal to such reduced or increased
Required Amount (as calculated by the Borrower). The Borrower
shall give notice of any such automatic reduction or increase of
the Commitment to the Liquidity Provider within two Business Days
thereof. The failure by the Borrower to furnish any such notice
shall not affect such automatic reduction or increase of the
Commitment.
(b) Termination. Upon the making of any
Downgrade Advance or Final Advance hereunder or the occurrence of
the Termination Date, the obligation of the 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 2.07 and 2.09 hereof,
the Borrower hereby agrees to pay, or to cause to be paid, to the
Liquidity Provider on each date on which the 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"), plus (b)
interest on the amount of each such Unpaid Advance as provided in
Section 3.07 hereof. Subject to Sections 2.06, 2.07 and 2.09
hereof, unless otherwise waived by the Liquidity Provider, the
Borrower shall be obligated, without notice of an Advance or
demand for repayment from the Liquidity Provider (which notice
and demand are hereby waived by the Borrower), to repay the
Liquidity Provider for all Advances on the same day as made. The
Borrower and the 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 Liquidity Provider.
Section 2.06. Repayments of Downgrade Advances.
(a) Amounts advanced hereunder in respect of a Downgrade Advance
8
shall be deposited in the Class B Cash Collateral Account,
invested and withdrawn from the Class B Cash Collateral Account
as set forth in Sections 3.6(c) and (f) of the Intercreditor
Agreement. The Borrower agrees to pay to the Liquidity Provider,
on each Regular Distribution Date, commencing on the first
Regular Distribution Date after the making of a Downgrade
Advance, interest on the principal amount of any such Downgrade
Advance as provided in Section 3.07; provided, however, that
amounts in respect of a Downgrade Advance withdrawn from the
Class B Cash Collateral Account for the purpose of paying
interest on the Class B Certificates in accordance with Section
3.6(f) of the Intercreditor Agreement (the amount of any such
withdrawal being, an "Applied Downgrade Advance") shall 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 Downgrade Advance, the Liquidity Provider delivers a
Termination Notice to the Borrower pursuant to Section 6.01
hereof, such Downgrade Advance shall thereafter be treated as a
Final Advance under this Agreement for purposes of determining
the Applicable Liquidity Rate for interest payable thereon.
Immediately upon the withdrawal of any amounts from the Class B
Cash Collateral Account on account of a reduction in the Required
Amount, the Borrower shall repay the Downgrade Advances in a
principal amount equal to the amount of such reduction, plus
interest on the principal amount prepaid as provided in Section
3.07 hereof.
(b) At any time when an Applied Downgrade
Advance (or any portion thereof) is outstanding, upon the deposit
in the Class B Cash Collateral Account of any amount pursuant to
clause "third" of Section 3.2 of the Intercreditor Agreement (any
such amount being a "Replenishment Amount") for the purpose of
replenishing the balance thereof up to the Required Amount at
such time, (i) the aggregate outstanding principal amount of all
Applied Downgrade Advances shall be automatically reduced by the
amount of such Replenishment Amount and (ii) the principal amount
of the outstanding Downgrade Advance shall be automatically
increased by the amount of such Replenishment Amount.
(c) Upon the provision of a Replacement
Liquidity Facility in replacement of this Agreement in accordance
with Section 3.6(e) of the Intercreditor Agreement, amounts
remaining on deposit in the Class B Cash Collateral Account after
giving effect to any application of funds therefrom to any
payment of interest on the Class B Certificates on the date of
such replacement shall be reimbursed to the Liquidity Provider,
but only to the extent such amounts are necessary to repay in
full to the Liquidity Provider all amounts owing to it hereunder.
Section 2.07. Payments to the Liquidity
Provider Under the Intercreditor Agreement. In order to provide
for payment or repayment to the 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 Liquidity
Provider pursuant to the terms of the Intercreditor Agreement
(including, without limitation, Section 3.6(f) of the
Intercreditor
9
Agreement), shall be paid to the Liquidity Provider in accordance
with the terms thereof. Amounts so paid to the Liquidity Provider
shall be applied by the Liquidity Provider in the order of
priority required by the applicable provisions of Articles II and
III of the Intercreditor Agreement.
Section 2.08. Book Entries. The 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 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 shall
be made only from amounts received by it that constitute Scheduled
Payments, Special Payments or payments under Section 10.1 of the
Participation Agreements and Section 10.1 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 Liquidity Provider agrees that it
will look solely to such amounts 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 any Participation
Agreement. Amounts on deposit in the Class B Cash Collateral
Account shall be available to the Borrower to make payments only
to the extent and for the purposes expressly contemplated in
Section 3.6(f) of the Intercreditor Agreement.
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs. The Borrower
shall pay to the Liquidity Provider from time to time such
amounts as may be necessary to compensate the Liquidity Provider
for any costs incurred by the 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 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), 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 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 or monetary authority
10
charged with the interpretation or administration thereof (a
"Regulatory Change"), which: (1) changes the basis of taxation of
any amounts payable to the Liquidity Provider under this
Agreement in respect of any such Advances (other than Excluded
Taxes or any taxes described in Section 3.03); 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 Liquidity
Provider (including any such Advances or any deposits referred to
in the definition of LIBOR Rate or related definitions). The
Liquidity Provider agrees to use reasonable efforts (consistent
with applicable legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would
avoid the need for, or reduce the amount of, any amount payable
under this Section that may thereafter accrue and would not, in
the reasonable judgment of the Liquidity Provider, be otherwise
disadvantageous to the Liquidity Provider.
The Liquidity Provider will notify the Borrower
of any event occurring after the date of this Agreement that will
entitle the 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
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 Liquidity Provider in respect of any Additional Costs, shall
be prima facie evidence of the amount owed under this Section.
Section 3.02. Capital Adequacy. If (1)
compliance with any judicial, administrative, or other
governmental interpretation of any law or regulation or (2)
compliance by the Liquidity Provider or any corporation
controlling the Liquidity Provider with any guideline or request
from any central bank or other governmental authority (whether or
not having the force of law) has the effect of requiring an
increase in the amount of capital required or expected to be
maintained by the Liquidity Provider or any corporation
controlling the Liquidity Provider, and such increase is based
upon the Liquidity Provider's obligations hereunder, and other
similar obligations, the Borrower shall pay to the Liquidity
Provider such additional amount as shall be reasonably allocable
to the Liquidity Provider's obligations to the Borrower
hereunder. The Liquidity Provider agrees to use reasonable
efforts (consistent with applicable legal and regulatory
restrictions) to change the jurisdiction of its Lending Office if
making such change would avoid the need for, or reduce the amount
of, any amount payable under this Section that may thereafter
accrue and would not, in the reasonable judgment of the Liquidity
Provider, be otherwise disadvantageous to the Liquidity Provider.
The Liquidity Provider will notify the Borrower
of any event occurring after the date of this Agreement that will
entitle the Liquidity Provider to compensation pursuant to this
Section 3.02 as promptly as practicable after it obtains
11
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
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 bank and of the amount allocable to the
Liquidity Provider's obligations to the Borrower hereunder shall
be prima facie evidence of the amounts owed under this Section.
Section 3.03. Payments Free of Deductions. All
payments made by the Borrower under this Agreement shall be made
free and clear of, and without reduction for or on account of,
any Taxes, excluding Excluded Taxes (such non-excluded taxes
being referred to herein, collectively, as "Non-Excluded Taxes").
If any Non-Excluded Taxes are required to be withheld or deducted
from any amounts payable to the Liquidity Provider under this
Agreement, the Borrower shall (a) within the time prescribed
therefor by applicable law pay to the appropriate governmental or
taxing authority the full amount of any such Non-Excluded Taxes
(and any additional Non-Excluded Taxes in respect of the payment
required under clause (b) hereof) and make such reports or
returns in connection therewith at the time or times and in the
manner prescribed by applicable law, and (b) pay to the Liquidity
Provider an additional amount which (after deduction of all such
Non-Excluded Taxes) will be sufficient to yield to the Liquidity
Provider the full amount which would have been received by it had
no such withholding or deduction been made. Within 30 days after
the date of each payment hereunder, the Borrower shall furnish to
the Liquidity Provider the original or a certified copy of (or
other documentary evidence of) the payment of the Non-Excluded
Taxes applicable to such payment. The Liquidity Provider agrees
to use reasonable efforts (consistent with applicable legal and
regulatory restrictions) to change the jurisdiction of its
Lending Office if making such change would avoid the need for, or
reduce the amount of, any such additional amounts that may
thereafter accrue and would not, in the reasonable judgment of
the Liquidity Provider, be otherwise materially disadvantageous
to the Liquidity Provider or require the Liquidity Provider to
incur any costs or expenses for which it is not indemnified by
the Borrower. The Liquidity Provider shall deliver to the
Borrower such certificates and documents as may be reasonably
requested by the Borrower and required by applicable law to
establish that payments hereunder are exempt from (or entitled to
a reduced rate of) withholding Tax.
Section 3.04. Payments. The Borrower shall make
or cause to be made each payment to the Liquidity Provider under
this Agreement so as to cause the same to be received by the
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
lawful money of the United States of America, to the Liquidity
Provider in immediately available funds, by wire transfer to the
office of Morgan Guaranty Trust Company of New York, New York
City, for credit to DNIB, Account No. 650.01.919.
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
12
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) The Borrower shall
pay, or shall cause to be paid, 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 Downgrade Advance,
from and including the date on which the amount thereof was
withdrawn from the Class B Cash Collateral Account to pay
interest on the Class B Certificates) to but excluding the date
such principal amount shall be paid in full and (ii) any other
amount due hereunder (whether fees, commissions, expenses or
other amounts or, to the extent permitted by law, installments of
interest on Advances or any such other amount) which is not paid
when due (whether at stated maturity, by acceleration or
otherwise) from and including the due date thereof to but
excluding the date such amount is paid in full, in each such
case, at a fluctuating interest rate per annum for each day equal
to the Applicable Liquidity Rate (as defined below) for such
Advance or such other amount as in effect for such day, but in no
event at a rate per annum greater than the maximum rate permitted
by applicable law; provided, however, that, if at any time the
otherwise applicable interest rate as set forth in this Section
3.07 shall exceed the maximum rate permitted by applicable law,
then any subsequent reduction in such interest rate will not
reduce the rate of interest payable pursuant to this Section 3.07
below the maximum rate permitted by applicable law until the
total amount of interest accrued equals the amount of interest
that would have accrued if such otherwise applicable interest
rate as set forth in this Section 3.07 had at all times been in
effect. Nothing contained in this Section 3.07 shall require the
Borrower to pay any amount under this Section 3.07 other than to
the extent the Borrower shall have funds available therefor.
(b) Each Advance will be a LIBOR Advance, except as
provided in Section 3.10.
(c) Each LIBOR Advance shall bear interest
during each Interest Period at the LIBOR Rate for such Interest
Period plus the Applicable Margin for such LIBOR Advance, payable
in arrears on the last day of such Interest Period and, in the
event of the payment of principal of such LIBOR Advance on a day
other than such last day, on the date of such payment (to the
extent of interest accrued on the amount of principal repaid).
13
Each Base Rate Advance shall bear interest at
the Base Rate plus the Applicable Margin for such Base Rate
Advance, payable in arrears on each Regular Distribution Date
and, in the event of the payment of principal of such Base Rate
Advance on a day other than a Regular Distribution Date, on the
date of such payment (to the extent of interest accrued on the
amount of principal repaid).
Each amount not paid when due hereunder
(whether fees, commissions, expenses or other amounts or, to the
extent permitted by applicable law, installments of interest on
Advances) shall bear interest at the Base Rate.
Each change in the Base Rate shall become
effective immediately. The rates of interest specified in this
Section 3.07(c) with respect to any Advance or other amount shall
be referred to as the "Applicable Liquidity Rate".
Section 3.08. Replacement of Borrower. From
time to time and subject to the successor Borrower's meeting the
eligibility requirements set forth in Section 6.9 of the
Intercreditor Agreement applicable to the Subordination Agent,
upon the effective date and time specified in a written and
completed Notice of Replacement Borrower in substantially the
form of Annex V attached hereto (a "Notice of Replacement
Borrower") delivered to the Liquidity Provider by the then
Borrower, the successor Borrower designated therein shall be
substituted for as the Borrower for all purposes hereunder.
Section 3.09. Funding Loss Indemnification. The
Borrower shall pay to the Liquidity Provider, upon the request of
the Liquidity Provider, such amount or amounts as shall be
sufficient (in the reasonable opinion of the Liquidity Provider)
to compensate it for any loss, cost, or expense incurred as a
result of:
(1) Any payment of a LIBOR Advance on a date other
than the last day of the Interest Period for such Advance;
or
(2) Any failure by the Borrower to borrow a LIBOR
Advance on the date for borrowing specified in the relevant
notice under Section 2.02.
Section 3.10. Illegality. Notwithstanding any
other provision in this Agreement, if any change in any
applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the
Liquidity Provider (or its Lending Office) with any request or
directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it
unlawful or impossible for the Liquidity Provider (or its Lending
Office) to maintain or fund its LIBOR Advances, then upon notice
to the Borrower by the Liquidity Provider, the outstanding
principal amount of the LIBOR Advances shall be converted to Base
Rate Advances (a) immediately upon demand of the Liquidity
Provider, if such change or
14
compliance with such request, in the judgment of the Liquidity
Provider, requires immediate repayment; or (b) at the expiration
of the last Interest Period to expire before the effective date
of any such change or request.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to
Effectiveness of Section 2.01. Section 2.01 of this Agreement
shall become effective on and as of the first date (the
"Effective Date") on which the following conditions precedent
have been satisfied or waived:
(a) The Liquidity Provider shall have received
on or before the Closing Date each of the following,
each dated such date, and in the case of each document
delivered pursuant to paragraphs (i), (ii) and (iii),
each in form and substance satisfactory to the Liquidity
Provider:
(i) This Agreement duly executed on behalf of the
Borrower;
(ii) The Intercreditor Agreement duly executed on
behalf of each of the parties thereto;
(iii) Fully executed copies of each of the
Operative Agreements (other than this Agreement and the
Intercreditor Agreement);
(iv) A copy of the Offering Memorandum and
specimen copies of the Class B Certificates;
(v) An executed copy of each opinion
delivered pursuant to the Class B Trust
Agreement, the Intercreditor Agreement, the
Refunding Agreements and the other Operative
Agreements (together with, in the case of each
such opinion, other than the opinion of counsel
for the Initial Purchasers, a letter from the
counsel rendering such opinion to the effect
that the Liquidity Provider is entitled to rely
on such opinion as if it were addressed to the
Liquidity Provider);
(vi) Evidence that there shall have
been made and shall be in full force and
effect, all filings, recordings and/or
registrations, and there shall have been given
or taken any notice or other similar action as
may be reasonably necessary or, to the extent
reasonably requested by the Liquidity Provider,
reasonably advisable, in order to establish,
perfect, protect and preserve the right, title
and interest, remedies, powers, privileges,
liens and security interests of, or for the
benefit of, the Trustees and the Liquidity
Provider created by the Operative Agreements;
(vii) An agreement from Continental, pursuant to
15
which (i) Continental agrees to provide copies
of quarterly financial statements and audited
annual financial statements to the Liquidity
Provider, and such other information as the
Liquidity Provider shall reasonably request
with respect to the transactions contemplated
by the Operative Agreements, in each case, only
to the extent that Continental is obligated to
provide such information pursuant to Section
8.2 of the Leases to the parties thereto and
(ii) Continental agrees to allow the Liquidity
Provider to inspect Continental's books and
records regarding such transactions, and to
discuss such transactions with officers and
employees of Continental, and
(viii) Such other documents,
instruments, opinions and approvals as the
Liquidity Provider shall have reasonably
requested.
(b) The following statements shall be true on and as
of the Effective Date:
(i) The representations and warranties in each
Refunding Agreement are true and correct on and as of
the Effective Date as though made on and as of the
Effective Date;
(ii) No event has occurred and is
continuing, or would result from the entering
into of this Agreement or the making of any
Advance, which constitutes a Liquidity Event of
Default; and
(iii) There has been no material
adverse change in the financial condition,
property or results of operations of
Continental since March 31, 1995.
(c) The Liquidity Provider shall have received
payment in full of all fees and other sums required to
be paid to or for the account of the Liquidity Provider
on or prior to the Effective Date.
(d) All conditions precedent to the issuance of
the Certificates under the Trust Agreements shall have
been satisfied, all conditions precedent to the
effectiveness of the other Liquidity Facilities shall
have been satisfied, and all conditions precedent to the
purchase of the Certificates by the Initial Purchasers
under the Purchase Agreement shall have been satisfied
(unless any of such conditions precedent shall have been
waived by the Initial Purchasers).
Section 4.02. Conditions Precedent to Borrowing.
The obligation of the Liquidity Provider to make an Advance on the
occasion of each Borrowing shall be subject to the conditions
precedent that the Effective Date shall have occurred and, prior
to the date of such Borrowing, the Borrower shall have delivered
a Notice of Borrowing which conforms to the terms and conditions
of this Agreement and has been completed as may be required by
the relevant form of the Notice of Borrowing for the type of
16
Advances requested.
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the
Borrower. So long as any Advance shall remain unpaid or the
Liquidity Provider shall have any Commitment hereunder or the
Borrower shall have any obligation to pay any amount to the
Liquidity Provider hereunder, the Borrower will, unless the
Liquidity Provider shall otherwise consent in writing:
(a) Performance of This and Other Agreements.
Punctually pay or cause to be paid all amounts payable
by it under this Agreement and the other Operative
Agreements and observe and perform in all material
respects the conditions, covenants and requirements
applicable to it contained in this Agreement and the
other Operative Agreements.
(b) Reporting Requirements. Furnish to the
Liquidity Provider with reasonable promptness, such
other information and data with respect to the
transactions contemplated by the Operative Agreements as
from time to time may be reasonably requested by the
Liquidity Provider; and permit the Liquidity Provider,
upon reasonable notice, to inspect the Borrower's books
and records with respect to such transactions and to
meet with officers and employees of the Borrower to
discuss such transactions.
Section 5.02. Negative Covenants of the Borrower.
So long as any Advance shall remain unpaid or the Liquidity Provider
shall have any Commitment hereunder or the Borrower shall have
any obligation to pay any amount to the Liquidity Provider
hereunder, the Borrower will not appoint or permit or suffer to
be appointed any successor Borrower without the written consent
of the Liquidity Provider, which consent shall not be
unreasonably withheld or delayed.
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT
Section 6.01. Liquidity Events of Default. If
(a) any Liquidity Event of Default occurs hereunder and (b) there
is a Performing Note Deficiency, the Liquidity Provider may, in
its discretion, deliver to the Borrower a Termination Notice, the
effect of which shall be to cause (i) this Agreement to expire on
the fifth Business Day after the date on which such Termination
Notice is received by the Borrower, (ii) the Borrower to promptly
request, and the Liquidity Provider to promptly make, a Final
Advance in accordance with Section 2.02(c) hereof and Section
3.6(i) of the Intercreditor Agreement, (iii) all other
outstanding Advances to be automatically converted into Final
Advances for purposes of determining the Applicable Liquidity
Rate for interest payable thereon, and (iv) subject to
17
Sections 2.07 and 2.09 hereof, all Advances, any accrued interest
thereon and any other amounts outstanding hereunder to become
immediately due and payable to the Liquidity Provider.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc. No amendment or
waiver of any provision of this Agreement, nor consent to any
departure by the Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by the
Liquidity Provider, and, in the case of an amendment, the
Borrower, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which
given.
Section 7.02. Notices, Etc. Except as otherwise
expressly provided herein, all notices and other communications
provided for hereunder shall be in writing (including telecopier
and mailed or delivered or sent by telecopier):
Borrower: WILMINGTON TRUST COMPANY
Rodney Square North
1100 North Market Square
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telephone: (302) 651-1000
Telecopy: (302) 651-8882
Liquidity Provider: De NATIONALE INVESTERINGSBANK N.V.
4 Carnegieplein
P.O. Box 380
2501 BH The Hague
The Netherlands
Attention: Aerospace Department
Telephone: 011-31-70-342-54-25
Telecopy: 011-31-365-10-71
or, as to each of the foregoing, at such other address as shall
be designated by such Person in a written notice to the others.
All such notices and communications shall be effective (i) if
given by telecopier, when transmitted to the telecopier number
specified above, (ii) if given by mail, when deposited in the
mails addressed as specified above, and (iii) if given by other
means, when delivered at the address specified above, except that
written notices to the Liquidity Provider pursuant to the
provisions of Articles II and III hereof shall not be effective
until received by the Liquidity Provider. A copy of all notices
delivered hereunder to either party shall in addition be
delivered to each of the parties to the Participation Agreements
at their respective addresses set forth therein.
Section 7.03. No Waiver; Remedies. No failure on the
18
part of the Liquidity Provider to exercise, and no delay in
exercising, any right under this Agreement shall operate as a
waiver thereof; nor shall any single or partial exercise of any
right under this Agreement preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies
provided by law.
Section 7.04. Further Assurances. The Borrower
agrees to do such further acts and things and to execute and
deliver to the Liquidity Provider such additional assignments,
agreements, powers and instruments as the Liquidity Provider may
reasonably require or deem advisable to carry into effect the
purposes of this Agreement and the other Operative Agreements or
to better assure and confirm unto the Liquidity Provider its
rights, powers and remedies hereunder and under the other
Operative Agreements.
Section 7.05. Indemnification; Survival of
Certain Provisions. The Liquidity Provider shall be indemnified
hereunder to the extent and in the manner described in Section
10.1 of the Participation Agreements and Section 10.1 of the Note
Purchase Agreement. In addition, the Borrower agrees to
indemnify, protect, defend and hold harmless the Liquidity
Provider from, against and in respect of, and shall pay on
demand, all Expenses of any kind or nature whatsoever, whether
arising before, on or after the date hereof, that may be imposed,
incurred by or asserted against any Liquidity Indemnitee, in any
way relating to, resulting from, or arising out of or in
connection with, this Agreement, the Fee Letter, the
Intercreditor Agreement or any Financing Agreement; provided,
however, that the Borrower shall not be required to indemnify,
protect, defend and hold harmless any Liquidity Indemnitee in
respect of any Expense of such Liquidity Indemnitee (i) to the
extent such Expense is attributable to the gross negligence or
willful misconduct of such Liquidity Indemnitee or any other
Liquidity Indemnitee, (ii) that is ordinary and usual operating
overhead expense, (iii) to the extent such Expense is
attributable to the failure by such Liquidity Indemnitee or any
other Liquidity Indemnitee to perform or observe any agreement,
covenant or condition on its part to be performed or observed in
any Operative Agreement. The indemnities contained in such
Section 10.1, and the provisions of Sections 3.01, 3.02, 3.03,
7.05 and 7.07 hereof, shall survive the termination of this
Agreement.
Section 7.06. Liability of the Liquidity
Provider. (a) Neither the Liquidity Provider nor any of its
officers or directors shall be liable or responsible for: (i) the
use which may be made of the Advances or any acts or omissions of
the Borrower or any beneficiary or transferee in connection
therewith; (ii) the validity, sufficiency or genuineness of
documents, or of any endorsement thereon, even if such documents
should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; or (iii) the making of Advances by the
Liquidity Provider against delivery of a Notice of Borrowing and
other documents which do not comply with the terms hereof;
provided, however, that the Borrower shall have a claim against
the Liquidity Provider, and the Liquidity Provider shall be
19
liable to the Borrower, to the extent of any damages suffered by
the Borrower which were the result of (A) the Liquidity
Provider's willful misconduct or negligence in determining
whether documents presented hereunder comply with the terms
hereof, or (B) any breach by the Liquidity Provider of any of the
terms of this Agreement, including, but not limited to, the
Liquidity Provider's failure to make lawful payment hereunder
after the delivery to it by the Borrower of a Notice of Borrowing
strictly complying with the terms and conditions hereof.
(b) The Liquidity Provider shall not be liable
or responsible in any respect for (i) any error, omission,
interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted, in connection with
this Agreement or any Notice of Borrowing delivered hereunder, or
(ii) any action, inaction or omission which may be taken by it in
good faith, absent willful misconduct or negligence (in which
event the extent of the Liquidity Provider's potential liability
to the Borrower shall be limited as set forth in the immediately
preceding paragraph), in connection with this Agreement or any
Notice of Borrowing.
Section 7.07. Costs, Expenses and Taxes. The
Borrower agrees to pay, or cause to be paid (A) on the Effective
Date and on such later date or dates on which the Liquidity
Provider shall make demand, all reasonable out-of-pocket costs
and expenses of the Liquidity Provider in connection with the
preparation, negotiation, execution, delivery, filing and
recording of this Agreement, any other Operative Agreement and
any other documents which may be delivered in connection with
this Agreement, including, without limitation, the reasonable
fees and expenses of outside counsel for the Liquidity Provider
and (B) on demand, all reasonable costs and expenses of the
Liquidity Provider (including reasonable counsel fees and
expenses) in connection with (i) the enforcement of this
Agreement or any other Operative Agreement, (ii) the modification
or amendment of, or supplement to, this Agreement or any other
Operative Agreement or such other documents which may be
delivered in connection herewith or therewith (whether or not the
same shall become effective) or (iii) any action or proceeding
relating to any order, injunction, or other process or decree
restraining or seeking to restrain the Liquidity Provider from
paying any amount under this Agreement, the Intercreditor
Agreement or any other Operative Agreement or otherwise affecting
the application of funds in the Cash Collateral Accounts. In
addition, the Borrower shall pay any and all recording, stamp and
other similar taxes and fees payable or determined to be payable
in connection with the execution, delivery, filing and recording
of this Agreement any other Operative Agreement and such other
documents, and agrees to save the Liquidity Provider harmless
from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes
or fees.
Section 7.08. Binding Effect; Participations. (a)
This Agreement shall be binding upon and inure to the benefit of
the Borrower and the Liquidity Provider and their respective
successors and assigns, except that neither the Liquidity
Provider (except as otherwise provided in this Section 7.08) nor
20
the Borrower shall have the right to assign its rights hereunder
or any interest herein without the prior written consent of the
other party, subject to the requirement of Section 7.08(b). The
Liquidity Provider may grant participations herein or in any of
its rights or security hereunder and under the other Operative
Agreements to such Persons as the Liquidity Provider may in its
sole discretion select, subject to the requirement of Section
7.08(b). No such participation by the Liquidity Provider,
however, will relieve the Liquidity Provider of its obligations
hereunder. In connection with any participation or any proposed
participation, the Liquidity Provider may disclose to the
participant or the proposed participant any information that the
Borrower is required to deliver or to disclose to the Liquidity
Provider pursuant to this Agreement. The Borrower acknowledges
and agrees that the Liquidity Provider's source of funds may
derive in part from its participants (other than Continental).
Accordingly, references in this Agreement and the other Operative
Agreements to determinations, reserve and capital adequacy
requirements, increased costs, reduced receipts and the like as
they pertain to the Liquidity Provider shall be deemed also to
include those of each of its participants (subject, in each case,
to the maximum amount that would have been incurred by or
attributable to the Liquidity Provider directly if the Liquidity
Provider, rather than the participant, had held the interest
participated).
(b) If, pursuant to subsection (a) above, the
Liquidity Provider sells any participation or transfers any
interest in this Agreement to any bank or other entity (each, a
"Transferee"), then, concurrently with the effectiveness of such
transfer, the Transferee shall (i) represent to the Liquidity
Provider (for the benefit of the Liquidity Provider and the
Borrower) either (A) that it is incorporated under the laws of
the United States or a state thereof or (B) that under applicable
law and treaties, no taxes will be required to be withheld with
respect to any payments to be made to such Transferee in respect
of this Agreement, (ii) furnish to the Liquidity Provider and the
Borrower either (x) a statement that it is incorporated under the
laws of the United States or a state thereof or (y) if it is not
so incorporated, two copies of a properly completed United States
Internal Revenue Service Form 4224 or Form 1001, as appropriate,
or other applicable form, certificate or document prescribed by
the Internal Revenue Service certifying, in each case, such
Transferee's entitlement to a complete exemption from United
States federal withholding tax in respect to any and all payments
to be made hereunder, and (iii) agree (for the benefit of the
Liquidity Provider and the Borrower) to provide the Liquidity
Provider and the Borrower a new Form 4224 or Form 1001, as
appropriate, (A) on or before the date that any such form expires
or becomes obsolete or (B) after the occurrence of any event
requiring a change in the most recent form previously delivered
by it and prior to the immediately following due date of any
payment by the Borrower hereunder, certifying in the case of a
Form 1001 or Form 4224 that such Transferee is entitled to a
complete exemption from United States federal withholding tax on
payments under this Agreement. Unless the Borrower has received
forms or other documents reasonably satisfactory to it (and
required by applicable law) indicating that payments hereunder
21
are not subject to United States federal withholding tax, the
Borrower will withhold taxes as required by law from such
payments at the applicable statutory rate without any obligation
to make additional payments under Section 3.03 hereof (other than
in respect of Non-Excluded Taxes).
(c) Notwithstanding the other provisions of
this Section 7.08, the Liquidity Provider may assign and pledge
all or any portion of the Advances owing to it to any Federal
Reserve Bank or the United States Treasury as collateral security
pursuant to Regulation A of the Board of Governors of the Federal
Reserve System and any Operating Circular issued by such Federal
Reserve Bank, provided that any payment in respect of such
assigned Advances made by the Borrower to the Liquidity Provider
in accordance with the terms of this Agreement shall satisfy the
Borrower's obligations hereunder in respect of such assigned
Advance to the extent of such payment. No such assignment shall
release the Liquidity Provider from its obligations hereunder.
Section 7.09. Severability. Any provision of
this Agreement which is prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition, unenforceability
or non- authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or
legality of such provision in any other jurisdiction.
Section 7.10. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.
Section 7.11. Submission to Jurisdiction; Waiver of
Jury Trial; Waiver of Immunity.
(a) Each of the parties hereto hereby irrevocably and
unconditionally:
(i) submits for itself and its
property in any legal action or proceeding
relating to this Agreement or any other
Operative Agreement, or for recognition and
enforcement of any judgment in respect hereof
or thereof, to the non-exclusive general
jurisdiction of the courts of the State of New
York, the courts of the United States of
America for the Southern District of New York,
and the appellate courts from any thereof;
(ii) consents that any such action or
proceeding may be brought in such courts, and
waives any objection that it may now or
hereafter have to the venue of any such action
or proceeding in any such court or that such
action or proceeding was brought in an
inconvenient court and agrees not to plead or
claim the same;
(iii) agrees that service of process
in any such action or proceeding may be
effected by mailing a copy thereof by
registered or certified mail (or any
substantially similar form and mail), postage
prepaid,
22
to each party hereto at its address set forth
in Section 7.02 hereof, or at such other
address of which the Liquidity Provider shall
have been notified pursuant thereto; and
(iv) agrees that nothing herein shall
affect the right to effect service of process
in any other manner permitted by law or shall
limit the right to sue in any other
jurisdiction.
(b) THE BORROWER AND THE LIQUIDITY PROVIDER
EACH HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE
SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS
BEING ESTABLISHED, including, without limitation, contract
claims, tort claims, breach of duty claims and all other common
law and statutory claims. The Borrower and the Liquidity Provider
each warrant and represent that it has reviewed this waiver with
its legal counsel, and that it knowingly and voluntarily waives
its jury trial rights following consultation with such legal
counsel. THIS WAIVER IS IRREVOCABLE, AND CANNOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT.
(c) The Liquidity Provider hereby waives any
immunity it may have from the jurisdiction of the courts of the
United States or of any State and waives any immunity any of its
properties located in the United States may have from attachment
or execution upon a judgement entered by any such court under the
United States Foreign Sovereign Immunities Act of 1976 or any
similar successor legislation.
Section 7.12. Execution in Counterparts. This
Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together,
shall constitute but one and the same Agreement.
Section 7.13. Entirety. This Agreement and the
other Operative Agreements constitute the entire agreement of the
parties hereto with respect to the subject matter hereof and
supersedes all prior understandings and agreements of such
parties.
Section 7.14. Headings. Section headings in this
Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other
purpose.
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION
TO MAKE ADVANCES. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, THE OBLIGATIONS OF THE LIQUIDITY PROVIDER TO MAKE
ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO DELIVER NOTICES
OF BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL
BE UNCONDITIONAL AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED,
23
IN EACH CASE STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS
AGREEMENT.
24
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date
first set forth above.
WILMINGTON TRUST COMPANY, not in
its individual capacity but
solely as
Subordination Agent and
Trustee,
as Borrower
By:_____________________________
Name:
Title:
De NATIONALE INVESTERINGSBANK N.V.,
as Liquidity Provider
By:______________________________
Name:
Title:
By:_____________________________
Name:
Title:
25
Annex I to
Revolving Credit Agreement
INTEREST ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of
the undersigned borrower (the "Borrower"), hereby certifies to De
NATIONALE INVESTERINGSBANK N.V. (the "Liquidity Provider"), with
reference to the Revolving Credit Agreement dated as of May 20,
1996, between the Borrower and the Liquidity Provider (the
"Liquidity Agreement"; the terms defined therein and not
otherwise defined herein being used herein as therein defined or
referenced), that:
(1) The Borrower is the Subordination
Agent under the Intercreditor Agreement.
(2) The Borrower is delivering this
Notice of Borrowing for the making of an
Interest Advance by the Liquidity Provider to
be used for the payment of interest on the
Class B Certificates which was payable on
, in accordance with the
terms and provisions of the Class B Trust
Agreement and the Class B Certificates pursuant
to clause fourth of Section 3.2 of the
Intercreditor Agreement or clause sixth of
Section 3.3 of the Intercreditor Agreement,
which Advance is requested to be made on
, .
(3) The amount of the Interest Advance
requested hereby (i) is $ . , to
be applied in respect of the payment of
interest which was due and payable on the Class
B Certificates on such Distribution Date, (ii)
does not include any amount with respect to the
payment of principal of, or premium on, the
Class A Certificates, the Class B Certificates,
the Class C Certificates or the Class D
Certificates, or interest on the Class A
Certificates, the Class C Certificates or the
Class D Certificates, (iii) was computed in
accordance with the provisions of the Class B
Certificates, the Class B Trust Agreement and
the Intercreditor Agreement (a copy of which
computation is attached hereto as Schedule I),
(iv) does not exceed the Available Commitment
on the date hereof, and (v) has not been and is
not the subject of a prior or contemporaneous
Notice of Borrowing.
(4) Upon receipt by or on behalf of
the Borrower of the amount requested hereby,
(a) the Borrower will apply the same in
accordance with the terms of Section 3.2 or 3.3
of the Intercreditor Agreement, as the case may
be, (b) no portion of such amount shall be
applied by the Borrower for any other purpose
and (c) no portion of such amount until so
applied shall be commingled with other funds
held by the Borrower.
The Borrower hereby acknowledges that, pursuant to the
26
Liquidity Agreement, the making of the Interest Advance as
requested by this Notice of Borrowing shall automatically reduce,
subject to reinstatement in accordance with the terms of the
Liquidity Agreement, the Available Commitment by an amount equal
to the amount of the Interest Advance requested to be made hereby
as set forth in clause (i) of paragraph (3) of this Certificate
and such reduction shall automatically result in corresponding
reductions in the amounts available to be borrowed pursuant to a
subsequent Advance.
27
IN WITNESS WHEREOF, the Borrower has executed and
delivered this Notice of Borrowing as of the day of
, .
WILMINGTON TRUST COMPANY, not in
its individual capacity but
solely as Subordination Agent, as
Borrower
By: ---------------------------------
Name:
Title:
28
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with Interest Advance
Notice of Borrowing]
29
Annex II to
Revolving Credit Agreement
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of
the undersigned subordination agent (the "Borrower"), hereby
certifies to De NATIONALE INVESTERINGSBANK N.V. (the "Liquidity
Provider"), with reference to the Revolving Credit Agreement
dated as of May 20, 1996, between the Borrower and the Liquidity
Provider (the "Liquidity Agreement"; the terms defined therein
and not otherwise defined herein being used herein as therein
defined or referenced), that:
(1) The Borrower is the Subordination
Agent under the Intercreditor Agreement.
(2) The Borrower is delivering this
Notice of Borrowing for the making of the
Downgrade Advance by the Liquidity Provider to
be used for the funding of the Class B Cash
Collateral Account in accordance with Section
3.6(c) of the Intercreditor Agreement by reason
of the downgrading of the short-term unsecured
debt rating of the Liquidity Provider issued by
either Rating Agency below the Threshold
Rating, which Advance is requested to be made
on , .
(3) The amount of the Downgrade
Advance requested hereby (i) is
$ . , which equals the Available
Commitment on the date hereof and is to be
applied in respect of the funding of the Class
B Cash Collateral Account in accordance with
Section 3.6(c) of the Intercreditor Agreement,
(ii) does not include any amount with respect
to the payment of the principal of, or premium
on, the Class B Certificates, or principal of,
or interest or premium on, the Class A
Certificates, the Class C Certificates or the
Class D Certificates, (iii) was computed in
accordance with the provisions of the Class B
Certificates, the Class B Trust Agreement and
the Intercreditor Agreement (a copy of which
computation is attached hereto as Schedule I),
and (iv) has not been and is not the subject of
a prior or contemporaneous Notice of Borrowing
under the Liquidity Agreement.
(4) Upon receipt by or on behalf of
the Borrower of the amount requested hereby,
(a) the Borrower will deposit such amount in
the Class B Cash Collateral Account and apply
the same in accordance with the terms of
Section 3.6(c) of the Intercreditor Agreement,
(b) no portion of such amount shall be applied
by the Borrower for any other purpose and (c)
no portion of such amount until so applied
shall be commingled with other funds held by
the Borrower.
The Borrower hereby acknowledges that, pursuant
to the Liquidity Agreement, (A) the making of the Downgrade
Advance as requested by this Notice of Borrowing shall
1
automatically and irrevocably terminate the obligation of the
Liquidity Provider to make further Advances under the Liquidity
Agreement; and (B) following the making by the Liquidity Provider of
the Downgrade Advance requested by this Notice of Borrowing, the Borrower
shall not be entitled to request any further Advances under the
Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed and
delivered this Notice of Borrowing as of the day of
- ---------, ------.
WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
as Subordination Agent, as Borrower
By:----------------------------------
Name:
Title:
2
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with Downgrade Advance
Notice of Borrowing]
1
Annex III to
Revolving Credit Agreement
FINAL ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of
the undersigned borrower (the "Borrower"), hereby certifies to De
NATIONALE INVESTERINGSBANK N.V. (the "Liquidity Provider"), with
reference to the Revolving Credit Agreement dated as of May 20,
1996, between the Borrower and the Liquidity Provider (the
"Liquidity Agreement"; the terms defined therein and not
otherwise defined herein being used herein as therein defined or
referenced), that:
(1) The Borrower is the Subordination
Agent under the Intercreditor Agreement.
(2) The Borrower is delivering this
Notice of Borrowing for the making of the Final
Advance by the Liquidity Provider to be used
for the funding of the Class B Cash Collateral
Account in accordance with Section 3.6(i) of
the Intercreditor Agreement by reason of the
receipt by the Borrower of a Termination Notice
from the Liquidity Provider with respect to the
Liquidity Agreement, which Advance is requested
to be made on , .
(3) The amount of the Final Advance
requested hereby (i) is $ . ,
which equals the Available Commitment on the
date hereof and is to be applied in respect of
the funding of the Class B Cash Collateral
Account in accordance with Section 3.6(i) of
the Intercreditor Agreement upon receipt by the
Borrower of a Termination Notice from the
Liquidity Provider in respect of the Liquidity
Agreement, (ii) does not include any amount
with respect to the payment of principal of, or
premium on, the Class B Certificates, or
principal of, or interest or premium on, the
Class A Certificates, the Class C Certificates
or the Class D Certificates, (iii) was computed
in accordance with the provisions of the Class
B Certificates, the Class B Trust Agreement and
the Intercreditor Agreement (a copy of which
computation is attached hereto as Schedule I),
and (iv) has not been and is not the subject of
a prior or contemporaneous Notice of Borrowing.
(4) Upon receipt by or on behalf of
the Borrower of the amount requested hereby,
(a) the Borrower will deposit such amount in
the Class B Cash Collateral Account and apply
the same in accordance with the terms of
Section 3.6(i) of the Intercreditor Agreement,
(b) no portion of such amount shall be applied
by the Borrower for any other purpose and (c)
no portion of such amount until so applied
shall be commingled with other funds held by
the Borrower.
The Borrower hereby acknowledges that, pursuant to the
1
Liquidity Agreement, (A) the making of the Final Advance as
requested by this Notice of Borrowing shall automatically and
irrevocably terminate the obligation of the Liquidity Provider to
make further Advances under the Liquidity Agreement; and (B)
following the making by the Liquidity Provider of the Final
Advance requested by this Notice of Borrowing, the Borrower shall
not be entitled to request any further Advances under the
Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed and
delivered this Notice of Borrowing as of the day of
- ---------- , -------.
WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
as Subordination Agent, as Borrower
By: ___________________________
Name:
Title:
2
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Final Advance Notice of Borrowing]
1
Annex IV to
Revolving Credit Agreement
NOTICE OF TERMINATION
[Date]
Wilmington Trust Company,
as Subordination Agent, as Borrower
Rodney Square North
1100 North Market Square
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Revolving Credit Agreement dated as of
May 20, 1996, between Wilmington Trust
Company, as Subordination Agent, as
agent and
trustee for the Continental Airlines Pass Through
Trust 1996-2B, as Borrower, and
De Nationale Investeringsbank N.V.
(the "Liquidity Agreement")
-------------------------------------------------------
Ladies and Gentlemen:
You are hereby notified that pursuant to
Section 6.01 of the Liquidity Agreement, by reason of the
occurrence of a Liquidity Event of Default and a Performing Note
Deficiency (each as defined therein) or other event specified
therein, we are giving this notice to you in order to cause (i)
our obligations to make Advances (as defined therein) under such
Liquidity Agreement to terminate on the fifth Business Day after
the date on which you receive this notice and (ii) you to request
a Final Advance under the Liquidity Agreement pursuant to Section
3.6(i) of the Intercreditor Agreement (as defined in the
Liquidity Agreement) as a consequence of your receipt of this
notice.
1
THIS NOTICE IS THE "NOTICE OF TERMINATION"
PROVIDED FOR UNDER THE LIQUIDITY AGREEMENT. OUR OBLIGATIONS TO
MAKE ADVANCES UNDER THE LIQUIDITY AGREEMENT WILL TERMINATE ON THE
FIFTH BUSINESS DAY AFTER THE DATE ON WHICH YOU RECEIVE THIS
NOTICE.
Very truly yours,
De NATIONALE INVESTERINGSBANK N.V.
By:----------------------------------
Name:
Title:
cc: Wilmington Trust Company,
as Class B Trustee
2
Annex V to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of
May 20, 1996, between Wilmington Trust
Company, as Subordination Agent, as
agent and
trustee for the Continental Airlines 1996-2B
Pass Through Trust, as Borrower, and
De Nationale Investeringsbank N.V.
(the "Liquidity Agreement")
---------------------------------------------------
Ladies and Gentlemen:
For value received, the undersigned beneficiary
hereby irrevocably transfers to:
[Name of Transferee]
[Address of Transferee]
all rights of the undersigned as Borrower under the Liquidity
Agreement referred to above. The transferee has succeeded the
undersigned as Subordination Agent under the Intercreditor
Agreement referred to in the first paragraph of the Liquidity
Agreement, pursuant to the terms of Section 8.1 of the
Intercreditor Agreement.
By this transfer, all rights of the undersigned
as Borrower under the Liquidity Agreement are transferred to the
transferee and the transferee shall hereafter have the sole
rights as Borrower thereunder. The undersigned shall pay any
costs and expenses of such transfer, including, but not limited
to, transfer taxes or governmental charges.
1
We ask that this transfer be effective as of
- ------------, ------.
WILMINGTON TRUST COMPANY, not in
its individual capacity but
solely as Subordination Agent,
as Borrower
By:-----------------------------------
Name:
Title:
2
- ------------------------------------------------------------------------------
REVOLVING CREDIT AGREEMENT
Dated as of May 20, 1996
between
WILMINGTON TRUST COMPANY,
as Subordination Agent,
as agent and trustee for the
Continental Airlines 1996-2C Pass Through Trust,
as Borrower
and
De NATIONALE INVESTERINGSBANK N.V.,
as Liquidity Provider
------------------------------------------------------------------------------
Relating to
Continental Airlines 1996-2C Pass Through Trust
10.22% Continental Airlines Pass Through Certificates,
Series 1996-2C
iii
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Page
Section 1.01. Certain Defined Terms..................................... 1
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01. The Advances.............................................. 6
Section 2.02. Making the Advances....................................... 6
Section 2.03. Fees...................................................... 8
Section 2.04. Adjustments or Termination of the Commitment.............. 8
Section 2.05. Repayments of Interest Advances or the Final Advance...... 8
Section 2.06. Repayments of Downgrade Advances.......................... 9
Section 2.07. Payments to the Liquidity Provider Under the
Intercreditor Agreement................................10
Section 2.08. Book Entries..............................................10
Section 2.09. Payments from Available Funds Only........................10
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs...........................................10
Section 3.02. Capital Adequacy..........................................11
Section 3.03. Payments Free of Deductions...............................12
Section 3.04. Payments..................................................12
Section 3.05. Computations..............................................13
Section 3.06. Payment on Non-Business Days..............................13
Section 3.07. Interest..................................................13
Section 3.08. Replacement of Borrower...................................14
Section 3.09. Funding Loss Indemnification..............................14
Section 3.10. Illegality................................................14
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to Effectiveness of Section 2.01.....15
Section 4.02. Conditions Precedent to Borrowing.........................17
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the Borrower.....................17
Section 5.02. Negative Covenants of the Borrower........................17
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT
Section 6.01. Liquidity Events of Default...............................18
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc...........................................18
Section 7.02. Notices, Etc..............................................18
Section 7.03. No Waiver; Remedies.......................................19
Section 7.04. Further Assurances........................................19
Section 7.05. Indemnification; Survival of Certain Provisions...........19
Section 7.06. Liability of the Liquidity Provider.......................20
Section 7.07. Costs, Expenses and Taxes.................................20
Section 7.08. Binding Effect; Participations............................21
Section 7.09. Severability..............................................22
Section 7.10. GOVERNING LAW.............................................22
Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial; Waiver
of Immunity..........................................22
Section 7.12. Execution in Counterparts.................................23
Section 7.13. Entirety..................................................24
Section 7.14. Headings..................................................24
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE
ADVANCES...............................................24
ANNEX I..Interest Advance Notice of Borrowing
ANNEX II.Downgrade Advance Notice of Borrowing
ANNEX III.........Final Advance Notice of Borrowing
ANNEX IV.Notice of Termination
ANNEX V..Notice of Replacement Subordination Agent
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of May
20, 1996, between WILMINGTON TRUST COMPANY, a Delaware
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 C Trust (as
defined below) (the "Borrower"), and De NATIONALE
INVESTERINGSBANK N.V., a bank organized under the laws of The
Netherlands ("DNIB" or the "Liquidity Provider").
W I T N E S S E T H :
WHEREAS, pursuant to the Class C 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 C Trust is issuing the Class C
Certificates; and
WHEREAS, the Borrower, in order to support the
timely payment of a portion of the interest on the Class C
Certificates in accordance with their terms, has requested the
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
premises, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. (a) Definitions. As
used in this Agreement and unless otherwise 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 Cost" has the meaning assigned to such term
in Section 3.01.
"Advance" means an Interest Advance, a Final
Advance, a Downgrade Advance, an Applied Downgrade
Advance or an Unpaid Advance, as the case may be.
"Applicable Liquidity Rate" has the meaning assigned to such
term in Section 3.07(c).
"Applicable Margin" means (w) with respect to
any Unpaid Advance (including an Applied Downgrade
Advance) that is a LIBOR Advance, 1.75%, (x) with
respect to any Unpaid Advance (including an Applied
Downgrade Advance) that is a Base Rate Advance, 1.75%,
(y) with respect to any Downgrade Advance (other than an
Applied Downgrade Advance) that is a LIBOR Advance,
0.60%, and (z) with respect to any Downgrade Advance
(other than an Applied Downgrade Advance) that is a Base
Rate Advance, 0.60%.
"Applied Downgrade Advance" has the meaning assigned to such
term in Section 2.06(a).
"Available Commitment" means, at any time of
determination, an amount equal to (i) the Commitment at
such time less (ii) subject to the proviso contained in
the third sentence of Section 2.02(a), the aggregate
amount of each Interest Advance outstanding at such
time; provided that following a Downgrade Advance or a
Final Advance, the Available Commitment shall be zero.
"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 Liquidity Provider from three Federal funds
brokers of recognized standing selected by it, plus (b)
three-tenths of one percent (0.30)%.
"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 or Sunday or a day on which commercial banks
are required or authorized to close in Houston, Texas,
New York, New York, Amsterdam, The Netherlands or, so
long as any Class C Certificate is outstanding, the city
and state in which the Class C Trustee 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.
"Commitment" means, initially, $5,421,148, as
the same may be reduced or increased from time to time
in accordance with Section 2.04(a).
"Downgrade Advance" means an Advance made pursuant to
Section 2.02(b).
"Effective Date" has the meaning specified in
Section 4.01.
"Excluded Taxes" means (i) any Taxes imposed
on, based on, or measured by the overall net income,
capital, franchises, or receipts (other than Taxes which
are or are in the nature of sales or use Taxes or value
added Taxes) of the Liquidity Provider or any of its
Lending Offices, (ii) withholding Taxes imposed under
laws in effect on the date hereof by the United States
on payments to a recipient in the jurisdiction in which
the Liquidity Provider's initial Lending Office is
located, and (iii) withholding Taxes imposed by the
United States on payments to a recipient in any other
jurisdiction to which such Lending Office is moved if,
under the laws in effect at the time of such move, such
laws would require greater withholding Taxes than the
laws applicable to the jurisdiction from which such
Lending Office was moved.
"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).
"Expiry Date" means January 17, 2016.
"Final Advance" means an Advance made pursuant to Section
2.02(c).
"Intercreditor Agreement" means the
Intercreditor Agreement dated the date hereof, among the
Trustees, the Liquidity Provider, the liquidity provider
under each Liquidity Facility (other than this
Agreement) 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 the Liquidity Provider's receipt of the
Notice of Borrowing for such LIBOR Advance and 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
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 Liquidity Provider, presently located at The Hague,
The Netherlands, or such other lending office as the
Liquidity Provider from time to time shall notify the
Borrower as its lending office hereunder.
"LIBOR Advance" means an Advance bearing
interest at a rate based upon the LIBOR Rate.
"LIBOR Rate" means, with respect to any
Interest Period, the average (rounded upward, if
necessary, to the next higher 1/16 of 1%) of the rates
per annum at which deposits in dollars are offered to
major banks 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 amount of
the Advance to which such Interest Period is to apply
and for a period of time 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 Liquidity
Provider, (ii) the directors, officers, employees and
agents of the Liquidity Provider, and (iii) the
successors and permitted assigns of the persons
described in clauses (i) and (ii), inclusive.
"Liquidity Provider" has the meaning assigned
to such term in the recital of parties to this
Agreement.
"Non-Excluded Tax" has the meaning specified in Section 3.03.
"Notice of Borrowing" has the meaning specified in Section
2.02(d).
"Notice of Replacement Borrower" has the meaning specified
in Section 3.08.
"Offering Memorandum" means the Offering
Memorandum dated May 9, 1996 relating to the
Certificates, as such Offering Memorandum may be amended
or supplemented.
"Performing Note Deficiency" means any time
that less than 65% of the then aggregate outstanding
principal amount of all Equipment Notes are Performing
Equipment Notes.
"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 Stated Interest Rate for the
Class C Certificates, that would be payable on the Class
C Certificates on each of the six successive quarterly
Regular Distribution Dates immediately following such
day or, if such day is a Regular Distribution Date, on
such day and the succeeding five quarterly Regular
Distribution Dates, in each case calculated on the basis
of the Pool Balance of the Class C Certificates on such
day and without regard to expected future payments of
principal on the Class C Certificates.
"Termination Date" means the earliest to occur
of the following: (i) the Expiry Date; (ii) the date on
which the Borrower delivers to the Liquidity Provider a
certificate, signed by a Responsible Officer of the
Borrower, certifying that all of the Class C
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 Liquidity Provider a certificate, signed by a
Responsible Officer of the Borrower, certifying that a
Replacement Liquidity Facility has been substituted for
this Agreement in full pursuant to Section 3.6(e) of the
Intercreditor Agreement; (iv) the fifth Business Day
following the receipt by the Borrower of a Termination
Notice from the Liquidity Provider pursuant to Section
6.01 hereof; and (v) the date on which no Advance is or
may (including by reason of reinstatement as herein
provided) become available for a Borrowing hereunder.
"Termination Notice" means the Notice of
Termination substantially in the form of Annex IV to
this Agreement.
"Transferee" has the meaning assigned to such term in
Section 7.08(b).
"Unpaid Advance" has the meaning assigned to such term in
Section 2.05.
(b) Terms Defined in the Intercreditor Agreement. For all
purposes of this Agreement, the following terms shall have the
respective meanings assigned to such terms in the Intercreditor
Agreement:
"Certificates", "Class C Certificates", "Class C
Certificateholders", "Class C Cash Collateral Account",
"Class C Trust", "Class C Trust Agreement", "Class C
Trustee", "Class A Certificates", "Class B
Certificates", "Class D Certificates", "Closing Date",
"Continental", "Continental Bankruptcy Event",
"Controlling Party", "Corporate Trust Office",
"Distribution Date", "Equipment Notes", "Fee Letter",
"Financing Agreement", "Indenture", "Initial
Purchasers", "Liquidity Facility", "Moody's", "Note
Purchase Agreement", "Operative Agreements",
"Participation Agreements", "Performing Equipment Note",
"Person", "Pool Balance", "Purchase Agreement","Rating
Agency", "Registration Rights Agreement", "Regular
Distribution Date", "Replacement Liquidity Facility",
"Responsible Officer", "Scheduled Payment", "Special
Payment", "Standard & Poor's", "Stated Interest Rate",
"Subordination Agent", "Taxes", "Threshold Rating",
"Triggering Event", "Trust Agreements", "Trustee" and
"Written Notice".
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01. The Advances. The 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 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 Commitment.
Section 2.02. Making the Advances. (a) Interest
Advances shall be made in one or more Borrowings by delivery to
the 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 Available Commitment at such time
and shall be used solely for the payment when due of interest on
the Class C Certificates at the Stated Interest Rate therefor in
accordance with Section 3.6(a) of the Intercreditor Agreement.
Each Interest Advance made hereunder shall automatically reduce
the 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 Liquidity Provider in full of
the amount of any Interest Advance made pursuant to this Section
2.02(a), together with accrued interest thereon (as provided
herein), the Available Commitment shall be reinstated by the
amount of such repaid Interest Advance, but not to exceed the
Required Amount; provided, however, that the Available Commitment
shall not be so reinstated at any time if (i) a Triggering Event
shall have occurred and be continuing and (ii) there is a
Performing Note Deficiency.
(b) A Downgrade Advance shall be made in a
single Borrowing upon a downgrading of the Liquidity Provider's
short-term unsecured debt rating issued by either Rating Agency
(or, so long as DNIB is the Liquidity Provider and does not have
a published short-term unsecured debt rating issued by Standard &
Poor's, the long-term unsecured debt rating of DNIB issued by
Standard & Poor's) below the Threshold Rating (as provided for in
Section 3.6(c) of the Intercreditor Agreement) unless a
Replacement Liquidity Facility shall have been delivered to the
Borrower in accordance with said Section 3.6(c), by delivery to
the 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 Available Commitment at such time, and shall be used
to fund the Class C Cash Collateral Account in accordance with
said Section 3.6(c).
(c) A Final Advance shall be made in a single
Borrowing upon the receipt by the Borrower of a Termination
Notice from the Liquidity Provider pursuant to Section 6.01
hereof by delivery to the 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 Available Commitment at such
time, and shall be used to fund the Class C Cash Collateral
Account (in accordance with Section 3.6(i) of the Intercreditor
Agreement).
(d) 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) or 2.02(c), as the case may
be, given not later than 12:00 Noon (New York City time) on the
second Business Day prior to the day of the proposed Borrowing by
the Borrower to the Liquidity Provider. Upon satisfaction of the
conditions precedent set forth in Section 4.02 with respect to a
requested Borrowing, the Liquidity Provider shall, before 12:00
Noon (New York City time) on the date of such Borrowing or on
such later Business Day specified by the Borrower in such Notice
of Borrowing, make available for the account of its Lending
Office, in U.S. dollars and in immediately available funds, the
amount of such Borrowing to be paid to the Borrower in accordance
with its payment instructions. If a Notice of Borrowing is
delivered by the Borrower in respect of any Borrowing after 12:00
Noon (New York City time) on a Business Day, the Liquidity
Provider shall, before 12:00 Noon (New York City time) on the
third 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, make available to the
Borrower, in accordance with its payment instructions, in U.S.
dollars and in immediately available funds, the amount of such
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 Liquidity Provider for
such purpose. Each Notice of Borrowing shall be irrevocable and
binding on the Borrower.
(e) Upon the making of any Advance requested
pursuant to a Notice of Borrowing, in accordance with the
Borrower's payment instructions, the Liquidity Provider shall be
fully discharged of its obligation hereunder with respect to such
Notice of Borrowing, and the 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 (including the holder of any Class C Certificate or
the Class C Trustee) who makes to the Class C Trustee or the
Borrower a demand for payment with respect to any Class C
Certificate. Following the making of any Advance pursuant to
Section 2.02(b) or (c) hereof to fund the Class C Cash Collateral
Account, the Liquidity Provider shall have no interest in or
rights to the Class C Cash Collateral Account, such Advance or
any other amounts from time to time on deposit in the Class C
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 3.6(e) or (f) 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 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
Liquidity Provider the fees set forth in the Fee Letter.
Section 2.04. Adjustments or Termination of the
Commitment. (a) Automatic Adjustments. Promptly following each
date on which the Required Amount is (1) reduced as a result of a
reduction in the Pool Balance of the Class C Certificates or
otherwise, (2) increased as a result of an increase in the Stated
Interest Rate, or (3) subsequent to such an increase, reduced
pursuant to the definition of "Stated Interest Rate", the
Commitment shall automatically be reduced or increased, as the
case may be, to an amount equal to such reduced or increased
Required Amount (as calculated by the Borrower). The Borrower
shall give notice of any such automatic reduction or increase of
the Commitment to the Liquidity Provider within two Business Days
thereof. The failure by the Borrower to furnish any such notice
shall not affect such automatic reduction or increase of the
Commitment.
(b) Termination. Upon the making of any
Downgrade Advance or Final Advance hereunder or the occurrence of
the Termination Date, the obligation of the 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 2.07 and 2.09 hereof,
the Borrower hereby agrees to pay, or to cause to be paid, to the
Liquidity Provider on each date on which the 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"), plus (b)
interest on the amount of each such Unpaid Advance as provided in
Section 3.07 hereof. Subject to Sections 2.06, 2.07 and 2.09
hereof, unless otherwise waived by the Liquidity Provider, the
Borrower shall be obligated, without notice of an Advance or
demand for repayment from the Liquidity Provider (which notice
and demand are hereby waived by the Borrower), to repay the
Liquidity Provider for all Advances on the same day as made. The
Borrower and the 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 Liquidity Provider.
Section 2.06. Repayments of Downgrade Advances.
(a) Amounts advanced hereunder in respect of a Downgrade Advance
shall be deposited in the Class C Cash Collateral Account,
invested and withdrawn from the Class C Cash Collateral Account
as set forth in Sections 3.6(c) and (f) of the Intercreditor
Agreement. The Borrower agrees to pay to the Liquidity Provider,
on each Regular Distribution Date, commencing on the first
Regular Distribution Date after the making of a Downgrade
Advance, interest on the principal amount of any such Downgrade
Advance as provided in Section 3.07; provided, however, that
amounts in respect of a Downgrade Advance withdrawn from the
Class C Cash Collateral Account for the purpose of paying
interest on the Class C Certificates in accordance with Section
3.6(f) of the Intercreditor Agreement (the amount of any such
withdrawal being, an "Applied Downgrade Advance") shall 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 Downgrade Advance, the Liquidity Provider delivers a
Termination Notice to the Borrower pursuant to Section 6.01
hereof, such Downgrade Advance shall thereafter be treated as a
Final Advance under this Agreement for purposes of determining
the Applicable Liquidity Rate for interest payable thereon.
Immediately upon the withdrawal of any amounts from the Class C
Cash Collateral Account on account of a reduction in the Required
Amount, the Borrower shall repay the Downgrade Advances in a
principal amount equal to the amount of such reduction, plus
interest on the principal amount prepaid as provided in Section
3.07 hereof.
(b) At any time when an Applied Downgrade
Advance (or any portion thereof) is outstanding, upon the deposit
in the Class C Cash Collateral Account of any amount pursuant to
clause "third" of Section 3.2 of the Intercreditor Agreement (any
such amount being a "Replenishment Amount") for the purpose of
replenishing the balance thereof up to the Required Amount at
such time, (i) the aggregate outstanding principal amount of all
Applied Downgrade Advances shall be automatically reduced by the
amount of such Replenishment Amount and (ii) the principal amount
of the outstanding Downgrade Advance shall be automatically
increased by the amount of such Replenishment Amount.
(c) Upon the provision of a Replacement
Liquidity Facility in replacement of this Agreement in accordance
with Section 3.6(e) of the Intercreditor Agreement, amounts
remaining on deposit in the Class C Cash Collateral Account after
giving effect to any application of funds therefrom to any
payment of interest on the Class C Certificates on the date of
such replacement shall be reimbursed to the Liquidity Provider,
but only to the extent such amounts are necessary to repay in
full to the Liquidity Provider all amounts owing to it hereunder.
Section 2.07. Payments to the Liquidity
Provider Under the Intercreditor Agreement. In order to provide
for payment or repayment to the 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 Liquidity
Provider pursuant to the terms of the Intercreditor Agreement
(including, without limitation, Section 3.6(f) of the
Intercreditor Agreement), shall be paid to the Liquidity Provider
in accordance with the terms thereof. Amounts so paid to the
Liquidity Provider shall be applied by the Liquidity Provider in
the order of priority required by the applicable provisions of
Articles II and III of the Intercreditor Agreement.
Section 2.08. Book Entries. The 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 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 shall be made only from amounts received by it that
constitute Scheduled Payments, Special Payments or payments under
Section 10.1 of the Participation Agreements and Section 10.1 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 Liquidity Provider
agrees that it will look solely to such amounts 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 any Participation Agreement. Amounts on deposit in the Class C
Cash Collateral Account shall be available to the Borrower to
make payments only to the extent and for the purposes expressly
contemplated in Section 3.6(f) of the Intercreditor Agreement.
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs. The Borrower
shall pay to the Liquidity Provider from time to time such
amounts as may be necessary to compensate the Liquidity Provider
for any costs incurred by the 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 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), 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 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 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 Liquidity Provider under this
Agreement in respect of any such Advances (other than Excluded
Taxes or any taxes described in Section 3.03); 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 Liquidity
Provider (including any such Advances or any deposits referred to
in the definition of LIBOR Rate or related definitions). The
Liquidity Provider agrees to use reasonable efforts (consistent
with applicable legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would
avoid the need for, or reduce the amount of, any amount payable
under this Section that may thereafter accrue and would not, in
the reasonable judgment of the Liquidity Provider, be otherwise
disadvantageous to the Liquidity Provider.
The Liquidity Provider will notify the Borrower
of any event occurring after the date of this Agreement that will
entitle the 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
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 Liquidity Provider in respect of any Additional Costs, shall
be prima facie evidence of the amount owed under this Section.
Section 3.02. Capital Adequacy. If (1)
compliance with any judicial, administrative, or other
governmental interpretation of any law or regulation or (2)
compliance by the Liquidity Provider or any corporation
controlling the Liquidity Provider with any guideline or request
from any central bank or other governmental authority (whether or
not having the force of law) has the effect of requiring an
increase in the amount of capital required or expected to be
maintained by the Liquidity Provider or any corporation
controlling the Liquidity Provider, and such increase is based
upon the Liquidity Provider's obligations hereunder, and other
similar obligations, the Borrower shall pay to the Liquidity
Provider such additional amount as shall be reasonably allocable
to the Liquidity Provider's obligations to the Borrower
hereunder. The Liquidity Provider agrees to use reasonable
efforts (consistent with applicable legal and regulatory
restrictions) to change the jurisdiction of its Lending Office if
making such change would avoid the need for, or reduce the amount
of, any amount payable under this Section that may thereafter
accrue and would not, in the reasonable judgment of the Liquidity
Provider, be otherwise disadvantageous to the Liquidity Provider.
The Liquidity Provider will notify the Borrower
of any event occurring after the date of this Agreement that will
entitle the 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
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 bank and of the amount allocable to the
Liquidity Provider's obligations to the Borrower hereunder shall
be prima facie evidence of the amounts owed under this Section.
Section 3.03. Payments Free of Deductions. All
payments made by the Borrower under this Agreement shall be made
free and clear of, and without reduction for or on account of,
any Taxes, excluding Excluded Taxes (such non-excluded taxes
being referred to herein, collectively, as "Non-Excluded Taxes").
If any Non-Excluded Taxes are required to be withheld or deducted
from any amounts payable to the Liquidity Provider under this
Agreement, the Borrower shall (a) within the time prescribed
therefor by applicable law pay to the appropriate governmental or
taxing authority the full amount of any such Non-Excluded Taxes
(and any additional Non-Excluded Taxes in respect of the payment
required under clause (b) hereof) and make such reports or
returns in connection therewith at the time or times and in the
manner prescribed by applicable law, and (b) pay to the Liquidity
Provider an additional amount which (after deduction of all such
Non-Excluded Taxes) will be sufficient to yield to the Liquidity
Provider the full amount which would have been received by it had
no such withholding or deduction been made. Within 30 days after
the date of each payment hereunder, the Borrower shall furnish to
the Liquidity Provider the original or a certified copy of (or
other documentary evidence of) the payment of the Non-Excluded
Taxes applicable to such payment. The Liquidity Provider agrees
to use reasonable efforts (consistent with applicable legal and
regulatory restrictions) to change the jurisdiction of its
Lending Office if making such change would avoid the need for, or
reduce the amount of, any such additional amounts that may
thereafter accrue and would not, in the reasonable judgment of
the Liquidity Provider, be otherwise materially disadvantageous
to the Liquidity Provider or require the Liquidity Provider to
incur any costs or expenses for which it is not indemnified by
the Borrower. The Liquidity Provider shall deliver to the
Borrower such certificates and documents as may be reasonably
requested by the Borrower and required by applicable law to
establish that payments hereunder are exempt from (or entitled to
a reduced rate of) withholding Tax.
Section 3.04. Payments. The Borrower shall make
or cause to be made each payment to the Liquidity Provider under
this Agreement so as to cause the same to be received by the
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
lawful money of the United States of America, to the Liquidity
Provider in immediately available funds, by wire transfer to the
office of Morgan Guaranty Trust Company of New York, New York
City, for credit to DNIB, Account No. 650.01.919.
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) The Borrower shall
pay, or shall cause to be paid, 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 Downgrade Advance,
from and including the date on which the amount thereof was
withdrawn from the Class C Cash Collateral Account to pay
interest on the Class C Certificates) to but excluding the date
such principal amount shall be paid in full and (ii) any other
amount due hereunder (whether fees, commissions, expenses or
other amounts or, to the extent permitted by law, installments of
interest on Advances or any such other amount) which is not paid
when due (whether at stated maturity, by acceleration or
otherwise) from and including the due date thereof to but
excluding the date such amount is paid in full, in each such
case, at a fluctuating interest rate per annum for each day equal
to the Applicable Liquidity Rate (as defined below) for such
Advance or such other amount as in effect for such day, but in no
event at a rate per annum greater than the maximum rate permitted
by applicable law; provided, however, that, if at any time the
otherwise applicable interest rate as set forth in this Section
3.07 shall exceed the maximum rate permitted by applicable law,
then any subsequent reduction in such interest rate will not
reduce the rate of interest payable pursuant to this Section 3.07
below the maximum rate permitted by applicable law until the
total amount of interest accrued equals the amount of interest
that would have accrued if such otherwise applicable interest
rate as set forth in this Section 3.07 had at all times been in
effect. Nothing contained in this Section 3.07 shall require the
Borrower to pay any amount under this Section 3.07 other than to
the extent the Borrower shall have funds available therefor.
(b) Each Advance will be a LIBOR Advance, except as
provided in Section 3.10.
(c) Each LIBOR Advance shall bear interest
during each Interest Period at the LIBOR Rate for such Interest
Period plus the Applicable Margin for such LIBOR Advance, payable
in arrears on the last day of such Interest Period and, in the
event of the payment of principal of such LIBOR Advance on a day
other than such last day, on the date of such payment (to the
extent of interest accrued on the amount of principal repaid).
Each Base Rate Advance shall bear interest at
the Base Rate plus the Applicable Margin for such Base Rate
Advance, payable in arrears on each Regular Distribution Date
and, in the event of the payment of principal of such Base Rate
Advance on a day other than a Regular Distribution Date, on the
date of such payment (to the extent of interest accrued on the
amount of principal repaid).
Each amount not paid when due hereunder
(whether fees, commissions, expenses or other amounts or, to the
extent permitted by applicable law, installments of interest on
Advances) shall bear interest at the Base Rate.
Each change in the Base Rate shall become
effective immediately. The rates of interest specified in this
Section 3.07(c) with respect to any Advance or other amount shall
be referred to as the "Applicable Liquidity Rate".
Section 3.08. Replacement of Borrower. From
time to time and subject to the successor Borrower's meeting the
eligibility requirements set forth in Section 6.9 of the
Intercreditor Agreement applicable to the Subordination Agent,
upon the effective date and time specified in a written and
completed Notice of Replacement Borrower in substantially the
form of Annex V attached hereto (a "Notice of Replacement
Borrower") delivered to the Liquidity Provider by the then
Borrower, the successor Borrower designated therein shall be
substituted for as the Borrower for all purposes hereunder.
Section 3.09. Funding Loss Indemnification. The
Borrower shall pay to the Liquidity Provider, upon the request of
the Liquidity Provider, such amount or amounts as shall be
sufficient (in the reasonable opinion of the Liquidity Provider)
to compensate it for any loss, cost, or expense incurred as a
result of:
(1) Any payment of a LIBOR Advance on a date
other than the last day of the Interest Period for such Advance; or
(2) Any failure by the Borrower to borrow a
LIBOR Advance on the date for borrowing specified in the
relevant notice under Section 2.02.
Section 3.10. Illegality. Notwithstanding any
other provision in this Agreement, if any change in any
applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the
Liquidity Provider (or its Lending Office) with any request or
directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it
unlawful or impossible for the Liquidity Provider (or its Lending
Office) to maintain or fund its LIBOR Advances, then upon notice
to the Borrower by the Liquidity Provider, the outstanding
principal amount of the LIBOR Advances shall be converted to Base
Rate Advances (a) immediately upon demand of the Liquidity
Provider, if such change or compliance with such request, in the
judgment of the Liquidity Provider, requires immediate repayment;
or (b) at the expiration of the last Interest Period to expire
before the effective date of any such change or request.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to
Effectiveness of Section 2.01. Section 2.01 of this Agreement
shall become effective on and as of the first date (the
"Effective Date") on which the following conditions precedent
have been satisfied or waived:
(a) The Liquidity Provider shall have received
on or before the Closing Date each of the following,
each dated such date, and in the case of each document
delivered pursuant to paragraphs (i), (ii) and (iii),
each in form and substance satisfactory to the Liquidity
Provider:
(i) This Agreement duly executed on behalf of
the Borrower;
(ii) The Intercreditor Agreement duly executed on
behalf of each of the parties thereto;
(iii) Fully executed copies of each of the
Operative Agreements (other than this Agreement and the
Intercreditor Agreement);
(iv) A copy of the Offering Memorandum and
specimen copies of the Class C Certificates;
(v) An executed copy of each opinion
delivered pursuant to the Class C Trust
Agreement, the Intercreditor Agreement, the
Refunding Agreements and the other Operative
Agreements (together with, in the case of each
such opinion, other than the opinion of counsel
for the Initial Purchasers, a letter from the
counsel rendering such opinion to the effect
that the Liquidity Provider is entitled to rely
on such opinion as if it were addressed to the
Liquidity Provider);
(vi) Evidence that there shall have
been made and shall be in full force and
effect, all filings, recordings and/or
registrations, and there shall have been given
or taken any notice or other similar action as
may be reasonably necessary or, to the extent
reasonably requested by the Liquidity Provider,
reasonably advisable, in order to establish,
perfect, protect and preserve the right, title
and interest, remedies, powers, privileges,
liens and security interests of, or for the
benefit of, the Trustees and the Liquidity
Provider created by the Operative Agreements;
(vii) An agreement from Continental,
pursuant to which (i) Continental agrees to
provide copies of quarterly financial
statements and audited annual financial
statements to the Liquidity Provider, and such
other information as the Liquidity Provider
shall reasonably request with respect to the
transactions contemplated by the Operative
Agreements, in each case, only to the extent
that Continental is obligated to provide such
information pursuant to Section 8.2 of the
Leases to the parties thereto and (ii)
Continental agrees to allow the Liquidity
Provider to inspect Continental's books and
records regarding such transactions, and to
discuss such transactions with officers and
employees of Continental, and
(viii) Such other documents,
instruments, opinions and approvals as the
Liquidity Provider shall have reasonably
requested.
(b) The following statements shall be true on and as of the
Effective Date:
(i) The representations and warranties
in each Refunding Agreement are true and
correct on and as of the Effective Date as though
made on and as of the Effective Date;
(ii) No event has occurred and is
continuing, or would result from the entering
into of this Agreement or the making of any
Advance, which constitutes a Liquidity Event of
Default; and
(iii) There has been no material
adverse change in the financial condition,
property or results of operations of
Continental since March 31, 1995.
(c) The Liquidity Provider shall have received
payment in full of all fees and other sums required to
be paid to or for the account of the Liquidity Provider
on or prior to the Effective Date.
(d) All conditions precedent to the issuance of
the Certificates under the Trust Agreements shall have
been satisfied, all conditions precedent to the
effectiveness of the other Liquidity Facilities shall
have been satisfied, and all conditions precedent to the
purchase of the Certificates by the Initial Purchasers
under the Purchase Agreement shall have been satisfied
(unless any of such conditions precedent shall have been
waived by the Initial Purchasers).
Section 4.02. Conditions Precedent to
Borrowing. The obligation of the Liquidity Provider to make an
Advance on the occasion of each Borrowing shall be subject to the
conditions precedent that the Effective Date shall have occurred
and, prior to the date of such Borrowing, the Borrower shall have
delivered a Notice of Borrowing which conforms to the terms and
conditions of this Agreement and has been completed as may be
required by the relevant form of the Notice of Borrowing for the
type of Advances requested.
ARTICLE V
COVENANTS
Section 5.01. Affirmative Covenants of the
Borrower. So long as any Advance shall remain unpaid or the
Liquidity Provider shall have any Commitment hereunder or the
Borrower shall have any obligation to pay any amount to the
Liquidity Provider hereunder, the Borrower will, unless the
Liquidity Provider shall otherwise consent in writing:
(a) Performance of This and Other Agreements.
Punctually pay or cause to be paid all amounts payable
by it under this Agreement and the other Operative
Agreements and observe and perform in all material
respects the conditions, covenants and requirements
applicable to it contained in this Agreement and the
other Operative Agreements.
(b) Reporting Requirements. Furnish to the
Liquidity Provider with reasonable promptness, such
other information and data with respect to the
transactions contemplated by the Operative Agreements as
from time to time may be reasonably requested by the
Liquidity Provider; and permit the Liquidity Provider,
upon reasonable notice, to inspect the Borrower's books
and records with respect to such transactions and to
meet with officers and employees of the Borrower to
discuss such transactions.
Section 5.02. Negative Covenants of the
Borrower. So long as any Advance shall remain unpaid or the
Liquidity Provider shall have any Commitment hereunder or the
Borrower shall have any obligation to pay any amount to the
Liquidity Provider hereunder, the Borrower will not appoint or
permit or suffer to be appointed any successor Borrower without
the written consent of the Liquidity Provider, which consent
shall not be unreasonably withheld or delayed.
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT
Section 6.01. Liquidity Events of Default. If
(a) any Liquidity Event of Default occurs hereunder and (b) there
is a Performing Note Deficiency, the Liquidity Provider may, in
its discretion, deliver to the Borrower a Termination Notice, the
effect of which shall be to cause (i) this Agreement to expire on
the fifth Business Day after the date on which such Termination
Notice is received by the Borrower, (ii) the Borrower to promptly
request, and the Liquidity Provider to promptly make, a Final
Advance in accordance with Section 2.02(c) hereof and Section
3.6(i) of the Intercreditor Agreement, (iii) all other
outstanding Advances to be automatically converted into Final
Advances for purposes of determining the Applicable Liquidity
Rate for interest payable thereon, and (iv) subject to Sections
2.07 and 2.09 hereof, all Advances, any accrued interest thereon
and any other amounts outstanding hereunder to become immediately
due and payable to the Liquidity Provider.
ARTICLE VII
MISCELLANEOUS
Section 7.01. Amendments, Etc. No amendment or
waiver of any provision of this Agreement, nor consent to any
departure by the Borrower therefrom, shall in any event be
effective unless the same shall be in writing and signed by the
Liquidity Provider, and, in the case of an amendment, the
Borrower, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which
given.
Section 7.02. Notices, Etc. Except as otherwise
expressly provided herein, all notices and other communications
provided for hereunder shall be in writing (including telecopier
and mailed or delivered or sent by telecopier):
Borrower: WILMINGTON TRUST COMPANY
Rodney Square North
1100 North Market Square
Wilmington, DE 19890-0001
Attention: Corporate Trust
Administration
Telephone: (302) 651-1000
Telecopy: (302) 651-8882
Liquidity Provider: De NATIONALE INVESTERINGSBANK N.V.
4 Carnegieplein
P.O. Box 380
2501 BH The Hague
The Netherlands
Attention: Aerospace Department
Telephone: 011-31-70-342-54-25
Telecopy: 011-31-365-10-71
or, as to each of the foregoing, at such other address as shall
be designated by such Person in a written notice to the others.
All such notices and communications shall be effective (i) if
given by telecopier, when transmitted to the telecopier number
specified above, (ii) if given by mail, when deposited in the
mails addressed as specified above, and (iii) if given by other
means, when delivered at the address specified above, except that
written notices to the Liquidity Provider pursuant to the
provisions of Articles II and III hereof shall not be effective
until received by the Liquidity Provider. A copy of all notices
delivered hereunder to either party shall in addition be
delivered to each of the parties to the Participation Agreements
at their respective addresses set forth therein.
Section 7.03. No Waiver; Remedies. No failure
on the part of the Liquidity Provider to exercise, and no delay
in exercising, any right under this Agreement shall operate as a
waiver thereof; nor shall any single or partial exercise of any
right under this Agreement preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies
provided by law.
Section 7.04. Further Assurances. The Borrower
agrees to do such further acts and things and to execute and
deliver to the Liquidity Provider such additional assignments,
agreements, powers and instruments as the Liquidity Provider may
reasonably require or deem advisable to carry into effect the
purposes of this Agreement and the other Operative Agreements or
to better assure and confirm unto the Liquidity Provider its
rights, powers and remedies hereunder and under the other
Operative Agreements.
Section 7.05. Indemnification; Survival of
Certain Provisions. The Liquidity Provider shall be indemnified
hereunder to the extent and in the manner described in Section
10.1 of the Participation Agreements and Section 10.1 of the Note
Purchase Agreement. In addition, the Borrower agrees to
indemnify, protect, defend and hold harmless the Liquidity
Provider from, against and in respect of, and shall pay on
demand, all Expenses of any kind or nature whatsoever, whether
arising before, on or after the date hereof, that may be imposed,
incurred by or asserted against any Liquidity Indemnitee, in any
way relating to, resulting from, or arising out of or in
connection with, this Agreement, the Fee Letter, the
Intercreditor Agreement or any Financing Agreement; provided,
however, that the Borrower shall not be required to indemnify,
protect, defend and hold harmless any Liquidity Indemnitee in
respect of any Expense of such Liquidity Indemnitee (i) to the
extent such Expense is attributable to the gross negligence or
willful misconduct of such Liquidity Indemnitee or any other
Liquidity Indemnitee, (ii) that is ordinary and usual operating
overhead expense, (iii) to the extent such Expense is
attributable to the failure by such Liquidity Indemnitee or any
other Liquidity Indemnitee to perform or observe any agreement,
covenant or condition on its part to be performed or observed in
any Operative Agreement. The indemnities contained in such
Section 10.1, and the provisions of Sections 3.01, 3.02, 3.03,
7.05 and 7.07 hereof, shall survive the termination of this
Agreement.
Section 7.06. Liability of the Liquidity
Provider. (a) Neither the Liquidity Provider nor any of its
officers or directors shall be liable or responsible for: (i) the
use which may be made of the Advances or any acts or omissions of
the Borrower or any beneficiary or transferee in connection
therewith; (ii) the validity, sufficiency or genuineness of
documents, or of any endorsement thereon, even if such documents
should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; or (iii) the making of Advances by the
Liquidity Provider against delivery of a Notice of Borrowing and
other documents which do not comply with the terms hereof;
provided, however, that the Borrower shall have a claim against
the Liquidity Provider, and the Liquidity Provider shall be
liable to the Borrower, to the extent of any damages suffered by
the Borrower which were the result of (A) the Liquidity
Provider's willful misconduct or negligence in determining
whether documents presented hereunder comply with the terms
hereof, or (B) any breach by the Liquidity Provider of any of the
terms of this Agreement, including, but not limited to, the
Liquidity Provider's failure to make lawful payment hereunder
after the delivery to it by the Borrower of a Notice of Borrowing
strictly complying with the terms and conditions hereof.
(b) The Liquidity Provider shall not be liable
or responsible in any respect for (i) any error, omission,
interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted, in connection with
this Agreement or any Notice of Borrowing delivered hereunder, or
(ii) any action, inaction or omission which may be taken by it in
good faith, absent willful misconduct or negligence (in which
event the extent of the Liquidity Provider's potential liability
to the Borrower shall be limited as set forth in the immediately
preceding paragraph), in connection with this Agreement or any
Notice of Borrowing.
Section 7.07. Costs, Expenses and Taxes. The
Borrower agrees to pay, or cause to be paid (A) on the Effective
Date and on such later date or dates on which the Liquidity
Provider shall make demand, all reasonable out-of-pocket costs
and expenses of the Liquidity Provider in connection with the
preparation, negotiation, execution, delivery, filing and
recording of this Agreement, any other Operative Agreement and
any other documents which may be delivered in connection with
this Agreement, including, without limitation, the reasonable
fees and expenses of outside counsel for the Liquidity Provider
and (B) on demand, all reasonable costs and expenses of the
Liquidity Provider (including reasonable counsel fees and
expenses) in connection with (i) the enforcement of this
Agreement or any other Operative Agreement, (ii) the modification
or amendment of, or supplement to, this Agreement or any other
Operative Agreement or such other documents which may be
delivered in connection herewith or therewith (whether or not the
same shall become effective) or (iii) any action or proceeding
relating to any order, injunction, or other process or decree
restraining or seeking to restrain the Liquidity Provider from
paying any amount under this Agreement, the Intercreditor
Agreement or any other Operative Agreement or otherwise affecting
the application of funds in the Cash Collateral Accounts. In
addition, the Borrower shall pay any and all recording, stamp and
other similar taxes and fees payable or determined to be payable
in connection with the execution, delivery, filing and recording
of this Agreement any other Operative Agreement and such other
documents, and agrees to save the Liquidity Provider harmless
from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes
or fees.
Section 7.08. Binding Effect; Participations.
(a) This Agreement shall be binding upon and inure to the benefit
of the Borrower and the Liquidity Provider and their respective
successors and assigns, except that neither the Liquidity
Provider (except as otherwise provided in this Section 7.08) nor
the Borrower shall have the right to assign its rights hereunder
or any interest herein without the prior written consent of the
other party, subject to the requirement of Section 7.08(b). The
Liquidity Provider may grant participations herein or in any of
its rights or security hereunder and under the other Operative
Agreements to such Persons as the Liquidity Provider may in its
sole discretion select, subject to the requirement of Section
7.08(b). No such participation by the Liquidity Provider,
however, will relieve the Liquidity Provider of its obligations
hereunder. In connection with any participation or any proposed
participation, the Liquidity Provider may disclose to the
participant or the proposed participant any information that the
Borrower is required to deliver or to disclose to the Liquidity
Provider pursuant to this Agreement. The Borrower acknowledges
and agrees that the Liquidity Provider's source of funds may
derive in part from its participants (other than Continental).
Accordingly, references in this Agreement and the other Operative
Agreements to determinations, reserve and capital adequacy
requirements, increased costs, reduced receipts and the like as
they pertain to the Liquidity Provider shall be deemed also to
include those of each of its participants (subject, in each case,
to the maximum amount that would have been incurred by or
attributable to the Liquidity Provider directly if the Liquidity
Provider, rather than the participant, had held the interest
participated).
(b) If, pursuant to subsection (a) above, the
Liquidity Provider sells any participation or transfers any
interest in this Agreement to any bank or other entity (each, a
"Transferee"), then, concurrently with the effectiveness of such
transfer, the Transferee shall (i) represent to the Liquidity
Provider (for the benefit of the Liquidity Provider and the
Borrower) either (A) that it is incorporated under the laws of
the United States or a state thereof or (B) that under applicable
law and treaties, no taxes will be required to be withheld with
respect to any payments to be made to such Transferee in respect
of this Agreement, (ii) furnish to the Liquidity Provider and the
Borrower either (x) a statement that it is incorporated under the
laws of the United States or a state thereof or (y) if it is not
so incorporated, two copies of a properly completed United States
Internal Revenue Service Form 4224 or Form 1001, as appropriate,
or other applicable form, certificate or document prescribed by
the Internal Revenue Service certifying, in each case, such
Transferee's entitlement to a complete exemption from United
States federal withholding tax in respect to any and all payments
to be made hereunder, and (iii) agree (for the benefit of the
Liquidity Provider and the Borrower) to provide the Liquidity
Provider and the Borrower a new Form 4224 or Form 1001, as
appropriate, (A) on or before the date that any such form expires
or becomes obsolete or (B) after the occurrence of any event
requiring a change in the most recent form previously delivered
by it and prior to the immediately following due date of any
payment by the Borrower hereunder, certifying in the case of a
Form 1001 or Form 4224 that such Transferee is entitled to a
complete exemption from United States federal withholding tax on
payments under this Agreement. Unless the Borrower has received
forms or other documents reasonably satisfactory to it (and
required by applicable law) indicating that payments hereunder
are not subject to United States federal withholding tax, the
Borrower will withhold taxes as required by law from such
payments at the applicable statutory rate without any obligation
to make additional payments under Section 3.03 hereof (other than
in respect of Non-Excluded Taxes).
(c) Notwithstanding the other provisions of
this Section 7.08, the Liquidity Provider may assign and pledge
all or any portion of the Advances owing to it to any Federal
Reserve Bank or the United States Treasury as collateral security
pursuant to Regulation A of the Board of Governors of the Federal
Reserve System and any Operating Circular issued by such Federal
Reserve Bank, provided that any payment in respect of such
assigned Advances made by the Borrower to the Liquidity Provider
in accordance with the terms of this Agreement shall satisfy the
Borrower's obligations hereunder in respect of such assigned
Advance to the extent of such payment. No such assignment shall
release the Liquidity Provider from its obligations hereunder.
Section 7.09. Severability. Any provision of
this Agreement which is prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition, unenforceability
or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or
legality of such provision in any other jurisdiction.
Section 7.10. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK.
Section 7.11. Submission to Jurisdiction; Waiver of Jury
Trial; Waiver of Immunity.
(a) Each of the parties hereto hereby irrevocably and
unconditionally:
(i) submits for itself and its
property in any legal action or proceeding
relating to this Agreement or any other
Operative Agreement, or for recognition and
enforcement of any judgment in respect hereof
or thereof, to the non-exclusive general
jurisdiction of the courts of the State of New
York, the courts of the United States of
America for the Southern District of New York,
and the appellate courts from any thereof;
(ii) consents that any such action or
proceeding may be brought in such courts, and
waives any objection that it may now or
hereafter have to the venue of any such action
or proceeding in any such court or that such
action or proceeding was brought in an
inconvenient court and agrees not to plead or
claim the same;
(iii) agrees that service of process
in any such action or proceeding may be
effected by mailing a copy thereof by
registered or certified mail (or any
substantially similar form and mail), postage
prepaid, to each party hereto at its address
set forth in Section 7.02 hereof, or at such
other address of which the Liquidity Provider
shall have been notified pursuant thereto; and
(iv) agrees that nothing herein shall
affect the right to effect service of process
in any other manner permitted by law or shall
limit the right to sue in any other
jurisdiction.
(b) THE BORROWER AND THE LIQUIDITY PROVIDER
EACH HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE
SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS
BEING ESTABLISHED, including, without limitation, contract
claims, tort claims, breach of duty claims and all other common
law and statutory claims. The Borrower and the Liquidity Provider
each warrant and represent that it has reviewed this waiver with
its legal counsel, and that it knowingly and voluntarily waives
its jury trial rights following consultation with such legal
counsel. THIS WAIVER IS IRREVOCABLE, AND CANNOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT.
(c) The Liquidity Provider hereby waives any
immunity it may have from the jurisdiction of the courts of the
United States or of any State and waives any immunity any of its
properties located in the United States may have from attachment
or execution upon a judgement entered by any such court under the
United States Foreign Sovereign Immunities Act of 1976 or any
similar successor legislation.
Section 7.12. Execution in Counterparts. This
Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together,
shall constitute but one and the same Agreement.
Section 7.13. Entirety. This Agreement and the
other Operative Agreements constitute the entire agreement of the
parties hereto with respect to the subject matter hereof and
supersedes all prior understandings and agreements of such
parties.
Section 7.14. Headings. Section headings in this Agreement
are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose.
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION
TO MAKE ADVANCES. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, THE OBLIGATIONS OF THE LIQUIDITY PROVIDER TO MAKE
ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO DELIVER NOTICES
OF BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL
BE UNCONDITIONAL AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED,
IN EACH CASE STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS
AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date
first set forth above.
WILMINGTON TRUST COMPANY, not in
its individual capacity but
solely as Subordination Agent
and Trustee, as Borrower
By:_____________________________
Name:
Title:
De NATIONALE INVESTERINGSBANK
N.V.,
as Liquidity Provider
By:______________________________
Name:
Title:
By:_____________________________
Name:
Title:
I-3
Annex I to
Revolving Credit Agreement
INTEREST ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of
the undersigned borrower (the "Borrower"), hereby certifies to De
NATIONALE INVESTERINGSBANK N.V. (the "Liquidity Provider"), with
reference to the Revolving Credit Agreement dated as of May 20,
1996, between the Borrower and the Liquidity Provider (the
"Liquidity Agreement"; the terms defined therein and not
otherwise defined herein being used herein as therein defined or
referenced), that:
(1) The Borrower is the Subordination
Agent under the Intercreditor Agreement.
(2) The Borrower is delivering this
Notice of Borrowing for the making of an
Interest Advance by the Liquidity Provider to
be used for the payment of interest on the
Class C Certificates which was payable on
______________, ______ in accordance with the
terms and provisions of the Class C Trust
Agreement and the Class C Certificates pursuant
to clause fourth of Section 3.2 of the
Intercreditor Agreement or clause sixth of
Section 3.3 of the Intercreditor Agreement,
which Advance is requested to be made on
______________ , _____ .
(3) The amount of the Interest Advance
requested hereby (i) is $_____________.____, to
be applied in respect of the payment of
interest which was due and payable on the Class
C Certificates on such Distribution Date, (ii)
does not include any amount with respect to the
payment of principal of, or premium on, the
Class A Certificates, the Class B Certificates,
the Class C Certificates or the Class D
Certificates, or interest on the Class A
Certificates, the Class B Certificates or the
Class D Certificates, (iii) was computed in
accordance with the provisions of the Class C
Certificates, the Class C Trust Agreement and
the Intercreditor Agreement (a copy of which
computation is attached hereto as Schedule I),
(iv) does not exceed the Available Commitment
on the date hereof, and (v) has not been and is
not the subject of a prior or contemporaneous
Notice of Borrowing.
(4) Upon receipt by or on behalf of
the Borrower of the amount requested hereby,
(a) the Borrower will apply the same in
accordance with the terms of Section 3.2 or 3.3
of the Intercreditor Agreement, as the case may
be, (b) no portion of such amount shall be
applied by the Borrower for any other purpose
and (c) no portion of such amount until so
applied shall be commingled with other funds
held by the Borrower.
The Borrower hereby acknowledges that, pursuant
to the Liquidity Agreement, the making of the Interest Advance as
requested by this Notice of Borrowing shall automatically reduce,
subject to reinstatement in accordance with the terms of the
Liquidity Agreement, the Available Commitment by an amount equal
to the amount of the Interest Advance requested to be made hereby
as set forth in clause (i) of paragraph (3) of this Certificate
and such reduction shall automatically result in corresponding
reductions in the amounts available to be borrowed pursuant to a
subsequent Advance.
IN WITNESS WHEREOF, the Borrower has executed
and delivered this Notice of Borrowing as of the day of , .
WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
as Subordination Agent, as Borrower
By:
Name:
Title:
Revolving Credit Agreement
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computation in accordance
with Interest Advance Notice of Borrowing]
II-2
Annex II to
Revolving Credit
Agreement
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of
the undersigned subordination agent (the "Borrower"), hereby
certifies to De NATIONALE INVESTERINGSBANK N.V. (the "Liquidity
Provider"), with reference to the Revolving Credit Agreement
dated as of May 20, 1996, between the Borrower and the Liquidity
Provider (the "Liquidity Agreement"; the terms defined therein
and not otherwise defined herein being used herein as therein
defined or referenced), that:
(1) The Borrower is the Subordination Agent
under the Intercreditor Agreement.
(2) The Borrower is delivering this
Notice of Borrowing for the making of the
Downgrade Advance by the Liquidity Provider to
be used for the funding of the Class C Cash
Collateral Account in accordance with Section
3.6(c) of the Intercreditor Agreement by reason
of the downgrading of the short-term unsecured
debt rating of the Liquidity Provider issued by
either Rating Agency below the Threshold
Rating, which Advance is requested to be made
on
-------------,-------.
(3) The amount of the Downgrade
Advance requested hereby (i) is
$_____________.____, which equals the Available
Commitment on the date hereof and is to be
applied in respect of the funding of the Class
C Cash Collateral Account in accordance with
Section 3.6(c) of the Intercreditor Agreement,
(ii) does not include any amount with respect
to the payment of the principal of, or premium
on, the Class C Certificates, or principal of,
or interest or premium on, the Class A
Certificates, the Class B Certificates or the
Class D Certificates, (iii) was computed in
accordance with the provisions of the Class C
Certificates, the Class C Trust Agreement and
the Intercreditor Agreement (a copy of which
computation is attached hereto as Schedule I),
and (iv) has not been and is not the subject of
a prior or contemporaneous Notice of Borrowing
under the Liquidity Agreement.
(4) Upon receipt by or on behalf of
the Borrower of the amount requested hereby,
(a) the Borrower will deposit such amount in
the Class C Cash Collateral Account and apply
the same in accordance with the terms of
Section 3.6(c) of the Intercreditor Agreement,
(b) no portion of such amount shall be applied
by the Borrower for any other purpose and (c)
no portion of such amount until so applied
shall be commingled with other funds held by
the Borrower.
The Borrower hereby acknowledges that, pursuant
to the Liquidity Agreement, (A) the making of the Downgrade
Advance as requested by this Notice of Borrowing shall
automatically and irrevocably terminate the obligation of the
Liquidity Provider to make further Advances under the Liquidity
Agreement; and (B) following the making by the Liquidity Provider
of the Downgrade Advance requested by this Notice of Borrowing,
the Borrower shall not be entitled to request any further
Advances under the Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed
and delivered this Notice of Borrowing as of the ___ day of
_________, ______.
WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
as Subordination Agent, as Borrower
By:
Name:
Title:
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance
with Downgrade Advance Notice of Borrowing]
III-2
Annex III to
Revolving Credit Agreement
FINAL ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of
the undersigned borrower (the "Borrower"), hereby certifies to De
NATIONALE INVESTERINGSBANK N.V. (the "Liquidity Provider"), with
reference to the Revolving Credit Agreement dated as of May 20,
1996, between the Borrower and the Liquidity Provider (the
"Liquidity Agreement"; the terms defined therein and not
otherwise defined herein being used herein as therein defined or
referenced), that:
(1) The Borrower is the Subordination Agent under
the Intercreditor Agreement.
(2) The Borrower is delivering this
Notice of Borrowing for the making of the Final
Advance by the Liquidity Provider to be used
for the funding of the Class C Cash Collateral
Account in accordance with Section 3.6(i) of
the Intercreditor Agreement by reason of the
receipt by the Borrower of a Termination Notice
from the Liquidity Provider with respect to the
Liquidity Agreement, which Advance is requested
to be made on _______________,______.
(3) The amount of the Final Advance
requested hereby (i) is $______________.____,
which equals the Available Commitment on the
date hereof and is to be applied in respect of
the funding of the Class C Cash Collateral
Account in accordance with Section 3.6(i) of
the Intercreditor Agreement upon receipt by the
Borrower of a Termination Notice from the
Liquidity Provider in respect of the Liquidity
Agreement, (ii) does not include any amount
with respect to the payment of principal of, or
premium on, the Class C Certificates, or
principal of, or interest or premium on, the
Class A Certificates, the Class B Certificates
or the Class D Certificates, (iii) was computed
in accordance with the provisions of the Class
C Certificates, the Class C Trust Agreement and
the Intercreditor Agreement (a copy of which
computation is attached hereto as Schedule I),
and (iv) has not been and is not the subject of
a prior or contemporaneous Notice of Borrowing.
(4) Upon receipt by or on behalf of
the Borrower of the amount requested hereby,
(a) the Borrower will deposit such amount in
the Class C Cash Collateral Account and apply
the same in accordance with the terms of
Section 3.6(i) of the Intercreditor Agreement,
(b) no portion of such amount shall be applied
by the Borrower for any other purpose and (c)
no portion of such amount until so applied
shall be commingled with other funds held by
the Borrower.
The Borrower hereby acknowledges that, pursuant
to the Liquidity Agreement, (A) the making of the Final Advance
as requested by this Notice of Borrowing shall automatically and
irrevocably terminate the obligation of the Liquidity Provider to
make further Advances under the Liquidity Agreement; and (B)
following the making by the Liquidity Provider of the Final
Advance requested by this Notice of Borrowing, the Borrower shall
not be entitled to request any further Advances under the
Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed
and delivered this Notice of Borrowing as of the ___ day of
__________ , _______.
WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
as Subordination Agent, as Borrower
By: ___________________________
Name:
Title:
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Final Advance Notice of Borrowing]
IV-2
Annex IV to
Revolving Credit Agreement
NOTICE OF TERMINATION
[Date]
Wilmington Trust Company,
as Subordination Agent, as Borrower
Rodney Square North
1100 North Market Square
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Revolving Credit Agreement dated as of
May 20, 1996, between Wilmington Trust
Company, as Subordination
Agent, as agent and
trustee for the Continental Airlines Pass Through
Trust 1996-2C, as Borrower, and
De Nationale Investeringsbank N.V.
(the "Liquidity Agreement")
-------------------------------------------------------
Ladies and Gentlemen:
You are hereby notified that pursuant to
Section 6.01 of the Liquidity Agreement, by reason of the
occurrence of a Liquidity Event of Default and a Performing Note
Deficiency (each as defined therein) or other event specified
therein, we are giving this notice to you in order to cause (i)
our obligations to make Advances (as defined therein) under such
Liquidity Agreement to terminate on the fifth Business Day after
the date on which you receive this notice and (ii) you to request
a Final Advance under the Liquidity Agreement pursuant to Section
3.6(i) of the Intercreditor Agreement (as defined in the
Liquidity Agreement) as a consequence of your receipt of this
notice.
THIS NOTICE IS THE "NOTICE OF TERMINATION" PROVIDED FOR
UNDER THE LIQUIDITY AGREEMENT. OUR OBLIGATIONS TO MAKE ADVANCES
UNDER THE LIQUIDITY AGREEMENT WILL TERMINATE ON THE FIFTH
BUSINESS DAY AFTER THE DATE ON WHICH YOU RECEIVE THIS NOTICE.
Very truly yours,
De NATIONALE INVESTERINGSBANK
N.V.
By:
Name:
Title:
cc: Wilmington Trust Company,
as Class C Trustee
V-2
Annex V to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of
May 20, 1996, between Wilmington Trust
Company, as Subordination Agent, as
agent and trustee for
the Continental Airlines 1996-2C
Pass Through Trust, as Borrower, and
De Nationale Investeringsbank N.V.
(the "Liquidity Agreement")
---------------------------------------------------
Ladies and Gentlemen:
For value received, the undersigned beneficiary
hereby irrevocably transfers to:
[Name of Transferee]
[Address of Transferee]
all rights of the undersigned as Borrower under the Liquidity
Agreement referred to above. The transferee has succeeded the
undersigned as Subordination Agent under the Intercreditor
Agreement referred to in the first paragraph of the Liquidity
Agreement, pursuant to the terms of Section 8.1 of the
Intercreditor Agreement.
By this transfer, all rights of the undersigned
as Borrower under the Liquidity Agreement are transferred to the
transferee and the transferee shall hereafter have the sole
rights as Borrower thereunder. The undersigned shall pay any
costs and expenses of such transfer, including, but not limited
to, transfer taxes or governmental charges.
We ask that this transfer be effective as of
____________, ______.
WILMINGTON TRUST COMPANY, not in
its individual capacity but
solely as Subordination Agent,
as Borrower
By:
Name:
Title:
- ------------------------------------------------------------------------
INTERCREDITOR AGREEMENT
Dated as of
May 20, 1996
AMONG
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Trustee under the
Continental Airlines Pass Through Trust 1996-2A,
Continental Airlines Pass Through Trust 1996-2B,
Continental Airlines Pass Through Trust 1996-2C
and
Continental Airlines Pass Through Trust 1996-2D
De NATIONALE INVESTERINGSBANK N.V.,
as Class A Liquidity Provider,
De NATIONALE INVESTERINGSBANK N.V.,
as Class B Liquidity Provider,
De NATIONALE INVESTERINGSBANK N.V.,
as Class C Liquidity Provider,
AND
WILMINGTON TRUST COMPANY,
not in its individual capacity except
as expressly set forth herein but
solely as Subordination Agent and Trustee
- ------------------------------------------------------------------------
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions..................................................2
ARTICLE II
TRUST ACCOUNTS; CONTROLLING PARTY
SECTION 2.1. Agreement to Terms of Subordination; Payments from Monies
Received Only................................................21
SECTION 2.2. Trust Accounts...............................................22
SECTION 2.3. Deposits to the Collection Account and Special Payments
Account......................................................24
SECTION 2.4. Distributions of Special Payments............................23
SECTION 2.5. Designated Representatives...................................26
SECTION 2.6. Controlling Party............................................26
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
AMOUNTS RECEIVED
SECTION 3.1. Written Notice of Distribution...............................28
SECTION 3.2. Distribution of Amounts on Deposit in the Collection Account.30
SECTION 3.3. Distribution of Amounts on Deposit Following a Triggering
Event........................................................32
SECTION 3.4. Other Payments...............................................34
SECTION 3.5. Payments to the Trustees and the Liquidity Providers.........34
SECTION 3.6. Liquidity Facilities.........................................34
ARTICLE IV
EXERCISE OF REMEDIES
SECTION 4.1. Directions from the Controlling Party........................40
SECTION 4.2. Remedies Cumulative..........................................41
SECTION 4.3. Discontinuance of Proceedings................................41
SECTION 4.4. Right of Certificateholders to Receive Payments Not to
Be Impaired..................................................42
SECTION 4.5. Undertaking for Costs........................................42
ARTICLE V
DUTIES OF THE SUBORDINATION AGENT;
AGREEMENTS OF TRUSTEES, ETC.
SECTION 5.1. Notice of Indenture Default or Triggering Event..............42
SECTION 5.2. Indemnification..............................................43
SECTION 5.3. No Duties Except as Specified in Intercreditor Agreement.....43
SECTION 5.4. Notice from the Liquidity Providers and Trustees.............43
ARTICLE VI
THE SUBORDINATION AGENT
SECTION 6.1. Acceptance of Trusts and Duties..............................44
SECTION 6.2. Absence of Duties............................................44
SECTION 6.3. No Representations or Warranties as to Documents.............44
SECTION 6.4. No Segregation of Monies; No Interest........................44
SECTION 6.5. Reliance; Agents; Advice of Counsel..........................44
SECTION 6.6. Capacity in Which Acting.....................................45
SECTION 6.7. Compensation.................................................45
SECTION 6.8. May Become Certificateholder.................................45
SECTION 6.9. Subordination Agent Required; Eligibility....................46
SECTION 6.10. Money to Be Held in Trust...................................46
ARTICLE VII
INDEMNIFICATION OF SUBORDINATION AGENT
SECTION 7.1. Scope of Indemnification.....................................46
ARTICLE VIII
SUCCESSOR SUBORDINATION AGENT
SECTION 8.1. Replacement of Subordination Agent; Appointment of
Successor....................................................47
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS
SECTION 9.1. Amendments, Waivers, etc.....................................48
SECTION 9.2. Subordination Agent Protected................................49
SECTION 9.3. Effect of Supplemental Agreements............................49
SECTION 9.4. Notice to Rating Agencies....................................49
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Termination of Intercreditor Agreement......................49
SECTION 10.2. Intercreditor Agreement for Benefit of Trustees,
Liquidity Providers and Subordination Agent.................50
SECTION 10.3. Notices.....................................................50
SECTION 10.4. Severability................................................51
SECTION 10.5. No Oral Modifications or Continuing Waivers.................51
SECTION 10.6. Successors and Assigns......................................51
SECTION 10.7. Headings....................................................51
SECTION 10.8. Counterpart Form............................................51
SECTION 10.9. Subordination...............................................51
SECTION 10.10. GOVERNING LAW..............................................53
SECTION 10.11. Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity.........................................53
Schedule 1 Indentures
Schedule 2 Refunding Agreements
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT dated as of May 20,
1996, among WILMINGTON TRUST COMPANY, a Delaware corporation
("WTC"), not in its individual capacity but solely as Trustee of
each Trust (each as defined below), De NATIONALE INVESTERINGSBANK
N.V., a bank organized under the laws of The Netherlands
("DNIB"), as Class A Liquidity Provider, DNIB, as Class B
Liquidity Provider, DNIB, as Class C Liquidity Provider, and
WILMINGTON TRUST COMPANY, not in its individual capacity except
as expressly set forth herein, but solely as Subordination Agent
and trustee hereunder (in such capacity, together with any
successor appointed pursuant to Article VIII hereof, the
"Subordination Agent").
WHEREAS, all capitalized terms used herein
shall have the respective meanings referred to in Article I
hereof;
WHEREAS, pursuant to each Indenture (i) with
respect to the Boeing 737-524 Aircraft that is owned by
Continental (the "Owned Aircraft"), Continental proposes to issue
on a recourse basis four series of Equipment Notes, to finance
such Aircraft and (ii) in the case of each of the four Boeing
757-224 Aircraft that are leased to Continental pursuant to the
related Lease (the "Leased Aircraft"), the related Owner Trustee
proposes to issue on a nonrecourse basis four series of Equipment
Notes to refinance the current indebtedness of such Owner Trustee
originally incurred to finance the purchase of the Leased
Aircraft;
WHEREAS, pursuant to the Financing Agreements,
each Trust will acquire those Equipment Notes having an interest
rate equal to the interest rate applicable to the Certificates to
be issued by such Trust;
WHEREAS, pursuant to each Trust Agreement, the
Trust created thereby proposes to issue a single class of
Certificates (a "Class") bearing the interest rate and having the
final distribution date described in such Trust Agreement on the
terms and subject to the conditions set forth therein;
WHEREAS, pursuant to the Purchase Agreement,
the Initial Purchasers propose to purchase the Certificates
issued by each Trust in the aggregate face amount set forth
opposite the name of such Trust on Schedule I thereto;
WHEREAS, each Liquidity Provider proposes to
enter into a revolving credit agreement (each, a "Liquidity
Facility") with the Subordination Agent, as agent for the Trustee
of each Trust (other than the Class D Trust), for the benefit of
the Certificateholders of such Trust; and
WHEREAS, it is a condition precedent to the
obligations of the Initial Purchasers under the Purchase
Agreement that the Subordination Agent, the Trustees and the
Liquidity Providers agree to the terms of subordination set forth
in this Agreement in respect of each Class of Certificates, and
the Subordination Agent, the Trustees and the Liquidity
Providers, by entering into this Agreement, hereby acknowledge
and agree to such terms of subordination and the other provisions
of this Agreement.
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 1.1. Definitions. For all purposes of this Agreement,
except as otherwise expressly provided or unless the context
otherwise requires:
(1) the terms used herein that are defined in
this Article have the meanings assigned to them in this
Article, and include the plural as well as the singular;
(2) all references in this Agreement to designated
"Articles", "Sections" and other subdivisions are to the
designated Articles, Sections and other subdivisions of this
Agreement;
(3) the words "herein", "hereof" and
"hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular
Article, Section or other subdivision; and
(4) the term "including" shall mean "including
without limitation".
"Acceleration" means, with respect to the amounts payable in
respect of the Equipment Notes issued under any Indenture, the
declaration of such amounts to be immediately due and payable.
"Accelerate", "Accelerated" and "Accelerating" have meanings
correlative to the foregoing.
"Adjusted Expected Distributions" means, with
respect to the Certificates of any Trust on any Current
Distribution Date, the sum of (x) accrued and unpaid
interest on such Certificates and (y) the greater of:
(A) the difference between (x) the
Pool Balance of such Certificates as of the
immediately preceding Distribution Date and (y)
the Pool Balance of such Certificates as of the
Current Distribution Date calculated on the
basis that (i) the principal of the
Non-Performing Equipment Notes held in such
Trust has been paid in full and such payments
have been distributed to the holders of such
Certificates and (ii) the principal of the
Performing Equipment Notes has been paid when
due (but without giving effect to any
acceleration of Performing Equipment Notes) and
such payments have been distributed to the
holders of such Certificates, and
(B) the amount of the excess, if any,
of (i) the Pool Balance of such Class of
Certificates as of the immediately preceding
Distribution Date, over (ii) the Aggregate LTV
Collateral Amount for such Class of
Certificates for the Current Distribution Date;
provided that, until the date of the initial LTV
Appraisals, clause (B) shall not apply.
"Affiliate" means, with respect to any Person,
any other Person directly or indirectly controlling,
controlled by or under common control with such Person.
For the purposes of this definition, "control" means the
power, directly or indirectly, to direct or cause the
direction of the management and policies of such Person
whether through the ownership of voting securities or by
contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregate LTV Collateral Amount" for any Class
of Certificates for any Distribution Date means the sum
of the applicable LTV Collateral Amounts for each
Aircraft, minus the Pool Balance for each Class of
Certificates, if any, senior to such Class, after giving
effect to any distribution of principal on such
Distribution Date on such senior Class or Classes.
"Aircraft" means, with respect to each Indenture,
the "Aircraft" referred to therein.
"Appraisal" means a fair market value appraisal
(which may be a "desktop" appraisal) performed by any
Appraiser or any other nationally recognized appraiser
on the basis of an arm's-length transaction between an
informed and willing purchaser under no compulsion to
buy and an informed and willing seller under no
compulsion to sell and both having knowledge of all
relevant facts.
"Appraised Current Market Value" of any
Aircraft means the lower of the average and the median
of the three most recent Appraisals of such Aircraft.
"Appraisers" means Aircraft Information Services, Inc.,
BK Associates, Inc. and Morten Beyer and Associates, Inc.
"Available Amount" means, with respect to any
Liquidity Facility on any drawing date, an amount equal
to (a) the Stated Amount of such Liquidity Facility,
less (b) the amount of each Interest Drawing honored by
the Liquidity Provider under such Liquidity Facility on
or prior to such date which has not been reimbursed or
reinstated as of such date; provided that, following a
Downgrade Drawing or a Final Drawing under such
Liquidity Facility, the Available Amount of such
Liquidity Facility shall be zero.
"Business Day" means any day other than a
Saturday or 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 Certificate is
outstanding, the city and state in which any Trustee,
the Subordination Agent or any Loan Trustee maintains
its Corporate Trust Office or receives and disburses
funds.
"Cash Collateral Account" means the Class A Cash
Collateral Account, the Class B Cash Collateral Account or
the Class C Cash Collateral Account, as applicable.
"Certificate" means a Class A Certificate, a
Class B Certificate, a Class C Certificate or a Class D
Certificate, as applicable.
"Certificateholder" means any holder of one or more
Certificates.
"Class" has the meaning assigned to such term
in the preliminary statements to this Agreement.
"Class A Cash Collateral Account" means an
Eligible Deposit Account in the name of the
Subordination Agent maintained at an Eligible
Institution, which shall be the Subordination Agent if
it shall so qualify, into which all amounts drawn under
the Class A Liquidity Facility pursuant to Section
3.6(c) or 3.6(i) shall be deposited.
"Class A Certificateholder" means, at any time,
any holder of one or more Class A Certificates.
"Class A Certificates" means the certificates
issued by the Class A Trust, substantially in the form
of Exhibit A to the Class A Trust Agreement, and
authenticated by the Class A Trustee, representing
fractional undivided interests in the Class A Trust, and
any certificates issued in exchange therefor or
replacement thereof pursuant to the terms of the Class A
Trust Agreement.
"Class A Liquidity Facility" means, initially,
the Revolving Credit Agreement dated as of the date
hereof, between the Subordination Agent, as agent of the
Class A Trustee, and the Class A Liquidity Provider,
and, from and after the replacement of such Agreement
pursuant hereto, 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.
"Class A Liquidity Provider" means DNIB,
together with any Replacement Liquidity Provider which
has issued a Replacement Liquidity Facility to replace
the Class A Liquidity Facility pursuant to Section
3.6(e).
"Class A Trust" means Continental Airlines
1996-2A Pass Through Trust created and administered
pursuant to the Class A Trust Agreement.
"Class A Trust Agreement" means the Pass
Through Trust Agreement dated as of the date hereof,
between Continental and the Class A Trustee, governing
the creation and administration of the Class A Trust and
the issuance of the Class A Certificates, as the same
may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Class A Trustee" means WTC, not in its
individual capacity except as expressly set forth in the
Class A Trust Agreement, but solely as trustee under the
Class A Trust Agreement, together with any successor
trustee appointed pursuant thereto.
"Class B Cash Collateral Account" means an
Eligible Deposit Account in the name of the
Subordination Agent maintained at an Eligible
Institution, which shall be the Subordination Agent if
it shall so qualify, into which all amounts drawn under
the Class B Liquidity Facility pursuant to Section
3.6(c) or 3.6(i) shall be deposited.
"Class B Certificateholder" means, at any time,
any holder of one or more Class B Certificates.
"Class B Certificates" means the certificates
issued by the Class B Trust, substantially in the form
of Exhibit A to the Class B Trust Agreement, and
authenticated by the Class B Trustee, representing
fractional undivided interests in the Class B Trust, and
any certificates issued in exchange therefor or
replacement thereof pursuant to the terms of the Class B
Trust Agreement.
"Class B Liquidity Facility" means, initially,
the Revolving Credit Agreement dated as of the date
hereof, between the Subordination Agent, as agent of the
Class B Trustee, and the Class B Liquidity Provider,
and, from and after the replacement of such Agreement
pursuant hereto, 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.
"Class B Liquidity Provider" means DNIB,
together with any Replacement Liquidity Provider which
has issued a Replacement Liquidity Facility to replace
the Class B Liquidity Facility pursuant to Section
3.6(e).
"Class B Trust" means Continental Airlines
1996-2B Pass Through Trust created and administered
pursuant to the Class B Trust Agreement.
"Class B Trust Agreement" means the Pass
Through Trust Agreement dated as of the date hereof,
between Continental and the Class B Trustee, governing
the creation and administration of the Class B Trust and
the issuance of the Class B Certificates, as the same
may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Class B Trustee" means WTC, not in its
individual capacity except as expressly set forth in the
Class B Trust Agreement, but solely as trustee under the
Class B Trust Agreement, together with any successor
trustee appointed pursuant thereto.
"Class C Cash Collateral Account" means an
Eligible Deposit Account in the name of the
Subordination Agent and maintained at an Eligible
Institution, which shall be the Subordination Agent if
it shall so qualify, into which all amounts drawn under
the Class C Liquidity Facility pursuant to Section
3.6(c) or 3.6(i) shall be deposited.
"Class C Certificateholder" means, at any time,
any holder of one or more Class C Certificates.
"Class C Certificates" means the certificates
issued by the Class C Trust, substantially in the form
of Exhibit A to the Class C Trust Agreement, and
authenticated by the Class C Trustee, representing
fractional undivided interests in the Class C Trust, and
any certificates issued in exchange therefor or in
replacement thereof pursuant to the terms of the Class C
Trust Agreement.
"Class C Liquidity Facility" means, initially,
the Revolving Credit Agreement dated as of the date
hereof, between the Subordination Agent, as agent of the
Class C Trustee, and the Class C Liquidity Provider and,
from and after the replacement of such Agreement
pursuant hereto, 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.
"Class C Liquidity Provider" means DNIB,
together with any Replacement Liquidity Provider which
has issued a Replacement Liquidity Facility to replace
the Class C Liquidity Facility pursuant to Section
3.6(e).
"Class C Trust" means Continental Airlines
1996-2C Pass Through Trust created and administered
pursuant to the Class C Trust Agreement.
"Class C Trust Agreement" means the Pass
Through Trust Agreement dated as of the date hereof,
between Continental and the Class C Trustee, governing
the creation and administration of the Class C Trust and
the issuance of the Class C Certificates, as the same
may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Class C Trustee" means WTC, not in its
individual capacity except as expressly set forth in the
Class C Trust Agreement, but solely as trustee under the
Class C Trust Agreement, together with any successor
trustee appointed pursuant thereto.
"Class D Certificateholder" means, at any time,
any holder of one or more Class D Certificates.
"Class D Certificates" means the certificates
issued by the Class D Trust, substantially in the form
of Exhibit A to the Class D Trust Agreement, and
authenticated by the Class D Trustee, representing
fractional undivided interests in the Class D Trust, and
any certificates issued in exchange therefor or in
replacement thereof pursuant to the terms of the Class D
Trust Agreement.
"Class D Trust" means Continental Airlines
1996-2D Pass Through Trust created and administered
pursuant to the Class D Trust Agreement.
"Class D Trust Agreement" means the Pass
Through Trust Agreement dated as of the date hereof,
between Continental and the Class D Trustee, governing
the creation and administration of the Class D Trust and
the issuance of the Class D Certificates, as the same
may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Class D Trustee" means WTC, not in its
individual capacity except as expressly set forth in the
Class D Trust Agreement, but solely as trustee under the
Class D Trust Agreement, together with any successor
trustee appointed pursuant thereto.
"Closing Date" means May 20, 1996.
"Code" means the Internal Revenue Code of 1986,
as amended from time to time, and Treasury Regulations
promulgated thereunder.
"Collection Account" means the Eligible Deposit
Account established by the Subordination Agent pursuant
to Section 2.2 which the Subordination Agent shall make
deposits in and withdrawals from in accordance with this
Agreement.
"Continental" means Continental Airlines, Inc., a
Delaware corporation, and its successors and assigns.
"Continental Bankruptcy Event" means the occurrence and
continuation of any of the following:
(a) Continental shall consent to the
appointment of or the taking of possession by a
receiver, trustee or liquidator of itself or of
a substantial part of its property, or
Continental shall admit in writing its
inability to pay it debts generally as they
come due, or does not pay its debts generally
as they become due or shall make a general
assignment for the benefit of creditors, or
Continental shall file a voluntary petition in
bankruptcy or a voluntary petition or an answer
seeking reorganization, liquidation or other
relief in a case under any bankruptcy laws or
other insolvency laws (as in effect at such
time) or an answer admitting the material
allegations of a petition filed against
Continental in any such case, or Continental
shall seek relief by voluntary petition, answer
or consent, under the provisions of any other
bankruptcy or other similar law providing for
the reorganization or winding-up of
corporations (as in effect at such time) or
Continental shall seek an agreement,
composition, extension or adjustment with its
creditors under such laws, or Continental's
board of directors shall adopt a resolution
authorizing corporate action in furtherance of
any of the foregoing; or
(b) an order, judgment or decree shall
be entered by any court of competent
jurisdiction appointing, without the consent of
Continental, a receiver, trustee or liquidator
of Continental or of any substantial part of
its property, or any substantial part of the
property of Continental shall be sequestered,
or granting any other relief in respect of
Continental as a debtor under any bankruptcy
laws or other insolvency laws (as in effect at
such time), and any such order, judgment or
decree of appointment or sequestration shall
remain in force undismissed, unstayed and
unvacated for a period of 60 days after the
date of entry thereof; and
(c) a petition against Continental in
a case under any bankruptcy laws or other
insolvency laws (as in effect at such time) is
filed and not withdrawn or dismissed within 60
days thereafter, or if, under the provisions of
any law providing for reorganization or
winding-up of corporations which may apply to
Continental, any court of competent
jurisdiction assumes jurisdiction, custody or
control of Continental or of any substantial
part of its property and such jurisdiction,
custody or control remains in force
unrelinquished, unstayed and unterminated for a
period of 60 days.
"Controlling Party" means the Person entitled
to act as such pursuant to the terms of Section 2.6.
"Corporate Trust Office" means, with respect to
any Trustee, the Subordination Agent or any Loan
Trustee, the office of such Person in the city at which,
at any particular time, its corporate trust business
shall be principally administered.
"Current Distribution Date" means a
Distribution Date specified as a reference date for
calculating the Expected Distributions or the Adjusted
Expected Distributions with respect to the Certificates
of any Trust as of such Distribution Date.
"Designated Representatives" means the Trustee
Representatives and the LP Representatives identified
under Section 2.5.
"Distribution Date" means a Regular Distribution Date or a
Special Distribution Date.
"DNIB" has the meaning assigned to such term in the recital
of parties to this Agreement.
"Dollars" means United States dollars.
"Downgrade Drawing" has the meaning assigned to such term
in Section 3.6(c).
"Downgraded Facility" has the meaning assigned to such term
in Section 3.6(c).
"Drawing" means an Interest Drawing, a Final Drawing or
a Downgrade Drawing, as the case may be.
"Eligible Deposit Account" means either (a) a
segregated account with an Eligible Institution or (b) a
segregated trust account with the corporate trust
department of a depository institution organized under
the laws of the United States of America or any one of
the states thereof or the District of Columbia (or any
U.S. branch of a foreign bank), having corporate trust
powers and acting as trustee for funds deposited in such
account, so long as any of the securities of such
depository institution has a long-term unsecured debt
rating from each Rating Agency of at least A-3 or its
equivalent. An Eligible Deposit Account may be
maintained with a Liquidity Provider so long as such
Liquidity Provider is an Eligible Institution; provided
that such Liquidity Provider shall have waived all
rights of set-off and counterclaim with respect to such
account; and provided further that no Cash Collateral
Account may be maintained with a Liquidity Provider at
any time Continental holds any participation in the
related Liquidity Facility unless written confirmation
shall have been received from each Rating Agency prior
to such time to the effect that such maintenance of the
Cash Collateral Account with the Liquidity Provider will
not result in a withdrawal or downgrading of the ratings
of the Certificates.
"Eligible Institution" means (a) the corporate
trust department of the Subordination Agent or any
Trustee, as applicable, or (b) a depository institution
organized under the laws of the United States of America
or any one of the states thereof or the District of
Columbia (or any U.S. branch of a foreign bank), which
has a long-term unsecured debt rating from each Rating
Agency of at least A-3 or its equivalent; provided that
a Liquidity Provider shall not qualify as an Eligible
Institution at any time Continental holds any
participation in the related Liquidity Facility unless
written confirmation shall have been received from each
Rating Agency to the effect that such Liquidity
Provider's status as an Eligible Institution will not
result in a withdrawal or downgrading of the ratings of
the Certificates.
"Eligible Investments" means (a) investments in
obligations of, or guaranteed by, the United States
Government having maturities no later than 90 days
following the date of such investment, (b) investments
in open market commercial paper of any corporation
incorporated under the laws of the United States of
America or any state thereof with a short-term unsecured
debt rating issued by Moody's and S&P of at least A-1
and P-1, respectively, having maturities no later than
90 days following the date of such investment or (c)
investments in negotiable certificates of deposit, time
deposits, banker's acceptances, commercial paper or
other direct obligations of, or obligations guaranteed
by, commercial banks organized under the laws of the
United States or of any political subdivision thereof
(or any U.S. branch of a foreign bank) with issuer
ratings of at least B/C by Thomson Bankwatch, having
maturities no later than 90 days following the date of
such investment; provided, however, that (x) all
Eligible Investments that are bank obligations shall be
denominated in U.S. dollars; and (y) the aggregate
amount of Eligible Investments at any one time that are
bank obligations issued by any one bank shall not be in
excess of 5% of such bank's capital surplus; provided
further that (1) any investment of the types described
in clauses (a), (b) and (c) above may be made through a
repurchase agreement in commercially reasonable form
with a bank or other financial institution qualifying as
an Eligible Institution so long as such investment is
held by a third party custodian also qualifying as an
Eligible Institution, and (2) all such investments set
forth in (a), (b) and (c) above mature no later than the
Business Day immediately preceding the next Regular
Distribution Date; provided further, however, that in
the case of any Eligible Investment issued by a domestic
branch of a foreign bank, the income from such
investment shall be from sources within the United
States for purposes of the Code. Notwithstanding the
foregoing, no investment of the types described in
clauses (b) or (c) above which is issued or guaranteed
by a Liquidity Provider or Continental or any of their
respective Affiliates, and no investment in the
obligations of any one bank in excess of $10,000,000,
shall be an Eligible Investment at any time Continental
holds any participation in the related Liquidity
Facility unless written confirmation shall have been
received from each Rating Agency that the making of such
investment will not result in a withdrawal or
downgrading of the ratings of the Certificates.
"Equipment Notes" means, at any time, the
Series A Equipment Notes, the Series B Equipment Notes,
the Series C Equipment Notes and the Series D Equipment
Notes, collectively, and in each case, any Equipment
Notes issued in exchange therefor or replacement thereof
pursuant to the terms of the Indentures.
"Expected Distributions" means, with respect to
the Certificates of any Trust on any Current
Distribution Date, the sum of (x) accrued and unpaid
interest on such Certificates and (y) the difference
between (A) the Pool Balance of such Certificates as of
the immediately preceding Distribution Date and (B) the
Pool Balance of such Certificates as of the Current
Distribution Date, calculated on the basis that the
principal of the Equipment Notes held in such Trust has
been paid when due (whether at stated maturity or upon
redemption, prepayment or acceleration or otherwise) and
such payments have been distributed to the holders of
such Certificates. For purposes of calculating Expected
Distributions, any premium paid on the Equipment Notes
held in any Trust which has not been distributed to the
Certificateholders of such Trust (other than such
premium or a portion thereof applied to the payment of
interest on the Certificates of such Trust or the
reduction of the Pool Balance of such Trust) shall be
added to the amount of such Expected Distributions.
"Fee Letter" means the Fee Letter dated May 20,
1996, between DNIB and the Subordination Agent with
respect to the Liquidity Facilities.
"Final Drawing" has the meaning assigned to such term in
Section 3.6(i).
"Final Distributions" means, with respect to
the Certificates of any Trust on any Distribution Date,
the sum of (x) the aggregate amount of all accrued and
unpaid interest on such Certificates and (y) the Pool
Balance of such Certificates as of the immediately
preceding Distribution Date. For purposes of calculating
Final Distributions, any premium paid on the Equipment
Notes held in any Trust which has not been distributed
to the Certificateholders of such Trust (other than such
premium or a portion thereof applied to the payment of
interest on the Certificates of such Trust or the
reduction of the Pool Balance of such Trust) shall be
added to the amount of such Final Distributions.
"Final Maturity Date" means (i) in the case of
the Class A Certificates, the Class B Certificates and
the Class C Certificates, January 2, 2016 and (ii) in
the case of the Class D Certificates, April 2, 2008.
"Financing Agreement" means each of the Refunding
Agreements and the Note Purchase Agreement.
"Indenture" means each of the four Amended and
Restated Trust Indentures and Mortgages and the Trust
Indenture and Mortgage listed on Schedule 1 hereto, as
the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Indenture Default" means, with respect to any
Indenture, any Event of Default (as such term is defined
in such Indenture) thereunder.
"Initial Purchasers" means Morgan Stanley & Co.
Incorporated, CS First Boston Corporation, and Fieldstone FPCG
Services, L.P.
"Interest Drawing" has the meaning assigned to such
term in Section 3.6(a).
"Investment Earnings" means investment earnings
on funds on deposit in the Trust Accounts net of losses
and investment expenses of the Subordination Agent in
making such investments.
"Lease" means, with respect to each Indenture
pertaining to a Leased Aircraft, the "Lease" referred to
therein.
"Leased Aircraft" has the meaning assigned to
such term in the preliminary statements to this
Agreement.
"Lien" means any mortgage, pledge, lien,
charge, claim, disposition of title, encumbrance, lease,
sublease, sub-sublease or security interest of any kind,
including, without limitation, any thereof arising under
any conditional sales or other title retention
agreement.
"Liquidity Event of Default," with respect to
any Liquidity Facility, has the meaning assigned to such
term in such Liquidity Facility.
"Liquidity Expenses" means all Liquidity
Obligations other than (i) the principal amount of any
Drawings under the Liquidity Facilities and (ii) any
interest accrued on any Liquidity Obligations.
"Liquidity Facility" means, at any time, the
Class A Liquidity Facility, the Class B Liquidity
Facility or the Class C Liquidity Facility, as
applicable.
"Liquidity Obligations" means all principal,
interest, fees and other amounts owing to the Liquidity
Providers under the Liquidity Facilities, Section 10.1
of the Participation Agreements, the Fee Letter,
Sections 9 and 10.1 of the Note Purchase Agreement and
Section 11 of the Refunding Agreements.
"Liquidity Provider" means, at any time, the
Class A Liquidity Provider, the Class B Liquidity
Provider or the Class C Liquidity Provider, as
applicable.
"Loan Trustee" means, with respect to any Indenture,
the loan trustee thereunder.
"LP Incumbency Certificate" has the meaning assigned
to such term in Section 2.5(b).
"LP Representatives" has the meaning assigned to such
term in Section 2.5(b).
"LTV Appraisals" has the meaning assigned to such term
in Section 4.1(a).
"LTV Collateral Amount" of any Aircraft for any
Class of Certificates means, as of any Distribution
Date, the lesser of (i) the LTV Ratio for such Class of
Certificates multiplied by the Appraised Current Market
Value of such Aircraft and (ii) the outstanding
principal amount of the Equipment Notes secured by such
Aircraft after giving effect to any principal payments
of such Equipment Notes on or before such Distribution
Date.
"LTV Ratio" means for the Class A Certificates
35.0%, for the Class B Certificates 50.0%, for the Class
C Certificates 65.0% and for the Class D Certificates
72.9%.
"Minimum Sale Price" means, with respect to any
Aircraft or the Equipment Notes issued in respect of
such Aircraft, at any time, the lesser of (a) 75% of the
Appraised Current Market Value of such Aircraft and (b)
the aggregate outstanding principal amount of such
Equipment Notes, plus accrued and unpaid interest
thereon.
"Moody's" means Moody's Investors Service, Inc.
"Non-Controlling Party" means, at any time, any
Trustee or Liquidity Provider which is not the
Controlling Party at such time.
"Non-Performing Equipment Note" means an
Equipment Note issued pursuant to an Indenture that is
not a Performing Equipment Note.
"Note Purchase Agreement" means the Note
Purchase Agreement dated as of the date hereof, among
Continental, the Loan Trustee, the Class A Trustee, the
Class B Trustee, the Class C Trustee and the Class D
Trustee.
"Officer's Certificate" of any Person means a
certification signed by a Responsible Officer of such
Person.
"Operative Agreements" means this Agreement,
the Liquidity Facilities, the Indentures, the Trust
Agreements, the Purchase Agreement, the Financing
Agreements, the Leases, the Participation Agreements,
the Fee Letter, the Equipment Notes and the
Certificates, together with all exhibits and schedules
included with any of the foregoing.
"Outstanding" means, when used with respect to
each Class of Certificates, as of the date of
determination, all Certificates of such Class
theretofore authenticated and delivered under the
related Trust Agreement, except:
(i) Certificates of such Class theretofore
canceled by the Registrar (as defined in such Trust
Agreement) or delivered to the Trustee thereunder or
such Registrar for cancellation;
(ii) Certificates of such Class for
which money in the full amount required to make
the final distribution with respect to such
Certificates pursuant to Section 11.01 of such
Trust Agreement has been theretofore deposited
with the related Trustee in trust for the
holders of such Certificates as provided in
Section 4.01 of such Trust Agreement pending
distribution of such money to such
Certificateholders pursuant to such final
distribution payment; and
(iii) Certificates of such Class in
exchange for or in lieu of which other
Certificates have been authenticated and
delivered pursuant to such Trust Agreement;
provided, however, that in determining whether the
holders of the requisite Outstanding amount of such
Certificates have given any request, demand,
authorization, direction, notice, consent or waiver
hereunder, any Certificates owned by Continental or any
of its Affiliates shall be disregarded and deemed not to
be Outstanding, except that, in determining whether such
Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice,
consent or waiver, only Certificates that such Trustee
knows to be so owned shall be so disregarded.
Certificates so owned that have been pledged in good
faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the applicable
Trustee the pledgee's right so to act with respect to
such Certificates and that the pledgee is not
Continental or any of its Affiliates.
"Overdue Scheduled Payment" means any Scheduled
Payment which is not in fact received by the
Subordination Agent within five days after the Scheduled
Payment Date relating thereto.
"Owned Aircraft" has the meaning assigned to
such term in the preliminary statements of this
Agreement.
"Owner Trustee" means, with respect to any
Indenture pertaining to an Aircraft that is a Boeing
757-224 aircraft, the Owner Trustee (as defined therein)
not in its individual capacity but solely as trustee
under the related owner trust agreement, together with
any successor trustee appointed pursuant to such owner
trust agreement.
"Participation Agreements" mean, with respect
to each Indenture pertaining to an Aircraft that is a
Boeing 757-224 aircraft, the "Participation Agreement"
referred to therein.
"Performing Equipment Note" means an Equipment
Note issued pursuant to an Indenture with respect to
which no payment default has occurred and is continuing;
provided that in the event of a bankruptcy proceeding
involving Continental under Title 11 of the United
States Code (the "Bankruptcy Code"), (i) any payment
default existing during the 60-day period under Section
1110(a)(1)(A) of the Bankruptcy Code (or such longer
period as may apply under Section 1110(b) of the
Bankruptcy Code) (the "Section 1110 Period") shall not
be taken into consideration, unless during the Section
1110 Period the trustee in such proceeding or
Continental does not agree to perform its obligations
under the Lease related to such Equipment Note (in the
case of a Leased Aircraft) or under the Indenture (in
the case of the Owned Aircraft) and (ii) any payment
default occurring after the date of the order of relief
in such proceeding shall not be taken into consideration
if such payment default is cured under Section
1110(a)(1)(B) of the Bankruptcy Code before the later of
30 days after the date of such default or the expiration
of the Section 1110 Period.
"Performing Note Deficiency" means any time
that less than 65% of the then aggregate outstanding
principal amount of all Equipment Notes are Performing
Equipment Notes.
"Person" means any individual, corporation,
partnership, joint venture, association, joint-stock
company, trust, trustee, unincorporated organization or
government or any agency or political subdivision
thereof.
"Pool Balance" means, with respect to each
Trust or the Certificates issued by any Trust, as of any
date, (i) the original aggregate face amount of the
Certificates of such Trust less (ii) the aggregate
amount of all payments made in respect of the
Certificates of such Trust other than payments made in
respect of interest or premium thereon or reimbursement
of any costs and expenses in connection therewith. The
Pool Balance for each Trust or the Certificates issued
by any Trust as of any Distribution Date shall be
computed after giving effect to the payment of
principal, if any, on the Equipment Notes or other Trust
Property held in such Trust and the distribution thereof
to be made on such date.
"Proceeding" means any suit in equity, action at law or
other judicial or administrative proceeding.
"PTC Event of Default" means, with respect to
each Trust Agreement, the failure to pay within 10
Business Days of the due date thereof: (i) the
outstanding Pool Balance of the applicable Class of
Certificates on the Final Maturity Date for such Class
or (ii) interest due on such Certificates on any
Distribution Date (unless, in the case of the Class A,
Class B or Class C Certificates, the Subordination Agent
shall have made an Interest Drawing with respect thereto
in an amount sufficient to pay such interest and shall
have distributed such amount to the Certificateholders
entitled thereto).
"Purchase Agreement" means the Purchase
Agreement dated May 9, 1996, among the Initial
Purchasers and Continental, relating to the purchase of
the Certificates by the Initial Purchasers, as the same
may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Rating Agencies" means, collectively, at any
time, each nationally recognized rating agency which
shall have been requested to rate the Certificates and
which shall then be rating the Certificates. The initial
Rating Agencies will be Moody's and Standard & Poor's.
"Ratings Confirmation" means, with respect to
any action proposed to be taken, a written confirmation
from each of the Rating Agencies that such action would
not result in (i) a reduction of the rating for any
Class of Certificates below the then current rating for
such Class of Certificates or (ii) a withdrawal or
suspension of the rating of any Class of Certificates.
"Refunding Agreements" means each of the
Refunding Agreements listed on Schedule 2 hereto, as the
same may be amended, supplemented or otherwise modified
from time to time in accordance with its terms.
"Registration Rights Agreement" means the
Registration Rights Agreement dated as of the date
hereof, among the Initial Purchasers, the Trustees and
Continental, as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Regular Distribution Dates" means, each
January 2, April 2, July 2 and October 2, commencing on
July 2, 1996; provided, however, that, if any such day
shall not be a Business Day, the related distribution
shall be made on the next succeeding Business Day
without additional interest.
"Replacement Liquidity Facility" means, for any
Liquidity Facility, an irrevocable revolving credit
agreement issued by a Replacement Liquidity Provider in
substantially the form of the replaced Liquidity
Facility, including reinstatement provisions, or in such
other form (which may include a letter of credit) as
shall permit the Rating Agencies to confirm in writing
their respective ratings then in effect for each Class
of Certificates (before the downgrading of such ratings,
if any, as a result of the downgrading of the Liquidity
Provider), in a face amount equal to the Required Amount
for such Liquidity Facility and issued by a Replacement
Liquidity Provider having short-term unsecured debt
ratings issued by each Rating Agency which are equal to
or higher than the Threshold Rating.
"Replacement Liquidity Provider" means a Person
having short-term unsecured debt ratings issued by each
Rating Agency which are equal to or higher than the
Threshold Rating.
"Required Amount" means, with respect to each
Liquidity Facility, for any day, the sum of the
aggregate amount of interest, calculated at the rate per
annum equal to the Stated Interest Rate for the related
Class of Certificates, that would be payable on such
Class of Certificates on each of the six successive
Regular Distribution Dates immediately following such
day or, if such day is a Regular Distribution Date, on
such day and the succeeding five Regular Distribution
Dates, in each case calculated on the basis of the Pool
Balance of such Class of Certificates on such date and
without regard to expected future payments of principal
on such Class of Certificates.
"Responsible Officer" means (i) with respect to
the Subordination Agent and each of the Trustees, any
officer in the corporate trust administration department
of the Subordination Agent or such Trustee or any other
officer customarily performing functions similar to
those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate
trust matter is referred because of his knowledge of and
familiarly with a particular subject and (ii) with
respect to each Liquidity Provider, any authorized
officer in the aerospace department of such Liquidity
Provider, or, if none, any other authorized officer of
such Liquidity Provider.
"Scheduled Payment" means, with respect to any
Equipment Note, (i) any payment of principal and
interest on such Equipment Note (other than an Overdue
Scheduled Payment) due from the obligor thereon or (ii)
any payment of interest on the corresponding Class of
Certificates with funds drawn under any Liquidity
Facility, which payment represents the installment of
principal at the stated maturity of such installment of
principal on such Equipment Note, the payment of
regularly scheduled interest accrued on the unpaid
principal amount of such Equipment Note, or both;
provided that any payment of principal of, premium, if
any, or interest resulting from the redemption or
purchase of any Equipment Note shall not constitute a
Scheduled Payment.
"Scheduled Payment Date" means, with respect to
any Scheduled Payment, the date on which such Scheduled
Payment is scheduled to be made.
"Series A Equipment Notes" means the 7.75%
Series A Equipment Notes issued pursuant to each
Indenture by the related Owner Trustee or Continental,
as the case may be, and authenticated by the Loan
Trustee thereunder, and any such Equipment Notes issued
in exchange therefor or replacement thereof pursuant to
the terms of such Indenture.
"Series B Equipment Notes" means the 8.56%
Series B Equipment Notes issued pursuant to each
Indenture by the related Owner Trustee or Continental,
as the case may be, and authenticated by the Loan
Trustee thereunder, and any such Equipment Notes issued
in exchange therefor or replacement thereof pursuant to
the terms of such Indenture.
"Series C Equipment Notes" means the 10.22%
Series C Equipment Notes issued pursuant to each
Indenture by the related Owner Trustee or Continental,
as the case may be, and authenticated by the Loan
Trustee thereunder, and any such Equipment Notes issued
in exchange therefor or replacement thereof pursuant to
the terms of such Indenture.
"Series D Equipment Notes" means the 11.50%
Series D Equipment Notes issued pursuant to each
Indenture by the related Owner Trustee or Continental,
as the case may be and authenticated by the Loan Trustee
thereunder, and any such Equipment Notes issued in
exchange therefor or replacement thereof pursuant to the
terms of such Indenture.
"Special Distribution Date" means, with respect
to any Special Payment, the date chosen by the
Subordination Agent pursuant to Section 2.4(a) for the
distribution of such Special Payment in accordance with
this Agreement; provided, however, that, if any such day
shall not be a Business Day, the related distribution
shall be made on the next succeeding Business Day
without additional interest.
"Special Payment" means any payment (other than
a Scheduled Payment) in respect of, or any proceeds of,
any Equipment Note or Trust Indenture Estate (as defined
in each Indenture).
"Special Payments Account" means the Eligible
Deposit Account created pursuant to Section 2.2 as a
sub-account to the Collection Account.
"Standard & Poor's" means Standard & Poor's
Rating Group, a division of McGraw-Hill Inc.
"Stated Amount" with respect to any Liquidity
Facility, means the Commitment (as defined in such
Liquidity Facility) of the applicable Liquidity Provider
thereunder.
"Stated Interest Rate" means (i) with respect
to the Class A Certificates, 7.75% per annum, (ii) with
respect to the Class B Certificates, 8.56% per annum,
(iii) with respect to the Class C Certificates, 10.22%
per annum, and (iv) with respect to the Class D
Certificates, 11.50% per annum, and in each case, plus
an additional margin equal to 0.50% per annum, from and
including January 2, 1997, in the event no Registration
Event (as defined in the Registration Rights Agreement)
occurs on or prior to the 180th day after the Closing
Date (provided that any such additional margin shall
cease to be in effect from and including the date on
which such Registration Event occurs); provided that if
the Shelf Registration Statement (as defined in the
Registration Rights Agreement) ceases to be effective at
any time during the period specified by Section 2(b) of
the Registration Rights Agreement for more than 60 days,
whether or not consecutive, during any 12-month period,
the Stated Interest Rate shall be increased by 0.50% per
annum from the 61st day of the applicable 12-month
period such Shelf Registration Statement ceases to be
effective until such time as the Shelf Registration
Statement again becomes effective.
"Tax" and "Taxes" mean any and all taxes, fees,
levies, duties, tariffs, imposts, and other charges of
any kind (together with any and all interest, penalties,
loss, damage, liability, expense, additions to tax and
additional amounts or costs incurred or imposed with
respect thereto) imposed or otherwise assessed by the
United States or by any state, local or foreign
government (or any subdivision or agency thereof) or
other taxing authority, including, without limitation:
taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll,
employment, social security, workers' compensation,
unemployment compensation, or net worth and similar
charges; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value added,
taxes on goods and services, gains taxes, license,
registration and documentation fees, customs duties,
tariffs, and similar charges.
"Termination Notice" with respect to any
Liquidity Facility has the meaning assigned to such term
in such Liquidity Facility.
"Threshold Rating" means the short-term
unsecured debt rating of P-1 by Moody's and A-1 by
Standard & Poor's (provided that, so long as DNIB is the
Liquidity Provider and does not have a published
short-term unsecured debt rating issued by Standard &
Poor's, the Threshold Rating with respect to Standard &
Poor's shall be its long-term unsecured debt rating of
AA-).
"Treasury Regulations" means regulations,
including proposed or temporary regulations, promulgated
under the Code. References herein to specific provisions
of proposed or temporary regulations shall include
analogous provisions of final Treasury Regulations or
other successor Treasury Regulations.
"Triggering Event" means (x) the occurrence of
an Indenture Default under all of the Indentures
resulting in a PTC Event of Default with respect to the
most senior Class of Certificates then Outstanding, (y)
the Acceleration of all of the outstanding Equipment
Notes or (z) the occurrence of a Continental Bankruptcy
Event.
"Trust" means any of the Class A Trust, the
Class B Trust, the Class C Trust or the Class D Trust.
"Trust Accounts" has the meaning assigned to such term in
Section 2.2(a).
"Trust Agreement" means any of the Class A Trust
Agreement, Class B Trust Agreement, Class C Trust
Agreement or Class D Trust Agreement.
"Trustee" means any of the Class A Trustee, the
Class B Trustee, the Class C Trustee or the Class D
Trustee.
"Trustee Incumbency Certificate" has the meaning assigned
to such term in Section 2.5(a).
"Trustee Representatives" has the meaning assigned to
such term in Section 2.5(a).
"Written Notice" means, from (i) any Trustee or
Liquidity Provider, a written instrument executed by the
Designated Representative of such Person, and (ii) the
Subordination Agent, a written instrument executed by a
Person designated in the Officer's Certificate of the
Subordination Agent delivered on the Closing Date. An
invoice delivered by a Liquidity Provider pursuant to
Section 3.1 in accordance with its normal invoicing
procedures shall constitute Written Notice under such
Section.
"WTC" has the meaning assigned to such term in the
recital of parties to this Agreement.
ARTICLE II
TRUST ACCOUNTS; CONTROLLING PARTY
SECTION 2.1. Agreement to Terms of Subordination;
Payments from Monies Received Only. (a) Each Trustee hereby acknowledges
and agrees to the terms of subordination set forth in this
Agreement in respect of each Class of Certificates and agrees to
enforce such provisions and cause all payments in respect of the
Equipment Notes and the Liquidity Facilities to be applied in
accordance with the terms of this Agreement. In addition, each
Trustee hereby agrees to cause the Equipment Notes purchased by
the related Trust to be registered in the name of the
Subordination Agent, as nominee of such Trustee, to be held in
trust by the Subordination Agent solely for the purpose of
facilitating the enforcement of the subordination and other
provisions of this Agreement.
(b) Except as otherwise expressly provided in
the next succeeding sentence of this Section 2.1, all payments to
be made by the Subordination Agent hereunder shall be made only
from amounts received by it that constitute Scheduled Payments,
Special Payments, payments under Section 10.1 of the
Participation Agreements or payments under Section 10.1 of the
Note Purchase Agreement, and only to the extent that the
Subordination Agent shall have received sufficient income or
proceeds therefrom to enable it to make such payments in
accordance with the terms hereof. Each of the Trustees and the
Subordination Agent hereby agrees and, as provided in each Trust
Agreement, each Certificateholder, by its acceptance of a
Certificate, and each Liquidity Provider, by entering into the
Liquidity Facility to which it is a party, has agreed to look
solely to such amounts to the extent available for distribution
to it as provided in this Agreement and that none of the
Trustees, Owner Trustees, Loan Trustees, Owner Participants nor
the Subordination Agent is personally liable to any of them for
any amounts payable or any liability under this Agreement, any
Trust Agreement, any Liquidity Facility or such Certificate,
except (in the case of the Subordination Agent) as expressly
provided herein or (in the case of the Trustees) as expressly
provided in each Trust Agreement or (in the case of the Owner
Trustees and the Loan Trustees) as expressly provided in any
Operative Agreement.
SECTION 2.2. Trust Accounts. (a) Upon the execution of
this Agreement, the Subordination Agent shall establish and maintain in
its name (i) the Collection Account as an Eligible Deposit Account,
bearing a designation clearly indicating that the funds deposited therein
are held in trust for the benefit of the Trustees, the
Certificateholders and the Liquidity Providers and (ii) as a
sub-account in the Collection Account, the Special Payments
Account as an Eligible Deposit Account, bearing a designation
clearly indicating that the funds deposited therein are held in
trust for the benefit of the Trustees, the Certificateholders and
the Liquidity Providers. The Subordination Agent shall establish
and maintain the Cash Collateral Accounts pursuant to and under
the circumstances set forth in Section 3.6(f) hereof. Upon such
establishment and maintenance under Section 3.6(f) hereof, the
Cash Collateral Accounts shall, together with the Collection
Account, constitute the "Trust Accounts" hereunder.
(b) Funds on deposit in the Trust Accounts
shall be invested and reinvested by the Subordination Agent in
Eligible Investments selected by the Subordination Agent if such
investments are reasonably available and have maturities no later
than the earlier of (i) 90 days following the date of such
investment and (ii) the Business Day immediately preceding the
Regular Distribution Date or the date of the related distribution
pursuant to Section 2.4 hereof, as the case may be, next
following the date of such investment; provided, however, that
following the making of a Downgrade Drawing, the Subordination
Agent shall invest and reinvest such amounts at the direction of
Continental; provided further, however, that upon the occurrence
and during the continuation of a Triggering Event, the
Subordination Agent shall invest and reinvest such amounts in
accordance with the written instructions of the Controlling
Party. Unless otherwise expressly provided in this Agreement
(including, without limitation, Section 3.6(f) hereof), any
Investment Earnings shall be deposited in the Collection Account
when received by the Subordination Agent and shall be applied by
the Subordination Agent in the same manner as the principal
amount of such investment is to be applied and any losses shall
be charged against the principal amount invested, in each case
net of the Subordination Agent's reasonable fees and expenses in
making such investments. The Subordination Agent shall not be
liable for any loss resulting from any investment, reinvestment
or liquidation required to be made under this Agreement other
than by reason of its willful misconduct or gross negligence.
Eligible Investments and any other investment required to be made
hereunder shall be held to their maturities except that any such
investment may be sold (without regard to its maturity) by the
Subordination Agent without instructions whenever such sale is
necessary to make a distribution required under this Agreement.
Uninvested funds held hereunder shall not earn or accrue
interest.
(c) The Subordination Agent shall possess all
right, title and interest in all funds on deposit from time to
time in the Trust Accounts and in all proceeds thereof (including
all income thereon). The Trust Accounts shall be held in trust by
the Subordination Agent under the sole dominion and control of
the Subordination Agent for the benefit of the Trustees, the
Certificateholders and the Liquidity Providers, as the case may
be. If, at any time, any of the Trust Accounts ceases to be an
Eligible Deposit Account, the Subordination Agent shall within 10
Business Days (or such longer period, not to exceed 30 calendar
days, to which each Rating Agency may consent) establish a new
Collection Account, Special Payments Account or Cash Collateral
Account, as the case may be, as an Eligible Deposit Account and
shall transfer any cash and/or any investments to such new
Collection Account, Special Payments Account or Cash Collateral
Account, as the case may be. So long as WTC is an Eligible
Institution, the Trust Accounts shall be maintained with it as
Eligible Deposit Accounts.
SECTION 2.3. Deposits to the Collection Account
and Special Payments Account. (a) The Subordination Agent shall,
upon receipt thereof, deposit in the Collection Account all
Scheduled Payments received by it.
(b) The Subordination Agent shall, on each date
when one or more Special Payments are made to the Subordination
Agent as holder of the Equipment Notes, deposit in the Special
Payments Account the aggregate amount of such Special Payments.
SECTION 2.4. Distributions of Special
Payments. (a) Notice of Special Payment. Upon receipt by the Subordination
Agent, as registered holder of the Equipment Notes, of any notice
of a Special Payment (or, in the absence of any such notice, upon
receipt by the Subordination Agent of a Special Payment), the
Subordination Agent shall promptly give notice thereof to each
Trustee and the Liquidity Providers. The Subordination Agent
shall promptly calculate the amount of the redemption or purchase
of Equipment Notes or the amount of any Overdue Scheduled
Payment, as the case may be, comprising such Special Payment
under the applicable Indenture or Indentures and shall promptly
send to each Trustee a Written Notice of such amount. Such
Written Notice shall also set the distribution date for such
Special Payment (a "Special Distribution Date"), which shall be a
Business Day which follows the later to occur of (x) the 20th day
after the date of such Written Notice or (y) the date the
Subordination Agent has received or expects to receive such
Special Payment.
(b) Redemptions and Purchases of Equipment
Notes. So long as no Triggering Event shall have occurred
(whether or not continuing), the Subordination Agent shall make
distributions pursuant to this Section 2.4(b) of amounts on
deposit in the Special Payments Account on account of the
redemption or purchase (including, without limitation, a purchase
resulting from a sale of the Equipment Notes permitted by Article
IV hereof) of all of the Equipment Notes issued pursuant to an
Indenture on the Special Distribution Date for such Special
Payment in the following order of priority:
first, such amount as shall be required to pay
(A) all accrued and unpaid Liquidity Expenses then in
arrears plus (B) the product of (x) the aggregate amount
of all accrued and unpaid Liquidity Expenses not in
arrears to such Special Payment Date multiplied by (y) a
fraction, the numerator of which is the aggregate
outstanding principal amount of Equipment Notes being
redeemed, purchased or prepaid on such Special Payment
Date and the denominator of which is the aggregate
outstanding principal amount of all Equipment Notes,
shall be distributed to the Liquidity Providers pari
passu on the basis of the amount of Liquidity Expenses
owed to each Liquidity Provider;
second, such amount as shall be required to pay
(A) all accrued and unpaid interest then in arrears on
all Liquidity Obligations (including interest accrued on
any Interest Drawing or any Applied Downgrade Drawing
(as defined in any Liquidity Facility)) plus (B) the
product of (x) the aggregate amount of all accrued and
unpaid interest on all Liquidity Obligations not in
arrears to such Special Payment Date (at the rate
provided in the applicable Liquidity Facility)
multiplied by (y) a fraction, the numerator of which is
the aggregate outstanding principal amount of Equipment
Notes being redeemed, purchased or prepaid on such
Special Payment Date and the denominator of which is the
aggregate outstanding principal amount of all Equipment
Notes, shall be distributed to the Liquidity Providers
pari passu on the basis of the amount of Liquidity
Obligations owed to each Liquidity Provider;
third, such amount as shall be required (A) to
pay or reimburse the Liquidity Providers in an amount
equal to the amount of any unreimbursed Interest
Drawings under the Liquidity Facilities shall be
distributed to the Liquidity Providers or (B) if
applicable, to replenish the Cash Collateral Accounts up
to their respective Required Amounts shall be deposited
in the Cash Collateral Accounts, in each such case, pari
passu on the basis of the amounts of such unreimbursed
Interest Drawings and/or deficiencies;
fourth, such amount as shall be required to pay
in full Expected Distributions to the holders of Class A
Certificates on such Special Distribution Date shall be
distributed to the Class A Trustee;
fifth, such amount as shall be required to pay
in full Expected Distributions to the holders of Class B
Certificates on such Special Distribution Date shall be
distributed to the Class B Trustee;
sixth, such amount as shall be required to pay
in full Expected Distributions to the holders of Class C
Certificates on such Special Distribution Date shall be
distributed to the Class C Trustee;
seventh, such amount as shall be required to
pay in full Expected Distributions to the holders of
Class D Certificates on such Special Distribution Date
shall be distributed to the Class D Trustee; and
eighth, the balance, if any, of such Special
Payment shall be transferred to the Collection Account
for distribution in accordance with Section 3.2 hereof.
(c) Other Special Payments. Any amounts on deposit
in the Special Payments Account other than in respect of amounts to be
distributed pursuant to Section 2.4(b) shall be distributed on
the Special Distribution Date therefor in accordance with Article
III hereof.
(d) Investment of Amounts in Special Payments
Account. Any amounts on deposit in the Special Payments Account
prior to the distribution thereof pursuant to Section 2.4(b) or
(c) shall be invested in accordance with Section 2.2(b).
Investment Earnings on such investments shall be distributed in
accordance with Section 2.4(b) or (c), as the case may be.
SECTION 2.5. Designated Representatives. (a) With
the delivery of this Agreement, each Trustee shall furnish to the
Subordination Agent, and from time to time thereafter may furnish
to the Subordination Agent, at such Trustee's discretion, or upon
the Subordination Agent's request (which request shall not be
made more than one time in any 12-month period), a certificate (a
"Trustee Incumbency Certificate") of a Responsible Officer of
such Trustee certifying as to the incumbency and specimen
signatures of the officers of such Trustee and the
attorney-in-fact and agents of such Trustee (the "Trustee
Representatives") authorized to give Written Notices on behalf of
such Trustee hereunder. Until the Subordination Agent receives a
subsequent Trustee Incumbency Certificate, it shall be entitled
to rely on the last Trustee Incumbency Certificate delivered to
it hereunder.
(b) With the delivery of this Agreement, each
Liquidity Provider shall furnish to the Subordination Agent, and
from time to time thereafter may furnish to the Subordination
Agent, at such Liquidity Provider's discretion, or upon the
Subordination Agent's request (which request shall not be made
more than one time in any 12-month period), a certificate (an "LP
Incumbency Certificate") of any authorized officer in the
aerospace department or any other authorized signatory of such
Liquidity Provider certifying as to the incumbency and specimen
signatures of any officer, attorney-in-fact, agent or other
designated representative of such Liquidity Provider (the "LP
Representatives" and, together with the Trustee Representatives,
the "Designated Representatives") authorized to give Written
Notices on behalf of such Liquidity Provider hereunder. Until the
Subordination Agent receives a subsequent LP Incumbency
Certificate, it shall be entitled to rely on the last LP
Incumbency Certificate delivered to it hereunder.
SECTION 2.6. Controlling Party. (a) The Trustees and
the Liquidity Providers hereby agree that, with respect to any Indenture
at any given time, the Loan Trustee thereunder will be directed (i) in
taking, or refraining from taking, any action under such Indenture or
with respect to the Equipment Notes issued thereunder, so long as
no Indenture Default has occurred and is continuing thereunder,
by the holders of at least a majority of the outstanding
principal amount of such Equipment Notes (provided that, for so
long as the Subordination Agent is the registered holder of the
Equipment Notes, the Subordination Agent shall act with respect
to this clause (i) in accordance with the directions of the
Trustees), and (ii) after the occurrence and during the
continuance of an Indenture Default thereunder (which, in the
case of an Indenture pertaining to a Leased Aircraft, has not
been cured by the applicable Owner Trustee or the applicable
Owner Participant, if applicable, pursuant to Section 4.03 of
such Indenture), in taking, or refraining from taking, any action
under such Indenture or with respect to such Equipment Notes,
including exercising remedies thereunder (including Accelerating
the Equipment Notes issued thereunder or foreclosing the Lien on
the Aircraft securing such Equipment Notes), by the Controlling
Party.
(b) The Person who shall be the "Controlling
Party" with respect to any Indenture shall be: (w) the Class A
Trustee; (x) upon payment of Final Distributions to the holders
of Class A Certificates, the Class B Trustee; (y) upon payment of
Final Distributions to the holders of Class B Certificates, the
Class C Trustee; and (z) upon payment of Final Distributions to
the holders of Class C Certificates, the Class D Trustee. For
purposes of giving effect to the foregoing, the Trustees (other
than the Controlling Party) irrevocably agree (and the
Certificateholders (other than the Certificateholders represented
by the Controlling Party) shall be deemed to agree by virtue of
their purchase of Certificates) that the Subordination Agent, as
record holder of the Equipment Notes, shall exercise its voting
rights in respect of the Equipment Notes as directed by the
Controlling Party.
The Subordination Agent shall give written
notice to all of the other parties to this Agreement promptly
upon a change in the identity of the Controlling Party. Each of
the parties hereto agrees that it shall not exercise any of the
rights of the Controlling Party at such time as it is not the
Controlling Party hereunder; provided, however, that nothing
herein contained shall prevent or prohibit any Non-Controlling
Party from exercising such rights as shall be specifically
granted to such Non-Controlling Party hereunder and under the
other Operative Agreements.
(c) Notwithstanding the foregoing, at any time
after 18 months from the earlier to occur of (i) the date on
which the entire Available Amount under any Liquidity Facility
shall have been drawn (for any reason other than a Downgrade
Drawing) and remain unreimbursed, and (ii) the date on which all
Equipment Notes shall have been Accelerated, the Liquidity
Provider shall have the right to elect, by Written Notice to the
Subordination Agent and each of the Trustees, to become the
Controlling Party hereunder with respect to any Indenture at any
time from and including the last day of such 18-month period. If
there is more than one Liquidity Provider, the Liquidity Provider
with the greatest amount of unreimbursed Liquidity Obligations
payable to it under the Liquidity Facilities shall have such
right.
(d) The exercise of remedies by the Controlling
Party under this Agreement shall be expressly limited by Section
4.1(a)(ii) hereof.
(e) The Controlling Party shall not be entitled
to require or obligate any Non-Controlling Party to provide funds
necessary to exercise any right or remedy hereunder.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
AMOUNTS RECEIVED
SECTION 3.1. Written Notice of Distribution.
(a) No later than 3:00 P.M. (New York City time) on the Business Day
immediately preceding each Distribution Date, each of the
following Persons shall deliver to the Subordination Agent a
Written Notice setting forth the following information as at the
close of business on such Business Day:
(i) With respect to the Class A Certificates,
the Class A Trustee shall separately set forth the
amounts to be paid in accordance with clause "fourth" of
Section 3.2 hereof;
(ii) With respect to the Class B Certificates,
the Class B Trustee shall separately set forth the
amounts to be paid in accordance with clause "fifth" of
Section 3.2 hereof;
(iii) With respect to the Class C Certificates,
the Class C Trustee shall separately set forth the
amounts to be paid in accordance with clause "sixth" of
Section 3.2 hereof;
(iv) With respect to the Class D Certificates,
the Class D Trustee shall separately set forth the
amounts to be paid in accordance with clause "seventh"
of Section 3.2 hereof;
(v) With respect to each Liquidity Facility,
the Liquidity Provider thereunder shall separately set
forth the amounts to be paid in accordance with clauses
"first", "second" and "third" of Section 3.2 hereof; and
(vi) Each Trustee shall set forth the amounts
to be paid in accordance with clause "eighth" of Section
3.2 hereof.
The notices required under this Section 3.1(a) may be in the form
of a schedule or similar document provided to the Subordination
Agent by the parties referenced therein or by any one of them,
which schedule or similar document may state that, unless there
has been a prepayment of the Certificates, such schedule or
similar document is to remain in effect until any substitute
notice or amendment shall be given to the Subordination Agent by
the party providing such notice.
(b) Following the occurrence of a Triggering
Event, the Subordination Agent shall request the following
information from the following Persons, and each of the following
Persons shall, upon the request of the Subordination Agent,
deliver a Written Notice to the Subordination Agent setting forth
for such Person the following information:
(i) With respect to the Class A Certificates,
the Class A Trustee shall separately set forth the
amounts to be paid in accordance with clauses "first"
(to reimburse payments made by the Class A
Certificateholders pursuant to subclause (iii) of clause
"first" of Section 3.3(a) hereof) and "sixth" of Section
3.3(a) hereof;
(ii) With respect to the Class B Certificates,
the Class B Trustee shall separately set forth the
amounts to be paid in accordance with clauses "first"
(to reimburse payments made by the Class B
Certificateholders pursuant to subclause (iii) of clause
"first" of Section 3.3(a) hereof) and "seventh" of
Section 3.3(a) hereof;
(iii) With respect to the Class C Certificates,
the Class C Trustee shall separately set forth the
amounts to be paid in accordance with clauses "first"
(to reimburse payments made by the Class C
Certificateholders pursuant to subclause (iii) of clause
"first" of Section 3.3(a) hereof) and "eighth" of
Section 3.3(a) hereof;
(iv) With respect to the Class D Certificates,
the Class D Trustee shall separately set forth the
amounts to be paid in accordance with clauses "first"
(to reimburse payments made by the Class D
Certificateholders pursuant to subclause (iii) of clause
"first" of Section 3.3(a) hereof) and "ninth" of Section
3.3(a) hereof;
(v) With respect to each Liquidity Facility,
the Liquidity Provider thereunder shall separately set
forth the amounts to be paid to it in accordance with
subclause (iii) of clause "first" of Section 3.3(a)
hereof and clauses "second, "third" and "fourth" of
Section 3.3(a) hereof; and
(vi) Each Trustee shall set forth the amounts
to be paid in accordance with clause "fifth" of Section
3.3(a) hereof.
(c) At such time as a Trustee or a Liquidity
Provider shall have received all amounts owing to it (and, in the
case of a Trustee, the Certificateholders for which it is acting)
pursuant to Section 2.4, 3.2 or 3.3 hereof, as applicable, and,
in the case of a Liquidity Provider, its commitment under the
related Liquidity Facility shall have terminated or expired, such
Person shall, by a Written Notice, so inform the Subordination
Agent and each other party to this Agreement.
(d) As provided in Section 6.5 hereof, the
Subordination Agent shall be fully protected in relying on any of
the information set forth in a Written Notice provided by any
Trustee or any Liquidity Provider pursuant to paragraphs (a)
through (c) above and shall have no independent obligation to
verify, calculate or recalculate any amount set forth in any
Written Notice delivered in accordance with such paragraphs.
(e) Any Written Notice delivered by a Trustee
or a Liquidity Provider, as applicable, pursuant to Section
3.1(a), 3.1(b) or 3.1(c) hereof, if made prior to 10:00 A.M. (New
York City time) shall be effective on the date delivered (or if
delivered later shall be effective as of the next Business Day).
Subject to the terms of this Agreement, the Subordination Agent
shall as promptly as practicable comply with any such
instructions; provided, however, that any transfer of funds
pursuant to any instruction received after 10:00 A.M. (New York
City time) on any Business Day may be made on the next succeeding
Business Day.
(f) In the event the Subordination Agent shall
not receive from any Person any information set forth in
paragraphs (a) or (b) above which is required to enable the
Subordination Agent to make a distribution to such Person
pursuant to Section 3.2 or 3.3(a) hereof, the Subordination Agent
shall request such information and, failing to receive any such
information, the Subordination Agent shall not make such
distribution(s) to such Person. In such event, the Subordination
Agent shall make distributions pursuant to clauses "first"
through "ninth" of Section 3.2 and clauses "first" through
"tenth" of Section 3.3(a) to the extent it shall have sufficient
information to enable it to make such distributions, and shall
continue to hold any funds remaining, after making such
distributions, until the Subordination Agent shall receive all
necessary information to enable it to distribute any funds so
withheld.
(g) On such dates (but not more frequently than
monthly) as any Liquidity Provider or any Trustee shall request,
the Subordination Agent shall send to such party a written
statement reflecting all amounts on deposit with the
Subordination Agent pursuant to Section 3.1(f) hereof.
SECTION 3.2. Distribution of Amounts on Deposit
in the Collection Account. Except as otherwise provided
in Sections 2.4, 3.1(f), 3.3, 3.4 and 3.6(b), amounts on deposit
in the Collection Account (or, in the case of any amount
described in Section 2.4(c), on deposit in the Special Payments
Account) shall be promptly distributed on each Distribution Date
in the following order of priority and in accordance with the
information provided to the Subordination Agent pursuant to
Section 3.1(a) hereof:
first, such amount as shall be required to pay
all accrued and unpaid Liquidity Expenses owed to each
Liquidity Provider shall be distributed to the Liquidity
Providers pari passu on the basis of the amount of
Liquidity Expenses owed to each Liquidity Provider;
second, such amount as shall be required to pay
in full the aggregate amount of interest accrued on all
Liquidity Obligations (at the rate provided in the
applicable Liquidity Facility) shall be distributed to
the Liquidity Providers pari passu on the basis of the
amount of Liquidity Obligations owed to each Liquidity
Provider;
third, such amount as shall be required (A) to
pay or reimburse the Liquidity Providers in an amount
equal to the amount of all Liquidity Obligations then
due (other than amounts payable pursuant to clause
"first" or "second" of this Section 3.2) shall be
distributed to the Liquidity Providers, and (B) if
applicable, to replenish the Cash Collateral Accounts up
to their respective Required Amounts shall be deposited
in the Cash Collateral Accounts, in each such case, pari
passu on the basis of the amounts of such unreimbursed
Liquidity Obligations and/or deficiencies;
fourth, such amount as shall be required to pay
in full Expected Distributions to the holders of the
Class A Certificates on such Distribution Date shall be
distributed to the Class A Trustee;
fifth, such amount as shall be required to pay
in full Expected Distributions to the holders of the
Class B Certificates on such Distribution Date shall be
distributed to the Class B Trustee;
sixth, such amount as shall be required to pay
in full Expected Distributions to the holders of the
Class C Certificates on such Distribution Date shall be
distributed to the Class C Trustee;
seventh, such amount as shall be required to
pay in full Expected Distributions to the holders of the
Class D Certificates on such Distribution Date shall be
distributed to the Class D Trustee;
eighth, such amount as shall be required to pay
in full the aggregate unpaid amount of fees and expenses
payable as of such Distribution Date to the
Subordination Agent and each Trustee pursuant to the
terms of this Agreement and the Trust Agreements, as the
case may be, shall be distributed to the Subordination
Agent and such Trustee; and
ninth, the balance, if any, of any such payment
remaining thereafter shall be held in the Collection
Account for later distribution in accordance with this
Article III or, if Final Distributions have been made on
all Classes of Certificates and all other amounts due
hereunder have been paid, such balance shall be
distributed to the Owner Trustees or Continental or
both, as the case may be, pro rata based on the amounts
of such funds paid by such Owner Trustees or Continental
or both, as the case may be.
SECTION 3.3. Distribution of Amounts on Deposit
Following a Triggering Event. (a) Except as otherwise
provided in Sections 3.1(f) and 3.6(b) hereof, upon the
occurrence of a Triggering Event and at all times thereafter, all
funds in the Collection Account or the Special Payments Account
shall be promptly distributed by the Subordination Agent in the
following order of priority:
first, such amount as shall be required to
reimburse (i) the Subordination Agent for any
out-of-pocket costs and expenses actually incurred by it
(to the extent not previously reimbursed) in the
protection of, or the realization of the value of, the
Equipment Notes or any Trust Indenture Estate, shall be
applied by the Subordination Agent in reimbursement of
such costs and expenses, (ii) each Trustee for any
amounts of the nature described in clause (i) above
actually incurred by it under the applicable Trust
Agreement (to the extent not previously reimbursed),
shall be distributed to such Trustee and (iii) any
Liquidity Provider or Certificateholder for payments, if
any, made by it to the Subordination Agent or any
Trustee in respect of amounts described in clause (i)
above, shall be distributed to such Liquidity Provider
or to the applicable Trustee for the account of such
Certificateholder, in each such case, pari passu on the
basis of all amounts described in clauses (i) through
(iii) above;
second, such amount remaining as shall be
required to pay all accrued and unpaid Liquidity
Expenses shall be distributed to each Liquidity Provider
pari passu on the basis of the amount of Liquidity
Expenses owed to each Liquidity Provider;
third, such amount remaining as shall be
required to pay accrued and unpaid interest on the
Liquidity Obligations as provided in the Liquidity
Facilities shall be distributed to each Liquidity
Provider pari passu on the basis of the amount of such
accrued and unpaid interest owed to each Liquidity
Provider;
fourth, such amount remaining as shall be
required (A) to pay in full the outstanding amount of
all Liquidity Obligations, whether or not then due
(other than amounts payable pursuant to clause "second"
or "third" of this Section 3.3(a)) shall be distributed
to each Liquidity Provider, and/or (B) if applicable, so
long as no Performing Note Deficiency exists, to
replenish the Cash Collateral Accounts up to their
respective Required Amounts shall be deposited in the
Cash Collateral Accounts, in each case, pari passu on
the basis of the amount of Liquidity Obligations owed to
each Liquidity Provider and/or such deficiencies;
fifth, such amount as shall be required to
reimburse or pay (i) the Subordination Agent for any Tax
(other than Taxes imposed on compensation paid
hereunder), expense, fee, charge or other loss incurred
by or any other amount payable to the Subordination
Agent in connection with the transactions contemplated
hereby (to the extent not previously reimbursed), shall
be applied by the Subordination Agent in reimbursement
of such amount, (ii) each Trustee for any Tax (other
than Taxes imposed on compensation paid under the
applicable Trust Agreement), expense, fee, charge, loss
or any other amount payable to such Trustee under the
applicable Trust Agreements (to the extent not
previously reimbursed), shall be distributed to such
Trustee and (iii) each Certificateholder for payments,
if any, made by it pursuant to Section 5.2 hereof in
respect of amounts described in clause (i) above, shall
be distributed to the applicable Trustee for the account
of such Certificateholder, in each such case, pari passu
on the basis of all amounts described in clauses (i)
through (iii) above;
sixth, such amount remaining as shall be
required to pay in full Adjusted Expected Distributions
on the Class A Certificates shall be distributed to the
Class A Trustee;
seventh, such amount remaining as shall be
required to pay in full Adjusted Expected Distributions
on the Class B Certificates shall be distributed to the
Class B Trustee;
eighth, such amount remaining as shall be
required to pay in full Adjusted Expected Distributions
on the Class C Certificates shall be distributed to the
Class C Trustee;
ninth, such amount remaining as shall be
required to pay in full Adjusted Expected Distributions
on the Class D Certificates shall be distributed to the
Class D Trustee; and
tenth, the balance, if any, of such funds
remaining thereafter shall be distributed to the Owner
Trustees or Continental or both, as the case may be, pro
rata based on the amounts of such funds paid by such
Owner Trustees or Continental or both, as the case may
be.
(b) [Intentionally omitted]
SECTION 3.4. Other Payments. Any payments received by
the Subordination Agent for which no provision as to the application
thereof is made in this Agreement shall be distributed by the Subordination
Agent (i) in the order of priority specified in Section 3.3(a) hereof
and (ii) to the extent received or realized at any time after the Final
Distributions for each Class of Certificates have been made, in
the following order of priority: first, in the manner provided in
clause "first" of Section 3.3(a) hereof and second, in the manner
provided in clause "tenth" of Section 3.3(a) hereof.
SECTION 3.5. Payments to the Trustees and the
Liquidity Providers. Any amounts distributed hereunder to any
Liquidity Provider shall be paid to such Liquidity Provider by
wire transfer of funds to the address such Liquidity Provider
shall provide to the Subordination Agent. The Subordination Agent
shall provide a Written Notice of any such transfer to the
applicable Liquidity Provider, as the case may be, at the time of
such transfer. Any amounts distributed hereunder by the
Subordination Agent to any Trustee which shall not be the same
institution as the Subordination Agent shall be paid to such
Trustee by wire transfer funds at the address such Trustee shall
provide to the Subordination Agent.
SECTION 3.6. Liquidity Facilities. (a) Interest Drawings.
If on any Distribution Date, after giving effect to the subordination
provisions of this Agreement, the Subordination Agent shall not
have sufficient funds for the payment of any amounts due and
owing in respect of accrued interest on the Class A Certificates,
the Class B Certificates or the Class C Certificates (at the
Stated Interest Rate for such Class of Certificates), then, prior
to 12:00 noon (New York City time) on the Business Day following
such Distribution Date, the Subordination Agent shall request a
drawing (each such drawing, an "Interest Drawing") under the
Liquidity Facility with respect to such Class of Certificates in
an amount equal to the lesser of (i) an amount sufficient to pay
the amount of such accrued interest (at the Stated Interest Rate
for such Class of Certificates) and (ii) the Available Amount
under such Liquidity Facility, and shall pay such amount to the
Trustee with respect to such Class of Certificates in payment of
such accrued interest.
(b) Application of Interest Drawings.
Notwithstanding anything to the contrary contained in this
Agreement, (i) all payments received by the Subordination Agent
in respect of an Interest Drawing under the Class A Liquidity
Facility and all amounts withdrawn by the Subordination Agent
from the Class A Cash Collateral Account, and payable in each
case to the Class A Certificateholders, shall be promptly
distributed to the Class A Trustee, (ii) all payments received by
the Subordination Agent in respect of an Interest Drawing under
the Class B Liquidity Facility and all amounts withdrawn by the
Subordination Agent from the Class B Cash Collateral Account, and
payable in each case to the Class B Certificateholders, shall be
promptly distributed to the Class B Trustee and (iii) all
payments received by the Subordination Agent in respect of an
Interest Drawing under the Class C Liquidity Facility and all
amounts withdrawn by the Subordination Agent from the Class C
Cash Collateral Account, and payable in each case to the Class C
Certificateholders, shall be promptly distributed to the Class C
Trustee.
(c) Downgrade Drawings. If at any time the
short-term unsecured debt rating of any Liquidity Provider issued
by either Rating Agency (or, if DNIB is such Liquidity Provider
and does not have a published short-term unsecured debt rating
issued by Standard & Poor's, with respect to Standard & Poor's
only, the long-term unsecured debt rating of DNIB issued by
Standard & Poor's) is lower than the Threshold Rating, within 10
days after receiving notice of such downgrading (but not later
than the expiration date of the Liquidity Facility issued by the
downgraded Liquidity Provider (the "Downgraded Facility")), such
Liquidity Provider or Continental may arrange for a Replacement
Liquidity Provider to issue and deliver a Replacement Liquidity
Facility to the Subordination Agent. If a Downgraded Facility has
not been replaced in accordance with the terms of this paragraph,
the Subordination Agent shall on such 10th day (or if such 10th
day is not a Business Day, on the next succeeding Business Day)
(or, if earlier, the expiration date of such Downgraded Facility)
request a drawing in accordance with and to the extent permitted
by such Downgraded Facility (such drawing, a "Downgrade Drawing")
of all available and undrawn amounts thereunder. Amounts drawn
pursuant to a Downgrade Drawing shall be maintained and invested
as provided in Section 3.6(f) hereof. The Liquidity Provider may
also arrange for a Replacement Liquidity Provider to issue and
deliver a Replacement Liquidity Facility at any time after such
Downgrade Drawing so long as such Downgrade Drawing has not been
reimbursed in full to the Liquidity Provider.
(d) [Intentionally omitted.]
(e) Issuance of Replacement Liquidity Facility.
At any time, Continental may, at its option, arrange for a
Replacement Liquidity Facility to replace the Liquidity Facility
for any Class of Certificates with cause or without cause,
provided that if DNIB is the Liquidity Provider being replaced,
(i) it shall be replaced with respect to all three Liquidity
Facilities, (ii) DNIB shall not be replaced prior to the fifth
anniversary of the Closing Date except for cause or for its
ceasing to meet the Threshold Ratings and (iii) if DNIB is
replaced after the fifth anniversary of the Closing Date but
prior to the tenth anniversary of the Closing Date other than for
cause or for its ceasing to meet the Threshold Ratings, the
Subordination Agent shall pay a replacement fee to DNIB in an
amount equal to 0.30% of the then current Required Amount under
each Liquidity Facility; and provided further that if such
Replacement Liquidity Facility is arranged by DNIB after a
Downgrade Drawing has been made, DNIB shall be entitled to
require Continental to waive its right (and Continental hereby
agrees so to waive its right) to replace such Replacement
Liquidity Provider unless Continental shall simultaneously
replace such Replacement Liquidity Provider with respect to each
other Liquidity Facility as to which it serves as Liquidity
Provider. For purposes of this Section 3.6(e), "with cause" and
"for cause" means a failure by DNIB to perform any agreement,
covenant or condition required to be performed by it under any
Liquidity Facility or a failure by DNIB to perform any material
agreement, covenant or condition required to be performed by it
hereunder. If such Replacement Liquidity Facility is provided at
any time after a Downgrade Drawing has been made, all funds on
deposit in the relevant Cash Collateral Account will be returned
to the Liquidity Provider being replaced. No such Replacement
Liquidity Facility executed in connection therewith shall become
effective and no such Replacement Liquidity Facility shall be
deemed a "Liquidity Facility" under the Operative Agreements,
unless and until (i) the Liquidity Provider being replaced shall
have satisfied each of the conditions referred to in the
immediately following paragraph and (ii) if such Replacement
Liquidity Facility shall materially adversely affect the rights,
remedies, interests or obligations of the Class A
Certificateholders, the Class B Certificateholders or the Class C
Certificateholders under any of the Operative Agreements, the
applicable Trustee shall have consented, in writing, to the
execution and issuance of such Replacement Liquidity Facility.
In connection with the issuance of each
Replacement Liquidity Facility, the Subordination Agent shall (x)
prior to the issuance of such Replacement Liquidity Facility,
obtain written confirmation from each Rating Agency that such
Replacement Liquidity Facility will not cause a reduction of any
rating then in effect for any Class of Certificates by such
Rating Agency (without regard to any downgrading of any rating of
any Liquidity Provider being replaced pursuant to Section 3.6(c)
hereof), (y) pay all Liquidity Obligations then owing to the
replaced Liquidity Provider (which payment may be made as
provided in clause (vii) of Section 3.6(f) hereof pursuant to a
drawing under the Replacement Liquidity Facility, or otherwise)
and (z) cause the issuer of the Replacement Liquidity Facility to
deliver the Replacement Liquidity Facility to the Subordination
Agent, together with a legal opinion opining that such
Replacement Liquidity Facility is an enforceable obligation of
such Replacement Liquidity Provider. Upon satisfaction of the
conditions set forth in this Section 3.6(e), (i) the replaced
Liquidity Facility shall terminate and (ii) such Replacement
Liquidity Provider shall be deemed to be a Liquidity Provider
with the rights and obligations of a Liquidity Provider hereunder
and under the other Operative Agreements and such Replacement
Liquidity Facility shall be deemed to be a Liquidity Facility
hereunder and under the other Operative Agreements.
(f) Cash Collateral Accounts; Withdrawals;
Investments. In the event the Subordination Agent shall draw all
available amounts under the Class A Liquidity Facility, the Class
B Liquidity Facility or the Class C Liquidity Facility pursuant
to Section 3.6(c) or 3.6(i) hereof, amounts so drawn shall be
deposited by the Subordination Agent in the Class A Cash
Collateral Account, the Class B Cash Collateral Account or the
Class C Cash Collateral Account, respectively. Amounts so
deposited shall be invested in Eligible Investments in accordance
with Section 2.2(b) hereof. Investment Earnings on amounts on
deposit in the Cash Collateral Accounts after any drawings under
Section 3.6(c) or 3.6(i) hereof shall be deposited in the
Collection Account prior to giving effect to the distributions
below on each Distribution Date commencing on the first
Distribution Date after any such drawing. The Subordination Agent
shall deliver a written statement to Continental and the
Liquidity Provider one day prior to each Distribution Date
setting forth the aggregate amount of Investment Earnings held in
the Cash Collateral Accounts as of such date. In addition, from
and after the date funds are so deposited, the Subordination
Agent shall make withdrawals from such account as follows:
(i) on each Distribution Date, the
Subordination Agent shall, to the extent it shall not
have received funds to pay accrued and unpaid interest
on the Class A Certificates (at the Stated Interest Rate
for the Class A Certificates) from any other source,
withdraw from the Class A Cash Collateral Account, and
pay to the Class A Trustee an amount equal to the lesser
of (x) an amount necessary to pay accrued and unpaid
interest (at the Stated Interest Rate for the Class A
Certificates) on such Class A Certificates and (y) the
amount on deposit in the Class A Cash Collateral
Account;
(ii) on each Distribution Date, the
Subordination Agent shall, to the extent it shall not
have received funds to pay accrued and unpaid interest
on the Class B Certificates (at the Stated Interest Rate
for the Class B Certificates) from any other source,
withdraw from the Class B Cash Collateral Account, and
pay to the Class B Trustee an amount equal to the lesser
of (x) an amount necessary to pay accrued and unpaid
interest (at the Stated Interest Rate for the Class B
Certificates) on such Class B Certificates and (y) the
amount on deposit in the Class B Cash Collateral
Account;
(iii) on each Distribution Date, the
Subordination Agent shall, to the extent it shall not
have received funds to pay accrued and unpaid interest
on the Class C Certificates (at the Stated Interest Rate
for the Class C Certificates) from any other source,
withdraw from the Class C Cash Collateral Account, and
pay to the Class C Trustee an amount equal to the lesser
of (x) an amount necessary to pay accrued and unpaid
interest (at the Stated Interest Rate for the Class C
Certificates) on such Class C Certificates and (y) the
amount on deposit in the Class C Cash Collateral
Account;
(iv) on each date on which the Pool Balance of
the Class A Trust shall have been reduced by payments
made to the Class A Certificateholders pursuant to
Section 2.4, 3.2 or 3.3 hereof, the Subordination Agent
shall withdraw from the Class A Cash Collateral Account
an amount equal to the excess, if any, of the amount on
deposit in such account over the Required Amount (with
respect to the Class A Liquidity Facility) and shall
first, pay such amount to the Class A Liquidity Provider
until the Liquidity Obligations (with respect to the
Class A Certificates) shall have been paid in full, and
second, deposit any remaining amount in the Collection
Account;
(v) on each date on which the Pool Balance of
the Class B Trust shall have been reduced by payments
made to the Class B Certificateholders pursuant to
Section 2.4, 3.2 or 3.3 hereof, the Subordination Agent
shall withdraw from the Class B Cash Collateral Account
an amount equal to the excess, if any, of the amount on
deposit in such account over the Required Amount (with
respect to the Class B Liquidity Facility) and shall
first, pay such amount to the Class B Liquidity Provider
until the Liquidity Obligations (with respect to the
Class B Certificates) shall have been paid in full, and
second, deposit any remaining amount in the Collection
Account;
(vi) on each date on which the Pool Balance of
the Class C Trust shall have been reduced by payments
made of the Class C Certificateholders pursuant to
Section 2.4, 3.2 or 3.3 hereof, the Subordination Agent
shall withdraw from the Class C Cash Collateral Account
an amount equal to the excess, if any, of the amount on
deposit in such account over the Required Amount (with
respect to the Class C Liquidity Facility) and shall
first, pay such amount to the Class C Liquidity Provider
until the Liquidity Obligations (with respect to the
Class C Certificates) shall have been paid in full, and
second, deposit any remaining amount in the Collection
Account;
(vii) if a Replacement Liquidity Facility for
any Class of Certificates shall be delivered to the
Subordination Agent following the date on which funds
have been deposited into the Cash Collateral Account for
such Class of Certificates, the Subordination Agent
shall withdraw all amounts on deposit in such Cash
Collateral Account and shall pay such amounts to the
replaced Liquidity Provider until all Liquidity
Obligations owed to such Person shall have been paid in
full, and shall deposit any remaining amount in the
Collection Account; and
(viii) following the payment of Final
Distributions with respect to any Class of Certificates
(other than the Class D Certificates), on the date on
which the Subordination Agent shall have been notified
by the Liquidity Provider for such Class of Certificates
that the Liquidity Obligations owed to such Liquidity
Provider have been paid in full, the Subordination Agent
shall withdraw all amounts on deposit in the Cash
Collateral Account in respect of such Class of
Certificates and shall deposit such amount in the
Collection Account.
(g) Reinstatement. With respect to any Interest
Drawing under the Liquidity Facility for any Trust, upon the
reimbursement of the applicable Liquidity Provider for all or any
part of the amount of such Interest Drawing, together with any
accrued interest thereon, the Available Amount of such Liquidity
Facility shall be reinstated by an amount equal to the amount of
such Interest Drawing so reimbursed to the applicable Liquidity
Provider but not to exceed the Required Amount; provided,
however, that such Liquidity Facility shall not be so reinstated
in part or in full at any time if (i) a Liquidity Event of
Default shall have occurred and be continuing and (ii) a
Performing Note Deficiency exists. In the event that at any time
prior to both the occurrence of a Liquidity Event of Default and
the existence of a Performing Note Deficiency funds are withdrawn
from any Cash Collateral Account pursuant to clauses (i), (ii) or
(iii) of Section 3.6(f) hereof, then funds received by the
Subordination Agent prior to both the occurrence of a Liquidity
Event of Default and the existence of a Performing Note
Deficiency shall be deposited in such Cash Collateral Account as
provided in clause "third" of Section 3.2 or clause "fourth" of
Section 3.3(a), as applicable, and applied in accordance with
Section 3.6(f) hereof.
(h) Reimbursement. The amount of each drawing
under the Liquidity Facilities shall be due and payable, together
with interest thereon, on the dates and at the rates,
respectively, provided in the Liquidity Facilities.
(i) Final Drawing upon Termination Notice. Upon
receipt from a Liquidity Provider of a Termination Notice with
respect to any Liquidity Facility, the Subordination Agent shall,
not later than the date specified in such Termination Notice, in
accordance with and to the extent permitted by the terms of such
Liquidity Facility, request a drawing under such Liquidity
Facility of all available and undrawn amounts thereunder (a
"Final Drawing"). Amounts drawn pursuant to a Final Drawing shall
be maintained and invested in accordance with Section 3.6(f)
hereof.
(j) Reduction of Stated Amount. Promptly
following each date on which the Required Amount of the Liquidity
Facility for a Class of Certificates is reduced as a result of a
distribution to the Certificateholders of such Class of
Certificates, the Subordination Agent shall, if such Liquidity
Facility provides for reductions of the Stated Amount of such
Liquidity Facility and if such reductions are not automatic,
request the Liquidity Provider for such Class of Certificates to
reduce such Stated Amount to an amount equal to the Required
Amount with respect to such Liquidity Facility (as calculated by
the Subordination Agent after giving effect to such payment).
Each such request shall be made in accordance with the provisions
of the applicable Liquidity Facility.
(k) Relation to Subordination Provisions.
Interest Drawings under the Liquidity Facilities and withdrawals
from the Cash Collateral Accounts, in each case, in respect of
interest on the Certificates of any Class, will be distributed to
the Trustee for such Class of Certificates, notwithstanding
Sections 3.2, 3.3 and 3.6(h) hereof.
ARTICLE IV
EXERCISE OF REMEDIES
SECTION 4.1. Directions from the Controlling
Party. (a) (i) Following the occurrence and during the continuation
of an Indenture Default under any Indenture, the Controlling Party
shall direct the Subordination Agent, which in turn shall direct
the Loan Trustee under such Indenture in the exercise of remedies
available to the holders of the Equipment Notes issued pursuant
to such Indenture, including, without limitation, the ability to
vote all such Equipment Notes in favor of declaring all of the
unpaid principal amount of such Equipment Notes and accrued
interest thereon to be due and payable under, and in accordance
with, the provisions of such Indenture. Subject to the Owner
Trustees' and the Owner Participants' rights set forth in the
Indentures with respect to the Leased Aircraft to purchase the
Equipment Notes and the provisions of the next paragraph, if the
Equipment Notes issued pursuant to any Indenture have been
Accelerated following an Indenture Default with respect thereto,
the Controlling Party may sell, assign, contract to sell or
otherwise dispose of and deliver all (but not less than all) of
such Equipment Notes to any Person at public or private sale, at
any location at the option of the Controlling Party, all upon
such terms and conditions as it may reasonably deem advisable in
accordance with applicable law.
(ii) Subject to the Owner Trustees' and the
Owner Participants' rights set forth in the Indentures with
respect to Leased Aircraft to purchase the Equipment Notes, and
notwithstanding the foregoing, so long as any Certificates remain
Outstanding, during the period ending on the date which is nine
months after the earlier of (x) the Acceleration of the Equipment
Notes issued pursuant to any Indenture or (y) the occurrence of a
Continental Bankruptcy Event, without the consent of each
Trustee, (A) no Aircraft subject to the Lien of such Indenture or
such Equipment Notes may be sold if the net proceeds from such
sale would be less than the Minimum Sale Price for such Aircraft
or such Equipment Notes, and (B) with respect to any Leased
Aircraft, the amount and payment dates of rentals payable by
Continental under the Lease for such Aircraft may not be
adjusted, if, as a result of such adjustment, the discounted
present value of all such rentals would be less than 75% of the
discounted present value of the rentals payable by Continental
under such Lease before giving effect to such adjustment, in each
case, using the weighted average interest rate of the Equipment
Notes issued pursuant to such Indenture as the discount rate.
(iii) At the request of the Controlling Party,
the Subordination Agent may from time to time during the
continuance of an Indenture Default (and before the occurrence of
a Triggering Event) commission Appraisals with respect to the
Aircraft subject to such Indenture.
(iv) After a Triggering Event occurs and any
Equipment Note becomes a Non-Performing Equipment Note, the
Subordination Agent shall obtain Appraisals with respect to all
of the Aircraft (the "LTV Appraisals") as soon as practicable and
additional LTV Appraisals on or prior to each anniversary of the
date of such initial LTV Appraisals; provided that if the
Controlling Party reasonably objects to the appraised value of
the Aircraft shown in such LTV Appraisals, the Controlling Party
shall have the right to obtain or cause to be obtained substitute
LTV Appraisals (including LTV Appraisals based upon physical
inspection of the Aircraft).
(b) The Controlling Party shall take such
actions as it may reasonably deem most effectual to complete the
sale or other disposition of such Aircraft or Equipment Notes. In
addition, in lieu of any sale, assignment, contract to sell or
other disposition, the Controlling Party may maintain possession
of such Equipment Notes and continue to apply monies received in
respect of such Equipment Notes in accordance with Article III
hereof. In addition, in lieu of such sale, assignment, contract
to sell or other disposition, or in lieu of such maintenance of
possession, the Controlling Party may instruct the Loan Trustee
under such Indenture to foreclose on the Lien on the related
Aircraft.
SECTION 4.2. Remedies Cumulative. Each and every right,
power and remedy given to the Trustees, the Liquidity Provider, the
Controlling Party or the Subordination Agent specifically or otherwise in
this Agreement shall be cumulative and shall be in addition to every
other right, power and remedy herein specifically given or now or
hereafter existing at law, in equity or by statute, and each and
every right, power and remedy whether specifically herein given
or otherwise existing may, subject always to the terms and
conditions hereof, be exercised from time to time and as often
and in such order as may be deemed expedient by any Trustee, the
Controlling Party or the Subordination Agent, as appropriate, and
the exercise or the beginning of the exercise of any power or
remedy shall not be construed to be a waiver of the right to
exercise at the same time or thereafter any other right, power or
remedy. No delay or omission by any Trustee, the Controlling
Party or the Subordination Agent in the exercise of any right,
remedy or power or in the pursuit of any remedy shall impair any
such right, power or remedy or be construed to be a waiver of any
default or to be an acquiescence therein.
SECTION 4.3. Discontinuance of Proceedings. In case
any party to this Agreement (including the Controlling Party in
such capacity) shall have instituted any Proceeding to enforce
any right, power or remedy under this Agreement by foreclosure,
entry or otherwise, and such Proceedings shall have been
discontinued or abandoned for any reason or shall have been
determined adversely to the Person instituting such Proceeding,
then and in every such case each such party shall, subject to any
determination in such proceedings, be restored to its former
position and rights hereunder, and all rights, remedies and
powers of such party shall continue as if no such Proceedings had
been instituted.
SECTION 4.4. Right of Certificateholders to Receive
Payments Not to Be Impaired. Anything in this Agreement to the contrary
notwithstanding but subject to each Trust Agreement, the right of
any Certificateholder or any Liquidity Provider, respectively, to
receive payments hereunder (including without limitation pursuant
to Section 2.4, 3.2 or 3.3 hereof) when due, or to institute suit
for the enforcement of any such payment on or after the
applicable Distribution Date, shall not be impaired or affected
without the consent of such Certificateholder or such Liquidity
Provider, respectively.
SECTION 4.5. Undertaking for Costs. In any suit for
the enforcement of any right or remedy under this Agreement or
in any suit against any Controlling Party or the Subordination
Agent for any action taken or omitted by it as Controlling Party
or Subordination Agent, as the case may be, a court in its
discretion may require the filing by any party litigant in the
suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party
litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. The
provisions of this Section do not apply to a suit instituted by
the Subordination Agent, a Liquidity Provider or a Trustee or a
suit by Certificateholders holding more than 10% of the original
principal amount of any Class of Certificates.
ARTICLE V
DUTIES OF THE SUBORDINATION AGENT;
AGREEMENTS OF TRUSTEES, ETC.
SECTION 5.1. Notice of Indenture Default or
Triggering Event. (a) In the event the Subordination Agent shall
have actual knowledge of the occurrence of an Indenture Default
or a Triggering Event, as promptly as practicable, and in any
event within 10 days after obtaining knowledge thereof, the
Subordination Agent shall transmit by mail to the Rating
Agencies, the Liquidity Providers and the Trustees notice of such
Indenture Default or Triggering Event, unless such Indenture
Default or Triggering Event shall have been cured or waived. For
all purposes of this Agreement, in the absence of actual
knowledge on the part of a Responsible Officer, the Subordination
Agent shall not be deemed to have knowledge of any Indenture
Default or Triggering Event unless notified in writing by one or
more Trustees, one or more Liquidity Providers or one or more
Certificateholders.
(b) Other Notices. The Subordination Agent will
furnish to each Liquidity Provider and Trustee, promptly upon
receipt thereof, duplicates or copies of all reports, notices,
requests, demands, certificates, financial statements and other
instruments furnished to the Subordination Agent as registered
holder of the Equipment Notes or otherwise in its capacity as
Subordination Agent to the extent the same shall not have been
otherwise directly distributed to such Liquidity Provider or
Trustee, as applicable, pursuant to the express provision of any
other Operative Agreement.
SECTION 5.2. Indemnification. The Subordination Agent
shall not be required to take any action or refrain from taking any
action under Section 5.1 (other than the first sentence thereof) or
Article IV hereof unless the Subordination Agent shall have been indemnified
(to the extent and in the manner reasonably satisfactory to the
Subordination Agent) against any liability, cost or expense
(including counsel fees and expenses) which may be incurred in
connection therewith. The Subordination Agent shall not be under
any obligation to take any action under this Agreement and
nothing contained in this Agreement shall require the
Subordination Agent to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its
duties hereunder or in the exercise of any of its rights or
powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it. The Subordination
Agent shall not be required to take any action under Section 5.1
(other than the first sentence thereof) or Article IV hereof, nor
shall any other provision of this Agreement be deemed to impose a
duty on the Subordination Agent to take any action, if the
Subordination Agent shall have been advised by counsel that such
action is contrary to the terms hereof or is otherwise contrary
to law.
SECTION 5.3. No Duties Except as Specified in
Intercreditor Agreement. The Subordination Agent shall not have
any duty or obligation to take or refrain from taking any action under,
or in connection with, this Agreement, except as expressly provided
by the terms of this Agreement; and no implied duties or obligations
shall be read into this Agreement against the Subordination Agent. The
Subordination Agent agrees that it will, in its individual capacity and
at its own cost and expense (but without any right of indemnity in
respect of any such cost or expense under Section 7.1 hereof)
promptly take such action as may be necessary to duly discharge
all Liens on any of the Trust Accounts or any monies deposited
therein which result from claims against it in its individual
capacity not related to its activities hereunder or any other
Operative Agreement.
SECTION 5.4. Notice from the Liquidity
Providers and Trustees. If any Liquidity Provider or Trustee has
notice of an Indenture Default or a Triggering Event, such Person
shall promptly give notice thereof to all other Liquidity
Providers and Trustees and to the Subordination Agent, provided,
however, that no such Person shall have any liability hereunder
as a result of its failure to deliver any such notice.
ARTICLE VI
THE SUBORDINATION AGENT
SECTION 6.1. Acceptance of Trusts and
Duties. WTC hereby accepts the duties hereby created and applicable to it
as the Subordination Agent and agrees to perform the same but only upon
the terms of this Agreement and agrees to receive and disburse
all monies received by it in accordance with the terms hereof.
The Subordination Agent shall not be answerable or accountable
under any circumstances, except (a) for its own willful
misconduct or gross negligence, (b) as provided in Section 2.2
hereof and (c) for liabilities that may result from the material
inaccuracy of any representation or warranty of the Subordination
Agent made in its individual capacity in any Operative Agreement.
The Subordination Agent shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the
Subordination Agent, unless it is proved that the Subordination
Agent was negligent in ascertaining the pertinent facts.
SECTION 6.2. Absence of Duties. The Subordination Agent
shall have no duty to see to any recording or filing of this
Agreement or any other document, or to see to the maintenance of
any such recording or filing.
SECTION 6.3. No Representations or Warranties
as to Documents. The Subordination Agent in its individual capacity
does not make nor shall be deemed to have made any representation
or warranty as to the validity, legality or enforceability of
this Agreement or any other Operative Agreement or as to the
correctness of any statement contained in any thereof, except for
the representations and warranties of the Subordination Agent,
made in its individual capacity, under any Operative Agreement to
which it is a party. The Certificateholders, the Trustees and the
Liquidity Providers make no representation or warranty hereunder
whatsoever.
SECTION 6.4. No Segregation of Monies; No
Interest. Any monies paid to or retained by the Subordination Agent
pursuant to any provision hereof and not then required to be distributed to
any Trustee or any Liquidity Provider as provided in Articles II
and III hereof need not be segregated in any manner except to the
extent required by such Articles II and III and by law, and the
Subordination Agent shall not (except as otherwise provided in
Section 2.2 hereof) be liable for any interest thereon; provided,
however, that any payments received or applied hereunder by the
Subordination Agent shall be accounted for by the Subordination
Agent so that any portion thereof paid or applied pursuant hereto
shall be identifiable as to the source thereof.
SECTION 6.5. Reliance; Agents; Advice of
Counsel. The Subordination Agent shall not incur liability to anyone in
acting upon any signature, instrument, notice, resolution, request,
consent, order, certificate, report, opinion, bond or other
document or paper believed by it to be genuine and believed by it
to be signed by the proper party or parties. As to the Pool
Balance of any Trust as of any date, the Subordination Agent may
for all purposes hereof rely on a certificate signed by any
Responsible Officer of the applicable Trustee, and such
certificate shall constitute full protection to the Subordination
Agent for any action taken or omitted to be taken by it in good
faith in reliance thereon. As to any fact or matter relating to
the Liquidity Providers or the Trustees the manner of
ascertainment of which is not specifically described herein, the
Subordination Agent may for all purposes hereof rely on a
certificate, signed by any Responsible Officer of the applicable
Liquidity Provider or Trustee, as the case may be, as to such
fact or matter, and such certificate shall constitute full
protection to the Subordination Agent for any action taken or
omitted to be taken by it in good faith in reliance thereon. The
Subordination Agent shall assume, and shall be fully protected in
assuming, that each of the Liquidity Providers and each of the
Trustees are authorized to enter into this Agreement and to take
all action to be taken by them pursuant to the provisions hereof,
and shall not inquire into the authorization of each of the
Liquidity Providers and each of the Trustees with respect
thereto. In the administration of the trusts hereunder, the
Subordination Agent may execute any of the trusts or powers
hereof and perform its powers and duties hereunder directly or
through agents or attorneys and may consult with counsel,
accountants and other skilled persons to be selected and retained
by it, and the Subordination Agent shall not be liable for the
acts or omissions of any agent appointed with due care or for
anything done, suffered or omitted in good faith by it in
accordance with the advice or written opinion of any such
counsel, accountants or other skilled persons.
SECTION 6.6. Capacity in Which Acting. The Subordination
Agent acts hereunder solely as agent and trustee herein and not in its
individual capacity, except as otherwise expressly provided in
the Operative Agreements.
SECTION 6.7. Compensation. The Subordination Agent shall
be entitled to reasonable compensation, including expenses and
disbursements, for all services rendered hereunder and shall have a
priority claim to the extent set forth in Article III hereof on all monies
collected hereunder for the payment of such compensation, to the
extent that such compensation shall not be paid by others. The
Subordination Agent agrees that it shall have no right against
any Trustee or Liquidity Provider for any fee as compensation for
its services as agent under this Agreement. The provisions of
this Section 6.7 shall survive the termination of this Agreement.
SECTION 6.8. May Become Certificateholder. The
institution acting as Subordination Agent hereunder may become a
Certificateholder and have all rights and benefits of a
Certificateholder to the same extent as if it were not the
institution acting as the Subordination Agent.
SECTION 6.9. Subordination Agent Required;
Eligibility. There shall at all times be a Subordination Agent
hereunder which shall be a corporation organized and doing
business under the laws of the United States of America or of any
State or the District of Columbia having a combined capital and
surplus of at least $100,000,000 (or the obligations of which,
whether now in existence or hereafter incurred, are fully and
unconditionally guaranteed by a corporation organized and doing
business under the laws of the United States, any State thereof
or of the District of Columbia and having a combined capital and
surplus of at least $100,000,000), if there is such an
institution willing and able to perform the duties of the
Subordination Agent hereunder upon reasonable or customary terms.
Such corporation shall be a citizen of the United States and
shall be authorized under the laws of the United States or any
State thereof or of the District of Columbia to exercise
corporate trust powers and shall be subject to supervision or
examination by federal, state or District of Columbia
authorities. If such corporation publishes reports of condition
at least annually, pursuant to law or to the requirements of any
of the aforesaid supervising or examining authorities, then, for
the purposes of this Section 6.9, the combined capital and
surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of
condition so published.
In case at any time the Subordination Agent
shall cease to be eligible in accordance with the provisions of
this Section, the Subordination Agent shall resign immediately in
the manner and with the effect specified in Section 8.1.
SECTION 6.10. Money to Be Held in Trust. All Equipment
Notes, monies and other property deposited with or held by the
Subordination Agent pursuant to this Agreement shall be held in trust
for the benefit of the parties entitled to such Equipment Notes, monies
and other property. All such Equipment Notes, monies or other property
shall be held in the Trust Department of the institution acting
as Subordination Agent hereunder.
ARTICLE VII
INDEMNIFICATION OF SUBORDINATION AGENT
SECTION 7.1. Scope of Indemnification. The Subordination
Agent shall be indemnified hereunder to the extent and in the manner
described in Section 10.1 of the Participation Agreements and Section 10.1
of the Note Purchase Agreement. The indemnities contained in
Section 10.1 of such agreements shall survive the termination of
this Agreement.
ARTICLE VIII
SUCCESSOR SUBORDINATION AGENT
SECTION 8.1. Replacement of Subordination
Agent; Appointment of Successor. The Subordination Agent may
resign at any time by so notifying the Trustees and the
Liquidity Providers. The Controlling Party may remove the
Subordination Agent for cause by so notifying the Subordination
Agent and may appoint a successor Subordination Agent. The
Controlling Party shall remove the Subordination Agent if:
(1) the Subordination Agent fails to comply with
Section 6.9 hereof;
(2) the Subordination Agent is adjudged bankrupt
or insolvent;
(3) a receiver or other public officer takes charge
of the Subordination Agent or its property; or
(4) the Subordination Agent otherwise becomes
incapable of acting.
If the Subordination Agent resigns or is
removed or if a vacancy exists in the office of Subordination
Agent for any reason (the Subordination Agent in such event being
referred to herein as the retiring Subordination Agent), the
Controlling Party shall promptly appoint a successor
Subordination Agent.
A successor Subordination Agent shall deliver a
written acceptance of its appointment as Subordination Agent
hereunder to the retiring Subordination Agent, upon which the
resignation or removal of the retiring Subordination Agent shall
become effective, and the successor Subordination Agent shall
have all the rights, powers and duties of the Subordination Agent
under this Agreement. The successor Subordination Agent shall
mail a notice of its succession to the Liquidity Providers and
the Trustees. The retiring Subordination Agent shall promptly
transfer its rights under each of the Liquidity Facilities and
all of the property held by it as Subordination Agent to the
successor Subordination Agent.
If a successor Subordination Agent does not
take office within 60 days after the retiring Subordination Agent
resigns or is removed, the retiring Subordination Agent or one or
more of the Trustees may petition any court of competent
jurisdiction for the appointment of a successor Subordination
Agent.
If the Subordination Agent fails to comply with
Section 6.9 hereof (to the extent applicable), one or more of the
Trustees or one or more of the Liquidity Providers may petition
any court of competent jurisdiction for the removal of the
Subordination Agent and the appointment of a successor
Subordination Agent.
Notwithstanding the foregoing, no resignation
or removal of the Subordination Agent shall be effective unless
and until a successor has been appointed. No appointment of a
successor Subordination Agent shall be effective unless and until
the Rating Agencies shall have delivered a Ratings Confirmation.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS
SECTION 9.1. Amendments, Waivers, etc. (a)
This Agreement may not be supplemented, amended or modified without the
consent of each Trustee (acting with the consent of holders of Certificates
of the related Class evidencing interests in the related Trust
aggregating not less than a majority in interest in such Trust),
the Subordination Agent and each Liquidity Provider; provided,
however, that this Agreement may be supplemented, amended or
modified without the consent of any Trustee if such supplement or
amendment cures an ambiguity or inconsistency or does not
materially adversely affect such Trustee or the holders of the
related Class of Certificates. Notwithstanding the foregoing,
without the consent of each Certificateholder and each Liquidity
Provider, no supplement, amendment or modification of this
Agreement may (i) reduce the percentage of the interest in any
Trust evidenced by the Certificates issued by such Trust
necessary to consent to modify or amend any provision of this
Agreement or to waive compliance therewith or (ii) modify Section
2.4, 3.2 or 3.3 hereof, relating to the distribution of monies
received by the Subordination Agent hereunder from the Equipment
Notes or pursuant to the Liquidity Facilities. Nothing contained
in this Section shall require the consent of a Trustee at any
time following the payment of Final Distributions with respect to
the related Class of Certificates.
(b) In the event that the Subordination Agent,
as the registered holder of any Equipment Notes, receives a
request for its consent to any amendment, modification or waiver
under such Equipment Notes, the Indenture pursuant to which such
Equipment Notes were issued, or the Lease, Participation
Agreement or other related document, (i) if no Indenture Default
shall have occurred and be continuing, the Subordination Agent
shall request instructions from the applicable Trustee(s) and the
consent of the Liquidity Provider (which consent shall not be
unreasonably withheld or delayed) and shall vote or consent in
accordance with the vote of such Trustee(s) and the instructions
of the Liquidity Provider and (ii) if any Indenture Default
(which, in the case of an Indenture pertaining to a Leased
Aircraft, has not been cured by the applicable Owner Trustee or
the applicable Owner Participant, if applicable, pursuant to
Section 4.03 of such Indenture shall have occurred and be
continuing with respect to such Indenture, the Subordination
Agent will exercise its voting rights as directed by the
Controlling Party, subject to Section 4.1 hereof.
SECTION 9.2. Subordination Agent
Protected. If, in the reasonable opinion of the institution acting
as the Subordination Agent hereunder, any document required to be
executed pursuant to the terms of Section 9.1 affects any right, duty,
immunity or indemnity with respect to it under this Agreement or any
Liquidity Facility, the Subordination Agent may in its discretion
decline to execute such document.
SECTION 9.3. Effect of Supplemental
Agreements. Upon the execution of any amendment or supplement hereto
pursuant to the provisions hereof, this Agreement shall be and be deemed to
be and shall be modified and amended in accordance therewith and
the respective rights, limitations of rights, obligations, duties
and immunities under this Agreement of the parties hereto and
beneficiaries hereof shall thereafter be determined, exercised
and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of
any such supplemental agreement shall be and be deemed to be and
shall be part of the terms and conditions of this Agreement for
any and all purposes. In executing or accepting any supplemental
agreement permitted by this Article IX, the Subordination Agent
shall be entitled to receive, and shall be fully protected in
relying upon, an opinion of counsel stating that the execution of
such supplemental agreement is authorized or permitted by this
Agreement.
SECTION 9.4. Notice to Rating Agencies. Promptly
following its receipt of each amendment, consent, modification,
supplement or waiver contemplated by this Article IX, the
Subordination Agent shall send a copy thereof to each Rating Agency.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Termination of Intercreditor
Agreement. Following payment of Final Distributions with respect to each
Class of Certificates and the payment in full of all Liquidity
Obligations to the Liquidity Providers and provided that there
shall then be no other amounts due to the Certificateholders, the
Trustees, the Liquidity Providers and the Subordination Agent
hereunder or under the Trust Agreements, and that the commitment
of the Liquidity Providers under the Liquidity Facilities shall
have expired or been terminated, this Agreement and the trusts
created hereby shall terminate and this Agreement shall be of no
further force or effect. Except as aforesaid or otherwise
provided, this Agreement and the trusts created hereby shall
continue in full force and effect in accordance with the terms
hereof.
SECTION 10.2. Intercreditor Agreement for
Benefit of Trustees, Liquidity Providers and Subordination
Agent. Nothing in this Agreement, whether express or implied, shall
be construed to give to any Person other than the Trustees, the Liquidity
Providers and the Subordination Agent any legal or equitable
right, remedy or claim under or in respect of this Agreement.
SECTION 10.3. Notices. Unless otherwise expressly
specified or permitted by the terms hereof, all notices, requests,
demands, authorizations, directions, consents, waivers or documents
provided or permitted by this Agreement to be made, given, furnished
or filed shall be in writing, mailed by certified mail, postage prepaid,
or by confirmed telecopy and
(i) if to the Subordination Agent, addressed to at
its office at:
WILMINGTON TRUST COMPANY
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Trustee Administration
Telecopy: (302) 651-8882
(ii) if to any Trustee, addressed to it at its office at:
WILMINGTON TRUST COMPANY
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Trustee Administration
Telecopy: (302) 651-8882
(iii) if to any Liquidity Provider, addressed to it at
its office at:
De NATIONALE INVESTERINGSBANK N.V.
4 Carnegieplein
P.O. Box 380
2501 BH The Hague
The Netherlands
Attention: Aerospace Department
Telecopy: 011-31-70-365-10-71
Whenever any notice in writing is required to be given by any
Trustee or Liquidity Provider or the Subordination Agent to any
of the other of them, such notice shall be deemed given and such
requirement satisfied when such notice is received, if such
notice is received, if such notice is mailed by certified mail,
postage prepaid or by courier service or is sent by confirmed
telecopy addressed as provided above. Any party hereto may change
the address to which notices to such party will be sent by giving
notice of such change to the other parties to this Agreement.
SECTION 10.4. Severability. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
SECTION 10.5. No Oral Modifications or
Continuing Waivers. No terms or provisions of this Agreement may
be changed, waived, discharged or terminated orally, but only by
an instrument in writing signed by the party or other Person
against whom enforcement of the change, waiver, discharge or
termination is sought and any other party or other Person whose
consent is required pursuant to this Agreement and any waiver of
the terms hereof shall be effective only in the specific instance
and for the specific purpose given.
SECTION 10.6. Successors and Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit
of, each of the parties hereto and the successors and assigns of each,
all as herein provided.
SECTION 10.7. Headings. The headings
of the various Articles and Sections herein and in the table of
contents hereto are for convenience of reference only and shall
not define or limit any of the terms or provisions hereof.
SECTION 10.8. Counterpart Form. This Agreement may be
executed by the parties hereto in separate counterparts, each of
which when so executed and delivered shall be an original, but
all such counterparts shall together constitute but one and the
same agreement.
SECTION 10.9. Subordination. (a) As between the Liquidity
Providers, on the one hand, and the Trustees and the
Certificateholders, on the other hand, this Agreement shall be a
subordination agreement for purposes of Section 510 of the United
States Bankruptcy Code, as amended from time to time.
(b) Notwithstanding the provisions of this
Agreement, if prior to the payment in full to the Liquidity
Providers of all Liquidity Obligations then due and payable, any
party hereto shall have received any payment or distribution in
respect of Equipment Notes or any other amount under the
Indentures or other Operative Agreements which, had the
subordination provisions of this Agreement been properly applied
to such payment, distribution or other amount, would not have
been distributed to such Person, then such payment, distribution
or other amount shall be received and held in trust by such
Person and paid over or delivered to the Subordination Agent for
application as provided herein.
(c) If any Trustee, any Liquidity Provider or
the Subordination Agent receives any payment in respect of any
obligations owing hereunder (or, in the case of the Liquidity
Providers, in respect of the Liquidity Obligations), which is
subsequently invalidated, declared preferential, set aside and/or
required to be repaid to a trustee, receiver or other party,
then, to the extent of such payment, such obligations (or, in the
case of the Liquidity Providers, such Liquidity Obligations)
intended to be satisfied shall be revived and continue in full
force and effect as if such payment had not been received.
(d) The Trustees (on behalf of themselves and
the holders of Certificates), the Liquidity Providers and the
Subordination Agent confirm that the payment priorities specified
in Sections 2.4, 3.2 and 3.3 shall apply in all circumstances,
notwithstanding the fact that the obligations owed to the
Trustees and the holders of Certificates are secured by certain
assets and the Liquidity Obligations are not so secured. The
Trustees expressly agree (on behalf of themselves and the holders
of Certificates) not to assert priority over the holders of
Liquidity Obligations due to their status as secured creditors in
any bankruptcy, insolvency or other legal proceeding.
(e) Each of the Trustees (on behalf of
themselves and the holders of Certificates), the Liquidity
Providers and the Subordination Agent may take any of the
following actions without impairing its rights under this
Agreement:
(i) obtain a Lien on any property to secure any amounts
owing to it hereunder, including, in the case of the Liquidity
Providers, the Liquidity Obligations,
(ii) obtain the primary or secondary obligation
of any other obligor with respect to any amounts owing
to it hereunder, including, in the case of the Liquidity
Providers, any of the Liquidity Obligations,
(iii) renew, extend, increase, alter or
exchange any amounts owing to it hereunder, including,
in the case of the Liquidity Providers, any of the
Liquidity Obligations, or release or compromise any
obligation of any obligor with respect thereto,
(iv) refrain from exercising any right or remedy,
or delay in exercising such right or remedy, which it may have, or
(v) take any other action which might discharge a
subordinated party or a surety under
applicable law;
provided, however, that the taking of any such actions
by any of the Trustees, the Liquidity Providers or the
Subordination Agent shall not prejudice the rights or
adversely affect the obligations of any other party
under this Agreement.
SECTION 10.10. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE.
SECTION 10.11. Submission to Jurisdiction; Waiver of Jury
Trial; Waiver of Immunity.
(a) Each of the parties hereto hereby irrevocably
and unconditionally:
(i) submits for itself and its
property in any legal action or proceeding
relating to this Agreement or any other
Operative Agreement, or for recognition and
enforcement of any judgment in respect hereof
or thereof, to the non-exclusive general
jurisdiction of the courts of the State of New
York, the courts of the United States of
America for the Southern District of New York,
and the appellate courts from any thereof;
(ii) consents that any such action or
proceeding may be brought in such courts, and
waives any objection that it may now or
hereafter have to the venue of any such action
or proceeding in any such court or that such
action or proceeding was brought in an
inconvenient court and agrees not to plead or
claim the same;
(iii) agrees that service of process
in any such action or proceeding may be
effected by mailing a copy thereof by
registered or certified mail (or any
substantially similar form and mail), postage
prepaid, to each party hereto at its address
set forth in Section 10.3 hereof, or at such
other address of which the other parties shall
have been notified pursuant thereto; and
(iv) agrees that nothing herein shall
affect the right to effect service of process
in any other manner permitted by law or shall
limit the right to sue in any other
jurisdiction.
(b) EACH OF THE PARTIES HERETO HEREBY AGREES TO
WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS
AGREEMENT AND THE RELATIONSHIP THAT IS BEING ESTABLISHED,
including, without limitation, contract claims, tort claims,
breach of duty claims and all other common law and statutory
claims. Each of the parties warrants and represents that it has
reviewed this waiver with its legal counsel, and that it
knowingly and voluntarily waives its jury trial rights following
consultation with such legal counsel. THIS WAIVER IS IRREVOCABLE,
AND CANNOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS
WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
(c) The Liquidity Provider hereby waives any
immunity it may have from the jurisdiction of the courts of the
United States or of any State and waives any immunity any of its
properties located in the United States may have from attachment
or execution upon a judgement entered by any such court under the
United States Foreign Sovereign Immunities Act of 1976 or any
similar successor legislation.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed by their respective
officers thereunto duly authorized, as of the day and year first
above written, and acknowledge that this Agreement has been made
and delivered in the City of New York, and this Agreement has
become effective only upon such execution and delivery.
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Trustee for each of the Trusts
By _________________________________
Name:
Title:
De NATIONALE INVESTERINGSBANK N.V.,
as Class A Liquidity Provider,
By _________________________________
Name:
Title:
By __________________________________
Name:
Title:
De NATIONALE INVESTERINGSBANK N.V.,
as Class B Liquidity Provider,
By _________________________________
Name:
Title:
By __________________________________
Name:
Title:
De NATIONALE INVESTERINGSBANK N.V.,
as Class C Liquidity Provider,
By _________________________________
Name:
Title:
By __________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity except
as expressly set forth herein but
solely as Subordination Agent and trustee
By __________________________________
Name:
Title:
SCHEDULE 1 TO
INTERCREDITOR AGREEMENT
-----------------------
Indentures
----------
1. Amended and Restated Trust Indenture and Mortgage 114, dated
as of May 20, 1996, between Wilmington Trust Company, as Loan
Trustee (the "Loan Trustee"), and First Security Bank of Utah,
National Association, as Owner Trustee (the "Owner Trustee").
2. Amended and Restated Trust Indenture and Mortgage 115,
dated as of May 20, 1996, between the Loan Trustee and the Owner
Trustee.
3. Amended and Restated Trust Indenture and Mortgage 116,
dated as of May 20, 1996, between the Loan Trustee and the Owner
Trustee.
4. Amended and Restated Trust Indenture and Mortgage 117,
dated as of May 20, 1996, between the Loan Trustee and the Owner
Trustee.
5. Trust Indenture and Mortgage 637, dated as of May 20,
1996, between the Loan Trustee and Continental Airlines, Inc.
SCHEDULE 2 TO
INTERCREDITOR AGREEMENT
-----------------------
Refunding Agreements
--------------------
1. Refunding Agreement 114, dated as of May 20, 1996, among
Continental Airlines, Inc. ("Continental"), Gaucho-2 Inc.
("Gaucho"), as Owner Participant, First Security Bank of Utah,
National Association ("FSB"), Fleet National Bank, as Original
Pass Through Trustee and Loan Participant ("Fleet"), Rolls-Royce
PLC, and Wilmington Trust Company, as Pass Through Trustee,
Subordination Agent and Loan Trustee ("Wilmington").
2. Refunding Agreement 115, dated as of May 20, 1996, among
Continental, Gaucho, FSB, Fleet, Rolls-Royce PLC and Wilmington.
3. Refunding Agreement 116, dated as of May 20, 1996, among
Continental, Gaucho, FSB, The Boeing Company and Wilmington.
4 Refunding Agreement 117, dated as of May 20, 1996, among
Continental, Gaucho, FSB, The Boeing Company and Wilmington.
iii
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Registration Rights Agreement
Dated as of May 20, 1996
among
Continental Airlines, Inc.
Wilmington Trust Company
as Trustee under
Continental Airlines
Pass Through Trust 1996-2A
Continental Airlines
Pass Through Trust 1996-2B
Continental Airlines
Pass Through Trust 1996-2C
Continental Airlines
Pass Through Trust 1996-2D
and
Morgan Stanley & Co. Incorporated
CS First Boston Corporation,
and
Fieldstone FPCG Services, L.P.
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REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement")
is made and entered into as of May 20, 1996, among Continental
Airlines, Inc., a Delaware corporation (the "Company"),
Wilmington Trust Company, as trustee under each of the Trusts (as
defined below) Morgan Stanley & Co. Incorporated, CS First Boston
Corporation and Fieldstone FPCG Services, L.P. (collectively, the
"Purchasers").
This Agreement is made pursuant to the Purchase
Agreement dated May 9, 1996 among the Company and the Purchasers
(the "Purchase Agreement"), which provides that the Trustee will
issue and sell $82,513,000, principal amount of the pass through
certificates of the Class A Trust, $35,363,000, principal amount
of the pass through certificates of the Class B Trust,
$35,363,000, principal amount of the pass through certificates of
the Class C Trust and $18,510,000, principal amount of the pass
through certificates of the Class D Trust (the certificates of
the Class A Trust, Class B Trust, Class C Trust and Class D Trust
collectively, the "Initial Certificates"). In order to induce the
Purchasers to enter into the Purchase Agreement the Company has
agreed to provide to the Purchasers and their successors, assigns
and direct and indirect transferees the registration rights set
forth in this Agreement. The execution of this Agreement is a
condition to the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto
agree as follows:
1. Definitions. As used in this Agreement, the
following capitalized defined terms shall have the following
meanings:
"1933 Act" shall mean the Securities Act of 1933, as
amended from time to time.
"1934 Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
"Class A Trust" shall mean the Continental Airlines
Pass Through Trust 1996-2A.
"Class B Trust" shall mean the Continental Airlines
Pass Through Trust 1996-2B.
"Class C Trust" shall mean the Continental Airlines
Pass Through Trust 1996-2C.
"Class D Trust" shall mean the Continental Airlines
Pass Through Trust 1996-2D.
"Closing Date" shall mean the Closing Date as defined
in the Purchase Agreement.
"Company" shall have the meaning set forth in the
preamble of this Agreement and shall include the Company's
successors.
"Depositary" shall mean the Depository Trust Company,
or any other depositary appointed by the Company; provided,
however, that any such depositary must have an address in
the Borough of Manhattan, in the City of New York.
"Equipment Notes" shall mean the equipment notes that
are the property of the Trusts.
"Exchange Certificates" shall mean the pass through
certificates issued by the Trusts under the Pass Through
Trust Agreements containing terms identical to the Initial
Certificates (except that, with respect to the Exchange
Certificates of each Trust, (i) interest thereon shall
accrue from the last date on which interest was paid on the
Initial Certificates of such Trust or, if no such interest
has been paid, from the Closing Date, (ii) the transfer
restrictions thereon shall be eliminated and (iii) certain
provisions relating to an increase in the stated rate of
interest thereon shall be eliminated) to be offered to
Holders of Initial Certificates in exchange for Initial
Certificates pursuant to the Exchange Offer.
"Exchange Offer" shall mean the exchange offer by the
Company of Exchange Certificates for Registrable
Certificates pursuant to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a
registration under the 1933 Act effected pursuant to
Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an
exchange offer registration statement on Form S-4 (or, if
applicable, on another appropriate form), and all
amendments and supplements to such registration statement,
in each case including the Prospectus contained therein,
all exhibits thereto and all material incorporated by
reference therein.
"Holders" shall mean each of the Purchasers, for so
long as they own any Registrable Certificates, and each of
their successors, assigns and direct and indirect
transferees who become registered owners of Registrable
Certificates under the Pass Through Trust Agreements.
"Initial Certificates" has the meaning set forth in the
preamble of this Agreement.
2
"Majority Holders" shall mean the Holders of a
majority of the aggregate principal amount of outstanding
Registrable Certificates; provided that whenever the
consent or approval of Holders of a specified percentage of
Registrable Certificates is required hereunder, Registrable
Certificates held by the Company or any of its affiliates
(as such term is defined in Rule 405 under the 1933 Act)
(other than the Purchasers or subsequent holders of
Registrable Certificates if such subsequent holders are
deemed to be affiliates solely by reason of their holding
of such Registrable Certificates) shall be disregarded in
determining whether such consent or approval was given by
the Holders of such required percentage or amount.
"Pass Through Trust Agreements" shall mean each of the
Pass Through Trust Agreements relating to the Initial
Certificates and the Exchange Certificates dated as of May
20, 1996 between the Company and each Trustee, as may be
amended from time to time in accordance with the terms
thereof.
"Person" shall mean an individual, partnership,
corporation, trust or unincorporated organization, or a
government or agency or political subdivision thereof.
"Prospectus" shall mean the prospectus included in a
Registration Statement, including any preliminary
prospectus, and any such prospectus as amended or
supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the
offering of any portion of the Registrable Certificates
covered by a Shelf Registration Statement, and by all other
amendments and supplements to a prospectus, including
post-effective amendments, and in each case including all
material incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth
in the preamble of this Agreement.
"Purchasers" shall have the meaning set forth in the
preamble of this Agreement.
"Financing Agreements" shall mean each of the
Refunding Agreements and the Note Purchase Agreement
relating to the Equipment Notes dated as of May 20, 1996,
as may be amended from time to time in accordance with the
terms thereof.
"Registrable Certificates" shall mean the Initial
Certificates; provided, however, that the Initial
Certificates shall cease to be Registrable Certificates
when (i) a Shelf Registration Statement with respect to
such
3
Initial Certificates shall have been declared effective
under the 1933 Act and such Initial Certificates shall have
been disposed of pursuant to such Shelf Registration
Statement, (ii) such Initial Certificates shall have been
sold to the public pursuant to Rule 144 (or any similar
provision then in force, but not Rule 144A) under the 1933
Act, (iii) such Initial Certificates shall have ceased to
be outstanding or (iv) such Initial Certificates have been
exchanged for Exchange Certificates upon consummation of
the Exchange Offer.
"Registration Expenses" shall mean any and all
expenses incident to performance of or compliance by the
Company and the Trustees with this Agreement, including
without limitation: (i) all SEC, stock exchange or National
Association of Securities Dealers, Inc. ("NASD")
registration and filing fees, (ii) all fees and expenses
incurred in connection with compliance with state or other
securities or blue sky laws and compliance with the rules
of the NASD (including reasonable fees and disbursements of
counsel for any underwriters or Holders in connection with
state or other securities or blue sky qualification of any
of the Exchange Certificates or Registrable Certificates),
(iii) all expenses of any Persons in preparing or assisting
in preparing, word processing, printing and distributing
any Registration Statement, any Prospectus, any amendments
or supplements thereto, any underwriting agreements,
securities sales agreements and other documents relating to
the performance of and compliance with this Agreement, (iv)
all rating agency fees, (v) all fees and expenses incurred
in connection with the listing, if any, of any of the
Registrable Certificates on any securities exchange or
exchanges, (vi) all fees and disbursements relating to the
qualification of the Pass Through Trust Agreements under
applicable securities laws, (vii) the fees and
disbursements of counsel for the Company and of the
independent public accountants of the Company, including
the expenses of any special audits or "cold comfort"
letters required by or incident to such performance and
compliance, (viii) the fees and expenses of the Trustees,
including their counsel, and any escrow agent or custodian,
and (ix) any reasonable fees and disbursements of the
underwriters, if any, and the reasonable fees and expenses
of any special experts retained by the Company in
connection with any Registration Statement, in each case as
are customarily required to be paid by issuers or sellers
of securities, but excluding fees of counsel to the
underwriters or the Holders and underwriting discounts and
commissions and transfer taxes, if any, relating to the
sale or disposition of Registrable Certificates by a
Holder.
4
"Registration Statement" shall mean any registration
statement of the Company which covers any of the Exchange
Certificates or Registrable Certificates pursuant to the
provisions of this Agreement, and all amendments and
supplements to any such Registration Statement, including
post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"SEC" shall mean the Securities and Exchange
Commission.
"Shelf Registration" shall mean a registration under
the 1933 Act effected pursuant to Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf"
registration statement of the Company pursuant to the
provisions of Section 2(b) of this Agreement which covers
some or all of the Registrable Certificates on an
appropriate form under Rule 415 under the 1933 Act, or any
similar rule that may be adopted by the SEC, and all
amendments and supplements to such registration statement,
including post-effective amendments, in each case including
the Prospectus contained therein, all exhibits thereto and
all material incorporated by reference therein.
"Trustees" shall mean the trustees with respect to the
Initial Certificates and the Exchange Certificates of the
Trusts under the Pass Through Trust Agreements.
"Trusts" shall mean the Class A Trust, the Class B
Trust, the Class C Trust and the Class D Trust.
2. Registration Under the 1933 Act. (a) Exchange Offer
Registration. To the extent not prohibited by any applicable law
or applicable interpretation of the Staff of the SEC, the Company
shall use its best efforts (A) to file with the SEC within 120
days after the Closing Date an Exchange Offer Registration
Statement covering the offer by the Company to the Holders to
exchange all of the Registrable Certificates for Exchange
Certificates, (B) to cause such Exchange Offer Registration
Statement to be declared effective by the SEC within 60 days
after the date of filing of such Exchange Offer Registration
Statement, (C) to cause such Registration Statement to remain
effective until the closing of the Exchange Offer and (D) to
consummate the Exchange Offer within 30 days after the date such
Exchange Offer Registration Statement is declared effective. Upon
the effectiveness of the Exchange Offer Registration Statement,
the Company shall promptly commence the Exchange Offer, it being
the objective of such Exchange Offer to enable each Holder (other
than Participating Broker-Dealers (as
5
defined in Section 3(f) hereof)) eligible and electing to
exchange Registrable Certificates for Exchange Certificates
(assuming that such Holder is not an affiliate of the Company
within the meaning of Rule 405 under the 1933 Act, acquires the
Exchange Certificates in the ordinary course of such Holder's
business and has no arrangements or understandings with any
person to participate in the Exchange Offer for the purpose of
distributing the Exchange Certificates) to trade such Exchange
Certificates from and after their receipt without any limitations
or restrictions under the 1933 Act and without material
restrictions under the securities laws of a substantial
proportion of the several states of the United States.
In connection with the Exchange Offer, the Company
shall or shall cause the Trustees to:
(i) mail to each Holder a copy of the Prospectus
forming part of the Exchange Offer Registration Statement,
together with an appropriate letter of transmittal and
related documents;
(ii) keep the Exchange Offer open for not less than 30
days after the date notice thereof is mailed to the Holders
(or longer if required by applicable law);
(iii) use the services of the Depositary for the
Exchange Offer with respect to Initial Certificates
evidenced by global certificates;
(iv) permit Holders to withdraw tendered Registrable
Certificates at any time prior to the close of business,
New York City time, on the last business day on which the
Exchange Offer shall remain open, by sending to the
institution specified in the notice, a telegram, telex,
facsimile transmission or letter setting forth the name of
such Holder, the principal amount of Registrable
Certificates delivered for exchange, and a statement that
such Holder is withdrawing his election to have such
Registrable Certificates exchanged; and
(v) use its best efforts to ensure that (i) any
Exchange Offer Registration Statement and any amendment
thereto and any Prospectus forming part thereof and any
supplement thereto complies in all material respects with
the 1933 Act and the rules and regulations thereunder, (ii)
any Exchange Offer Registration Statement and any amendment
thereto does not, when it becomes effective, contain an
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading and (iii) any
Prospectus forming part of any Exchange Offer Registration
6
Statement, and any supplement to such Prospectus (as
amended or supplemented from time to time), does not
include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the
statements, in light of the circumstances under which they
were made, not misleading.
(vi) otherwise comply in all respects with all
applicable laws relating to the Exchange Offer.
As soon as practicable after the close of the Exchange
Offer, the Company shall or shall cause the Trustees to:
(i) accept for exchange Registrable Certificates duly
tendered and not validly withdrawn pursuant to the Exchange
Offer in accordance with the terms of the Exchange Offer
Registration Statement and the letter of transmittal which
is an exhibit thereto;
(ii) cancel or cause to be cancelled all Registrable
Certificates so accepted for exchange by the Company; and
(iii) promptly cause to be authenticated and delivered
Exchange Certificates to each Holder of Registrable
Certificates equal in amount to the Registrable
Certificates of such Holder so accepted for exchange.
Interest on each Exchange Certificate will accrue from
the last date on which interest was paid on the Registrable
Certificates surrendered in exchange therefor or, if no interest
has been paid on the Registrable Certificates, from the Closing
Date. The Exchange Offer shall not be subject to any conditions,
other than that the Exchange Offer, or the making of any exchange
by a Holder, does not violate applicable law or any applicable
interpretation of the Staff of the SEC. Each Holder of
Registrable Certificates (other than Participating
Broker-Dealers, as hereinafter defined) who wishes to exchange
such Registrable Certificates for Exchange Certificates in the
Exchange Offer shall represent that (i) it is not an affiliate of
the Company within the meaning of Rule 405 under the 1933 Act,
(ii) any Exchange Certificates to be received by it were acquired
in the ordinary course of business and (iii) it has no
arrangement with any Person to participate in the distribution
(within the meaning of the 1933 Act) of the Exchange
Certificates.
(b) Shelf Registration. (i) If, because of any
change in law or applicable interpretations thereof by the Staff
of the SEC, the Company is not permitted to effect the Exchange
Offer as contemplated by Section 2(a) hereof, or (ii) if for any
other reason the Exchange Offer Registration Statement is not
7
declared effective within 60 days following the date such
Exchange Offer Registration Statement is filed or the Exchange
Offer is not consummated within 30 days following the date such
Exchange Offer Registration Statement is declared effective, or
(iii) if any Holder (other than a Purchaser) is not eligible to
participate in the Exchange Offer or (iv) upon the request of any
Purchaser (with respect to any Registrable Certificates which it
acquired directly from the Company) following the consummation of
the Exchange Offer if such Purchaser shall hold Registrable
Certificates which it acquired directly from the Company and if
such Purchaser is not permitted, in the opinion of counsel to
such Purchaser, pursuant to applicable law or applicable
interpretation of the Staff of the SEC to participate in the
Exchange Offer, the Company shall, at its cost:
(A) as promptly as practicable, file with the SEC a
Shelf Registration Statement relating to the offer and sale
of the Registrable Certificates by the Holders from time to
time in accordance with the methods of distribution elected
by the Majority Holders of such Registrable Certificates
and set forth in such Shelf Registration Statement, and use
its best efforts to cause such Shelf Registration Statement
to be declared effective by the SEC by the 180th day after
the Closing Date (or promptly in the event of a request by
any Holder pursuant to clause (iii) above or any Purchaser
pursuant to clause (iv) above). In the event that the
Company is required to file a Shelf Registration Statement
upon the request of any Holder (other than a Purchaser) not
eligible to participate in the Exchange Offer pursuant to
clause (iii) above or upon the request of any Purchaser
pursuant to clause (iv) above, the Company shall file and
have declared effective by the SEC both an Exchange Offer
Registration Statement pursuant to Section 2(a) with
respect to all Registrable Certificates and a Shelf
Registration Statement (which may be a combined
Registration Statement with the Exchange Offer Registration
Statement) with respect to offers and sales of Registrable
Certificates held by such Holder or such Purchaser after
completion of the Exchange Offer. If the Company files a
Shelf Registration Statement pursuant to Section 2(b)(ii)
hereof, the Company will no longer be required to effect
the Exchange Offer;
(B) use its best efforts to keep the Shelf
Registration Statement continuously effective, in order to
permit the Prospectus forming part thereof to be usable by
Holders, until the end of the period referred to in Rule
144(k) (or one year from the Closing Date if such Shelf
Registration Statement is filed upon the request of any
Purchaser pursuant to clause (iv) above) or such shorter
period as shall end when all of the Registrable
Certificates
8
covered by the Shelf Registration Statement have been sold
pursuant to the Shelf Registration Statement; and
(C) notwithstanding any other provisions hereof, use
its best efforts to ensure that (i) any Shelf Registration
Statement and any amendment thereto and any Prospectus
forming part thereof and any supplement thereto complies in
all material respects with the 1933 Act and the rules and
regulations thereunder, (ii) any Shelf Registration
Statement and any amendment thereto does not, when it
becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to
be stated therein or necessary to make the statements
therein not misleading and (iii) any Prospectus forming
part of any Shelf Registration Statement, and any
supplement to such Prospectus (as amended or supplemented
from time to time), does not include an untrue statement of
a material fact or omit to state a material fact necessary
in order to make the statements, in light of the
circumstances under which they were made, not misleading.
The Company further agrees, if necessary, to
supplement or amend the Shelf Registration Statement if
reasonably requested by the Majority Holders with respect to
information relating to the Holders and otherwise as required by
Section 3(b) below, to use all reasonable efforts to cause any
such amendment to become effective and such Shelf Registration to
become usable as soon as practicable thereafter and to furnish to
the Holders of Registrable Certificates copies of any such
supplement or amendment promptly after its being used or filed
with the SEC.
The Company shall be allowed a period of five days,
beginning on the first day a Registration Default (as hereinafter
defined) referred to in Section 2(b)(ii) occurs, to cure such
Registration Default before the Company will be required to
comply with the requirements of Section 2(b).
(c) Expenses. The Company shall pay all Registration
Expenses in connection with the registration pursuant to Section
2(a) or 2(b) and, in the case of any Shelf Registration
Statement, will reimburse the Holders or Purchasers for the
reasonable fees and disbursements of one firm or counsel
designated in writing by the Majority Holders to act as counsel
for the Holders of the Registrable Certificates in connection
therewith. Each Holder shall pay all expenses of its counsel,
other than as set forth in the preceding sentence, underwriting
discounts and commissions and transfer taxes, if any, relating to
the sale or disposition of such Holder's Registrable Certificates
pursuant to the Shelf Registration Statement.
9
(d) Effective Registration Statement. (i) The Company
will be deemed not to have used its best efforts to cause the
Exchange Offer Registration Statement or the Shelf Registration
Statement, as the case may be, to become, or to remain, effective
during the requisite period if the Company voluntarily takes any
action that would result in any such Registration Statement not
being declared effective or in the Holders of Registrable
Certificates covered thereby not being able to exchange or offer
and sell such Registrable Certificates during that period unless
(A) such action is required by applicable law or (B) such action
is taken by the Company in good faith and for valid business
reasons (not including avoidance of the Company's obligations
hereunder), including, without limitation, the acquisition or
divestiture of assets, so long as the Company promptly complies
with the requirements of Section 3(j) hereof, if applicable.
(ii) An Exchange Offer Registration Statement pursuant
to Section 2(a) hereof or a Shelf Registration Statement pursuant
to Section 2(b) hereof will not be deemed to have become
effective unless it has been declared effective by the SEC;
provided, however, that if, after it has been declared effective,
the offering of Registrable Certificates pursuant to a
Registration Statement is interfered with by any stop order,
injunction or other order or requirement of the SEC or any other
governmental agency or court, such Registration Statement will be
deemed not to have been effective during the period of such
interference, until the offering of Registrable Certificates
pursuant to such Registration Statement may legally resume.
(e) Increase in Interest Rate. In the event that
neither the consummation of the Exchange Offer nor the
declaration by the Commission of a Shelf Registration to be
effective (each a "Registration Event") occurs on or prior to the
180th day after the date of the issuance of the Registrable
Certificates, the interest rate per annum borne by the Equipment
Notes shall be increased by 0.50%, effective from and including
January 2, 1997, to but excluding the date on which a
Registration Event occurs. In the event that the Shelf
Registration Statement ceases to be effective at any time during
the period specified by Section 2(b) hereof for more than 60
days, whether or not consecutive, during any 12-month period, the
interest rate borne by the Equipment Notes shall be increased by
0.50% per annum from the 61st day of the applicable 12-month
period such Shelf Registration Statement ceases to be effective
until such time as the Shelf Registration Statement again becomes
effective.
3. Registration Procedures. In connection with the
obligations of the Company with respect to the Registration
10
Statements pursuant to Sections 2(a) and 2(b) hereof, the Company
shall:
(a) prepare and file with the SEC a Registration
Statement, within the time period specified in Section 2,
on the appropriate form under the 1933 Act, which form (i)
shall be selected by the Company, (ii) shall, in the case
of a Shelf Registration, be available for the sale of the
Registrable Certificates by the selling Holders thereof and
(iii) shall comply as to form in all material respects with
the requirements of the applicable form;
(b) prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as
may be necessary under applicable law to keep such
Registration Statement effective for the applicable period;
cause each Prospectus to be supplemented by any required
prospectus supplement, and as so supplemented to be filed
pursuant to Rule 424 under the 1933 Act;
(c) in the case of a Shelf Registration, (i) notify
each Holder of Registrable Certificates when a Shelf
Registration Statement with respect to the Registrable
Certificates has been filed and advise such Holders that
the distribution of Registrable Certificates will be made
in accordance with the method elected by the Majority
Holders; (ii) furnish to each Holder of Registrable
Certificates included within the coverage of the Shelf
Registration Statement at least one copy of such Shelf
Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, and,
if the Holder so requests in writing, all reports, other
documents and exhibits (including those incorporated by
reference) at the expense of the Company, (iii) furnish to
each Holder of Registrable Certificates included within the
coverage of the Shelf Registration Statement, to counsel
for the Holders and to each underwriter of an underwritten
offering of Registrable Certificates, if any, without
charge, as many copies of each Prospectus, including each
preliminary Prospectus, and any amendment or supplement
thereto as such Holder or underwriter may reasonably
request in order to facilitate the public sale or other
disposition of the Registrable Certificates; and (iv)
subject to the last paragraph of Section 3, consent to the
use of the Prospectus or any amendment or supplement
thereto by each of the selling Holders of Registrable
Certificates included in the Shelf Registration Statement
in connection with the offering and sale of the Registrable
Certificates covered by the Prospectus or any amendment or
supplement thereto;
11
(d) use its best efforts to register or qualify the
Registrable Certificates or cooperate with the Holders of
Registrable Certificates and their counsel in the
registration or qualification of such Registrable
Certificates under all applicable state securities or "blue
sky" laws of such jurisdictions as any Holder of
Registrable Certificates covered by a Registration
Statement and each underwriter of an underwritten offering
of Registrable Certificates shall reasonably request in
writing to cooperate with the Holders in connection with
any filings required to be made with the NASD, and do any
and all other acts and things which may be reasonably
necessary or advisable to enable such Holders to consummate
the disposition in each such jurisdiction of such
Registrable Certificates owned by such Holders; provided,
however, that in no event shall the Company be required to
(i) qualify as a foreign corporation or as a dealer in
securities in any jurisdiction where it would not otherwise
be required to qualify but for this Section 3(d) or (ii)
take any action which would subject it to general service
of process or taxation in any such jurisdiction if it is
not then so subject;
(e) in the case of a Shelf Registration, notify each
Holder of Registrable Certificates promptly and, if
requested by such Holder or counsel, confirm such advice in
writing promptly (i) when a Shelf Registration Statement
has become effective and when any post-effective amendments
and supplements thereto become effective, (ii) of any
request by the SEC or any state securities authority for
post-effective amendments and supplements to a Shelf
Registration Statement and Prospectus or for additional
information after the Shelf Registration Statement has
become effective, (iii) of the issuance by the SEC or any
state securities authority of any stop order suspending the
effectiveness of a Shelf Registration Statement or the
initiation of any proceedings for that purpose, (iv) at the
closing of any sale of Registrable Certificates if, between
the effective date of a Shelf Registration Statement and
such closing, the representations and warranties of the
Company contained in any underwriting agreement, securities
sales agreement or other similar agreement, if any,
relating to such offering cease to be true and correct in
all material respects, (v) of the receipt by the Company of
any notification with respect to the suspension of the
qualification of the Registrable Certificates for sale in
any jurisdiction or the initiation or threatening of any
proceeding for such purpose, (vi) of the happening of any
material event or the discovery of any material facts
during the period a Shelf Registration Statement is
effective which makes any statement made in such
Registration Statement or the related
12
Prospectus untrue or which requires the making of any
changes in such Registration Statement or Prospectus in
order to make the statements therein (in the case of the
Prospectus in light of the circumstances under which they
were made) not misleading and (vii) of any determination by
the Company that a post-effective amendment to a
Registration Statement would be appropriate;
(f) (A) in the case of the Exchange Offer, (i) include
in the Exchange Offer Registration Statement a "Plan of
Distribution" section covering the use of the Prospectus
included in the Exchange Offer Registration Statement by
broker-dealers who have exchanged their Registrable
Certificates for Exchange Certificates for the resale of
such Exchange Certificates, (ii) furnish to each
broker-dealer who desires to participate in the Exchange
Offer, without charge, as many copies of each Prospectus
included in the Exchange Offer Registration Statement,
including any preliminary prospectus, and any amendment or
supplement thereto, as such broker-dealer may reasonably
request, (iii) include in the Exchange Offer Registration
Statement a statement that any broker-dealer who holds
Registrable Certificates acquired for its own account as a
result of market-making activities or other trading
activities (a "Participating Broker-Dealer"), and who
receives Exchange Certificates for Registrable Certificates
pursuant to the Exchange Offer, may be a statutory
underwriter and must deliver a prospectus meeting the
requirements of the 1933 Act in connection with any resale
of such Exchange Certificates, (iv) subject to the last
paragraph of Section 3, hereby consent to the use of the
Prospectus forming part of the Exchange Offer Registration
Statement or any amendment or supplement thereto, by any
broker-dealer in connection with the sale or transfer of
the Exchange Certificates covered by the Prospectus or any
amendment or supplement thereto, and (v) include in the
transmittal letter or similar documentation to be executed
by an exchange offeree in order to participate in the
Exchange Offer (x) the following provision:
"If the undersigned is not a broker-dealer, the
undersigned represents that it is not engaged in, and
does not intend to engage in, a distribution of
Exchange Certificates. If the undersigned is a
broker-dealer that will receive Exchange Certificates
for its own account in exchange for Registrable
Certificates, it represents that the Registrable
Certificates to be exchanged for Exchange Certificates
were acquired by it as a result of market-making
activities or other trading activities and
acknowledges that it will deliver a prospectus meeting
the requirements of the 1933 Act in connection with
13
any resale of such Exchange Certificates pursuant to
the Exchange Offer; however, by so acknowledging and
by delivering a prospectus, the undersigned will not
be deemed to admit that it is an "underwriter" within
the meaning of the 1933 Act"; and
(y) a statement to the effect that by a broker-dealer
making the acknowledgment described in subclause (x) and by
delivering a Prospectus in connection with the exchange of
Registrable Certificates, the broker-dealer will not be
deemed to admit that it is an underwriter within the
meaning of the 1933 Act; and
(B) to the extent any Participating Broker-Dealer
participates in the Exchange Offer, use its best efforts to
cause to be delivered at the request of an entity
representing the Participating Broker-Dealers (which entity
shall be one of the Purchasers, unless it elects not to act
as such representative) only one, if any, "cold comfort"
letter with respect to the Prospectus in the form existing
on the last date for which exchanges are accepted pursuant
to the Exchange Offer and with respect to each subsequent
amendment or supplement, if any, effected during the period
specified in clause (C) below; and
(C) to the extent any Participating Broker-Dealer
participates in the Exchange Offer, use its best efforts to
maintain the effectiveness of the Exchange Offer
Registration Statement for the 180 day period specified in
clause (D) below; and
(D) not be required to amend or supplement the
Prospectus contained in the Exchange Offer Registration
Statement as would otherwise be contemplated by Section
3(b), or take any other action as a result of this Section
3(f), for a period exceeding 180 days after the last date
for which exchanges are accepted pursuant to the Exchange
Offer (as such period may be extended by the Company) and
Participating Broker-Dealers shall not be authorized by the
Company to, and shall not, deliver such Prospectus after
such period in connection with resales contemplated by this
Section 3;
(g) (A) in the case of an Exchange Offer, furnish
counsel for the Purchasers and (B) in the case of a Shelf
Registration, furnish counsel for the Holders of
Registrable Certificates copies of any request by the SEC
or any state securities authority for amendments or
supplements to a Registration Statement and Prospectus or
for additional information;
14
(h) make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of a
Registration Statement as soon as practicable and provide
immediate notice to each Holder of the withdrawal of any
such order;
(i) unless any Registrable Certificates are in book
entry form only, in the case of a Shelf Registration, cause
the Trustees to cooperate with the selling Holders of
Registrable Certificates to facilitate the timely
preparation and delivery of certificates representing
Registrable Certificates to be sold free from any
restrictive legends; and cause such Registrable
Certificates to be in such denominations (consistent with
the provisions of the Pass Through Trust Agreements) and
registered in such names as the selling Holders or the
underwriters, if any, may reasonably request at least one
business day prior to the closing of any sale of
Registrable Certificates;
(j) in the case of a Shelf Registration, upon the
occurrence of any event or the discovery of any facts, each
as contemplated by Sections 2(d)(i)(B) or 3(e)(ii)-(vi)
hereof, use its best efforts to prepare a post-effective
amendment to a Registration Statement or an amendment or
supplement to the related Prospectus or file any other
required document so that, as thereafter delivered to the
purchasers of the Registrable Certificates, such Prospectus
will not contain at the time of such delivery any untrue
statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of
the circumstances under which they were made, not
misleading. The Company agrees to notify each Holder to
suspend use of the Prospectus as promptly as practicable
after the occurrence of such an event, and each Holder
hereby agrees to suspend use of the Prospectus as promptly
as practicable upon receipt of such notice until the
Company has amended or supplemented the Prospectus to
correct such misstatement or omission, provided that the
Company shall cause such suspension not to last more than
30 days per occurrence or more than 60 days in aggregate in
a calendar year. At such time as such public disclosure is
otherwise made or the Company determines that such
disclosure is not necessary, in each case to correct any
misstatement of a material fact or to include any omitted
material fact, the Company agrees promptly to notify each
Holder of such determination and to furnish each Holder
such numbers of copies of the Prospectus, as amended or
supplemented, as such Holder may reasonably request;
(k) obtain a CUSIP number for all Exchange
Certificates, or Registrable Certificates, as the case may
15
be, of each Trust not later than the effective date of an
Exchange Offer Registration Statement or Shelf Registration
Statement, as the case may be, and provide the Trustees
with printed certificates evidencing the Exchange
Certificates or the Registrable Certificates, as the case
may be, held in book entry form, in a form eligible for
deposit with the Depositary;
(l) (i) cause the Pass Through Trust Agreements to be
qualified under the Trust Indenture Act of 1939, as amended
(the "TIA"), in connection with the registration of the
Exchange Certificates, or Registrable Certificates, as the
case may be, (ii) cooperate with the Trustees and the
Holders to effect such changes to the Pass Through Trust
Agreements as may be required for the Pass Through Trust
Agreements to be so qualified in accordance with the terms
of the TIA and (iii) execute, and use its best efforts to
cause the Trustees to execute, all documents as may be
required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable the
Pass Through Trust Agreements to be so qualified in a
timely manner;
(m) in the case of a Shelf Registration, enter into
such customary agreements (including underwriting
agreements in customary form) and take all other customary
and appropriate actions (including those reasonably
requested by the Holders of a majority in principal amount
of Registrable Certificates being sold) in order to
expedite or facilitate the disposition of such Registrable
Certificates and in such connection whether or not an
underwriting agreement is entered into and whether or not
the registration is an underwritten registration:
(i) make such representations and warranties to
the Holders of such Registrable Certificates and the
underwriters, if any, in form, substance and scope as
are customarily made by the Company to underwriters in
similar underwritten offerings as may be reasonably
requested by them;
(ii) obtain opinions of counsel to the Company
(who may be the general counsel of the Company) and
updates thereof (which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory
to the managing underwriters, if any, or if there are
no such managing underwriters, to the Holders of a
majority in principal amount of the Registrable
Certificates being sold) addressed to each selling
Holder and the underwriters, if any, covering the
matters customarily covered in opinions requested in
16
sales of securities or underwritten offerings and such
other matters as may be reasonably requested by such
Holders and underwriters;
(iii) obtain a "cold comfort" letter and updates
thereof from the Company's independent certified
public accountants addressed to the underwriters, if
any, and will use its best efforts to have such letter
addressed to the selling Holders of Registrable
Certificates, such letter to be in customary form and
covering such matters of the type customarily covered
in "cold comfort" letters in connection with similar
underwritten offerings as the Holders of a majority in
principal amount of the Registration Certificates
being sold shall request;
(iv) enter into a securities sales agreement with
the Holders and an agent of the Holders providing for,
among other things, the appointment of such agent for
the selling Holders for the purpose of soliciting
purchases of Registrable Certificates, which agreement
shall be in form, substance and scope customary for
similar offerings;
(v) if an underwriting agreement is entered into,
cause the same to set forth indemnification provisions
and procedures substantially equivalent to the
indemnification provisions and procedures set forth in
Section 5 hereof with respect to all parties to be
indemnified pursuant to said Section; and
(vi) deliver such other documents and
certificates as may be reasonably requested by Holders
of a majority in principal amount of Registrable
Certificates being sold, and as are customarily
delivered in similar offerings.
The above shall be done at (i) the effectiveness of such
Registration Statement (and, if appropriate, each
post-effective amendment thereto) if appropriate in
connection with any particular disposition of Registrable
Certificates and (ii) each closing under any underwriting
or similar agreement as and to the extent required
thereunder. In the case of any underwritten offering, the
Company shall provide written notice to the Holders of all
Registrable Certificates of such underwritten offering at
least 30 days prior to the filing of a prospectus
supplement for such underwritten offering. Such notice
shall (x) offer each such Holder the right to participate
in such underwritten offering, (y) specify a date, which
shall be no earlier than 10 days following the date of such
notice, by which such Holder must inform the Company of its
17
intent to participate in such underwritten offering and
(z) include the instructions such Holder must follow in
order to participate in such underwritten offering;
(n) in the case of a Shelf Registration, make
available for inspection by representatives of the Holders
of the Registrable Certificates and any underwriters
participating in any disposition pursuant to a Shelf
Registration Statement and any counsel or accountant
retained by such Holders or underwriters, all financial and
other records, pertinent corporate documents and properties
of the Company reasonably requested by it, and cause the
respective officers, directors, employees, and any other
agents of the Company to make reasonably available all
relevant information reasonably requested by any such
representative, underwriter, counsel or accountant in
connection with a Registration Statement, in each case as
is customary for similar due diligence examinations;
provided, however, that any information that is designated
in writing by the Company, in good faith, as confidential
at the time of delivery of such information shall be kept
confidential by such representatives, underwriters, counsel
or accountant, unless such disclosure is made in connection
with a court proceeding or required by law, or such
information becomes available to the public generally or
through a third party without an accompanying, obligation
of confidentiality; and provided further that the foregoing
inspection and information gathering shall, to the extent
reasonably possible, be coordinated on behalf of the
Holders and the other parties entitled thereto by one
counsel designated by and on behalf of such Holders and
other parties;
(o) (i) a reasonable time prior to the filing of any
Exchange Offer Registration Statement, any Prospectus
forming a part thereof, any amendment to an Exchange Offer
Registration Statement or amendment or supplement to a
Prospectus, provide copies of such document to the
Purchasers, and use its best efforts to reflect in any such
document when filed such comments as any of the Purchasers
or their counsel may reasonably request; (ii) in the case
of a Shelf Registration, a reasonable time prior to filing
any Shelf Registration Statement, any Prospectus forming a
part thereof, any amendment to such Shelf Registration
Statement or amendment or supplement to such Prospectus,
provide copies of such document to the Holders of
Registrable Certificates, to the Purchasers, to counsel on
behalf of the Holders and to the underwriter or
underwriters of an underwritten offering of Registrable
Certificates, if any, and use its best efforts to reflect
such comments in any such document when filed as the
18
Holders of Registrable Certificates, their counsel and any
underwriter may reasonably request; and (iii) cause the
representatives of the Company to be available for discussion
of such document as shall be reasonably requested by the Holders
of Registrable Certificates, the Purchasers on behalf of such
Holders or any underwriter and shall not at any time make
any filing of any such document of which such Holders, the
Purchasers on behalf of such Holders, their counsel or any
underwriter shall not have previously been advised and
furnished a copy or to which such Holders, the Purchasers
on behalf of such Holders, their counsel or any underwriter
shall reasonably object;
(p) in the case of a Shelf Registration, use its best
efforts to cause the Registrable Certificates to be rated
with the appropriate rating agencies at the time of
effectiveness of such Shelf Registration Statement, unless
the Registrable Certificates are already so rated; and
(q) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC and make
generally available to its security holders, as soon as
reasonably practicable after the effective date of a
Registration Statement, an earnings statement which shall
satisfy the provisions of Section 11(a) of the 1933 Act and
Rule 158 thereunder.
In the case of a Shelf Registration Statement, the
Company may (as a condition to such Holder's participation in the
Shelf Registration) require each Holder of Registrable
Certificates to furnish to the Company such information regarding
such Holder and the proposed distribution by such Holder of such
Registrable Certificates as the Company may from time to time
reasonably request and the Company may exclude from such
registration the Registrable Certificates of any Holder that
fails to furnish such information within a reasonable time after
receiving such request.
In the case of a Shelf Registration Statement, each
Holder agrees that, upon receipt of any notice from the Company
of the happening of any event or the discovery of any facts, each
of the kind described in Sections 2(d)(i)(B) or 3(e)(ii)-(vi)
hereof, such Holder will forthwith discontinue disposition of
Registrable Certificates pursuant to such Shelf Registration
Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(j)
hereof, and, if so directed by the Company, such Holder will
deliver to the Company (at the Company's expense) all copies in
its possession, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Registrable
19
Certificates current at the time of receipt of such notice. If
the Company shall give any such notice to suspend the disposition
of Registrable Certificates pursuant to a Shelf Registration
Statement as a result of the happening of any event or the
discovery of any facts, each of the kind described in Sections
2(d)(i)(B) or 3(e)(ii)-(vi) hereof, the Company shall be deemed
to have used its best efforts to keep the Shelf Registration
Statement effective during such period of suspension provided
that the Company shall use its best efforts to file and have
declared effective (if an amendment) as soon as practicable an
amendment or supplement to the Shelf Registration Statement and
shall extend the period during which the Registration Statement
shall be maintained effective pursuant to this Agreement by the
number of days during the period from and including the date of
the giving of such notice to and including the date when the
Holders shall have received copies of the supplemented or amended
Prospectus necessary to resume such dispositions.
4. Underwritten Offering. The Holders of Registrable
Certificates covered by a Shelf Registration Statement who desire
to do so may sell such Registrable Certificates in an
underwritten offering. In any such underwritten offering, the
investment banker or bankers and manager or managers that will
administer the offering will be selected by, and the underwriting
arrangements with respect thereto will be approved by, the
Holders of a majority of the Registrable Securities to be
included in such offering; provided however, that (i) such
investment bankers and managers and underwriting arrangements
must be reasonably satisfactory to the Company and (ii) the
Company shall not be obligated to arrange for more than one
underwritten offering during the period such Shelf Registration
Statement is required to be effective pursuant to Section
2(b)(i)(B) hereof. No Holder may participate in any underwritten
offering contemplated hereby unless such Holder (a) agrees to
sell such Holder's Registrable Certificates in accordance with
any approved underwriting arrangements, (b) completes and
executes all reasonable questionnaires, powers of attorney,
indemnities, underwriting agreements, lock-up letters and other
documents required under the terms of such approved underwriting
arrangements and (c) at least 20% of the outstanding Registrable
Certificates are included in such underwritten offering. The
Holders participating in any underwritten offering shall be
responsible for any expenses customarily borne by selling
securityholders, including underwriting discounts and commissions
and fees and expenses of counsel to the selling securityholders.
5. Indemnification and Contribution. (a) The
Company agrees to indemnify and hold harmless each Holder and
each person, if any, who controls any Holder within the meaning
of either Section 15 of the 1933 Act or Section 20 of the 1934
20
Act, from and against all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses
reasonably incurred by any Holder or any such controlling person
in connection with defending or investigating any such action or
claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in any Registration Statement (or
any amendment thereto) pursuant to which Exchange Certificates or
Registrable Certificates were registered under the 1933 Act,
including all documents incorporated therein by reference, 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, or caused by any untrue
statement or alleged untrue statement of a material fact
contained in any Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state
therein a material fact necessary to make the statements therein
in light of the circumstances under which they were made not
misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission
or alleged untrue statement or omission based upon information
relating to any Holder furnished to the Company in writing by any
selling Holder expressly for use therein; provided, however, that
the foregoing indemnity agreement with respect to any preliminary
Prospectus shall not inure to the benefit of any Person from whom
the Person asserting any such losses, claims, damages or
liabilities purchased Registerable Certificates, or any person
controlling such seller, if a copy of the final Prospectus (as
then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by
or on behalf of such seller to such purchaser with or prior to
the written confirmation of the sale of the Registerable
Certificates to such Person, and if the final Prospectus (as so
amended or supplemented) would have cured the defect giving rise
to such losses, claims, damages or liabilities. In connection
with any underwritten offering permitted by Section 3, the
Company will also indemnify the underwriters participating in the
distribution, their officers and directors and each Person who
controls such Persons (within the meaning of the Securities Act
and the Exchange Act) to the same extent as provided above with
respect to the indemnification of the Holders, if requested in
connection with any Registration Statement.
(b) Each Holder agrees, severally and not jointly, to
indemnify and hold harmless the Company and the other selling
Holders, and each of their respective directors, officers who
sign the Registration Statement and each Person, if any, who
controls the Company and any other selling Holder within the
meaning of either Section 15 of the 1933 Act or Section 20 of the
1934 Act to the same extent as the foregoing indemnity from the
Company to the Holders, but only with reference to information
21
relating to such Holder furnished to the Company in writing by
such Holder expressly for use in any Registration Statement (or
any amendment thereto) or any Prospectus (or any amendment or
supplement thereto).
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in
respect of which indemnity may be sought pursuant to either
paragraph (a) or paragraph (b) above, such person (the
"indemnified party") shall promptly notify the person against
whom such indemnity may be sought (the "indemnifying party") in
writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory
to the indemnified party to represent the indemnified party and
any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel,
but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and
the indemnified party shall have mutually agreed to the retention
of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying
party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual
or potential differing interests between them. It is understood
that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be
liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all such indemnified
parties and that such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by
the Majority Holders in the case of parties indemnified pursuant
to paragraph (a) above and by the Company in the case of parties
indemnified pursuant to paragraph (b) above. The indemnifying
party shall not be liable for any settlement of any proceeding
effected without its written consent but, if settled with such
consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested in writing an
indemnifying party to reimburse the indemnified party for fees
and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that
it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered
into more than 90 days after receipt by such indemnifying party
of the aforesaid request and (ii) such indemnifying party shall
not have reimbursed the indemnified party for such fees and
expenses of counsel in accordance with such request prior to the
22
date of such settlement, unless such fees and expenses are being
disputed in good faith. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of
which such indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release
of such indemnified party from all liability on claims that are
the subject matter of such proceeding.
(d) If the indemnification provided for in paragraph
(a) or paragraph (b) of this Section 5 is unavailable to an
indemnified party or insufficient in respect of any losses,
claims, damages or liabilities, then each indemnifying party
under such paragraph, in lieu of indemnifying such indemnified
party thereunder, shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to
reflect the relative fault of the indemnifying party or parties
on the one hand and of the indemnified party or parties on the
other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative
fault of the Company and the Holders shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied
by the Company or by the Holders and the parties' relative
intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Holders'
respective obligations to contribute pursuant to this Section
5(d) are several in proportion to the respective aggregate
principal amount of Registrable Certificates of such Holder that
were registered pursuant to a Registration Statement.
(e) The Company and each Holder agree that it would
not be just or equitable if contribution pursuant to this Section
5 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 5, no Holder shall be required to
indemnify or contribute any amount in excess of the amount by
which the total price at which Registrable Certificates were sold
by such Holder exceeds the amount of any damages that such Holder
has otherwise been required to pay by reason of such untrue or
23
alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this
Section 5 are not exclusive and shall not limit any rights or
remedies which may otherwise be available to any indemnified
party at law or in equity.
The indemnity and contribution provisions contained in
this Section 5 shall remain operative and in full force and
effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of any Holder or any
person controlling any Holder, or by or on behalf of the Company,
its officers or directors or any person controlling the Company,
(iii) acceptance of any of the Exchange Certificates and (iv) any
sale of Registrable Certificates pursuant to a Shelf Registration
Statement.
6. Miscellaneous. (a) Rule 144 and Rule 144A. For so
long as the Company is subject to the reporting requirements of
Section 13 or 15 of the 1934 Act, the Company covenants that it
will file the reports required to be filed by it under Section
13(a) or 15(d) of the 1934 Act and the rules and regulations
adopted by the SEC thereunder, that if it ceases to be so
required to file such reports, it will upon the request of any
Holder of Registrable Certificates (i) make publicly available
such information as is necessary to permit sales pursuant to Rule
144 under the 1933 Act, (ii) deliver such information to a
prospective purchaser as is necessary to permit sales pursuant to
Rule 144A under the 1933 Act and it will take such further action
as any Holder of Registrable Certificates may reasonably request,
and (iii) take such further action that is reasonable in the
circumstances, in each case, to the extent required from time to
time to enable such Holder to sell its Registrable Certificates
without registration under the 1933 Act within the limitation of
the exemptions provided by (x) Rule 144 under the 1933 Act, as
such Rule may be amended from time to time, (y) Rule 144A under
the 1933 Act, as such Rule may be amended from time to time, or
(z) any similar rules or regulations hereafter adopted by the
SEC. Upon the request of any Holder of Registrable Certificates,
the Company will deliver to such Holder a written statement as to
whether it has complied with such requirements.
(b) Other Registration Rights. The Company may grant
registration rights that would permit any Person the right to
piggy-back on any Shelf Registration Statement, provided that if
the managing underwriter, if any, of an offering pursuant to such
Shelf Registration Statement delivers an opinion of the selling
Holders that the total amount of securities which they and the
24
holders of such piggy-back rights intend to include in any Shelf
Registration Statement materially adversely affects the success
of such offering (including the price at which such securities
can be sold), then the amount, number or kind of securities to be
offered for the account of holders of such piggy-back rights will
be reduced to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount, number
or kind recommended by such managing underwriter; and provided
further that such piggy-back registration rights shall in no
event materially adversely affect the interests of any Holder.
(c) Trustees. The Trustees shall take such action as
may be reasonably requested by the Company in connection with the
Company satisfying its obligations arising under this Agreement.
(d) No Inconsistent Agreements. The Company has not
entered into nor will the Company on or after the date of this
Agreement enter into any agreement which is inconsistent with the
rights granted to the Holders of Registrable Certificates in this
Agreement or otherwise conflicts with the provisions hereof.
(e) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be
amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given unless the
Company has obtained the written consent of Holders of at least a
majority in aggregate principal amount of the outstanding
Registrable Certificates affected by such amendment,
modification, supplement, waiver or departure; provided, however,
that no amendment, modification, supplement or waiver or consent
to any departure from the provisions of Section 5 hereof shall be
effective as against any Holder of Registrable Certificates
unless consented to in writing by such Holder.
(f) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, telex, telecopier, or
any courier guaranteeing overnight delivery (i) if to a Holder,
at the most current address given by such Holder to the Company
by means of a notice given in accordance with the provisions of
this Section 6(e), which address initially is, with respect to
the Purchasers, the address set forth in the Purchase Agreement;
and (ii) if to the Company, initially at the Company's address
set forth in the Purchase Agreement and thereafter at such other
address, notice of which is given in accordance with the
provisions of this Section 6(e).
All such notices and communications shall be deemed to
have been duly given: at the time delivered by hand, if
personally delivered; five business days after being deposited in
the mail, postage prepaid, if mailed; when answered back, if
25
telexed; when receipt is acknowledged, if telecopied; and on the
next business day if timely delivered to an air courier
guaranteeing overnight delivery.
Copies of all such notices, demands, or other
communications shall be concurrently delivered by the person
giving the same to the Trustees, at the address specified in the
Pass Through Trust Agreements.
(g) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors, assigns and
transferees of each of the parties, including, without limitation
and without the need for an express assignment, subsequent
Holders; provided that nothing herein shall be deemed to permit
any assignment, transfer or other disposition of Registrable
Certificates in violation of the terms hereof or of the Purchase
Agreement or the Pass Through Trust Agreements. If any transferee
of any Holder shall acquire Registrable Certificates, in any
manner, whether by operation of law or otherwise, such
Registrable Certificates shall be held subject to all of the
terms of this Agreement, and by taking and holding such
Registrable Certificates, such Person shall be conclusively
deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the
restrictions on resale set forth in this Agreement and, if
applicable, the Purchase Agreement, and such Person shall be
entitled to receive the benefits hereof.
(h) Third Party, Beneficiary. The Holders shall be
third party beneficiaries to the agreements made hereunder and to
the obligations of the Company hereunder and shall have the right
to enforce such agreements and obligations directly to the extent
any such Holder deems such enforcement necessary or advisable to
protect its rights hereunder.
(i) Counterparts. This Agreement may be executed in
any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute
one and the same agreement.
(j) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
(k) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
(l) Severability. In the event that any one or more
of the provisions contained herein, or the application thereof in
26
any circumstance, is held invalid, illegal or unenforceable, the
validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date first written above.
CONTINENTAL AIRLINES, INC.
By_________________________________
Name:
Title:
WILMINGTON TRUST COMPANY
not in its individual capacity but
solely as Trustee under each of the
Trusts
By_________________________________
Name:
Title:
Confirmed and accepted as of the date first above written:
MORGAN STANLEY & CO. INCORPORATED
CS FIRST BOSTON CORPORATION
FIELDSTONE FPCG SERVICES, L.P.
By: MORGAN STANLEY & CO. INCORPORATED
By:____________________________
Name:
Title:
27
- -----------------------------------------------------------------
REFUNDING AGREEMENT 114
Dated as of May 20, 1996
Among
CONTINENTAL AIRLINES, INC.,
as Lessee
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
as Owner Trustee
WILMINGTON TRUST COMPANY,
as Pass Through Trustee under each of the
Continental Airlines 1996-2 Pass Through Trust Agreements
FLEET NATIONAL BANK, formerly named SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION,
as Original Pass Through Trustee and Loan Participant
GAUCHO-2 INC.,
as Owner Participant
ROLLS-ROYCE PLC,
as Guarantor
WILMINGTON TRUST COMPANY,
as Subordination Agent
WILMINGTON TRUST COMPANY,
as Loan Trustee
and
MORGAN STANLEY & CO. INCORPORATED,
as Aero Trust Certificateholder
-------------
One Boeing 757-224 Aircraft
MSN 27556
Leased to Continental Airlines, Inc.
- -----------------------------------------------------------------
INDEX TO REFUNDING AGREEMENT 114
Page
----
SECTION 1. Purchase of Refunding Notes; Refunding.............3
SECTION 2. Refunding Notes....................................6
SECTION 3. Conditions Precedent...............................6
SECTION 4. Certain Conditions Precedent to the
Obligations of the Lessee; Conditions
Precedent with Respect to the Pass
Through Trustee....................................10
SECTION 5. Amendment of the Original Indenture...............10
SECTION 6. Amendment of the Original Lease...................11
SECTION 7. Amendment of the Participation Agreement..........11
SECTION 8. Lessee's Representations and Warranties...........11
SECTION 9. Representations, Warranties and Covenants.........14
SECTION 10. Notices...........................................26
SECTION 11. Expenses..........................................26
SECTION 12. Miscellaneous.....................................27
SECTION 13. Governing Law.....................................27
Schedules
Schedule I Pass Through Trust Agreements
Schedule II Refunding Notes, Purchasers and Purchase Price
ii
REFUNDING AGREEMENT 114
This REFUNDING AGREEMENT, dated as of May 20, 1996,
among (i) CONTINENTAL AIRLINES, INC., a Delaware corporation (the
"Lessee"), (ii) GAUCHO-2 INC., a Delaware corporation (the "Owner
Participant"), (iii) FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, a national banking association, not in its
individual capacity except as otherwise expressly provided
herein, but solely as trustee (the "Owner Trustee") under the
Trust Agreement (as defined below), (iv) WILMINGTON TRUST
COMPANY, a Delaware banking corporation, not in its individual
capacity except as otherwise expressly provided herein, but
solely as trustee (in such capacity, the "Pass Through Trustee")
under each of the four separate Pass Through Trust Agreements (as
defined below), (v) FLEET NATIONAL BANK, formerly named SHAWMUT
BANK CONNECTICUT, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity, except as provided
for herein, but solely as pass through trustee (the "Original
Pass Through Trustee") under the Aero Trust Deeds (as defined
below) as loan participant (the "Loan Participant"), (vi)
ROLLS-ROYCE PLC, a corporation organized under the laws of
England (the "Guarantor"), (vii) WILMINGTON TRUST COMPANY, a
Delaware banking corporation, not in its individual capacity, but
solely as subordination agent and trustee (in such capacity, the
"Subordination Agent") under the Intercreditor Agreement (as
defined below), (viii) WILMINGTON TRUST COMPANY, a Delaware
banking corporation, not in its individual capacity, but solely
as Loan Trustee (the "Loan Trustee") under the Indenture (as
defined below) and MORGAN STANLEY & CO. INCORPORATED, as Trust
Certificateholder (as such term is defined in the Aero Trust
Deeds (as defined below)) (the "Aero Trust Certificateholder").
W I T N E S S E T H:
WHEREAS, the Lessee, the Owner Participant, the
Guarantor, the Owner Trustee, the Loan Participant and the Loan
Trustee entered into Participation Agreement 114, dated as of
July 1, 1995 (the "Original Participation Agreement"), providing
for the sale and lease of one Boeing 757-224 aircraft (the
"Aircraft");
WHEREAS, concurrently with the execution and delivery
of the Original Participation Agreement the Original Pass Through
Trustee entered into the Declaration of Trust Aero Engine Trust
1995-D1 (the "Aero Trust-D1"), dated July 3, 1995 (the "Delivery
Date") and the Declaration of Trust Aero Engine Trust 1995-D2,
dated the Delivery Date (the "Aero Trust D-2", and together with
the Aero Trust-D1, the "Aero Trust Deeds");
WHEREAS, the Aero Trust Certificateholder is the holder
of all outstanding Trust Certificates (as defined in the Aero
Trust Deeds) (the "Aero Trust Certificates") issued under the
Aero Trust Deeds;
WHEREAS, concurrently with the execution and delivery
of the Original Participation Agreement, the Owner Trustee and
Wilmington Trust Company, as mortgagee, entered into the Trust
Indenture and Mortgage 114, dated as of July 1, 1995 (as
supplemented by the Trust Indenture and Mortgage 114 Supplement
No. 1, dated the Delivery Date, (the "Original Indenture"),
pursuant to which the Owner Trustee issued to the Loan
Participant loan certificates (the "Loan Certificates") as
evidence of the loan then being made by the Loan Participant in
participating in the payment of the Lessor's Cost (as such term
and other capitalized terms used herein without definition are
defined in the Participation Agreement (as defined below) or, if
not defined therein, as defined in the Lease (as defined below))
for the Aircraft;
WHEREAS, concurrently with the execution and delivery
of the Original Participation Agreement the Guarantor and the
Original Pass Through Trustee entered into Guaranty Agreement
114, dated as of July 1, 1995 (the "Guaranty"), pursuant to which
the Guarantor guaranteed, among other things, certain payments
under the Loan Certificates;
WHEREAS, concurrently with the execution and delivery
of the Original Participation Agreement, the Owner Trustee and
the Lessee entered into the Lease Agreement 114 relating to the
Aircraft, dated as of even date with the Original Indenture (such
Lease Agreement, as supplemented by Lease Supplement No. 1, dated
as of the Delivery Date, the "Original Lease"), whereby, the
Owner Trustee agreed to lease to the Lessee, and the Lessee
agreed to lease from such Owner Trustee, the Aircraft on its
Delivery Date;
WHEREAS, concurrently with the execution and delivery
of the Original Participation Agreement, the Owner Participant
and the Owner Trustee entered into the Trust Agreement 114, dated
as of even date with the Original Indenture (the "Original Trust
Agreement"), pursuant to which the Owner Trustee agreed, among
other things, to hold the Trust Estate defined in Section 1
thereof for the benefit of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery
of this Agreement, the Owner Trustee and the Loan Trustee have
entered into the Amended and Restated Trust Indenture and
Mortgage 114, dated as of the date hereof and to be effective on
the Refunding Date, as defined in Section 1 hereof (the
"Indenture Amendment"; the Original Indenture, as amended by the
Indenture Amendment, the "Indenture"), pursuant to which the
Refunding Notes (as defined below) shall be issued;
2
WHEREAS, concurrently with the execution and delivery
of this Agreement, the Owner Trustee and the Lessee have entered
into the Amended and Restated Lease Agreement 114, dated as of
July 1, 1995 and to be effective on the Refunding Date, as
defined in Section 1 hereof (the "Lease Amendment"; the Original
Lease, as amended and restated as of the date hereof by the Lease
Amendment, the "Lease"), containing amendments, modifications and
additions necessary to give effect to the transactions described
herein;
WHEREAS, concurrently with the execution and delivery
of this Agreement, the Lessee, the Owner Trustee, the Owner
Participant, the Loan Trustee and the Subordination Agent have
entered into the Amended and Restated Participation Agreement
114, dated as of July 1, 1995 and to be effective on the
Refunding Date, as defined in Section 1 hereof (the "PA
Amendment"; the Original Participation Agreement, as amended and
restated as of the date hereof by the PA Amendment, the
"Participation Agreement");
WHEREAS, pursuant to each of the Pass Through Trust
Agreements set forth in Schedule 1 hereto (the "Pass Through
Trust Agreements"), on the Refunding Date (as defined in Section
1 below), a separate grantor trust (collectively, the "Pass
Through Trusts" and, individually, a "Pass Through Trust") will
be created to facilitate certain of the transactions contemplated
hereby, including, without limitation, the issuance and sale of
pass through certificates pursuant thereto (collectively, the
"Certificates");
WHEREAS, the proceeds from the issuance and sale of
the Certificates will be applied by the Pass Through Trustee to
purchase from the Owner Trustee, on behalf of each Pass Through
Trust, all of the Refunding Notes bearing the same interest rate
as the Certificates issued by such Pass Through Trust; and
WHEREAS, concurrently with the execution and delivery
of this Agreement, (i) De Nationale Investeringsbank N.V., a bank
organized under the laws of The Netherlands (the "Liquidity
Provider"), entered into three revolving credit agreements (each,
a "Liquidity Facility") for the benefit of the Certificateholders
of each Pass Through Trust (other than the Continental Airlines
1996-2D Pass Through Trust (the "Class D Trust")), with the
Subordination Agent, as agent for the Pass Through Trustee on
behalf of each such Pass Through Trust; and (ii) the Pass Through
Trustee, the Liquidity Provider and the Subordination Agent
entered into the Intercreditor Agreement, dated as of the date
hereof (the "Intercreditor Agreement");
NOW, THEREFORE, in consideration of the foregoing
premises and the mutual agreements herein contained and other
good and valuable consideration, the receipt and adequacy of
3
which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Purchase of Refunding Notes; Refunding. (a)
Subject to the satisfaction or waiver of the conditions set forth
herein, on the date hereof or such other date agreed to by the
parties hereto (the "Refunding Date"):
(i) immediately prior to the Closing (as hereinafter
defined), the Lessee shall pay to the Owner Trustee, as a
special payment of Basic Rent under the Lease, an amount
equal to the unpaid interest on the Loan Certificates
accrued up to but not including the Refunding Date plus an
amount equal to the LIBOR Breakage Costs on the Loan
Certificates, plus $510,910.56 to be applied towards
principal on the Loan Certificates plus an additional
amount of $92,272.21 (such dollar amounts were determined
assuming a Refunding Date on May 20, 1996, which amounts
shall be recalculated on the same basis as originally
determined for a Refunding Date that occurs on a date other
than May 20, 1996);
(ii) the Pass Through Trustee for each Pass Through
Trust shall pay to the Owner Trustee the aggregate purchase
price of the Refunding Notes being issued to such Pass
Through Trustee as set forth in clause (vi) below;
(iii) the Owner Trustee shall pay to the Loan Trustee
for the benefit of the Loan Participant an amount equal to
the aggregate principal amount of Loan Certificates
outstanding on the Refunding Date, together with accrued
and unpaid interest on the Loan Certificates up to but not
including the Refunding Date and all other amounts payable
to the Loan Participant under the Original Indenture and
the Original Participation Agreement;
(iv) the Loan Trustee shall disburse to the Loan
Participant the amounts of principal and interest, and
other amounts, if any, described in clause (iii) above,
owing to it on the Refunding Date with respect to the Loan
Certificates as a prepayment of the Loan Certificates;
(v) the Loan Participant shall, against receipt of
payment for the Loan Certificates, deliver to the Loan
Trustee the Loan Certificates for cancellation; and
(vi) the Owner Trustee shall issue, pursuant to
Article II of the Indenture, to the Subordination Agent on
behalf of the Pass Through Trustee for each of the Pass
Through Trusts, equipment notes of the maturity and
aggregate principal amount and bearing the interest rate
set forth on Schedule II hereto (each a "Refunding Note"
4
and collectively, the "Refunding Notes") opposite the name
of such Pass Through Trust.
(b) The Owner Participant, by its execution and
delivery hereof, requests and directs the Owner Trustee to
execute and deliver this Agreement and, subject to the terms
hereof, to take the actions contemplated herein.
(c) Each of the Guarantor and Aero Trust
Certificateholder, by its execution and delivery hereof, requests
and directs the Loan Participant to execute and deliver this
Agreement and, subject to the terms hereof, to take the actions
contemplated herein.
(d) Each of the Guarantor and the Loan Participant, by
its execution and delivery hereof, requests and directs the Loan
Trustee to execute and deliver this Agreement and, subject to the
terms hereof, to take the actions contemplated herein.
(e) The closing (the "Closing") of the transactions
described in this Agreement shall take place at the offices of
Cleary, Gottlieb, Steen & Hamilton, One Liberty Plaza, New York,
New York 10006, on the Refunding Date, or at such other place as
the parties hereto may agree.
(f) In case any Pass Through Trustee shall for any
reason fail to purchase the Refunding Notes pursuant to Section
1(a) above on or prior to August 2, 1996, neither the Owner
Trustee nor the Lessee shall have any obligation to pay to the
Loan Participant any amount in respect of the prepayment of the
Loan Certificates and the Loan Certificates shall remain
outstanding and in full force and effect, and the amendments
contemplated by Sections 5, 6 and 7 hereof shall not become
effective.
(g) All payments pursuant to this Section 1 shall be
made in immediately available funds to such accounts and at such
banks as the parties hereto shall designate in writing not less
than one Business Day prior to the Refunding Date.
(h) In order to facilitate the transactions
contemplated hereby, the Lessee has entered into the Purchase
Agreement, dated as of May 9, 1996, among the Lessee and the
several purchasers (the "Initial Purchasers") named therein (the
"Purchase Agreement"), and, subject to the terms and conditions
hereof, the Lessee will enter into each of the Pass Through Trust
Agreements and will undertake to perform certain administrative
and ministerial duties under such Pass Through Trust Agreements.
(i) In order to consummate the transactions
contemplated in Section 1 and Section 2 hereof, the parties
hereto agree as follows:
5
(1) Section 13.2 of the Original Participation
Agreement prohibiting a refunding under Section 13 of the
Original Participation Agreement to involve a public
offering of new debt is hereby waived;
(2) The provision in Section 13.3 of the Original
Participation Agreement and Section 2.11 of the Original
Indenture, (i) prohibiting any refunding under Section 13
of the Original Participation Agreement prior to the last
day of the calendar year in which the fifth anniversary of
the Delivery Date occurs and (ii) requiring thirty (30)
days written notice for an optional redemption are hereby
waived, and the parties agree that the refunding
contemplated hereby shall not be in violation of the
Original Participation Agreement or any other Operative
Agreement (as such term is defined in the Original
Participation Agreement) or the Aero Trust Deeds.
(3) The Guarantor hereby waives any right to
payments that otherwise may be due pursuant to Section
8.7.19. of the Original Participation Agreement or
otherwise arise from, relate to, or are in connection with,
the Swap Transaction and Swaption (as such terms are
defined in the Original Participation Agreement).
(4) The requirements that the Lessee provide a
Redemption Deposit (as such term is defined in the Original
Participation Agreement) and pay Revocation Costs in each
case as provided in Section 8.7.20 of the Original
Participation Agreement are hereby waived.
(5) The requirements of Section 12(a) of each of
the Aero Trust Deeds requiring the Original Pass Through
Trustee to give the holders of the Aero Trust Certificates
at least 10 days notice is hereby waived, and the
redemption of the Aero Trust Certificates contemplated
hereby shall not be in violation of the Aero Trust Deeds.
(6) The requirement of Section 12(c) of each of
the Aero Trust Deeds that Lessee provide, and Loan Trustee
confirm, the Redemption Deposit is hereby waived.
(7) To waive any other provisions of the Original
Indenture, the Original Participation Agreement, the Aero
Trust Deeds or any other Operative Agreement (as defined in
the Original Participation Agreement relating to the
voluntary redemption of the Loan Certificates under
the.Original Indenture, that would prohibit, limit or
otherwise impose conditions upon (other than conditions
with respect to which compliance is expressly required or
contemplated under the terms and provisions of the
documents and agreements entered into concurrently
6
herewith) the consummation of the transactions contemplated
in this Section 1 and Section 2.
SECTION 2. Refunding Notes. The Refunding Notes shall
be payable as to principal in accordance with the terms of the
Indenture, and the Refunding Notes shall provide for a fixed rate
of interest per annum (subject to certain adjustments
contemplated thereby) and shall contain the terms and provisions
provided for the Refunding Notes in the Indenture. The Owner
Trustee shall execute, and the Loan Trustee shall authenticate
and deliver to the Pass Through Trustee for each Pass Through
Trust, a principal amount of Refunding Notes bearing the interest
rate set forth opposite the name of such Pass Through Trust on
Schedule II hereto, which Refunding Notes in the aggregate shall
be in the principal amounts set forth on Schedule II hereto.
Subject to the terms hereof, of the Pass Through Agreements and
of the other Operative Agreements, all such Refunding Notes shall
be dated and authenticated as of the Refunding Date and shall
bear interest therefrom, shall be registered in such names as
shall be specified by the Subordination Agent and shall be paid
in the manner and at such places as are set forth in the
Indenture.
SECTION 3. Conditions Precedent. The obligation of the
Pass Through Trustee to make the payment described in Section
1(a)(iv) and the obligations of the Owner Trustee and the Owner
Participant to participate in the transactions contemplated by
this Agreement on the Refunding Date are subject to the
fulfillment, prior to or on the Refunding Date, of the following
conditions precedent (except that paragraphs (a), (f) and (j)
shall not be conditions precedent to the obligations of the Owner
Trustee hereunder and paragraphs (g) and (l) shall not be
conditions precedent to the obligations of the Owner Participant
hereunder):
(a) The Owner Trustee shall have tendered the
Refunding Notes to the Loan Trustee for authentication, and the
Loan Trustee shall have authenticated such Refunding Notes and
shall have tendered the Refunding Notes to the Subordination
Agent on behalf of the Pass Through Trustee in accordance with
Section 1.
(b) The Pass Through Trustee, the Owner Trustee and
the Owner Participant each shall have received executed
counterparts or conformed copies of the following documents:
(1) this Agreement;
(2) the Lease Amendment;
(3) the Indenture Amendment;
7
(4) the PA Amendment;
(5) each of the Pass Through Trust Agreements;
(6) the Intercreditor Agreement;
(7) the Liquidity Facility for each of the Class
A, Class B and Class C Trusts; and
(8) the Registration Rights Agreement, dated the
date hereof, among the Lessee, the Pass
Through Trustee and each of the Initial
Purchasers, with respect to the Certificates
(the "Registration Rights Agreement") (for
the Owner Participant only).
(c) The Pass Through Trustee, the Owner Trustee and
the Owner Participant each shall have received the following:
(1) an incumbency certificate of the Lessee as to
the person or persons authorized to execute and deliver
this Agreement, the Lease Amendment, the PA Amendment, the
Pass Through Trust Agreements, the Registration Rights
Agreement and any other documents to be executed on behalf
of the Lessee in connection with the transactions
contemplated hereby and the signatures of such person or
persons;
(2) a copy of the resolutions of the board of
directors of the Lessee or the executive committee thereof,
certified by the Secretary or an Assistant Secretary of the
Lessee, duly authorizing the transactions contemplated
hereby and the execution and delivery of each of the
documents required to be executed and delivered on behalf
of the Lessee in connection with the transactions
contemplated hereby; and
(3) a copy of the certificate of incorporation of
the Lessee, certified by the Secretary of State of the
State of Delaware, a copy of the by-laws of the Lessee,
certified by the Secretary or Assistant Secretary of the
Lessee, and a certificate or other evidence from the
Secretary of State of the State of Delaware, dated as of a
date reasonably near the date of this Agreement, as to the
due incorporation and good standing of the Lessee in such
state.
(d) If the Refunding Date occurs on a date subsequent
to the date hereof, the Pass Through Trustee, the Owner Trustee
and the Owner Participant each shall have received a certificate
signed by an authorized officer of the Lessee, dated the
Refunding Date, certifying that, to the best knowledge of such
officer, after due inquiry, the representations and warranties
contained herein of the Lessee are correct as though made on and
8
as of the Refunding Date, except to the extent that such
representations and warranties relate solely to an earlier date
(in which case such representations and warranties are correct on
and as of such earlier date).
(e) The Pass Through Trustee, the Owner Trustee and
the Owner Participant each shall have received a certificate
signed by an authorized officer of the Loan Trustee, dated the
Refunding Date, certifying that the representations and
warranties contained herein of the Loan Trustee are correct as
though made on and as of the Refunding Date, except to the extent
that such representations and warranties relate solely to an
earlier date (in which case such representations and warranties
are correct on and as of such earlier date).
(f) The Pass Through Trustee and the Owner Participant
each shall have received a certificate signed by an authorized
officer of the Owner Trustee, dated the Refunding Date,
certifying that the representations and warranties contained
herein of the Owner Trustee are correct as though made on and as
of the Refunding Date, except to the extent that such
representations and warranties relate solely to an earlier date
(in which case such representations and warranties are correct on
and as of such earlier date).
(g) The Pass Through Trustee and the Owner Trustee
each shall have received a certificate signed by an authorized
officer of the Owner Participant, dated the Refunding Date,
certifying that the representations and warranties contained
herein of the Owner Participant are correct as though made on and
as of the Refunding Date, except to the extent that such
representations and warranties relate solely to an earlier date
(in which case such representations and warranties are correct on
and as of such earlier date).
(h) The Pass Through Trustee, the Owner Trustee and
the Owner Participant each shall have received a certificate
signed by an authorized officer of the Loan Participant, dated
the Refunding Date, certifying that the representations and
warranties contained herein of the Loan Participant are correct
as though made on and as of the Refunding Date, except to the
extent that such representations and warranties relate solely to
an earlier date (in which case such representations and
warranties are correct on and as of such earlier date).
(i) The Pass Through Trustee, the Owner Trustee and
the Owner Participant each shall have received a certificate
signed by an authorized officer of the Guarantor, dated the
Refunding Date, certifying that the representations and
warranties contained herein of the Guarantor are correct as
though made on and as of the Refunding Date, except to the extent
that such representations and warranties relate solely to an
9
earlier date (in which case such representations and warranties
are correct on and as of such earlier date).
(j) The Pass Through Trustee, the Owner Trustee and
the Owner Participant each shall have received an independent
insurance broker's report, together with certificates of
insurance from such broker, as to the due compliance with the
terms of Section 11 of the Lease relating to insurance with
respect to the Aircraft.
(k) The Pass Through Trustee, the Loan Participant,
the Owner Trustee and the Owner Participant each shall have
received an opinion addressed to it from Cleary, Gottlieb, Steen
& Hamilton, counsel for the Lessee, an opinion addressed to it
from Hughes Hubbard & Reed LLP, counsel for the Lessee, and an
opinion addressed to it from the Lessee's legal department, in
each case in form and substance reasonably satisfactory to each
of them.
(l) The Pass Through Trustee and the Owner Participant
each shall have received an opinion addressed to it from Ray,
Quinney & Nebeker, special counsel for the Owner Trustee, in form
and substance reasonably satisfactory to each of them.
(m) The Pass Through Trustee, the Owner Trustee, the
Loan Participant and the Owner Participant each shall have
received an opinion addressed to it from Richards, Layton &
Finger, special counsel for the Loan Trustee, in form and
substance reasonably satisfactory to each of them.
(n) The Pass Through Trustee and the Owner Trustee
each shall have received an opinion addressed to it from Perkins
Coie, counsel for the Owner Participant, and an opinion addressed
to it from corporate counsel to the Owner Participant, in each
case in form and substance reasonably satisfactory to each of
them.
(o) The Pass Through Trustee shall have received an
opinion of Whitman, Breed, Abbott & Morgan, United States counsel
to the Liquidity Provider, and internal counsel to the Liquidity
Provider, in each case in form and substance reasonably
satisfactory to the Pass Through Trustee.
(p) The Pass Through Trustee, the Owner Trustee and
the Owner Participant each shall have received an opinion
addressed to it from Lytle, Soule & Curlee, special counsel in
Oklahoma City, Oklahoma, in form and substance reasonably
satisfactory to each of them.
(q) The Pass Through Trustee, the Owner Trustee, and
the Owner Participant each shall have received an opinion
addressed to it of Shipman & Goodwin, counsel for the Loan
10
Participant in each case in form and substance reasonably
satisfactory to each of them.
(r) The Owner Trustee, the Pass Through Trustee, and
the Owner Participant shall have received an opinion of Marcia L.
Nordgren, Esq., special New York counsel for the Guarantor, in
form and substance reasonably satisfactory to each of them.
(s) The Lessee shall have entered into the Purchase
Agreement and each of the Pass Through Trust Agreements, the
Certificates shall have been issued and sold pursuant to the
Purchase Agreement and the Pass Through Trust Agreements, and the
Initial Purchasers shall have transferred to the Pass Through
Trustees in immediately available funds an amount equal to the
aggregate purchase price of the Refunding Notes to be purchased
from the Owner Trustee.
(t) No change shall have occurred after the date of
this Agreement in applicable law or regulations thereunder or
interpretations thereof by appropriate regulatory authorities or
any court that would make it illegal for the Pass-Through
Trustees to make the payments described in Section 1(a)(v) or for
the Owner Trustee or the Owner Participant to participate in the
transactions contemplated by this Agreement on the Refunding
Date.
(u) All approvals and consents of any trustee or
holder of any indebtedness or obligations of the Lessee which are
required in connection with the Pass Through Trustee's making of
the payments described in Section 1(b)(i) or the Owner Trustee's
or the Owner Participant's participation in the transactions
contemplated by this Agreement on the Refunding Date shall have
been duly obtained.
Promptly following the recording of the Lease
Amendment and the Indenture Amendment pursuant to 49 U.S.C.
Sections 40101- 46507 (the "Aviation Act") and the filing of the
Trust Amendment No. 1 pursuant to such Act, the Lessee will cause
Lytle, Soule & Curlee, special counsel in Oklahoma City,
Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the
Loan Trustee, the Owner Participant and the Owner Trustee an
opinion as to the due recording of the Lease Amendment and the
Indenture Amendment.
SECTION 4. Certain Conditions Precedent to the
Obligations of the Lessee; Conditions Precedent with Respect to
the Pass Through Trustee. (a) The Lessee's obligation to
participate in the transactions contemplated by this Agreement
and to execute and deliver the Lease Amendment and the PA
Amendment are subject to the receipt by the Lessee of (i) each
opinion referred to in subsections (l) through (r) of Section 3,
addressed to the Lessee or accompanied by a letter from counsel
rendering such opinion authorizing the Lessee to rely on such
11
opinion as if it were addressed to the Lessee, and (ii) such
other documents and evidence with respect to each other party
hereto as it may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement,
the taking of all necessary corporate action in connection
therewith and compliance with the conditions herein set forth.
(b) The respective obligations of each of the Lessee,
the Loan Participant, the Guarantor and the Loan Trustee to
participate in the transactions contemplated hereby is subject to
the receipt by each of them of (i) a certificate signed by an
authorized officer of the Pass Through Trustee, dated the
Refunding Date, certifying that the representations and
warranties contained herein of the Pass Through Trustee are
correct as though made on and as of the Refunding Date, except to
the extent that such representations and warranties relate solely
to an earlier date (in which case such representations and
warranties are correct on and as of such earlier date), (ii) the
certificate referred to in paragraphs (d) through (i) of Section
3, (iii) an opinion addressed to each of them of Richards, Layton
& Finger, special counsel for the Pass Through Trustee, in form
and substance reasonably satisfactory to each of them, (iv) the
opinions referred to in paragraphs (q) and (r) of Section 3 and
(v) such other documents and evidence with respect to the Pass
Through Trustee as it may reasonably request in order to
establish the due consummation of the transactions contemplated
by this Agreement, the taking of all necessary corporate action
in connection therewith and compliance with the conditions herein
set forth.
(c) In addition to the conditions precedent set forth
in Section 4(b) above, the respective obligations of the Loan
Participant and the Guarantor to participate in the transactions
contemplated hereby are subject to (i) receipt by each of them of
the items set forth in Sections 3(b)(1), 3(c)(1), 3(c)(2) and
3(c)(3) and (ii) the receipt by each of them of the opinions
referred to in subsections (k), (l), (m), (n), and (p) of Section
3, addressed to each of them or accompanied by a letter from
counsel rendering such opinion authorizing each of them to rely
on such opinion as if it were addressed to each of them.
SECTION 5. Amendment of the Original Indenture. The
Loan Participant and Owner Participant, respectively, by
execution and delivery hereof, requests, authorizes and directs
the Owner Trustee and the Loan Trustee to execute and deliver the
Indenture Amendment, and the Guarantor, by execution and delivery
hereof, requests, authorizes and directs the Loan Trustee to
execute and deliver the Indenture Amendment and the Owner Trustee
and the Loan Trustee, by execution and delivery hereof, agree to
execute and deliver the Indenture Amendment. The Lessee, by
execution and delivery hereof, consents to such execution and
delivery of the Indenture Amendment. The Indenture Amendment
12
shall be effective as of the Refunding Date.
SECTION 6. Amendment of the Original Lease. The Loan
Trustee and the Owner Participant, by execution and delivery
hereof, request and instruct the Owner Trustee to execute and
deliver the Lease Amendment, and the Owner Trustee and the Lessee
agree, by execution and delivery hereof, to execute and deliver
the Lease Amendment. The Lease Amendment shall be effective as of
the Refunding Date.
SECTION 7. Amendment of the Participation Agreement.
The Pass Through Trustee and Owner Participant, respectively, by
execution and delivery hereof, request, authorize and direct the
Owner Trustee and the Loan Trustee to execute and deliver the PA
Amendment, and the Owner Trustee and the Loan Trustee, by
execution and delivery hereof, agree to execute and deliver the
PA Amendment. The PA Amendment shall be effective as of the
Refunding Date.
SECTION 8. Lessee's Representations and Warranties.
The Lessee represents and warrants to the Pass Through Trustee,
the Owner Participant, the Owner Trustee, the Guarantor, the Loan
Participant and the Loan Trustee that:
(a) the Lessee is duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, is
an "air carrier" within the meaning of 49 U.S.C. Section
40102(a), holds a certificate of public convenience and necessity
in accordance with 49 U.S.C. Section 41102, and an air carrier
operating certificate issued by the Secretary of Transportation
pursuant to Chapter 447 of Title 49 of United States Code for
aircraft capable of carrying 10 or more individuals or 6,000
pounds or more of cargo, is a "citizen of the United States" as
defined in 49 U.S.C. Section 40102, has the corporate power and
authority to own or hold under lease its properties, has, or had
on the respective dates of execution thereof, the corporate power
and authority to enter into and perform its obligations under
this Agreement, the Lease Amendment, the PA Amendment, the Pass
Through Trust Agreements, the Registration Rights Agreement, the
Purchase Agreement and the other Operative Agreements to which it
is a party, and is duly qualified to do business as a foreign
corporation in good standing in each state in which it has a
principal office or a major overhaul facility and in which such
qualification is required, except where the failure to so qualify
would not be reasonably likely to have a material adverse effect
on the financial condition, properties or results of operations
of the Lessee, and its chief executive office (as such term is
used in Article 9 of the Uniform Commercial Code in effect in the
State of Texas) is located at 2929 Allen Parkway, Houston, Texas
77019;
(b) the execution and delivery by the Lessee of this
13
Agreement, the Lease Amendment, the PA Amendment, the Pass
Through Trust Agreements, the Registration Rights Agreement, the
Purchase Agreement and each other Operative Agreement to which it
is a party, and the performance of its obligations under this
Agreement, the Participation Agreement, the Lease, the Pass
Through Trust Agreements, the Registration Rights Agreement, the
Purchase Agreement and each other Operative Agreement to which it
is a party, have been duly authorized by all necessary corporate
action on the part of the Lessee, do not require any stockholder
approval, or approval or consent of any trustee or holder of any
material indebtedness or material obligations of the Lessee,
except such as have been duly obtained and are in full force and
effect, and do not contravene any law, governmental rule,
regulation or order binding on the Lessee or the certificate of
incorporation or by-laws of the Lessee, or contravene the
provisions of, or constitute a default under, or result in the
creation of any Lien (other than Permitted Liens) upon the
property of the Lessee under, any indenture, mortgage, contract
or other agreement to which the Lessee is a party or by which it
may be bound or affected which contravention, default or Lien,
individually or in the aggregate, would be reasonably likely to
have a material adverse effect on the financial condition,
properties or results of operations of the Lessee;
(c) neither the execution and delivery by the Lessee
of this Agreement, the Lease Amendment, the PA Amendment, the
Pass Through Trust Agreements, the Registration Rights Agreement,
the Purchase Agreement or any other Operative Agreement to which
it is a party, nor the performance of its obligations hereunder
or under the Participation Agreement, the Tax Indemnity
Agreement, the Lease, the Pass Through Trust Agreements, the
Registration Rights Agreement, the Purchase Agreement or the
other Operative Agreements to which it is a party, nor the
consummation by the Lessee of any of the transactions
contemplated hereby or thereby, requires the consent or approval
of, the giving of notice to, the registration with, or the taking
of any other action in respect of, the Department of
Transportation, the FAA, or any other federal, state or foreign
governmental authority having jurisdiction, other than (i) the
registration of the Exchange Certificates (as defined in each
Pass Through Trust Agreement), if any, pursuant to the provisions
of the Pass Through Trust Agreements, under the Securities Act of
1933, as amended, and under the securities laws of any state in
which the Certificates may be offered for sale if the laws of
such state require such action, (ii) the qualification of the
Pass Through Trust Agreements under the Trust Indenture Act of
1939, as amended, which qualification will be duly obtained upon
the effectiveness of any Registration Statement (as defined in
the Registration Rights Agreement) pursuant to an order of the
Securities and Exchange Commission, (iii) the registrations and
filings referred to in Section 8(e) and (iv) authorizations,
consents, approvals, actions, notices and filings required to be
14
obtained, taken, given or made the failure of which to obtain,
take, give or make would not be reasonably likely to have a
material adverse effect on the financial condition, properties or
results of operations of the Lessee;
(d) each of this Agreement, the Pass Through Trust
Agreements, the Registration Rights Agreement and each other
Operative Agreement to which the Lessee is a party constitutes,
and each of the Participation Agreement and the Lease, when the
PA Amendment and the Lease Amendment shall have been executed and
delivered by each of the parties thereto, will constitute, the
legal, valid and binding obligations of the Lessee enforceable
against the Lessee in accordance with their respective terms,
except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
the rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in equity,
and except, in the case of the Lease, as limited by applicable
laws which may affect the remedies provided in the Lease, which
laws, however, do not make the remedies provided in the Lease
inadequate for practical realization of the rights and benefits
intended to be afforded thereby;
(e) except for the filing for recording pursuant to
the Aviation Act of the Indenture Amendment and the Lease
Amendment, no further filing or recording of any document
(including any financing statement in respect thereof under
Article 9 of the Uniform Commercial Code of any applicable
jurisdiction) is necessary under the laws of the United States of
America or any State thereof in order to perfect the Owner
Trustee's interest in the Aircraft as against the Lessee and any
third parties, or to perfect the security interest in favor of
the Loan Trustee in the Owner Trustee's interest in the Aircraft
or the Lease (with respect to such portion of the Aircraft as is
covered by the recording system established by the FAA pursuant
to 49 U.S.C. Section 44107) in any applicable jurisdiction in the
United States and in the Lease in any applicable jurisdiction in
the United States other than the Loan Trustee taking possession
of the original counterparts of the Lease and the Lease Amendment
(to the extent the Lease and the Lease Amendment constitute
chattel paper) and the filing of continuation statements with
respect to the Uniform Commercial Code financing statements in
effect on the date hereof covering the security interests created
by the Original Indenture or describing the Original Lease as a
lease;
(f) neither the Lessee nor any of its affiliates has
directly or indirectly offered the Equipment Notes or the Pass
Through Certificates for sale to any Person other than in a
manner permitted by the Securities Act of 1933, as amended, and
by the rules and regulations thereunder;
15
(g) the Lessee is not an "investment company" within
the meaning of the Investment Company Act of 1940, as amended;
(h) no event has occurred and is continuing which
constitutes an Indenture Event of Default or would constitute an
Indenture Event of Default but for the requirement that notice be
given or time lapse or both;
(i) no event has occurred and is continuing which
constitutes an Event of Loss or would constitute an Event of Loss
with the lapse of time;
(j) the Aircraft has been duly certified by the FAA as
to type and airworthiness in accordance with the terms of the
Original Lease and has a current, valid certificate of
airworthiness;
(k) the FAA Bill of Sale, the Original Lease, and the
Original Indenture have been duly recorded, and the Trust
Agreement has been duly filed, with the FAA pursuant to the
Aviation Act;
(l) the Aircraft has been registered with the FAA in
the name of the Owner Trustee and the Lessee has authority to
operate the Aircraft; and
(m) there has been no material adverse change in the
financial condition of the Lessee since March 31, 1996.
SECTION 9. Representations, Warranties and Covenants.
Each of the parties below represents, warrants and covenants to
each of the other parties to this Agreement as follows:
(a) The Loan Trustee represents, warrants and
covenants that:
(1) the Loan Trustee is duly incorporated,
validly existing and in good standing under the laws of the
State of Delaware, is a "citizen of the United States" as
defined in 49 U.S.C. Section 40102 and will resign as Loan
Trustee promptly after it obtains actual knowledge that it
has ceased to be such a citizen, and has the full corporate
power, authority and legal right under the laws of the
State of Delaware and the United States pertaining to its
banking, trust and fiduciary powers to execute and deliver
each of this Agreement, the PA Amendment, the Indenture
Amendment and each other Operative Agreement to which it is
a party and to carry out its obligations under this
Agreement, the Participation Agreement, the Indenture and
each other Operative Agreement to which it is a party;
16
(2) the execution and delivery by the Loan
Trustee of this Agreement, the Indenture Amendment, the PA
Amendment and each other Operative Agreement to which it is
a party and the performance by the Loan Trustee of its
obligations under this Agreement, the Participation
Agreement, the Indenture and each other Operative Agreement
to which it is a party have been duly authorized by the
Loan Trustee and will not violate its articles of
association or by-laws or the provisions of any indenture,
mortgage, contract or other agreement to which it is a
party or by which it is bound; and
(3) this Agreement constitutes, and the
Participation Agreement, when the PA Amendment has been
executed and delivered by the Loan Trustee, and the
Indenture, when the Indenture Amendment has been executed
and delivered by the Loan Trustee, will constitute, the
legal, valid and binding obligations of the Loan Trustee
enforceable against it in accordance with their respective
terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in
a proceeding at law or in equity.
(b) The Owner Trustee, in its individual capacity
(except as provided in clauses (3), (4), (8) and (9) below) and
(but only as provided in clauses (3), (4) and, to the extent that
it relates to the Owner Trustee, clauses (8), (10) and (12)
below) as Owner Trustee, represents and warrants that:
(1) the Owner Trustee, in its individual
capacity, is a national banking association duly organized
and validly existing in good standing under the laws of the
United States holding a valid certificate to do business as
a national banking association, has full corporate power
and authority to carry on its business as now conducted,
has, or had on the respective dates of execution thereof,
the corporate power and authority to execute and deliver
the Trust Agreement, has the corporate power and authority
to carry out the terms of the Trust Agreement, and has, or
had on the respective dates of execution thereof (assuming
the authorization, execution and delivery of the Trust
Agreement by the Owner Participant), as Owner Trustee, and
to the extent expressly provided herein or therein, in its
individual capacity, the corporate power and authority to
execute and deliver and to carry out the terms of this
Agreement, the Original Indenture, the Indenture Amendment,
the Refunding Notes, the Lease Amendment, the PA Amendment
and each other Operative Agreement (other than the Trust
Agreement) to which it is a party;
17
(2) the Owner Trustee in its trust capacity and,
to the extent expressly provided therein, in its individual
capacity, has duly authorized, executed and delivered the
Trust Agreement and (assuming the due authorization,
execution and delivery of the Trust Agreement by the Owner
Participant) each of this Agreement, the Original
Participation Agreement, the Trust Agreement, the Original
Indenture, the Original Lease, the Trust Agreement and each
other Operative Agreement to which it is a party,
constitutes a legal, valid and binding obligation of the
Owner Trustee, in its individual capacity, enforceable
against it in its individual capacity or as Owner Trustee,
as the case may be, in accordance with its terms, except as
the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at
law or in equity;
(3) assuming the due authorization, execution and
delivery of the Trust Agreement by the Owner Participant,
each of this Agreement, the Original Participation
Agreement, the Original Indenture, the Original Lease and
each other Operative Agreement to which it is party
constitutes, and each of the Participation Agreement, when
the PA Amendment shall have been entered into, the
Indenture, when the Indenture Amendment shall have been
entered into, and the Lease, when the Lease Amendment shall
have been entered into, will constitute, the legal, valid
and binding obligation of the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may
be, enforceable against it in its individual capacity or as
Owner Trustee, as the case may be, in accordance with its
terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in
a proceeding at law or in equity;
(4) assuming the due authorization, execution and
delivery of the Trust Agreement by the Owner Participant,
the Owner Trustee has duly authorized, and on the Refunding
Date shall have duly issued, executed and delivered to the
Loan Trustee for authentication, the Refunding Notes
pursuant to the terms and provisions hereof and of the
Indenture, and each Refunding Note on the Refunding Date
will constitute the valid and binding obligation of the
Owner Trustee and will be entitled to the benefits and
security afforded by the Indenture in accordance with the
terms of such Refunding Note and the Indenture;
(5) neither the execution and delivery by the
18
Owner Trustee, in its individual capacity or as Owner
Trustee, as the case may be, of this Agreement, the
Original Participation Agreement, the PA Amendment, the
Trust Agreement, the Original Indenture, the Indenture
Amendment, the Original Lease, the Lease Amendment or the
Refunding Notes, nor the consummation by the Owner Trustee,
in its individual capacity or as Owner Trustee, as the case
may be, of any of the transactions contemplated hereby or
thereby, nor the compliance by the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may
be, with any of the terms and provisions hereof and
thereof, (A) requires or will require any approval of its
stockholders, or approval or consent of any trustees or
holders of any indebtedness or obligations of it, or (B)
violates or will violate its articles of association or
by-laws, or contravenes or will contravene any provision
of, or constitutes or will constitute a default under, or
results or will result in any breach of, or results or will
result in the creation of any Lien (other than as permitted
under the Lease) upon its property under, any indenture,
mortgage, chattel mortgage, deed of trust, conditional sale
contract, bank loan or credit agreement, license or other
agreement or instrument to which it is a party or by which
it is bound, or contravenes or will contravene any law,
governmental rule or regulation of the United States of
America or the State of Utah governing the trust powers of
the Owner Trustee, or any judgment or order applicable to
or binding on it;
(6) no consent, approval, order or authorization
of, giving of notice to, or registration with, or taking of
any other action in respect of, any Utah state or local
governmental authority or agency or any United States
federal governmental authority or agency regulating the
trust powers of the Owner Trustee in its individual
capacity is required for the execution and delivery of, or
the carrying out by, the Owner Trustee, in its individual
capacity or as Owner Trustee, as the case may be, of any of
the transactions contemplated hereby or by the Trust
Agreement, the Participation Agreement, the Indenture, the
Lease or the Refunding Notes, other than any such consent,
approval, order, authorization, registration, notice or
action as has been duly obtained, given or taken or which
is described in Section 8(h);
(7) there exists no Lessor Lien attributable to
the Owner Trustee, in its individual capacity, other than
any Lessor Liens (A) the existence of which poses no
material risk of the sale, forfeiture or loss of the
Aircraft, Airframe or any Engine or any interest therein,
(B) the existence of which does not interfere in any way
with the use or operation of the Aircraft by the Lessee (or
any Permitted Sublessee), (C) the existence of which does
19
not affect the priority or perfection of, or otherwise
jeopardize, the Lien of the Indenture, (D) which the Owner
Trustee is diligently contesting by appropriate
proceedings, (E) the existence of which does not result in
actual interruption in the receipt and distribution by the
Loan Trustee in accordance with the Indenture of Rent
assigned to the Loan Trustee for the benefit of the Note
Holders, and (F) any property subject to which is not then
required to be conveyed to any other Person pursuant to
Section 4.6 of the Lease;
(8) there exists no Lessor Lien attributable to
the Owner Trustee, as lessor under the Lease, other than
any Lessor Liens (A) the existence of which poses no
material risk of the sale, forfeiture or loss of the
Aircraft, Airframe or any Engine or any interest therein,
(B) the existence of which does not interfere in any way
with the use or operation of the Aircraft by the Lessee (or
any Permitted Sublessee), (C) the existence of which does
not affect the priority or perfection of, or otherwise
jeopardize, the Lien of the Indenture, (D) which the Owner
Trustee is diligently contesting by appropriate
proceedings, (E) the existence of which does not result in
actual interruption in the receipt and distribution by the
Loan Trustee in accordance with the Indenture of Rent
assigned to the Loan Trustee for the benefit of the Note
Holders, and (F) any property subject to which is not then
required to be conveyed to any other Person pursuant to
Section 4.6 of the Lease;
(9) there are no Taxes payable by the Owner
Trustee, either in its individual capacity or as Owner
Trustee, imposed by the State of Utah or any political
subdivision thereof in connection with the redemption of
the Initial Notes or the issuance of the Refunding Notes,
and in its individual capacity or as Owner Trustee, as the
case may be, of any of the instruments referred to in
clauses (1), (2), (4) and (5) above, that, in each case,
would not have been imposed if the Trust Estate had not
been created pursuant to the laws of the State of Utah and
First Security Bank of Utah, National Association, had not
(a) had its principal place of business in, (b) performed
(in its individual capacity or as Owner Trustee) any or all
of its duties under the Operative Agreements in, and (c)
engaged in any activities unrelated to the transactions
contemplated by the Operative Agreements in, the State of
Utah;
(10) there are no pending or, to its knowledge,
threatened actions or proceedings against the Owner
Trustee, either in its individual capacity or as Owner
Trustee, before any court or administrative agency which,
if determined adversely to it, would materially adversely
20
affect the ability of the Owner Trustee, in its individual
capacity or as Owner Trustee, as the case may be, to
perform its obligations under any of the instruments
referred to in clauses (1), (2), (4) and (5) above;
(11) both its chief executive office, and the
place where its records concerning the Aircraft and all its
interests in, to and under all documents relating to the
Trust Estate, are located in Salt Lake City, Utah, and the
Owner Trustee, in its individual capacity, agrees to give
the Lessee, the Owner Participant, the Loan Trustee and the
Pass Through Trustee at least 30 days' prior written notice
of any relocation of said chief executive office or said
place from its present location;
(12) the Owner Trustee has not, in its individual
capacity or as Owner Trustee, directly or indirectly
offered any Refunding Note or Certificate or any interest
in or to the Trust Estate, the Trust Agreement or any
similar interest for sale to, or solicited any offer to
acquire any of the same from, anyone other than the Pass
Through Trustee, the Loan Participant and the Owner
Participant; and the Owner Trustee has not authorized
anyone to act on its behalf (it being understood that in
arranging and proposing the refinancing contemplated hereby
and agreed to herein by the Owner Trustee, the Lessee has
not acted as agent of the Owner Trustee) to offer directly
or indirectly any Refunding Note, any Certificate or any
interest in and to the Trust Estate, the Trust Agreement or
any similar interest for sale to, or to solicit any offer
to acquire any of the same from, any person; and
(13) it is a "citizen of the United States" as
defined in 49 U.S.C. Section 40102 (without making use of a
voting trust agreement or voting powers agreement).
(c) The Owner Participant represents and warrants
that:
(1) it is duly incorporated, validly existing and
in good standing under the laws of the State of Delaware
and has the corporate power and authority to carry on its
present business and operations and to own or lease its
properties, has, or had on the respective dates of
execution thereof or assumption of rights and obligations
thereunder, as the case may be, the corporate power and
authority to enter into and to perform its obligations
under this Agreement, the Original Participation Agreement,
the Trust Agreement and the PA Amendment; and this
Agreement has been duly authorized, executed and delivered
by it and the execution and delivery of the PA Amendment has
has been duly authorized by it; and each of this Agreement,
21
the Original Participation Agreement and the Trust Agreement
constitutes, and the Participation Agreement when the PA
Amendment shall have been entered into, will constitute,
the legal, valid and binding obligations of the Owner
Participant enforceable against it in accordance with their
respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of
creditors generally and by general principles of equity,
whether considered in a proceeding at law or in equity;
(2) neither (A) the execution and delivery by the
Owner Participant of this Agreement, the PA Amendment or
any other Operative Agreement to which it is a party nor
(B) compliance by it with all of the provisions thereof,
(x) will contravene any law or order of any court or
governmental authority or agency applicable to or binding
on the Owner Participant (it being understood that no
representation or warranty is made with respect to laws,
rules or regulations relating to aviation or to the nature
of the equipment owned by the Owner Trustee other than such
laws, rules or regulations relating to the citizenship
requirements of the Owner Participant under applicable
law), or (y) will contravene the provisions of, or
constitutes or has constituted or will constitute a default
under, its certificate of incorporation or by-laws or any
indenture, mortgage, contract or other agreement or
instrument to which the Owner Participant is a party or by
which it or any of its property may be bound or affected;
(3) no authorization or approval or other action
by, and no notice to or filing with, any governmental
authority or regulatory body (other than as required by the
Aviation Act or the regulations promulgated thereunder and
except for routine filings which have been or will be made)
is or was required, as the case may be, for the due
execution, delivery or performance by it of this Agreement
and the PA Amendment;
(4) there are no pending or, to its knowledge,
threatened actions or proceedings before any court or
administrative agency or arbitrator which would materially
adversely affect the Owner Participant's ability to perform
its obligations under this Agreement, the Participation
Agreement and the Trust Agreement;
(5) neither the Owner Participant nor anyone
authorized by it to act on its behalf (it being understood
that in proposing, facilitating and otherwise taking any
action in connection with the refinancing contemplated
hereby and agreed to herein by the Owner Participant,
neither the Lessee nor any other party hereto has acted as
22
agent of the Owner Participant) has directly or indirectly
offered any Refunding Note or Pass Through Certificate or
any interest in and to the Trust Estate, the Trust
Agreement or any similar interest for sale to, or solicited
any offer to acquire any of the same from, any Person
except in compliance with the Securities Act of 1933, as
amended; the Owner Participant's interest in the Trust
Estate and the Trust Agreement was acquired for its own
account and was purchased for investment and not with a
view to any resale or distribution thereof;
(6) on the Refunding Date, the Trust Estate shall
be free of Lessor Liens attributable to the Owner
Participant other than any Lessor Liens (A) the existence
of which poses no material risk of the sale, forfeiture or
loss of the Aircraft, Airframe or any Engine or any
interest therein, (B) the existence of which does not
interfere in any way with the use or operation of the
Aircraft by the Lessee (or any Permitted Sublessee), (C)
the existence of which does not affect the priority or
perfection of, or otherwise jeopardize, the Lien of the
Indenture, (D) which the Owner Participant is diligently
contesting by appropriate proceedings, (E) the existence of
which does not result in actual interruption in the receipt
and distribution by the Loan Trustee in accordance with the
Indenture of Rent assigned to the Loan Trustee for the
benefit of the Note Holders, and (F) any property subject
to which is not then required to be conveyed to any other
Person pursuant to Section 4.6 of the Lease; and
(7) it is a "citizen of the United States" as
defined in 49 U.S.C. Section 40102 (without making use of a
voting trust agreement or a voting powers agreement).
(d) The Pass Through Trustee represents, warrants and
covenants that:
(1) the Pass Through Trustee is duly
incorporated, validly existing and in good standing under
the laws of the State of Delaware, and has the full
corporate power, authority and legal right under the laws
of the State of Delaware and the United States pertaining
to its banking, trust and fiduciary powers to execute and
deliver each of the Pass Through Trust Agreements, the
Registration Rights Agreement, the Intercreditor Agreement,
the PA Amendment and this Agreement and to perform its
obligations under this Agreement, the Pass Through Trust
Agreements, the Registration Rights Agreement, the
Intercreditor Agreement, the PA Amendment and the
Participation Agreement;
(2) each of the Pass Through Trust Agreements,
23
the Registration Rights Agreement, the Intercreditor
Agreement, the PA Amendment and this Agreement has been
duly authorized, executed and delivered by the Pass Through
Trustee; this Agreement and each of the Pass Through Trust
Agreements, the Registration Rights Agreement, the
Intercreditor Agreement and the Participation Agreement
constitute the legal, valid and binding obligations of the
Pass Through Trustee enforceable against it in accordance
with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in
equity;
(3) none of the execution, delivery and
performance by the Pass Through Trustee of any of the Pass
Through Trust Agreements, the Registration Rights
Agreement, the Intercreditor Agreement, this Agreement or
the Participation Agreement, the purchase by the Pass
Through Trustee of the Refunding Notes pursuant to this
Agreement, or the issuance of the Certificates pursuant to
the Pass Through Trust Agreements, contravenes any law,
rule or regulation of the State of Delaware or any United
States governmental authority or agency regulating the Pass
Through Trustee's banking, trust or fiduciary powers or any
judgment or order applicable to or binding on the Pass
Through Trustee and does not contravene or result in any
breach of, or constitute a default under, the Pass Through
Trustee's articles of association or by-laws or any
agreement or instrument to which the Pass Through Trustee
is a party or by which it or any of its properties may be
bound;
(4) neither the execution and delivery by the
Pass Through Trustee of any of the Pass Through Trust
Agreements, the Registration Rights Agreement, the
Intercreditor Agreement, the PA Amendment or this
Agreement, nor the consummation by the Pass Through Trustee
of any of the transactions contemplated hereby or thereby
or by the Participation Agreement, requires the consent or
approval of, the giving of notice to, the registration
with, or the taking of any other action with respect to,
any Delaware governmental authority or agency or any
federal governmental authority or agency regulating the
Pass Through Trustee's banking, trust or fiduciary powers;
(5) there are no Taxes payable by the Pass
Through Trustee imposed by the State of Delaware or any
political subdivision or taxing authority thereof in
connection with the execution, delivery and performance by
the Pass Through Trustee of this Agreement, any of the Pass
Through Trust Agreements, the Registration Rights Agreement,
24
the Intercreditor Agreement or the PA Amendment (other than
franchise or other taxes based on or measured by any fees
or compensation received by the Pass Through Trustee for
services rendered in connection with the transactions
contemplated by any of the Pass Through Trust Agreements),
and there are no Taxes payable by the Pass Through Trustee
imposed by the State of Delaware or any political
subdivision thereof in connection with the acquisition,
possession or ownership by the Pass Through Trustee of any
of the Refunding Notes (other than franchise or other taxes
based on or measured by any fees or compensation received
by the Pass Through Trustee for services rendered in
connection with the transactions contemplated by any of the
Pass Through Trust Agreements), and, assuming that the
trusts created by the Pass Through Trust Agreements will
not be taxable as corporations, but, rather, each will be
characterized as a grantor trust under subpart E, Part I of
Subchapter J of the Code, such trusts will not be subject
to any Taxes imposed by the State of Delaware or any
political subdivision thereof;
(6) there are no pending or threatened actions or
proceedings against the Pass Through Trustee before any
court or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Pass Through Trustee to
perform its obligations under this Agreement, the PA
Amendment, the Registration Rights Agreement, the
Intercreditor Agreement or any Pass Through Trust
Agreement;
(7) except for the issue and sale of the
Certificates contemplated hereby, the Pass Through Trustee
has not directly or indirectly offered any Refunding Note
for sale to any Person or solicited any offer to acquire
any Refunding Notes from any Person, nor has the Pass
Through Trustee authorized anyone to act on its behalf to
offer directly or indirectly any Refunding Note for sale to
any Person, or to solicit any offer to acquire any
Refunding Note from any Person; and the Pass Through
Trustee is not in default under any Pass Through Trust
Agreement; and
(8) the Pass Through Trustee is not directly or
indirectly controlling, controlled by or under common
control with the Owner Participant, the Owner Trustee, any
Initial Purchaser or the Lessee.
(e) The Subordination Agent represents, warrants and
covenants that:
(1) the Subordination Agent is duly incorporated,
validly existing and in good standing under the laws of the
State of Delaware, and has the full corporate power,
25
authority and legal right under the laws of the State of
Delaware and the United States pertaining to its banking,
trust and fiduciary powers to execute and deliver each of
the Liquidity Facilities, the Intercreditor Agreement, the
PA Amendment and this Agreement and to perform its
obligations under this Agreement, the Liquidity Facilities,
the Intercreditor Agreement and PA Amendment;
(2) each of the Liquidity Facilities, the
Intercreditor Agreement, PA Amendment and this Agreement
has been duly authorized, executed and delivered by the
Subordination Agent; this Agreement, each of the Liquidity
Facilities, the Intercreditor Agreement, the PA Amendment
and this Agreement constitute the legal, valid and binding
obligations of the Subordination Agent enforceable against
it in accordance with their respective terms, except as the
same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in
equity;
(3) none of the execution, delivery and
performance by the Subordination Agent of each of the
Liquidity Facilities, the Intercreditor Agreement, this
Agreement or the PA Amendment contravenes any law, rule or
regulation of the State of Delaware or any United States
governmental authority or agency regulating the
Subordination Agent's banking, trust or fiduciary powers or
any judgment or order applicable to or binding on the
Subordination Agent and do not contravene or result in any
breach of, or constitute a default under, the Subordination
Agent's articles of association or by-laws or any agreement
or instrument to which the Subordination Agent is a party
or by which it or any of its properties may be bound;
(4) neither the execution and delivery by the
Subordination Agent of any of the Liquidity Facilities, the
Intercreditor Agreement, the PA Amendment or this Agreement
nor the consummation by the Subordination Agent of any of
the transactions contemplated hereby or thereby requires
the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with
respect to, any Delaware governmental authority or agency
or any federal governmental authority or agency regulating
the Subordination Agent's banking, trust or fiduciary
powers;
(5) there are no Taxes payable by the
Subordination Agent imposed by the State of Delaware or any
political subdivision or taxing authority thereof in
connection with the execution, delivery and performance by
the Subordination Agent of this Agreement, any of the
26
Liquidity Facilities, the Intercreditor Agreement, the PA
Amendment or the PA Amendment (other than franchise or
other taxes based on or measured by any fees or
compensation received by the Subordination Agent for
services rendered in connection with the transactions
contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities), and there are no Taxes payable by
the Subordination Agent imposed by the State of Delaware or
any political subdivision thereof in connection with the
acquisition, possession or ownership by the Subordination
Agent of any of the Refunding Notes (other than franchise
or other taxes based on or measured by any fees or
compensation received by the Subordination Agent for
services rendered in connection with the transactions
contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities);
(6) there are no pending or threatened actions or
proceedings against the Subordination Agent before any
court or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Subordination Agent to
perform its obligations under this Agreement, the PA
Amendment, the Intercreditor Agreement or any Liquidity
Facility;
(7) the Subordination Agent has not directly or
indirectly offered any Refunding Note for sale to any
Person or solicited any offer to acquire any Refunding
Notes from any Person, nor has the Subordination Agent
authorized anyone to act on its behalf to offer directly or
indirectly any Refunding Note for sale to any Person, or to
solicit any offer to acquire any Refunding Note from any
Person; and the Subordination Agent is not in default under
any Liquidity Facility; and
(8) the Subordination Agent is not directly or
indirectly controlling, controlled by or under common
control with the Owner Participant, the Owner Trustee, any
Initial Purchaser or the Lessee.
(f) The Loan Participant, in its individual capacity
(except as provided in clause (3) below and (but only as provided
in clause (3) and, to the extent that it relates to the Loan
Participant, clause (7) below) as Loan Participant, represents
and warrants that:
(1) the Loan Participant, in its individual
capacity, is a national banking association duly organized
and validly existing in good standing under the laws of the
United States holding a valid certificate to do business as
a national banking association, has full corporate power and
authority to carry on its business as now conducted, has, or
27
had on the respective dates of execution thereof, the
corporate power and authority to execute and deliver the
Aero Trust Deeds, has the corporate power and authority to
carry out the terms of the Aero Trust Deeds, and has, or
had on the respective dates of execution thereof, as pass
through trustee under the Aero Trust Deeds, and to the
extent expressly provided herein or therein, in its
individual capacity, the corporate power and authority to
execute and deliver and to carry out the terms of this
Agreement and each other Operative Agreement (as defined in
the Original Participation Agreement) to which it is a
party;
(2) the Loan Participant as pass through trustee
under the Aero Trust Deeds, and, to the extent expressly
provided therein, in its individual capacity, has duly
authorized, executed and delivered the Aero Trust Deeds and
each of this Agreement, the Original Participation
Agreement, the Aero Trust Deeds, and each other Operative
Agreement to which it is a party, constitutes a legal,
valid and binding obligation of the Loan Participant, in
its individual capacity, enforceable against it in its
individual capacity or as pass through trustee under the
Aero Trust Deeds, as the case may be, in accordance with
its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in
a proceeding at law or in equity;
(3) neither the execution and delivery by the
Loan Participant, in its individual capacity or as pass
through trustee under the Aero Trust Deeds, as the case may
be, of this Agreement or the Original Participation
Agreement, nor the consummation by the Loan Participant, in
its individual capacity or as pass through trustee under
the Aero Trust Deeds, as the case may be, of any of the
transactions contemplated hereby or thereby, nor the
compliance by the Loan Participant, in its individual
capacity or as pass through trustee under the Aero Trust
Deeds, as the case may be, with any of the terms and
provisions hereof and thereof, (A) requires or will require
any approval of its stockholders, or approval or consent of
any trustees or holders of any indebtedness or obligations
of it, or (B) violates or will violate its articles of
association or by-laws, or contravenes or will contravene
any provision of, or constitutes or will constitute a
default under, or results or will result in any breach of,
or results or will result in the creation of any Lien (other
than as permitted under the Lease) upon its property under,
any indenture, mortgage, chattel mortgage, deed of trust,
conditional sale contract, bank loan or credit agreement,
28
license or other agreement or instrument to which it is a
party or by which it is bound, or contravenes or will
contravene any law, governmental rule or regulation of the
United States of America or the State of Connecticut
governing the trust powers of the Loan Participant, or any
judgment or order applicable to or binding on it;
(4) no consent, approval, order or authorization
of, giving of notice to, or registration with, or taking of
any other action in respect of, any Connecticut state or
local governmental authority or agency or any United States
federal governmental authority or agency regulating the
trust powers of the Loan Participant in its individual
capacity is required for the execution and delivery of, or
the carrying out by, the Loan Participant, in its
individual capacity or as pass through trustee, as the case
may be, of any of the transactions contemplated hereby, by
the Aero Trust Deeds or by the Original Participation
Agreement, other than any such consent, approval, order,
authorization, registration, notice or action as has been
duly obtained, given or taken;
(5) there exists no Lessor Lien attributable to
the Loan Participant, in its individual capacity, other
than any Lessor Liens (A) the existence of which poses no
material risk of the sale, forfeiture or loss of the
Aircraft, Airframe or any Engine or any interest therein,
(B) the existence of which does not interfere in any way
with the use or operation of the Aircraft by the Lessee (or
any Permitted Sublessee), (C) the existence of which does
not affect the priority or perfection of, or otherwise
jeopardize, the Lien of the Indenture, (D) which the Loan
Participant is diligently contesting by appropriate
proceedings and (E) the existence of which does not result
in actual interruption in the receipt and distribution by
the Loan Trustee in accordance with the Indenture of Rent
assigned to the Loan Trustee for the benefit of the Note
Holders;
(6) there are no pending or, to its knowledge,
threatened actions or proceedings against the Loan
Participant, either in its individual capacity or as pass
through trustee under the Aero Trust Deeds, before any
court or administrative agency which, if determined
adversely to it, would materially adversely affect the
ability of the Loan Participant, in its individual capacity
or as trustee under the Aero Trust Deeds, as the case may
be, to perform its obligations under any of the instruments
referred to in clauses (1), (2) and (3) above;
(8) it is as of the date hereof, and will be as
of the Refunding Date, the owner of all of the outstanding
29
Loan Certificates, free and clear of Liens attributable to
it; and
(g) The Guarantor represents and warrants that:
(1) it is duly incorporated, validly existing and
in good standing under the laws of England and has the
corporate power and authority to carry on its present
business and operations and to own or lease its properties,
has, or had on the respective dates of execution thereof,
the corporate power and authority to enter into and to
perform its obligations under this Agreement and the
Original Participation Agreement); and this Agreement has
been duly authorized, executed and delivered by it; and
each of this Agreement, the Guaranty and the Original
Participation Agreement constitutes, the legal, valid and
binding obligations of the Guarantor enforceable against it
in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting
the rights of creditors generally and by general principles
of equity, whether considered in a proceeding at law or in
equity;
(2) neither (A) the execution and delivery by the
Guarantor of this Agreement nor (B) compliance by it with
all of the provisions thereof, (x) will contravene any law
or order of any court or governmental authority or agency
applicable to or binding on the Guarantor, or (y) will
contravene the provisions of, or constitutes or has
constituted or will constitute a default under, its
Articles of Associations or any indenture, mortgage,
contract or other agreement or instrument to which the
Guarantor is a party or by which it or any of its property
may be bound or affected;
(3) no authorization or approval or other action
by, and no notice to or filing with, any governmental
authority or regulatory body (other than as required by the
Aviation Act or the regulations promulgated thereunder and
except for routine insurance regulatory filings which have
been or will be made) is or was required, as the case may
be, for the due execution, delivery or performance by it of
this Agreement;
(4) there are no pending or, to its knowledge,
threatened actions or proceedings before any court or
administrative agency or arbitrator which would materially
adversely affect the Guarantor's ability to perform its
obligations under this Agreement or the Original
Participation Agreement;
30
(5) neither the Guarantor nor anyone authorized
by it to act on its behalf (it being understood that in
proposing, facilitating and otherwise taking any action in
connection with the refinancing contemplated hereby and
agreed to herein by the Guarantor, the Lessee has not acted
as agent of the Guarantor) has directly or indirectly
offered any Refunding Note or Certificate or any interest
in and to the Trust Estate, the Trust Agreement or any
similar interest for sale to, or solicited any offer to
acquire any of the same from, any Person; and
(6) no Guaranty Event (as defined in the
Guaranty), or event with which notice or the lapse of time
would constitute a Guaranty Event, shall have occurred or
be continuing.
(h) The Aero Trust Certificateholder hereby represents
and warrants that:
(1) as of the Refunding Date, it is the owner of
all the outstanding Aero Trust Certificates, free and clear
of Liens attributable to it; and
(2) this Agreement has been duly authorized,
executed and delivered by the Aero Trust Certificateholder
and constitutes the legal, valid and binding obligation of
the Aero Trust Certificateholder, enforceable against the
Aero Trust Certificateholder in accordance with its terms,
except as the same may be limited by applicable bankruptcy,
insolvency, moratorium or similar laws affecting the rights
of creditors generally and by general principles of equity
whether considered in a proceeding at law or in equity.
SECTION 10. Notices. Unless otherwise specifically
provided herein, all notices required or permitted by the terms
of this Agreement shall be in English and in writing, and any
such notice shall become effective upon being deposited in the
United States mail, with proper postage for first-class
registered or certified mail prepaid, or when delivered
personally or, if promptly confirmed by mail as provided above,
when dispatched by telegram, telex, facsimile or other written
telecommunication, addressed, if to the Lessee, the Owner
Participant, the Owner Trustee, the Pass Through Trustee, the
Subordination Agent, the Loan Participant or the Loan Trustee, at
their respective addresses or facsimile numbers set forth below
the signatures of such parties at the foot of this Agreement.
SECTION 11. Expenses. All of the reasonable
out-of-pocket costs, fees and expenses incurred by the Owner
Trustee, the Owner Participant, the Pass Through Trustee, the
Subordination Agent and the Loan Trustee in connection with the
transactions contemplated by this Agreement, the other Operative
31
Agreements, the Pass Through Trust Agreements, the Registration
Rights Agreement, the Intercreditor Agreement, the Liquidity
Facilities and the Purchase Agreement (except, in each case, as
otherwise provided therein) shall be paid promptly by the Lessee,
including, without limitation, the reasonable fees, expenses and
disbursements allocable to the Refunding Notes issued under the
Indenture of (A) Richards, Layton & Finger, special counsel for
the Pass Through Trustee and the Loan Trustee, (B) Ray, Quinney &
Nebeker, special counsel for the Owner Trustee, (C) Lytle, Soule
& Curlee, special counsel in Oklahoma City, Oklahoma, (D)
Shearman & Sterling, special counsel for the Initial Purchasers,
in an amount separately agreed, (E) Perkins Coie, special counsel
to the Owner Participant and (F) Shipman & Goodwin, special
counsel to the Loan Participant.
Notwithstanding the foregoing, (i) the Lessee shall
pay, in amounts separately agreed, the fees, expenses and
disbursements of Cleary, Gottlieb, Steen & Hamilton and Hughes
Hubbard & Reed LLP, special counsel for the Lessee and (ii) the
Guarantor shall pay the fees, expenses and disbursements of
counsel retained by Guarantor and all other out-of-pocket costs,
fees and expenses incurred by Guarantor in connection with the
transactions contemplated hereby.
SECTION 12. Miscellaneous. (a) Provided that the
transactions contemplated hereby have been consummated, and
except as otherwise provided for herein, the representations,
warranties and agreements herein of the Lessee, the Owner
Trustee, the Loan Trustee, the Owner Participant, the Loan
Participant, the Guarantor, the Subordination Agent and the Pass
Through Trustee, and the Lessee's, the Owner Trustee's, the Loan
Trustee's, the Owner Participant's, the Subordination Agent's and
the Pass Through Trustee's obligations under any and all thereof,
shall survive the expiration or other termination of this
Agreement and the other agreements referred to herein.
(b) This Agreement may be executed in any number of
counterparts (and each of the parties hereto shall not be
required to execute the same counterpart). Each counterpart of
this Agreement, including a signature page executed by each of
the parties hereto, shall be an original counterpart of this
Agreement, but all of such counterparts together shall constitute
one instrument. Neither this Agreement nor any of the terms
hereof may be terminated, amended, supplemented, waived or
modified orally, but only by an instrument in writing signed by
the party against which the enforcement of the termination,
amendment, supplement, waiver or modification is sought; and no
such termination, amendment, supplement, waiver or modification
shall be effective unless a signed copy thereof shall have been
delivered to the Loan Trustee. The index preceding this Agreement
and the headings of the various Sections of this Agreement
are for convenience of reference only and shall not modify,
32
define, expand or limit any of the terms or provisions hereof.
The terms of this Agreement shall be binding upon, and
shall inure to the benefit of, the Lessee and, subject to the
terms of the Participation Agreement, its successors and
permitted assigns, the Loan Participant, the Guarantor, Aero
Trust Certificateholder, the Pass Through Trustee and its
successors as Pass Through Trustee (and any additional trustee
appointed) under any of the Pass Through Trust Agreements, the
Loan Trustee and its successors as Loan Trustee (and any
additional Loan Trustee appointed) under the Indenture, the
Subordination Agent and its successors as Subordination Agent
under the Intercreditor Agreement, the Owner Trustee and its
successors as Owner Trustee under the Trust Agreement, and the
Owner Participant, and, subject to the provisions of the
Participation Agreement, its successors and permitted assigns. No
purchaser or holder of any Refunding Notes shall be deemed to be
a successor or assign of the Loan Participant.
SECTION 13. Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
33
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective officers
thereunto duly authorized as of the day and year first above
written.
CONTINENTAL AIRLINES, INC.,
as Lessee
By_________________________________
Name:
Title:
Address: 2929 Allen Parkway
Suite 2010
Houston, TX 77019
Attention: Senior Vice
President and Chief
Financial Officer
Facsimile: (713) 520-6329
GAUCHO-2 INC.,
as Owner Participant
By_________________________________
Name:
Title:
Address: P.O. Box 3707
Seattle, WA 98124-3707
Attention: Treasurer
Facsimile: (206) 237-8746
34
WILMINGTON TRUST COMPANY, not in
its individual capacity, except
as otherwise provided herein,
but solely as Loan Trustee,
Pass Through Trustee and
Subordination Agent
By_________________________________
Name:
Title:
Address: One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust
Administration
Facsimile: (302) 651-8882
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual capacity,
except as otherwise provided
herein, but solely as Owner
Trustee
By_________________________________
Name:
Title:
Address: 79 South Main Street
Salt Lake City, UT 84111
Attention: Corporate Trust
Department
Facsimile: (801) 246-5053
35
ROLLS-ROYCE PLC
as Guarantor
By_________________________________
Name:
Title:
Address: 65 Buckingham Gate
London SWIE 6AT, England
Attention: Company
Secretary
Facsimile: 011-44-71-233-1733
FLEET NATIONAL BANK, formerly named
SHAWMUT BANK CONNECTICUT, NATIONAL
ASSOCIATION
as Original Pass Through Trustee
and Loan Participant and in its
individual capacity as provided
for herein
By_________________________________
Name:
Title:
Address: 777 Main Street
11th Floor
Hartford, Connecticut 06115
Attention: Corporate Trust
Administration CTMO/0238
(Continental/Rolls-Royce
Aeroengine Trusts 1995-D)
Facsimile: (860) 986-7920
36
MORGAN STANLEY & CO. INCORPORATED
By_________________________________
Name:
Title:
Address: 1585 Broadway
New York, NY 10036
Facsimile: (212) 761-0786
37
SCHEDULE I to
Refunding Agreement
PASS THROUGH TRUST AGREEMENTS
1. Continental Airlines 1996-2A Pass Through Trust Agreement.
2. Continental Airlines 1996-2B Pass Through Trust Agreement.
3. Continental Airlines 1996-2C Pass Through Trust Agreement.
4. Continental Airlines 1996-2D Pass Through Trust Agreement.
SCHEDULE II to
Refunding Agreement 114
-----------------------
REFUNDING NOTES, PURCHASERS AND PURCHASE PRICE
Continental
Airlines
Pass
Through Principal
Trust Interest Rate and Maturity Amount
- ----------- ---------------------------------- -----------
1996-2A 7.75% Refunding Notes due 7/2/2014 $18,077,500
1996-2B 8.56% Refunding Notes due 7/2/2014 $7,747,500
1996-2C 10.22% Refunding Notes due 7/2/2014 $7,747,500
1996-2D 11.50% Refunding Notes due 4/2/2008 $4,080,350
CONFIDENTIAL: Subject to Restrictions on Dissemination
Set Forth in Section 18 of this Agreement
--------------------------------------------------------------
AMENDED AND RESTATED PARTICIPATION AGREEMENT 114
Dated as of July 1, 1995
Among
CONTINENTAL AIRLINES, INC.,
Lessee,
GAUCHO-2 INC.,
Owner Participant,
Wilmington Trust Company,
Not in its Individual Capacity,
but solely as Subordination Agent
under the Intercreditor Agreement,
Loan Participant,
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
Not in its Individual Capacity,
except as expressly provided herein,
but solely as Owner Trustee,
Owner Trustee
and
WILMINGTON TRUST COMPANY,
Not in its Individual Capacity,
except as expressly provided herein,
but solely as Loan Trustee,
Loan Trustee
--------------------------
One Boeing Model 757-224 Aircraft
Bearing Manufacturer's Serial No. 27556
--------------------------------------------------------------
CONTENTS
SECTION 1. DEFINITIONS AND CONSTRUCTION 2
SECTION 2. [INTENTIONALLY OMITTED] 2
SECTION 3. [INTENTIONALLY OMITTED] 2
SECTION 4. COMMITMENT TO LEASE AIRCRAFT 2
SECTION 5. [INTENTIONALLY OMITTED] 3
SECTION 6. [INTENTIONALLY OMITTED] 3
SECTION 7. REPRESENTATIONS AND WARRANTIES 3
7.1 Lessee's Representations and Warranties 3
7.2 Owner Participant's Representations and
Warranties 7
7.3 First Security's Representations and
Warranties 10
7.4 Loan Participant's Representations and
Warranties 13
7.5 [Intentionally Omitted] 14
7.6 WTC's Representations and Warranties 14
SECTION 8. COVENANTS, UNDERTAKINGS AND AGREEMENTS 16
8.1 Covenants of Lessee 16
8.2 Covenants of Owner Participant 18
8.3 Covenants of First Security and Owner
Trustee 20
8.4 Covenants of WTC and Loan Trustee 22
8.5 Covenants of Certificate Holders 23
8.6 [INTENTIONALLY OMITTED] 26
8.7 Agreements 26
SECTION 9. [INTENTIONALLY OMITTED] 36
SECTION 10. INDEMNIFICATION AND EXPENSES 36
10.1 General Indemnity 36
10.2 Expenses 45
10.3 General Tax Indemnity 45
10.4 [INTENTIONALLY OMITTED] 56
i
10.5 Payments 56
10.6 Interest 56
10.7 Benefit of Indemnities 57
SECTION 11. [INTENTIONALLY OMITTED] 57
SECTION 12. ASSIGNMENT OR TRANSFER OF INTERESTS 57
12.1 Participants, Owner Trustee and
Certificate Holders 57
12.2 Effect of Transfer 60
12.3 Majority in Interest of Certificate
Holders 60
SECTION 13. REFUNDING AND CERTAIN OTHER MATTERS 60
13.1 Refunding Generally 60
13.2 Private Offering 62
13.3 Timing; Refunding Limit; Notice 62
13.4 Limitations on Obligation to Refund 63
13.5 All Loan Certificates 63
13.6 Execution of Certain Documents 63
13.7 ERISA 64
13.8 Consent to Optional Redemptions 64
13.9 [INTENTIONALLY OMITTED] 64
SECTION 14. LEASE FOR ALL PURPOSES; SECTION 1110 64
SECTION 15. OWNER PARTICIPANT'S RIGHT TO RESTRUCTURE 65
15.1 General Right to Restructure 65
15.2 Limitations on Restructuring Provisions;
Additional Terms 65
15.3 Transaction Expenses 66
SECTION 16. CHANGE OF CITIZENSHIP 67
16.1 Generally 67
16.2 Owner Participant 67
16.3 Owner Trustee 68
16.4 Loan Trustee 68
SECTION 17. CONCERNING OWNER TRUSTEE 68
SECTION 18. CONFIDENTIALITY 68
SECTION 19. MISCELLANEOUS 69
19.1 Amendments 69
19.2 Severability 69
19.3 Survival 70
ii
19.4 Reproduction of Documents 70
19.5 Counterparts 70
19.6 No Waiver 70
19.7 Notices 71
19.8 GOVERNING LAW; SUBMISSION TO JURISDICTION;
VENUE 71
19.9 Third-Party Beneficiary 73
19.10 Entire Agreement 74
19.11 Further Assurances 74
SECTION 20. ERISA 74
20.1 Generally 74
20.2 Owner Participant 75
20.3 Certificate Holders 75
20.4 [Intentionally Omitted] 75
20.5 Owner Trustee 75
20.6 Loan Trustee 75
20.7 ERISA--Pass Through Trustee 75
20.8 Certain Agreements 76
iii
SECTION 21. REFINANCING TRANSACTION 76
ANNEX, SCHEDULES AND EXHIBITS
ANNEX A - Definitions
SCHEDULE 1 - Accounts; Addresses
SCHEDULE 2 - Lessee's Address for Service of
Process
SCHEDULE 3 - Commitments
SCHEDULE 4 - Certain Terms
SCHEDULE 5 - [Intentionally Omitted)
EXHIBIT A - Opinion of special counsel to Lessee
EXHIBIT B - Opinion of corporate counsel to
Lessee
EXHIBIT C - Opinion of corporate counsel to
Airframe Manufacturer
EXHIBIT D - [Intentionally Omitted]
EXHIBIT E - Opinion of special counsel to Owner
Trustee
EXHIBIT F - Opinion of special counsel to Loan
Trustee
EXHIBIT G - Opinion of special counsel to Owner
Participant and Owner Participant
Parent
EXHIBIT H - Opinion of corporate counsel to
Owner Participant and Owner
Participant Parent
EXHIBIT I - [Intentionally Omitted]
EXHIBIT J - [Intentionally Omitted]
EXHIBIT K - [Intentionally Omitted]
EXHIBIT L - Opinion of special counsel in
Oklahoma City, Oklahoma
iv
PARTICIPATION AGREEMENT 114
AMENDED AND RESTATED PARTICIPATION AGREEMENT 114, dated as
of July 1, 1995 (this "Agreement"), among (a) CONTINENTAL
AIRLINES, INC., a Delaware corporation ("Lessee"), (b) GAUCHO-2
INC., a Delaware corporation ("Owner Participant"), (c)
WILMINGTON TRUST COMPANY, not in its individual capacity but
solely as Subordination Agent under the Intercreditor Agreement
("Loan Participant""), (d) FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, a national banking association, not in its
individual capacity, except as expressly provided herein, but
solely as Owner Trustee (this and all other capitalized terms
used but not defined herein shall have the respective meanings
ascribed thereto in Section 1) (in its capacity as Owner Trustee,
"Owner Trustee" or "Lessor," and in its individual capacity,
"First Security") and (e) WILMINGTON TRUST COMPANY, a Delaware
banking corporation, not in its individual capacity, except as
expressly provided herein, but solely as Loan Trustee (in its
capacity as Loan Trustee, "Loan Trustee" and in its individual
capacity, "WTC") (Lessee, Owner Participant, Loan Participant,
Owner Trustee and Loan Trustee collectively referred to herein as
the "Transaction Participants").
RECITALS
A. Certain of the Transaction Participants are parties to
that certain Participation Agreement 114, dated as of July 1, 1995,
relating to that certain Boeing 757-224 aircraft (the "Original
Participation Agreement")
B. In connection with the transactions contemplated by the
Original Participation Agreement, the Owner Participant and Fleet
National Bank ("Fleet"), formerly named Shawmut Bank Connecticut,
National Association, as loan participant (the "Original Loan
Participant"), participated in the payment of Lessor's Cost as
set
forth in Schedule 3 hereto.
C. On the Effective Date (as defined in Section 1(b) below,
Owner Trustee has redeemed certain loan certificates (the
"Original Loan Certificates") issued pursuant to the Original
Indenture to the Original Loan Participant and, as of the
Effective Date, the Original Loan Participant is no longer a
party to this Agreement.
D. In connection with the transactions contemplated by the
Original Participation Agreement, Rolls-Royce plc ("Rolls-Royce")
issued a guaranty (the "Rolls-Royce Guaranty"), pursuant to which
Rolls-Royce guaranteed certain of the indebtedness evidenced by
the Original Loan Certificates.
E. In connection with the the redemption of the Original Loan
certificates, as of the Effective Date, the Rolls-Royce Guaranty is
of no effect and Rolls-Royce is no longer a party to this
1
Agreement.
F. The Transaction Parties wish to amend and restate, with
effect in respect of all periods from and after May 20, 1996, the
Original Participation Agreement as set forth in this Amended and
Restated Participation Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements contained herein and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS AND CONSTRUCTION
(a) Capitalized terms used but not defined herein shall
have the respective meanings set forth or incorporated by
reference, and shall be construed and interpreted in the manner
described, in Annex A.
(b) This Amended and Restated Participation Agreement shall
be effective as of May 20, 1996 (the "Effective Date") and, in
respect of all acts, events and circumstances occurring or
arising from (and including) and after the Effective Date, the
terms and provisions of this Amended and Restated Participation
Agreement shall govern the respective rights and obligations of
the parties hereto with respect to the subject matter hereof;
provided that the representations and warranties set forth in
Section 7 hereof shall, except as otherwise provided in Section
7.1.14(b), relate back to the Delivery Date. The Original
Participation Agreement shall remain in full force and effect
with respect to all acts, events and circumstances occurring or
arising prior to the Effective Date; and accordingly, the terms
and provisions of the Original Participation Agreement shall, in
respect of all acts, events and circumstances occurring or
arising prior to the Effective Date, govern the respective rights
and obligations of those parties hereto, who are also parties to
the Original Participation Agreement, with respect to the subject
matter thereof, to the same extent and with the same force and
effect as though the Original Participation Agreement had not
been amended and restated hereby.
SECTION 2. [INTENTIONALLY OMITTED]
SECTION 3. [INTENTIONALLY OMITTED]
SECTION 4. COMMITMENT TO LEASE AIRCRAFT
Subject to the terms and conditions of this Agreement,
concurrently with the issuance of the Loan Certificates on the
Delivery Date, Owner Trustee shall purchase and accept delivery
of the Aircraft under and pursuant to the Purchase Agreement and
the Purchase Agreement Assignment, and thereupon Owner Trustee
shall lease the Aircraft to Lessee, and Lessee shall lease the
Aircraft from Owner Trustee, under the Lease.
2
SECTION 5. [INTENTIONALLY OMITTED]
SECTION 6. [INTENTIONALLY OMITTED]
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 Lessee's Representations and Warranties
Lessee represents and warrants to each Participant, Owner
Trustee and Loan Trustee that:
7.1.1 Organization; Qualification
Lessee is a corporation duly incorporated, validly existing
and in good standing under the Laws of the State of Delaware and
has the corporate power and authority to conduct the business in
which it is currently engaged and to own or hold under lease its
properties and to enter into and perform its obligations under
the Lessee Operative Agreements. Lessee is duly qualified to do
business as a foreign corporation in good standing in the State
of Texas and in all other jurisdictions required by Law or in
which the nature and extent of the business conducted by it, or
the ownership of its properties, makes such qualification
necessary or desirable except where the failure to be so
qualified would not give rise to a Material Adverse Change to
Lessee.
7.1.2 Corporate Authorization
Lessee has taken, or caused to be taken, all necessary
corporate action (including, without limitation, the obtaining of
any consent or approval of stockholders required by its
Certificate of Incorporation or By-Laws) to authorize the
execution and delivery of each of the Lessee Operative
Agreements, and the performance of its obligations thereunder.
7.1.3 No Violation
The execution and delivery by Lessee of the Lessee
Operative Agreements, the performance by Lessee of its
obligations thereunder and the consummation by Lessee on the
Delivery Date of the transactions contemplated thereby, do not
and will not (a) violate or contravene any provision of the
Certificate of Incorporation or By-Laws of Lessee, (b) violate or
contravene any Law applicable to or binding on Lessee (it being
understood that this representation is not made with respect to
any Law to the extent that such Law relates to any Plan), or (c)
violate, contravene or constitute any default under, or result in
the creation of any Lien (other than as permitted under the
Lease) upon any property of Lessee or any of its subsidiaries
under, any material indenture, mortgage, chattel mortgage, deed
of trust, conditional sales contract, lease, loan or other
material agreement, instrument or document to which Lessee is a
party or by which Lessee or any of its properties is or may be
bound or affected.
3
7.1.4 Approvals
The execution and delivery by Lessee of the Lessee
Operative Agreements, the performance by Lessee of its
obligations thereunder and the consummation by Lessee on the
Delivery Date of the transactions contemplated thereby do not and
will not require the consent, approval or authorization of, or
the giving of notice to, or the registration with, or the
recording or filing of any documents with, or the taking of any
other action in respect of, (a) any trustee or other holder of
any Debt of Lessee and (b) any Government Entity, other than the
filing of the FAA Filed Documents and the Financing Statements
(and continuation statements periodically) and filings,
recordings, notices or other ministerial actions pursuant to any
routine recording, contractual or regulatory requirements
applicable to it.
7.1.5 Valid and Binding Agreements
The Lessee Operative Agreements have been duly authorized,
executed and delivered by Lessee and, assuming the due
authorization, execution and delivery thereof by the other party
or parties thereto, constitute the legal, valid and binding
obligations of Lessee and are enforceable against Lessee in
accordance with the respective terms thereof, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar Laws
affecting the rights of creditors generally and general
principles of equity, whether considered in a proceeding at law
or in equity.
7.1.6 Litigation
Except as set forth in Lessee's most recent Annual Report
on Form 10-K, as amended, Quarterly Report on Form 10-Q or
Current Report on Form 8-K filed by Lessee with the SEC on or
prior to the Delivery Date (copies of which (excluding exhibits),
in each case, have been furnished to Owner Participant by
Lessee), no action, claim or proceeding is now pending or, to the
Actual Knowledge of Lessee, threatened, against Lessee, at law,
in equity or otherwise, before any court, board, commission,
agency or instrumentality of any foreign government or any
federal, state or local government or of any agency or
subdivision thereof, or before any arbitrator or panel of
arbitrators, which is reasonably likely to be determined
adversely to Lessee and if determined adversely to Lessee would
result in a Material Adverse Change.
4
7.1.7 Taxes
Lessee has filed or caused to be filed all material tax
returns, reports and statements that are required to be filed and
has paid or caused to be paid or is paying pursuant to Lessee's
Revised Second Amended Joint Plan of Reorganization, as modified,
under Chapter 11 of the Bankruptcy Code, all taxes shown to be
due and payable by such returns, reports or statements and any
tax assessments received by Lessee to the extent that such taxes
have become due and payable (except to the extent being contested
in good faith and for the payment of which adequate reserves have
been provided).
7.1.8 Financial Condition
The audited consolidated balance sheet of Lessee as of
December 31, 1994, and the related consolidated statements of
cash flows and non-redeemable preferred stock and common
stockholders' deficit for the period then ended (copies of which
have been furnished to Owner Participant) have been prepared in
accordance with GAAP and fairly present in all material respects
the financial condition of Lessee and its consolidated
subsidiaries as of such date and the results of its operations
and cash flows for such period, and since December 31, 1994,
there has been no material adverse change in such financial
condition or operations, except for matters disclosed in the
financial statements referred to above or any subsequent Annual
Report on Form 10-K, Quarterly Report on Form 10-Q or Current
Report on Form 8-K filed by Lessee with the SEC on or prior to
the date hereof (copies of which (excluding exhibits) have been
delivered to Owner Participant by Lessee).
7.1.9 Registration and Recordation
Except for (a) the registration of the Aircraft with the
FAA pursuant to the Act in the name of Owner Trustee, (b) the
filing for recordation (and recordation) of the FAA Filed
Documents, (c) the filing of the Financing Statements (and
continuation statements relating thereto at periodic intervals),
(d) the taking of possession and retention by Loan Trustee of the
original counterparts of the Lease and Lease Supplement No. 1 and
(e) the affixation of the nameplates referred to in Section 7.1.3
of the Lease, no further action, including any filing or
recording of any document (including any financing statement in
respect thereof under Article 9 of the UCC) is necessary or
advisable in order to establish and perfect the right, title or
interest of Owner Trustee, and the Loan Trustee's security
interest, in the Aircraft and the Lease, as against Lessee and
any other Person, in each case, in any applicable jurisdictions.
7.1.10 Chief Executive Office
The chief executive office (as such term is defined in
Article 9 of the UCC) of Lessee is located at 2929 Allen Parkway,
Houston, Texas 77019.
5
7.1.11 No Default
No event which, if the Aircraft were subject to the Lease,
constitutes a Lease Default or Lease Event of Default has
occurred and is continuing.
7.1.12 No Event of Loss
No Event of Loss has occurred with respect to the Airframe
or any Engine, and, to the Actual Knowledge of Lessee, no
circumstance, condition, act or event occurred that, with the
giving of notice or lapse of time or both gives rise to or
constitutes an Event of Loss with respect to the Airframe or any
Engine.
7.1.13 Compliance With Laws
(a) Lessee is not in default under, or in violation of, any
Law applicable to Lessee or to which Lessee is subject, the
violation of which would give rise to a Material Adverse Change
to Lessee.
(b) Without limiting the generality of Section 7.1.13(a):
(i) Lessee is a Citizen of the United States and a U.S.
Air Carrier,
(ii) Lessee holds all licenses, permits and franchises
from the appropriate Government Entities necessary to
authorize Lessee to lawfully engage in air transportation
and to carry on scheduled commercial passenger service as
currently conducted, except where the failure to so hold
any such license, permit or franchise would not give rise
to a Material Adverse Change to Lessee; and
(iii) Lessee is not an "investment company" or a
company controlled by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
7.1.14 Securities Laws
(a) Neither Lessee nor any person authorized to act on its
behalf (it being understood that the Managers (as defined in the
Original Participation Agreement) are not acting on Lessee's
behalf) has directly or indirectly offered any beneficial
interest or Security relating to the ownership of the Aircraft or
the Lease or any interest in the Trust Estate and Trust
Agreement, or any of the Original Loan Certificates, Pass Through
Trust Certificates (as defined in the Original Participation
Agreement) or any other interest in or security under the Trust
Indenture, for sale to, or solicited any offer to acquire any
such interest or security from, or has sold any such interest or
security to, any person in violation of the Securities Act or
applicable state securities Laws.
6
(b) As of May 20, 1996, neither Lessee nor any person
authorized to act on its behalf (it being deemed for purposes of
this representation that the initial purchasers under that
certain purchase agreement dated as of May 9, 1996 among Lessee,
Morgan Stanley & Co. Incorporated, CS First Boston Corporation
and Fieldstone FPCG Services, L.P. are not acting on Lessee's
behalf) has directly or indirectly offered any beneficial
interest or Security relating to any of the Equipment Notes or
Pass Through Certificates for sale to, or solicited any offer to
acquire any such interest or Security from, or has sold any such
interest or Security to, any person in violation of the
Securities Act or applicable state securities Laws.
7.1.15 All Disclosures Made
No Operative Agreement contains any untrue statement of a
material fact by Lessee and Lessee has not omitted to state any
material fact necessary to make the statements of fact of Lessee,
in light of the circumstances under which they were made,
contained herein or therein not misleading. For purposes of this
Section 7.1.15, the term "Operative Agreements" shall not include
the Tax Indemnity Agreement.
7.1.16 Broker's Fees
No Person acting on behalf of Lessee is or will be entitled
to any broker's fee, commission or finder's fee in connection
with the Transactions.
7.1.17 Section 1110
Owner Trustee, as lessor under the Lease (and Loan Trustee,
as assignee of Owner Trustee under the Trust Indenture), is
entitled to the benefits of Section 1110 (as currently in effect)
with respect to the right to take possession of the Airframe and
Engines as provided in the Lease in the event of a case under
Chapter 11 of the Bankruptcy Code in which Lessee is a debtor.
7.1.18 No Party in Interest Standing
Lessee is not a "party in interest" (as defined in Section
3(14) of ERISA) with respect to any Plan disclosed by any Loan
Participant or Certificate Holder pursuant to Section 7.4.3(a) or
(c). Neither Lessee nor any of its "affiliates" (as defined in
Section V(c) of Prohibited Transaction Class Exemption ("PTCE")
84- 14) has, or during the immediately preceding one year period
has exercised, the authority to appoint or terminate the
"qualified professional asset manager" (within the meaning of
Section V(a) of PTCE 84-14) (the "QPAM") as manager of the assets
of any Plan disclosed by any Loan Participant or Certificate
Holder pursuant to Section 7.4.3(d) or to negotiate the terms of
such QPAM's management agreement (including renewals or
modifications thereof) on behalf of any such Plan.
7
7.2 Owner Participant's Representations and Warranties
Owner Participant represents and warrants (and, in the case
of Section 7.2.9, covenants) to Lessee, Loan Participant, Owner
Trustee and Loan Trustee that:
7.2.1 Organization, Etc.
Owner Participant is a corporation duly incorporated,
validly existing and in good standing under the Laws of the State
of Delaware and has the corporate power and authority to conduct
the business in which it is currently engaged and to own or hold
under lease its properties and to enter into, and perform its
obligations under the Owner Participant Agreements.
7.2.2 Corporate Authorization
Owner Participant has taken, or caused to be taken, all
necessary corporate action (including, without limitation, the
obtaining of any consent or approval of stockholders required by
its Certificate of Incorporation or By-Laws) to authorize the
execution and delivery of each of the Owner Participant
Agreements, and the performance of its obligations thereunder.
7.2.3 No Violation
The execution and delivery by Owner Participant
of the Owner Participant Agreements, the performance by Owner
Participant of its obligations thereunder and the consummation by
Owner Participant on the Delivery Date of the transactions
contemplated thereby, do not and will not (a) violate or
contravene any provision of the Certificate of Incorporation or
By-Laws of Owner Participant, (b) violate or contravene any Law
applicable to or binding on Owner Participant (it being
understood that this representation is not made with respect to
any Law to the extent that such Law relates to any Plan), or (c)
violate, contravene or constitute any default under, or result in
the creation of any Lien (other than as provided for or otherwise
permitted in the Operative Agreements) upon the Trust Estate
under, any material indenture, mortgage, chattel mortgage, deed
of trust, conditional sales contract, lease, loan or other
material agreement, instrument or document to which Owner
Participant is a party or by which Owner Participant or any of
its properties is or may be bound or affected.
8
7.2.4 Approvals
The execution and delivery by Owner Participant of the
Owner Participant Agreements, the performance by Owner
Participant of its obligations thereunder and the consummation by
Owner Participant on the Delivery Date of the transactions
contemplated thereby do not and will not require the consent,
approval or authorization of, or the giving of notice to, or the
registration with, or the recording or filing of any documents
with, or the taking of any other action in respect of, (a) any
trustee or other holder of any Debt of Owner Participant and (b)
any Government Entity, other than the filing of the FAA Filed
Documents and the Financing Statements.
7.2.5 Valid and Binding Agreements
The Owner Participant Agreements have been duly authorized,
executed and delivered by Owner Participant and, assuming the due
authorization, execution and delivery by the other party or
parties thereto, constitute the legal, valid and binding
obligations of Owner Participant and are enforceable against
Owner Participant in accordance with the respective terms
thereof, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, receivership, moratorium
and other similar Laws affecting the rights of creditors
generally and general principles of equity, whether considered in
a proceeding at law or in equity.
7.2.6 Citizenship
On the Delivery Date, Owner Participant is a Citizen of the
United States.
7.2.7 No Liens
On the Delivery Date, there are no Lessor Liens
attributable to Owner Participant in respect of all or any part
of the Trust Estate.
7.2.8 Investment by Owner Participant
Owner Participant's beneficial interest in the Trust Estate
is being acquired by it for its own account, for investment and
not with a view to any resale or distribution thereof, except
that, subject to the restrictions on transfer set forth in
Section 12, the disposition by Owner Participant of its
beneficial interest in the Trust Estate shall at all times be
within its control.
7.2.9 ERISA
No part of the funds to be used by Owner Participant to
acquire or hold its interests in the Trust Estate to be acquired
by it under this Agreement directly or indirectly constitutes
assets of a Plan.
9
7.2.10 Litigation
There are no pending or, to the Actual Knowledge of Owner
Participant, threatened actions or proceedings against Owner
Participant or Owner Participant Parent before any court,
administrative agency or tribunal which, if determined adversely
to Owner Participant or Owner Participant Parent, would
materially adversely affect the ability of Owner Participant to
perform its obligations under the Owner Participant Agreements or
Owner Participant Parent to perform its obligations under the
Owner Participant Guaranty.
7.2.11 Securities Laws
Neither Owner Participant nor any person Owner Participant
has authorized to act on its behalf has directly or indirectly
offered any beneficial interest in or Security relating to the
ownership of the Aircraft or any interest in the Trust Estate, or
any of the Original Loan Certificates, Pass Through Certificates
(as defined in the Original Participation Agreement) or any other
interest in or Security under the Trust Indenture for sale to, or
solicited any offer to acquire any of the same from, any Person
in violation of the Securities Act or applicable state securities
Laws.
7.2.12 Broker's Fees
No Person acting on behalf of Owner Participant or Owner
Participant Parent is or will be entitled to any broker's fee,
commission or finder's fee in connection with the Transactions.
7.2.13 No Party in Interest Standing
Owner Participant is not a "party in interest" (as defined
in Section 3(14) of ERISA) with respect to any Plan disclosed by
any Loan Participant or Certificate Holder pursuant to Section
7.4.3(a) or (c). Neither Owner Participant nor any of its
"affiliates" (as defined in Section V(c) of PTCE 84-14) has, or
during the immediately preceding one year period has exercised,
the authority to appoint or terminate the QPAM as manager of the
assets of any Plan disclosed by any Loan Participant or
Certificate Holder pursuant to Section 7.4.3(d) or to negotiate
the terms of such QPAM's management agreement (including renewals
or modifications thereof) on behalf of any such Plan.
7.3 First Security's Representations and Warranties
First Security represents and warrants to Lessee, Owner
Participant, Loan Participant and Loan Trustee that:
10
7.3.1 Organization, Etc.
First Security is a national banking association duly
organized, validly existing and in good standing under the Laws
of the United States, holding a valid certificate to do business
as a national banking association with banking authority to
execute and deliver, and perform its obligations under, the Owner
Trustee Agreements.
7.3.2 Corporate Authorization
First Security has taken, or caused to be taken, all
necessary corporate action (including, without limitation, the
obtaining of any consent or approval of stockholders required by
Law or by its Certificate of Incorporation or By-Laws) to
authorize the execution and delivery by First Security, in its
individual capacity and as Owner Trustee, of each of the Owner
Trustee Agreements, and the performance of its obligations
thereunder.
7.3.3 No Violation
The execution and delivery by First Security, in its
individual capacity and as Owner Trustee of the Owner Trustee
Agreements, the performance by First Security, in its individual
capacity and as Owner Trustee, of its obligations thereunder and
the consummation by First Security in its individual capacity and
as Owner Trustee on the Delivery Date of the transactions
contemplated thereby, do not and will not (a) violate or
contravene any provision of the Articles of Association or
By-Laws of First Security, (b) violate or contravene any Law
applicable to or binding on Owner Trustee or First Security or
(c) violate, contravene or constitute any default under, or
result in the creation of any Lien (other than the lien of the
Trust Indenture) upon any property of First Security, in its
individual capacity and as Owner Trustee, or any of its
subsidiaries under, any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, lease, loan or other
material agreement, instrument or document to which First
Security, in its individual capacity and as Owner Trustee, is a
party or by which First Security, in its individual capacity and
as Owner Trustee, or any of its properties is or may be bound or
affected.
11
7.3.4 Approvals
The execution and delivery by First Security, in its
individual capacity and as Owner Trustee, of the Owner Trustee
Agreements, the performance by First Security, in its individual
capacity and as Owner Trustee on the Delivery Date, of its
obligations thereunder and the consummation by First Security, in
its individual capacity and as Owner Trustee, of the transactions
contemplated thereby do not and will not require the consent,
approval or authorization of, or the giving of notice to, or the
registration with, or the recording or filing of any documents
with, or the taking of any other action in respect of, (a) any
trustee or other holder of any Debt of First Security or (b) any
Government Entity, other than the filing of the FAA Filed
Documents and the Financing Statements.
7.3.5 Valid and Binding Agreements
The Owner Trustee Agreements have been duly authorized,
executed and delivered by First Security, in its individual
capacity or as Owner Trustee, as the case may be, and constitute
the legal, valid and binding obligations of First Security, in
its individual capacity and as Owner Trustee, and, assuming the
due authorization, execution and delivery thereof by the other
party or parties thereto, are enforceable against First Security,
in its individual capacity and as Owner Trustee, in accordance
with the respective terms thereof, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar Laws affecting the
rights of creditors generally and general principles of equity,
whether considered in a proceeding at law or in equity.
7.3.6 Citizenship
On the Delivery Date, First Security is a Citizen of the
United States.
7.3.7 Chief Executive Office
The chief executive office (as such term is defined in
Article 9 of the UCC) of Owner Trustee is located at 79 South
Main Street, Salt Lake City, Utah 84111.
7.3.8 Title
On the Delivery Date, Owner Trustee shall have received
whatever title (a) to the Aircraft (other than the BFE) as was
conveyed to it by Airframe Manufacturer and (b) to the BFE as was
conveyed to it by Lessee.
12
7.3.9 No Liens; Financing Statements
On the Delivery Date, there are no Lessor Liens
attributable to First Security or Owner Trustee in respect of all
or any part of the Aircraft, Trust Estate or the Trust Indenture
Estate. Except for the Financing Statements, it has not, either
in its individual capacity or as Owner Trustee, executed any UCC
financing statements relating to the Aircraft or the Lease.
7.3.10 Litigation
There are no pending or, to the Actual Knowledge of First
Security, threatened actions or proceedings against First
Security and Owner Trustee before any court, administrative
agency or tribunal which, if determined adversely to First
Security, would materially adversely affect the ability of First
Security or Owner Trustee, to perform its obligations under the
Owner Trustee Agreements.
7.3.11 Securities Laws
Neither First Security, nor any person authorized to act on
its behalf, has directly or indirectly offered any beneficial
interest or Security relating to the ownership of the Aircraft or
any interest in the Trust Estate or any of the Loan Certificates
or any other interest in or security under the Trust Indenture
for sale to, or solicited any offer to acquire any such interest
or security from, or has sold any such interest or security to,
any person other than the Participants.
7.3.12 Expenses and Taxes
There are no Expenses or Taxes that may be imposed on or
asserted against the Trust, the Trust Estate or any part thereof
or any interest therein, the Trust Indenture Estate, Lessee,
Owner Participant, Loan Participant, Owner Trustee or Loan
Trustee (except as to Owner Trustee, Taxes imposed on the fees
payable to Owner Trustee) under the laws of Utah in connection
with the execution, delivery or performance of any Operative
Agreement by Owner Trustee or in connection with the issuance of
the Loan Certificates, which Expenses or Taxes would not have
been imposed if Owner Trustee had not (x) had its principal place
of business in, (y) performed (in its individual capacity or as
Owner Trustee) any or all of its duties under the Operative
Agreements in or (z) engaged in any activities unrelated to the
transactions contemplated by the Operative Agreements in, the
State of Utah.
7.4 Loan Participant's Representations and Warranties
Loan Participant (and, by its acceptance of a Loan
Certificate, each Certificate Holder) represents and warrants
(and, in the case of Section 7.4.3, covenants) to Lessee, Owner
Participant, Owner Trustee and Loan Trustee that:
13
7.4.1 Valid and Binding Agreements
The Loan Participant Agreements have been duly authorized,
executed and delivered by it and, assuming the due authorization,
execution and delivery by the other party or parties thereto,
constitute the legal, valid and binding obligations of it and are
enforceable against it in accordance with the respective terms
thereof, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, receivership, moratorium
and other similar Laws affecting the rights of creditors
generally and general principles of equity, whether considered in
a proceeding at law or in equity.
7.4.2 Investment by Loan Participant
The Equipment Notes to be acquired by it are being acquired
by it for its own account, for investment and not with a view to
any resale or distribution thereof, except for the offer and sale
of the Pass Through Certificates and except that, subject to the
restrictions on transfer set forth in Sections 8.5.3 and 12.1.3
(which are subject to Section 21), the disposition by it of its
Equipment Notes shall at all times be within its control. Neither
it nor any person it has authorized to act on its behalf has
directly or indirectly offered any interest in and to the
Equipment Notes for sale to, or solicited any offer to acquire
any of the same from, any person in violation of applicable Laws.
7.4.3 [Intentionally Omitted]
7.4.4 [Intentionally Omitted]
No Person acting on behalf of Loan Participant is or will
be entitled to any broker's fee, commission or finder's fee in
connection with the Transactions.
7.5 [Intentionally Omitted]
7.6 WTC's Representations and Warranties
WTC represents and warrants to Lessee, each Participant,
and Owner Trustee that:
7.6.1 Organization, Etc.
WTC is a Delaware banking corporation duly organized,
validly existing and in good standing under the Laws of the State
of Delaware, holding a valid certificate to do business as a
Delaware banking corporation with banking authority to execute
and deliver, and perform its obligations under, the Mortgagee
Agreements.
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7.6.2 Corporate Authorization
WTC has taken, or caused to be taken, all necessary
corporate action (including, without limitation, the obtaining of
any consent or approval of stockholders required by Law or by its
Certificate of Incorporation or By-Laws) to authorize the
execution and delivery by Loan Trustee or WTC, as the case may
be, of the Mortgagee Agreements, and the performance of its
obligations thereunder.
7.6.3 No Violation
The execution and delivery by Loan Trustee or WTC, as the
case may be, of the Mortgagee Agreements, the performance by Loan
Trustee or WTC, as the case may be, of its obligations thereunder
and the consummation on the Delivery Date of the transactions
contemplated thereby, do not and will not (a) violate or
contravene any provision of the Certificate of Incorporation or
By-Laws of WTC, (b) violate or contravene any Law applicable to
or binding on WTC or (c) violate, contravene or constitute any
default under, or result in the creation of any Lien (other than
the lien of the Trust Indenture) upon any property of WTC or any
of its subsidiaries under, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, lease, loan
or other agreement, instrument or document to which WTC is a
party or by which WTC or any of its properties is or may be bound
or affected.
7.6.4 Approvals
The execution and delivery by Loan Trustee or WTC, as the
case may be, of the Mortgagee Agreements, the performance by Loan
Trustee or WTC, as the case may be, of its obligations thereunder
and the consummation on the Delivery Date by Loan Trustee or WTC,
as the case may be, of the transactions contemplated thereby do
not and will not require the consent, approval or authorization
of, or the giving of notice to, or the registration with, or the
recording or filing of any documents with, or the taking of any
other action in respect of, (a) any trustee or other holder of
any Debt of WTC or (b) any Government Entity, other than the
filing of the FAA Filed Documents and the Financing Statements.
7.6.5 Valid and Binding Agreements
The Mortgagee Agreements have been duly authorized,
executed and delivered by WTC and, assuming the due
authorization, execution and delivery by the other party or
parties thereto, constitute the legal, valid and binding
obligations of WTC and are enforceable against WTC in accordance
with the respective terms thereof, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other similar Laws affecting the
rights of creditors generally and general principles of equity,
whether considered in a proceeding at law or in equity.
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7.6.6 Citizenship
WTC is a Citizen of the United States.
7.6.7 No Liens
On the Delivery Date, there are no Lessor Liens
attributable to WTC in respect of all or any part of the Trust
Estate or the Trust Indenture Estate.
7.6.8 Litigation
There are no pending or, to the Actual Knowledge of WTC,
threatened actions or proceedings against Loan Trustee or WTC
before any court, administrative agency or tribunal which, if
determined adversely to Loan Trustee or WTC, as the case may be,
would materially adversely affect the ability of Loan Trustee or
WTC, as the case may be, to perform its obligations under any of
the Mortgagee Agreements.
7.6.9 Securities Laws
Neither WTC nor any person authorized to act on its behalf
has directly or indirectly offered any beneficial interest or
Security relating to the ownership of the Aircraft or any
interest in the Trust Indenture Estate or any of the Loan
Certificates or any other interest in or security under the Trust
Indenture for sale to, or solicited any offer to acquire any such
interest or security from, or has sold any such interest or
security to, any Person other than the Participants.
SECTION 8. COVENANTS, UNDERTAKINGS AND AGREEMENTS
8.1 Covenants of Lessee
Lessee covenants and agrees, at its own cost and expense,
with Owner Participant, Loan Participant, Owner Trustee and Loan
Trustee as follows:
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8.1.1 Corporate Existence; Franchises
Lessee shall at all times maintain its corporate existence,
except as permitted by Section 13.2 of the Lease, and shall not
wind-up, liquidate or dissolve or take any action, or fail to
take any action, that would have the effect of any of the
foregoing. Lessee will do or cause to be done all things
necessary to preserve and keep in full force and effect its
rights (charter and statutory) and franchises, except that Lessee
shall not be required to preserve or keep in full force and
effect any right or franchise if Lessee shall reasonably
determine that the preservation thereof is no longer necessary or
desirable in the conduct of its business and if the loss thereof
does not (a) adversely affect or diminish the rights of
Participants under the Operative Agreements or (b) materially and
adversely affect Lessee's ability to observe or perform its
obligations, liabilities and agreements under the Lessee
Operative Agreements.
8.1.2 U.S. Air Carrier; Section 1110
Lessee shall at all times remain a U.S. Air Carrier and
shall at all times be otherwise certificated and registered to
the extent necessary to entitle Owner Trustee (and Loan Trustee
as assignee of Owner Trustee's rights under the Lease) the rights
afforded to lessors of aircraft equipment under Section 1110.
8.1.3 Notice of Change of Chief Executive Office
Lessee will give each Participant, Owner Trustee and Loan
Trustee timely written notice (but in any event not later than
three Business Days after its occurrence) of any relocation of
its chief executive office (as such term is defined in Article 9
of the UCC) from its then present location and will promptly take
any action required by Section 8.1.4(c) as a result of such
relocation.
8.1.4 Certain Assurances
(a) Lessee shall duly execute, acknowledge and deliver, or
shall cause to be executed, acknowledged and delivered, all such
further agreements, instruments, certificates or documents, and
shall do and cause to be done such further acts and things, in
any case, as any Participant, Owner Trustee or Loan Trustee shall
reasonably request in connection with its administration of, or
to carry out more effectually the purposes of, or to better
assure and confirm unto it the rights and benefits to be provided
under, this Agreement and the other Operative Agreements.
(b) Lessee shall promptly take such action with respect to
the recording, filing, re-recording and refiling of the Lease,
the Trust Agreement and the Trust Indenture and the respective
supplements thereto, including, without limitation, Lease
Supplement No. 1 and the Trust Indenture Supplement, as shall be
necessary to establish, perfect and protect the interests and
rights of Owner Trustee in and to the Aircraft and under the Lease
and the perfection and priority of the Lien created by the Trust
17
Indenture. Lessee shall furnish to Owner Participant or Owner
Trustee such information (other than with respect to the
citizenship of Owner Participant and Owner Trustee) in Lessee's
possession or otherwise reasonably available to Lessee as may be
required to enable Owner Participant or Owner Trustee to make
application for registration of the Aircraft under the Act
(subject to Lessee's rights under Section 7.1.2 of the Lease) and
shall, without limiting the generality of Section 10, pay or
cause to be paid all out-of-pocket costs and expenses thereof
(including, without limitation, reasonable attorneys' fees and
disbursements).
(c) Lessee, at its sole cost and expense, will cause the
FAA Filed Documents, the Financing Statements and all
continuation statements (and any amendments necessitated by any
combination, consolidation or merger pursuant to Section 13.2 of
the Lease, or any relocation of its chief executive office) in
respect of the Financing Statements to be prepared and, subject
only to the execution and delivery thereof by Owner Trustee and
Loan Trustee, as applicable, duly and timely filed and recorded,
or filed for recordation, to the extent permitted under the Act
(with respect to the FAA Filed Documents) or the UCC or similar
law of any other applicable jurisdiction (with respect to such
other documents).
(d) If the Aircraft has been registered in a country other
than the United States pursuant to Section 7.1.2 of the Lease,
Lessee will furnish to Owner Trustee, Loan Trustee and each
Participant annually after such registration, commencing with the
calendar year after such registration is effected, an opinion of
special counsel reasonably satisfactory to the Participants,
stating that, in the opinion of such counsel, either that (i)
such action has been taken with respect to the recording, filing,
rerecording and refiling of the Operative Agreements and any
supplements and amendments thereto as is necessary to establish,
perfect and protect Owner Trustee's and Loan Trustee's respective
right, title and interest in and to the Aircraft and the
Operative Agreements, reciting the details of such actions, or
(ii) no such action is necessary to maintain the perfection of
such right, title and interest.
8.1.5 Securities Laws
Neither Lessee nor any person authorized to act on its
behalf will directly or indirectly offer any beneficial interest
or Security relating to the ownership of the Aircraft or the
Lease or any interest in the Trust Estate and Trust Agreement or
any of the Loan Certificates or any other interest in or security
under the Trust Indenture, for sale to, or solicit any offer to
acquire any such interest or security from, or sell any such
interest or security to, any person in violation of the
Securities Act or applicable state or foreign securities Laws.
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8.2 Covenants of Owner Participant
Owner Participant covenants and agrees with Lessee, and,
except with respect to Section 8.2.4, Loan Participant, Owner
Trustee and Loan Trustee as follows:
8.2.1 Liens
Owner Participant (a) will not directly or indirectly
create, incur, assume or suffer to exist any Lessor Lien
attributable to it on or with respect to all or any part of the
Trust Estate, the Trust Indenture Estate or the Aircraft, (b)
will, at its own cost and expense, promptly take such action as
may be necessary to discharge any Lessor Lien attributable to
Owner Participant on all or any part of the Trust Estate, the
Trust Indenture Estate or the Aircraft and (c) will make
restitution to the Trust Estate for any actual diminution of the
assets of the Trust Estate resulting from such Lessor Liens
attributable to or caused by it.
8.2.2 Revocation of Trust Agreement
(a) Owner Participant will comply with the provisions of
the Trust Agreement applicable to it, the non-compliance with
which would have a material adverse effect on Lessee, any
Certificate Holder or Loan Trustee, and will not terminate or
revoke the Trust Agreement or the trusts created thereunder
without the prior written consent of Lessee and Loan Trustee and
will not amend, modify or supplement the Trust Agreement, or
waive any of the provisions thereof, if such amendment,
modification, supplement or waiver would have a material adverse
effect on Lessee, without the consent of Lessee, or on Loan
Trustee or any Certificate Holder, without the consent of Loan
Trustee.
(b) Notwithstanding Section 8.2.2(a), Owner Participant may
at any time remove Owner Trustee pursuant to Section 9.1 of the
Trust Agreement; provided, however, that so long as any Pass
Through Certificates are outstanding, the Owner Participant shall
(i) give prior written notice of any such proposed removal to the
nationally recognized rating agencies which have been requested
by Lessee to rate, and are then rating, the Pass Through
Certificates, and (ii) obtain written confirmation from such
rating agencies prior to effecting any such proposed removal to
the effect that such removal will not result in a withdrawal or
downgrading of the ratings of the Pass Through Certificates.
Prior to or concurrently with entering into any substitute trust
arrangement, Owner Participant shall have executed and delivered,
and shall have caused the New Trustee to have executed and
delivered, such agreements, certificates and other documentation
(together with legal opinions and other related closing
documentation) as shall reasonably be requested by Lessee or Loan
Trustee to establish (x) the transfer of the Trust Estate to the
substitute trust, (y) the assignment to and assumption by the
substitute trust of each of the Owner Trustee Agreements (other
than the original Trust Agreement) and (z) the filing or recordation
of any document with the FAA or under the UCC necessary or advisable
19
to establish and perfect the substitute trust's title to and
interest in the Aircraft, Lessee's rights under the Lease and the
Lien of the Trust Indenture. Upon the transfer of the Trust Estate
to such substitute trust, such substitute trust agreement shall,
for all purposes hereof, be deemed to be the Trust Agreement.
8.2.3 Change of Situs of Owner Trust
If, at any time, any Tax Indemnitee or the Trust Estate
becomes subject to any Taxes for which it is indemnified pursuant
to Section 10.3 of this Agreement and if, as a consequence
thereof, Lessee should request that the situs of the Trust be
moved to another state in the United States from the state in
which it is then located, the situs of the Trust may be moved
with the written consent of Owner Participant (which consent
shall not be unreasonably withheld) and Owner Participant will
take whatever action may be reasonably necessary to accomplish
such removal; provided, that, in any event, (a) Lessee shall
provide such additional tax indemnification as Owner Participant
and the Certificate Holders may reasonably request to cover any
additional unindemnified Taxes or loss of Tax benefits described
in the assumptions in the Tax Indemnity Agreement resulting from
such change in the situs of the Trust, (b) the rights and
obligations under the Operative Agreements of Owner Participant,
the Certificate Holders and Loan Trustee shall not be adversely
affected as a result of the taking of such action, (c) the Lien
of the Trust Indenture on the Trust Indenture Estate shall not be
adversely affected by such action, and Lessee and Owner Trustee
shall execute and deliver such documents as may reasonably be
requested by Loan Trustee to protect and maintain the perfection
and priority of such Lien, (d) Owner Participant and Loan Trustee
shall have received an opinion or opinions of counsel (which
counsel is reasonably satisfactory to Owner Participant and Loan
Trustee) in scope, form and substance reasonably satisfactory to
Owner Participant and Loan Trustee to the effect that (i) the
Trust, as thus removed, shall remain a validly established trust,
(ii) any amendments to the Trust Agreement necessitated by such
removal shall have been duly authorized, executed and delivered
by the parties thereto and shall constitute the valid and binding
obligations of such parties, enforceable in accordance with their
terms, (iii) covering such other matters as Owner Participant or
Loan Trustee may reasonably request, (e) if such removal involves
the replacement of Owner Trustee, then Owner Participant and Loan
Trustee shall have received an opinion of counsel to such
successor Owner Trustee in form and substance reasonably
satisfactory to Owner Participant and Loan Trustee covering the
matters described in the opinion delivered pursuant to Section
6.1.2(xxvii)(E) and (f) Lessee shall indemnify and hold harmless
Owner Participant, Certificate Holders and First Security, in its
individual capacity and as Owner Trustee, on a net after-tax
basis against any and all reasonable out-of-pocket costs and
expenses including attorneys' fees and disbursements, fees and
expenses of any new owner trustee, registration, recording or
filing fees and taxes incurred by Owner Participant, Certificate
Holders or Owner Trustee in connection with such change of situs.
Owner Participant agrees with Lessee
20
that it will not consent to or direct a change in the situs of
the Trust Estate without the prior written consent of Lessee.
8.2.4 Compliance with Lease Provisions
Owner Participant will, solely for the benefit of Lessee,
comply with the express provisions applicable to it contained in
Sections 3.2.1 and 8.2.5 of the Lease.
8.2.5 Securities Act
Owner Participant will not directly or indirectly offer any
beneficial interest or security relating to the ownership of the
Aircraft or any interest in the Trust Estate or any of the Loan
Certificates or any other interest in or security under the Trust
Indenture for sale to, or solicit any offer to acquire any such
interest or security from, or sell any such interest or security
to, any Person in violation of the Securities Act or applicable
state or foreign securities Laws, provided that the foregoing
shall not be deemed to impose on Owner Participant any
responsibility with respect to any such offer, sale or
solicitation by any other party hereto.
8.2.6 Regarding the Owner Trustee
Owner Participant will not cause Owner Trustee to violate
its obligations under any Owner Trustee Agreement.
8.3 Covenants of First Security and Owner Trustee
First Security, in its individual capacity and/or as Owner
Trustee, as provided below, covenants and agrees with Lessee,
each Participant and Loan Trustee as follows:
8.3.1 Liens
First Security (a) will not directly or indirectly create,
incur, assume or suffer to exist any Lessor Liens attributable to
it or Owner Trustee with respect to all or any part of the Trust
Estate, the Trust Indenture Estate or the Aircraft, (b) will, at
its own cost and expense, promptly take such action as may be
necessary to discharge any Lessor Lien attributable to First
Security or Owner Trustee on all or any part of the Trust Estate,
the Trust Indenture Estate or the Aircraft and (c) will
personally hold harmless and indemnify Lessee, Owner Participant,
each Certificate Holder, Loan Trustee, each of their respective
Affiliates, successors and permitted assigns, the Trust Estate
and the Trust Indenture Estate from and against (i) any and all
Expenses, (ii) any reduction in the amount payable out of the
Trust Estate or the Trust Indenture Estate and (iii) any
interference with the possession, operation or other use of all
or any part of the Aircraft imposed on, incurred by or asserted
against any of the foregoing as a consequence of any such Lessor
Lien.
21
8.3.2 Other Business
Owner Trustee will not enter into any business or other
activity except as contemplated by the Operative Agreements.
8.3.3 Notice of Change of Chief Executive Office
First Security, in its individual capacity and as Owner
Trustee, will give Lessee, each Participant and Loan Trustee 30
days' prior written notice of any relocation of its chief
executive office (as such term is defined in Article 9 of the
UCC) from its then present location and will promptly take any
action required by Section 8.3.8 as a result of such relocation.
8.3.4 Securities Act
First Security, in its individual capacity and as Owner
Trustee, will not directly or indirectly offer any beneficial
interest or Security relating to the ownership of the Aircraft or
any interest in the Trust Estate or any of the Loan Certificates
or any other interest in or security under the Trust Indenture
for sale to, or solicit any offer to acquire any such interest or
security from, or sell any such interest or security to, any
Person in violation of the Securities Act or applicable state or
foreign securities Laws, provided that the foregoing shall not be
deemed to impose on First Security in its individual capacity or
as Owner Trustee, any responsibility with respect to any such
offer, sale or solicitation by any other party hereto.
8.3.5 Performance of Agreements
Subject to the terms and provisions of the Trust Agreement,
Owner Trustee shall perform its obligations under the Owner
Trustee Agreements in accordance with the terms thereof.
8.3.6 Release of Lien of Trust Indenture
Owner Trustee, in each instance referred to in the Lease in
which a transfer of any property is required to be made by Owner
Trustee to Lessee or any other Person (other than Loan Trustee or
Owner Participant), shall, at Lessee's request and expense, use
its reasonable efforts to procure from Loan Trustee the prompt
release of the Lien of the Trust Indenture with respect to such
property.
8.3.7 Notices; Documents
In the event any claim with respect to any liabilities is
filed against the Owner Trustee in its capacity as such and Owner
Trustee shall have Actual Knowledge thereof, the Owner Trustee
shall promptly notify Lessee in writing thereof. Owner Trustee
further agrees to provide to Lessee promptly any documents
(including the certificate of aircraft registration) that it
receives from the FAA with respect to the Aircraft.
22
8.3.8 Filings
After the Delivery Date, Owner Trustee shall duly execute
and deliver to Lessee all filings and recordings (including,
without limitation, all filings and UCC financing statements
under the Act and the UCC and any amendments to UCC financing
statements necessitated by any relocation of its chief executive
office), prepared and delivered to it by Lessee required to
perfect Owner Trustee's title to the Aircraft and the liens of
and security interests granted by the Trust Indenture (or to
maintain such perfection) and to make such title, liens and
security interests valid and enforceable.
8.4 Covenants of WTC and Loan Trustee
WTC or Loan Trustee, as the case may be, covenants and
agrees with Lessee, each Participant and Owner Trustee as
follows:
8.4.1 Liens
WTC (a) will not directly or indirectly create, incur,
assume or suffer to exist any Lessor Lien attributable to it on
or with respect to all or any part of the Trust Estate, the Trust
Indenture Estate or the Aircraft, (b) will, at its own cost and
expense, promptly take such action as may be necessary to
discharge any Lessor Lien attributable to WTC on all or any part
of the Trust Estate, the Trust Indenture Estate or the Aircraft
and (c) will personally hold harmless and indemnify Lessee, Owner
Participant, each Certificate Holder, Owner Trustee, each of
their respective Affiliates, successors and permitted assigns,
the Trust Estate and the Trust Indenture Estate from and against
(i) any and all Expenses, (ii) any reduction in the amount
payable out of the Trust Estate or the Trust Indenture Estate and
(iii) any interference with the possession, operation or other
use of all or any part of the Aircraft, imposed on, incurred by
or asserted against any of the foregoing as a consequence of any
such Lessor Lien.
8.4.2 Securities Act
Loan Trustee will not offer any beneficial interest or
Security relating to the ownership of the Aircraft or any
interest in the Trust Indenture Estate, or any of the Loan
Certificates or any other interest in or security under the Trust
Indenture for sale to, or solicit any offer to acquire any such
interest or security from, or sell any such interest or security
to, any Person in violation of the Securities Act or applicable
state or foreign securities Laws, provided that the foregoing
shall not be deemed to impose on Loan Trustee any responsibility
with respect to any such offer, sale or solicitation by any other
party hereto.
8.4.3 Performance of Agreements
Subject to the terms and provisions of the Trust Indenture,
Loan Trustee shall perform its obligations under the Indenture
Agreements in accordance with the terms thereof.
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8.4.4 [Intentionally Omitted]
8.4.5 Withholding Taxes
WTC shall indemnify (on an after-tax basis) and hold
harmless Lessee and Owner Participant against any United States
withholding taxes (and related interest, penalties and additions
to tax) as a result of the failure by WTC to withhold on payments
to any Certificate Holder if such Certificate Holder failed to
provide to Loan Trustee necessary certificates or forms to
substantiate the right to exemption from such withholding tax.
8.5 Covenants of Certificate Holders
Each Certificate Holder (including Loan Participant,
whether or not it has elected or elects to have its Loan
Certificate(s) registered in the name of a nominee) as to itself
only covenants and agrees with Lessee, Owner Participant, Owner
Trustee and Loan Trustee as follows:
8.5.1 [Intentionally Omitted]
8.5.2 Withholding Taxes
Such Note Holder (if it is a Non-U.S. Person) agrees to
indemnify (on an after-Tax basis) and hold harmless Lessee, Owner
Participant and Loan Trustee against any United States
withholding taxes (and related interest, penalties and additions
to tax) as a result of the inaccuracy or invalidity of any
certificate or form provided by such Note Holder to Loan Trustee
in connection with such withholding taxes. Any amount payable
hereunder shall be paid within 30 days after receipt by a Note
Holder of a written demand therefor.
8.5.3 Transfer; Compliance
(a) Such Certificate Holder will (i) not transfer any
Loan Certificate or interest therein in violation of the
Securities Act or applicable state or foreign securities
Law; provided, that the foregoing provisions of this
section shall not be deemed to impose on such Certificate
Holder any responsibility with respect to any such offer,
sale or solicitation by any other party hereto, (ii) for so
long as Gaucho-2 Inc. or any Affiliate thereof is Owner
Participant hereunder, without the consent of such party,
not transfer any Loan Certificate or interest therein to
Aetna Life Insurance Company or knowingly transfer any Loan
Certificate or interest therein to any Affiliate thereof
and (iii) perform and comply with the obligations specified
to be imposed on it (as a Loan Participant or Certificate
Holder) under each of the Trust Indenture and the form of
Loan Certificate set forth in the Trust Indenture.
(b) Subject to Section 21, each Loan Participant and
each Note Holder (including the Pass Through Trustee, as
24
beneficial owner of the Equipment Notes, and the
Subordination Agent, as record owner of the Equipment
Notes) covenants and agrees that it shall not sell, assign,
convey, exchange or otherwise transfer any Equipment Note
or any interest in, or represented by, any Equipment Note
unless the proposed transferee thereof first provides
Lessee and Owner Participant with both of the following:
(i) a written representation that either (a) no
portion of the funds it uses to purchase, acquire and
hold such Equipment Note or interest directly or
indirectly constitutes, or may be deemed under the
Code or ERISA or any rulings, regulations or court
decisions thereunder to constitute, the assets of any
Plan, or (b) the transfer, and subsequent holding, of
such Equipment Note or interest shall not involve or
give rise to a transaction that constitutes a
prohibited transaction within the meaning of Section
406 of ERISA or Section 4975(c)(1) of the Code
involving Lessee, Owner Participant, Pass Through
Trustee, the Subordination Agent or the proposed
transferee (other than a transaction that is exempted
from the prohibitions of such sections by applicable
provisions of ERISA or the Code or administrative
exemptions or regulations issued thereunder) and so
long as Gaucho-2 Inc. or any Affiliate thereof is
Owner Participant, a written representation that such
proposed transferee is not an Affiliate of Aetna Life
Insurance Company; and
(ii) a written covenant that it will not transfer
any Equipment Note or any interest in, or represented
by, any Equipment Note unless the subsequent
transferee also makes the representation described in
clause (i) above and agrees to comply with this clause
(ii).
(c) Subject to Section 21, promptly after discovery by
any Note Holder that its source of funding for its
Equipment Note has resulted in, or will result in, a
prohibited transaction within the meaning of Section 406 of
ERISA or Section 4975(c)(1) of the Code, (i) such Note
Holder shall promptly and diligently use all good faith
reasonable efforts to fund such Equipment Note in a manner
that would correct such prohibited transaction and (ii)
during the Term, so long as such prohibited transaction has
not been corrected pursuant to clause (i) above or
otherwise, upon notice (which notice shall specifically
refer to this Section 8.5.3(c)(ii)) from either Lessee or
Owner Participant to such Note Holder, the following
actions will be taken:
(A) a Person (which may be Lessee), designated by
Lessee with the consent of Owner Participant (which consent
shall not be unreasonably withheld or delayed) in such
notice of Lessee, or within ten days of any such notice of
Owner Participant (which Person confirms in writing to such
Note Holder and Owner Participant that it will comply with the
25
obligations of the remarketing agent under this Section
8.5.3(c)(ii)) (such Person being referred to herein as the
"remarketing agent"), will use reasonable efforts promptly,
and in any event within 65 days following such notice from
Lessee or Owner Participant to the remarketing agent, to
identify to Lessee potential purchasers that are not
Affiliates of Lessee for such Equipment Note that are
willing to purchase such Equipment Note pursuant to this
Section 8.5.3(c)(ii) and would be willing to pay a
commercially reasonable cash purchase price therefor,
taking into account, among other things, prevailing
interest rates, the security for the Equipment Notes under
the Trust Indenture and the market prices of comparable
securities;
(B) within 70 days following such notice from
Lessee or Owner Participant to the remarketing agent,
Lessee shall designate a purchaser (which shall not be an
Affiliate of Lessee) to the Note Holder and the remarketing
agent that is willing to pay a commercially reasonable cash
purchase price for such Equipment Note, failing which the
remarketing agent shall within two Business Days identify
to Lessee and such Note Holder the potential purchaser
willing to pay the highest cash purchase price and such
potential purchaser shall be deemed to be the designated
purchaser;
(C) within ten Business Days following such
designation by Lessee or the remarketing agent, as the case
may be, such Certificate Holder shall sell, assign,
transfer and convey all its right, title and interest in
and to its Loan Certificate (without recourse or warranty
of any kind except against Liens on such Loan Certificate
arising by, through or under such Certificate Holder) to
the designated purchaser against payment by such designated
purchaser to such Certificate Holder in immediately
available funds of the purchase price therefor;
(D) upon such sale, assignment, transfer and
conveyance, such designated purchaser shall be deemed to
have accepted such Loan Certificate for all purposes of the
Operative Agreements, including, without limitation,
Section 2.07 of the Trust Indenture and Section 12.1.3; and
(E) immediately following such sale, assignment,
transfer and conveyance (but not as a condition thereto),
Lessee shall pay to such former Certificate Holder (x) the
excess, if any, of the outstanding principal amount of such
transferred Loan Certificate at the date of such sale,
assignment, transfer and conveyance, plus accrued interest
on such Loan Certificate to such date over the portion of
the purchase price paid by the designated purchaser to such
former Certificate Holder in respect of such transferred
Loan Certificate pursuant to clause (C) above and (y) any
other sums then due and payable by Lessee to such former
Certificate Holder under the Operative Agreements.
26
Neither Lessee nor Owner Participant shall be obligated to
give the notice referred to in Section 8.5.3(c)(ii). Any such
notice, whether given by Lessee or Owner Participant, may be
rescinded by Lessee with the consent of Owner Participant at any
time prior to the sale, assignment, transfer and conveyance of
such Loan Certificate by delivering written notice of such
rescission to such Certificate Holder, Owner Participant and the
remarketing agent. Such rescission shall not preclude delivery of
another such notice pursuant to Section 8.5.3(c)(ii). No party
shall have any liability for the default by the designated
purchaser in purchasing such Loan Certificate, but such default
shall not preclude the designation of another purchaser under
Section 8.5.3(c)(ii). Lessee shall be responsible for paying the
fees and expenses of the remarketing agent.
8.6 [INTENTIONALLY OMITTED]
8.7 Agreements
8.7.1 Owner Trustee Is Owner for All Purposes
Lessee, the Participants, Owner Trustee and Loan Trustee
agree that for all purposes, after the Closing, Owner Trustee
will be the owner of the Aircraft (except that Owner Participant
will be the owner for income tax purposes) and Lessee will be the
lessee thereof. No transfer, by operation of Law or otherwise, of
the beneficial interest of Owner Participant in and to the Trust
Estate shall operate to transfer legal title to any part of the
Trust Estate to any transferee thereof.
8.7.2 Rights under the Lease
Lessee acknowledges and confirms each of Owner
Participant's and Loan Trustee's rights under the Lease.
8.7.3 Commencement of Bankruptcy Proceedings
Lessee, each Participant, each Certificate Holder, First
Security, Owner Trustee, WTC and Loan Trustee agree for the
benefit of each of the others that it will not commence or join
in any proceeding under the Bankruptcy Code to commence a case
under Section 303 of the Bankruptcy Code against the Trust
Estate. Nothing contained herein shall be deemed to preclude any
Participant, any Certificate Holder, First Security, Owner
Trustee, WTC or Loan Trustee from filing any claim against the
Trust Estate in any case commenced against the Trust Estate.
27
8.7.4 Certain Bankruptcy Matters
If (a) all or any part of the Trust Estate becomes the
property of, or Owner Trustee or Owner Participant becomes, a
debtor subject to the reorganization provisions of the Bankruptcy
Code, (b) pursuant to such reorganization provisions, including
Section 1111(b) of the Bankruptcy Code, First Security or Owner
Participant is required, by reason of First Security or Owner
Participant being held to have recourse liability to any
Certificate Holder or Loan Trustee directly or indirectly (other
than the recourse liability of First Security or Owner
Participant under this Agreement, the Trust Indenture or by
separate agreement), to make payment on account of any amount
payable as principal, Make-Whole Amount, if any, interest or
other amounts on the Loan Certificates, and (c) any Certificate
Holder or Loan Trustee actually receives any Excess Amount, as
defined below, which reflects any payment by First Security or
Owner Participant on account of (b) above, then such Certificate
Holder or Loan Trustee, as the case may be, shall promptly refund
to First Security or Owner Participant (whichever shall have made
such payment) such Excess Amount.
For purposes of this Section 8.7.4, "Excess Amount" means
the amount by which such payment exceeds the amount that would
have been received by a Certificate Holder or Loan Trustee if
First Security or Owner Participant had not become subject to the
recourse liability referred to in clause (b) above. Nothing
contained in this Section 8.7.4 shall prevent a Certificate
Holder or Loan Trustee from enforcing any personal recourse
obligation (and retaining the proceeds thereof) of First Security
or Owner Participant under this Agreement (other than as referred
to in clause (b) above) or the Trust Indenture (and any exhibits
or annexes thereto) or from retaining any amount paid by Owner
Participant under Sections 2.14 or 4.03 of the Trust Indenture.
8.7.5 Quiet Enjoyment; Sale by Owner Trustee Binding
(a) Each Participant, each Certificate Holder, Owner
Trustee and Loan Trustee agrees as to itself with Lessee that, so
long as no Lease Event of Default shall have occurred and be
continuing, such Person shall not (and shall not permit any
Affiliate or other Person claiming by, through or under it to)
interfere with Lessee's rights in accordance with the Lease to
the quiet enjoyment, possession and use of the Aircraft during
the Term. The foregoing, however, shall not be construed or
deemed to modify or condition in any respect the obligations of
Lessee pursuant to Section 16 of the Lease, which obligations are
absolute and unconditional.
(b) Any assignment, sale, transfer or other conveyance of
the Aircraft by Owner Trustee made pursuant to the terms of this
Agreement or the Lease shall bind Owner Participant and shall be
effective to transfer or convey all right, title and interest of
Owner Trustee and Owner Participant in and to the Aircraft. No
purchaser or other grantee shall be required to inquire as to
the authorization, necessity, expediency or regularity of such
28
assignment, sale, transfer or conveyance, or as to the application
of any sale or other proceeds with respect thereto by Owner Trustee,
as regards Owner Participant.
8.7.6 Effect of Lessee's Merger
Section 13.2.2 of the Lease is incorporated by reference
herein.
8.7.7 Non-Recourse
Loan Participant and Loan Trustee agree that (a)
obligations of Owner Trustee under the Trust Indenture or any
other Operative Agreement and with respect to the Loan
Certificates shall be non-recourse to Owner Participant and to
First Security and (b) they will look solely to the income and
proceeds from the Trust Estate and the Trust Indenture Estate to
the extent available for distribution to Loan Participant or Loan
Trustee as provided in the Trust Indenture and that neither Owner
Participant nor First Security will be personally liable to Loan
Participant or Loan Trustee for any amounts payable by Owner
Trustee under the Trust Indenture or any other Operative
Agreement. The foregoing is not intended to limit any liability
of Owner Participant or First Security to the extent that such
liability is expressly set forth in this Agreement (with respect
to Owner Participant) or in any of the Operative Agreements (with
respect to First Security).
29
8.7.8 Other Documents; Amendment
(a) Each Participant hereby consents to the terms of the
Lease, the Trust Agreement and the Trust Indenture. Lessee
acknowledges receipt of executed copies of the Trust Agreement
and the Trust Indenture and hereby consents to the execution and
delivery of the Trust Agreement and the Trust Indenture and to
all the terms thereunder, including, without limitation, the
creation of a Lien in respect of, among other things, the
Aircraft and the Lease pursuant to the Trust Indenture. Nothing
in this Section 8.7.8 shall be construed to require Lessee's
consent to any future supplement to, or amendment, waiver or
modification of any other terms of, the Trust Agreement or the
Trust Indenture. Notwithstanding the foregoing, so long as the
Lease has not terminated or expired, Owner Trustee and Loan
Trustee hereby agree for the benefit of Lessee (i) to comply with
the provisions of the Trust Indenture if failure to so comply
would have an adverse effect on Lessee and such noncompliance is
not the direct result of an act or failure to act by Lessee, and
(ii) not, without the consent of Lessee, directly or indirectly
to amend or modify any provisions of Section 2.01, 2.07 (as to
reduction of the minimum denominations of Loan Certificates),
2.08, 2.09, 3.02, 3.04, 5.05, 5.06, 5.07, 5.08, 5.09, 8.02
(insofar as Lessee is specified to have rights thereunder), 10.04
or 10.05 of the Trust Indenture, Article I or Article VII of the
Trust Indenture or any Loan Certificate in a manner adversely
affecting Lessee. Owner Trustee agrees to furnish promptly to
Lessee and Owner Participant copies of any amendment,
modification, supplement or waiver relating to any of the
Operative Agreements to which Lessee or Owner Participant, as the
case may be, is not a party.
(b) Owner Trustee agrees to join with Lessee to the extent
that action on its part is necessary or appropriate (i) to cause
the following to be duly accomplished in accordance with
applicable United States federal Law by the time the Aircraft is
delivered under this Agreement and the Lease: (A) the application
for registration of the Aircraft in the name of Owner Trustee and
(B) all related action necessary in order for Lessee to have
temporary or permanent authority to operate the Aircraft as
contemplated by the Lease and (ii) forthwith upon delivery of the
Aircraft under this Agreement and the Lease, to cause all
necessary documents to be duly filed for recording in accordance
with applicable United States federal Law.
8.7.9 Consents
Each Participant, Owner Trustee and Loan Trustee covenants
and agrees, for the benefit of Lessee, that it shall not
unreasonably withhold its consent to any consent or approval
requested of it or of Owner Trustee or Loan Trustee under the
terms of any of the Operative Agreements which by its terms is
not to be unreasonably withheld.
30
8.7.10 Insurance
Each party hereto (other than Lessee) agrees not to obtain
or maintain insurance for its own account as permitted by Section
11.3 of the Lease if such insurance would limit or otherwise
adversely affect the coverage of any insurance required to be
obtained or maintained by Lessee pursuant to Section 11 and Annex
D of the Lease.
8.7.11 Extent of Interest of Certificate Holders
A Certificate Holder shall not, as such, have any further
interest in, or other right with respect to, the Trust Estate or
the Trust Indenture Estate when and if the principal and
Make-Whole Amount, if any, of and interest on the Loan
Certificate held by such Holder, and all other sums, then due and
payable to such Holder hereunder and under any other Operative
Agreement, shall have been paid in full.
8.7.12 Foreign Registration
Each Participant, Owner Trustee and Loan Trustee (for
purposes of this Section 8.7.12, acting only at the direction of
a Majority in Interest of Certificate Holders determined without
reference to the second sentence of the definition thereof)
hereby agrees, for the benefit of Lessee but subject to the
provisions of Section 7.1.2 of the Lease:
(a) that Lessee shall be entitled to register the Aircraft
or cause the Aircraft to be registered in a country other than
the United States subject to compliance with the following:
(i) each of Lessor and Loan Trustee gives its prior written consent; and
(ii) each of the following requirements is satisfied:
(A) Lessee shall deliver such request to Lessor and
Loan Trustee at least 30 days in advance of the
date of any such proposed change of registration;
(B) such registration shall be made, if at all, only
after the close of the calendar year in which the
seventh anniversary of the Delivery Date occurs or
if a Lessee Act (as defined in the Tax Indemnity
Agreement) as a result of which indemnification has
been required under the Tax Indemnity Agreement has
created a longer Tax Attribute Period (as defined in
the Tax Indemnity Agreement), after the close of the
Tax Attribute Period, unless in either case Lessee
prepays any liability Owner Participant determines
would be due under the Tax Indemnity Agreement as a
result of such registration based upon the
assumption that such registration would continue for
the remainder of the term of the Permitted Sublease
described in clause (D) below;
31
(C) no Lease Default or Lease Event of Default shall
have occurred and be continuing at the time of
such request;
(D) such proposed change of registration is made in
connection with a Permitted Sublease to a
Permitted Air Carrier;
(E) such country (1) is the domicile of Permitted
Sublessee and the country in which Permitted
Sublessee maintains its principal place of
business and (2) is a country with which the
United States then maintains normal diplomatic
relations;
(F) such country would recognize the interests of, and
would provide substantially equivalent protection
(including the right to take possession of the
Aircraft in the event of (1) a Lease Event of
Default or a default by Permitted Sublessee or
(2) the bankruptcy of Lessee or Permitted Sublessee)
for the rights and remedies of, owner participants,
lessors, lenders and mortgagees in similar
transactions as provided under the Law of the United
States;
(G) the courts of such country would give effect to
Lessor's title to and leasehold interest in the
Aircraft, to the registration of the Aircraft in
the name of Lessor and to the priority of the
Lien of the Trust Indenture, in each case
substantially to the same extent as provided
under the Law of the United States; and
(H) if requested by Lessor, Lessee or any Permitted
Sublessee shall, for purposes of enforcement of the
rights and remedies provided for in Section 15 of
the Lease, execute an irrevocable power of attorney
in form and substance satisfactory to Lessor
providing for, among other things, upon and during
the continuance of a Lease Event of Default, (1) the
deregistration of the Aircraft and (2) the
reregistration of the Aircraft in the United States
by Lessor, including the ability to obtain export
licenses and take any other action necessary or
advisable for the repossession, export and
redelivery to Lessor of the Airframe, any Engine and
any airframe or engine substituted for the Airframe
or any Engine, all in accordance with the Lease.
(b) Neither Lessor nor Loan Trustee shall unreasonably
withhold its consent to such a request by Lessee for a change of
registration of the Aircraft in accordance with this Section, if:
(i) Lessee shall have given to Lessor and Loan Trustee
assurances reasonably satisfactory to each of them:
(A) to the effect that the provisions of Section 11
of the Lease have been complied with after giving
32
effect to such change of registration;
(B) of the payment by Lessee of all reasonable expenses
of Lessor, each Participant, each Certificate Holder
and Loan Trustee in connection with such change of
registry, including, without limitation (1) the
reasonable fees and disbursements of counsel,
(2) any filing or recording fees, Taxes or similar
payments incurred in connection with the change of
registration of the Aircraft and the creation and
perfection of the security interest therein in favor
of Loan Trustee for the benefit of Certificate
Holders, (3) all costs and expenses incurred in
connection with any filings necessary to continue in
the United States the perfection of the security
interest in the Aircraft and the Lease in favor of
Loan Trustee for the benefit of Certificate Holders
and (4) any and all other costs, expenses and Taxes
under the Law of the country of registry, whether
initial or on a continuing basis, incurred by
Lessor, each Participant, each Certificate Holder or
Loan Trustee as a result of the registration of the
Aircraft, or the creation, attachment and perfection
of the security interest therein, under the laws of
the country of registry;
(C) to the effect that the tax and other indemnities in
favor of each person named as an indemnitee under
any other Operative Agreement afford each such
person substantially the same protection as provided
prior to such change of registration (or Lessee
shall have agreed upon additional indemnities that,
together with such original indemnities, in the
reasonable judgment of Lessor and Loan Trustee,
afford such protection);
(D) as to the continued status of the Trust Indenture
as a first priority perfected Lien (subject to
Permitted Liens) on the Trust Indenture Estate
(including, without limitation, the Aircraft);
(E) that any import or export permits necessary to
take the Aircraft into or out of such country and
any exchange permits necessary to allow all Rent
and other payments provided for under the Lease
shall be in full force and effect;
(F) that any value-added tax, customs or import fee
or duty, tariff, other Tax or similar
governmental charge relating to the change in
jurisdiction of registration of the Aircraft
shall have been paid in full or adequately
provided for by Lessee;
(G) that such new country of registry imposes
aircraft maintenance standards no less stringent
than those of the FAA;
(H) that no Lease Default or Lease Event of Default
33
exists and that no Lease Default or Lease Event
of Default will occur or exist upon, or result
from, such reregistration; and
(I) with respect to such other matters as Lessor, any
Participant, Owner Participant or Loan Trustee
may reasonably request; and
(ii) Lessee shall deliver to Lessor, Certificate Holders
and Loan Trustee a favorable opinion, in form and substance
and from counsel in such country, in each case, reasonably
satisfactory to Lessor and Loan Trustee, to the effect
that:
(A) the terms (including, without limitation, the
governing law, service-of-process and
jurisdictional submission provisions, and the
remedies) of this Agreement, the Lease, the
applicable Permitted Sublease and the Trust
Indenture are legal, valid, binding and
enforceable in such country;
(B) it is not necessary for Lessor, any Participant,
Certificate Holders or Loan Trustee to register
or qualify to do business in such country as a
result, in whole or in part, of the registration
of the Aircraft in such country;
(C) there is no tort liability of or imputed to the
owner or lessor, or of persons lending money, on a
secured or unsecured basis, or any guarantor of any
such person, to such an owner or lessor for the
purchase of, an aircraft, under the laws of such
country (it being understood that, in the event such
latter opinion cannot be given in a form
satisfactory to Lessor and each Participant, such
opinion shall be waived if insurance or third-party
indemnities satisfactory to Lessor and each
Participant are available to cover such risk and is
provided at or before the time of such change of
registration, at Lessee's expense);
(D) unless Lessee shall have agreed to provide insurance
satisfactory to Lessor and each Participant covering
the risk of requisition of use of the Aircraft by
the government of such country (so long as the
Aircraft is registered under the laws of such
country), the laws of such country require fair
compensation by the government of such country
payable in currency freely convertible into Dollars
and freely removable from such country (without
license or permit, unless Lessee prior to such
proposed reregistration has obtained such license or
permit) for the taking or loss of use of the
Aircraft in the event of the taking or requisition
by such government of such use;
(E) the registration of the Aircraft would be
terminable without material burden, penalty or
delay by Lessor or Loan Trustee upon the
occurrence of a Lease Event of Default;
34
(F) there shall not exist possessory rights in favor of
the government of such country, Lessee or Permitted
Sublessee (including, without limitation, a defense
of sovereign immunity) that would, upon the
bankruptcy of Lessee or Permitted Sublessee or upon
the occurrence of a Lease Event of Default, prevent
or delay the return of the Aircraft pursuant to the
Lease;
and covering the matters set forth in
Sections 8.7.12(a)(ii)(F) and (G) and to such further
effect with respect to such other matters as Lessor, each
Participant or Certificate Holders may reasonably request.
(c) The parties hereto acknowledge to each other that none
of such parties has conducted a review of the countries in which
the Permitted Air Carriers are domiciled to determine whether any
of the criteria set forth in Section 8.7.12(a) or (b) are
currently met.
(d) Any such change in registration shall be at the sole
expense of Lessee, and Lessee shall pay all reasonable expenses
of Lessor, each Participant, Certificate Holders and Loan Trustee
in connection with any request to change (and the evaluation
thereof), and any actual change, of registration of the Aircraft.
8.7.13 Other Commercial Relations Unaffected
Notwithstanding anything to the contrary set forth in any
Operative Agreement:
(a) Except as set forth in the Purchase Agreement
Assignment, nothing contained in the Lessee Operative Agreements
shall constitute or be deemed to be a waiver by Lessee of any
rights, remedies or claims it may have against Airframe
Manufacturer or Engine Manufacturer or any subcontractor or
supplier of either; and the Lessee Operative Agreements do not
and shall not be construed or deemed to create any rights,
waivers, immunities or indemnities in favor of Airframe
Manufacturer, Engine Manufacturer or any subcontractor or
supplier of either with respect to any such rights, remedies or
claims of Lessee; and
(b) None of Airframe Manufacturer, by its execution and
delivery of the Consent and Agreement, Owner Participant Parent,
by its execution and delivery of the Owner Participant Guaranty,
and Engine Manufacturer, by its execution and delivery of the
Engine Consent and Agreement, shall be deemed to have waived any
rights, remedies or claims which Airframe Manufacturer, Engine
Manufacturer (or any subcontractor or supplier of either) or
Owner Participant Parent, as the case may be, may have against
Lessee; and the Operative Agreements do not and shall not be
construed or deemed to create any rights, waivers, immunities or
indemnities in favor of Lessee with respect to any such rights,
remedies or claims of
35
Airframe Manufacturer, Engine Manufacturer (or any subcontractor
or supplier of either) or Owner Participant Parent.
8.7.14 Interest in Certain Engines
Each Participant, Owner Trustee and Loan Trustee agree, for
the benefit of each of the lessor, conditional seller, Loan
Trustee or secured party of any airframe or engine leased to, or
purchased by, Lessee or any Permitted Sublessee subject to a
lease, conditional sale, trust indenture or other security
agreement that it will not acquire or claim, as against such
lessor, conditional seller, Loan Trustee or secured party, any
right, title or interest in any engine as the result of such
engine being installed on the Airframe at any time while such
engine is subject to such lease, conditional sale, trust
indenture or other security agreement and owned by such lessor or
conditional seller or subject to a trust indenture or security
interest in favor of such Loan Trustee or secured party;
provided, that Lessee or any such Permitted Sublessee shall have
received from the lessor, conditional seller, Loan Trustee or
secured party in respect of such airframe a written agreement
(which may be the lease, conditional sale agreement, trust
indenture or other security agreement covering such airframe)
whereby such lessor, conditional seller, Loan Trustee or secured
party effectively agrees that neither it nor its successors or
assigns will acquire or claim any right, title or interest in any
Engine by reason of such Engine being installed on such airframe
at any time while such Engine is subject to the Lease or is owned
by Owner Trustee.
8.7.15 Trust Agreement
Each of First Security and Owner Trustee hereby (i) agrees
with Lessee, Loan Participant and Loan Trustee not to amend,
supplement, terminate or otherwise modify any provision of the
Trust Agreement in such a manner as to adversely affect the
rights of any such party without the prior written consent of
such party and (ii) agrees with Lessee, Loan Participant and Loan
Trustee not to revoke the trust created by the Trust Agreement so
long as the Trust Indenture remains undischarged or if such
revocation would have an adverse effect on the Lessee. Nothing
contained in this Agreement shall impair any right under the
Trust Agreement of First Security to resign as Owner Trustee.
36
8.7.16 Release of Lien of Trust Indenture
Each of Lessee, Owner Trustee and Loan Trustee agree that
in each instance referred to in the Lease in which a transfer of
any property is required to be made by Owner Trustee to Lessee or
any other Person (other than Loan Trustee or Owner Participant),
upon full compliance by Lessee with Lessee's obligations, if any,
under the applicable section thereof, Loan Trustee shall (upon
certification by Lessee and Owner Trustee of any such event and
without the consent of Certificate Holders) promptly execute such
instruments as Owner Trustee or Lessee may reasonably request to
evidence the release of the Lien of the Trust Indenture with
respect to such property.
8.7.17 With respect to any amounts paid by Lessee
as Supplemental Rent in excess of amounts owed by Lessee as
Supplemental Rent, the Owner Trustee agrees to forward promptly
to Lessee such excess (if and to the extent such excess has been
distributed to and received by the Owner Trustee) after Final
Distributions (as such term is defined in the Intercreditor
Agreement) have been made on all classes of the Pass Through
Certificates and all other amounts due under the Intercreditor
Agreement have been paid and all amounts due and payable by
Lessee to the Owner Trustee or to the Owner Participant or both
under the Operative Agreements have been paid in full.
SECTION 9. [INTENTIONALLY OMITTED]
SECTION 10. INDEMNIFICATION AND EXPENSES
10.1 General Indemnity
10.1.1 Indemnity
Whether or not any of the transactions contemplated hereby
are consummated, Lessee shall indemnify, protect, defend and hold
harmless each Indemnitee from, against and in respect of, and
shall pay on demand, any and all Expenses of any kind or nature
whatsoever, and whether arising before, on or after the Delivery
Date, that may be imposed on, incurred by or asserted against any
Indemnitee, in any way relating to, resulting from, or arising
out of or in connection with, in each case, directly or
indirectly, any one or more of the following:
(a) The Operative Agreements, any Permitted Sublease, the
Refinancing Agreement, the Refunding Agreements, the Note
Purchase Agreement, the Pass Through Trust Agreements, the
Intercreditor Agreement, the Liquidity Facilities and (with
respect to Owner Participant only) the Fee Letter (as defined in
the Intercreditor Agreement) or the enforcement of any of the
terms of any of the Operative Agreements, any Permitted Sublease,
the Refinancing Agreement, the Refunding Agreements, the Note
Purchase Agreement, the Pass Through Trust Agreements, the
Intercreditor Agreement, the Liquidity Facilities and (with
respect to Owner Participant only) the Fee Letter (as defined in
the Intercreditor Agreement).
37
(b) The Aircraft, the Airframe, any Engine or any Part,
including, without limitation, with respect thereto, (i) the
manufacture, design, purchase, acceptance, nonacceptance or
rejection, ownership, registration, reregistration,
deregistration, financing, delivery, nondelivery, lease,
sublease, assignment, possession, use or non-use, operation,
maintenance, testing, repair, overhaul, condition, alteration,
modification, addition, improvement, storage, airworthiness,
replacement, repair, sale, substitution, return, abandonment,
redelivery or other disposition of the Aircraft, any Engine or
any Part, (ii) any claim or penalty arising out of violations of
applicable Laws by Lessee (or any Permitted Sublessee), (iii)
tort liability, whether or not arising out of the negligence of
any Indemnitee (whether active, passive or imputed), (iv) death
or property damage of passengers, shippers or others, (v)
environmental control, noise or pollution and (vi) any Liens in
respect of the Aircraft, any Engine or any Part;
(c) The offer, sale, resale, purchase, delivery or holding
of any Loan Certificate or Equipment Note (whether issued
pursuant to the Original Indenture or the Trust Indenture and
whether issued on the Delivery Date or in connection with the
Refinancing Transaction or otherwise) or Pass Through Certificate
or any interest in or represented by any Loan Certificate or
Equipment Note (whether issued pursuant to the Original Indenture
or the Trust Indenture and whether issued on the Delivery Date or
in connection with the Refinancing Transaction or otherwise) or
Pass Through Certificate or any refunding of any Loan Certificate
or Equipment Note pursuant to Section 13, whether before, on or
after the Delivery Date;
(d) The offer or sale of any interest in the Aircraft, the
Equipment Notes (whether issued on the Delivery Date or in
connection with the Refinancing Transaction or otherwise), the
Pass Through Certificates, the Trust Estate or the Trust
Agreement or any similar interest or in any way resulting from or
arising out of the Trust Agreement and the Trust Estate and the
Trust Indenture Estate (including for claims resulting from or
arising under the Securities Act or other applicable federal,
state or foreign securities Laws or at common law) in each case
(other than the Equipment Notes issued in connection with the
Refinancing Transaction and the Pass Through Certificates) on or
prior to the Delivery Date and, in the case of the Equipment
Notes issued in connection with the Refinancing Transaction, and
the Pass Through Certificates, on or prior to the date on which
the Refinancing Transaction is consummated or on or prior to the
date on which registered Pass Through Certificates are issued, as
contemplated by the Registration Rights Agreement, in exchange
for the initial Pass Through Certificates;
(e) Any breach of or failure to perform or observe, or any
other noncompliance with, any covenant or agreement or other
obligation to be performed by Lessee under any Lessee Operative
Agreement, the Refinancing Agreement, any Refunding Agreement,
the Note Purchase Agreement or any Pass Through Trust Agreement
or the falsity of any representation or warranty of Lessee in any
such agreement other than in the Tax Indemnity Agreement or the
38
occurrence of any Lease Default or Lease Event of Default; and
(f) Any "prohibited transaction," within the meaning of
Section 406 of ERISA or Section 4975(c)(1) of the Code, in any
way relating to, resulting from, or arising out of or in
connection with, directly or indirectly, the Refinancing
Transaction, the offer, sale, resale, purchase, delivery or
holding of any Loan Certificate or Equipment Note (whether issued
pursuant to the Original Indenture or the Trust Indenture and
whether issued on the Delivery Date or in connection with the
Refinancing Transaction or otherwise) or Pass Through Certificate
or any interest therein or represented thereby or any refunding
thereof pursuant to Section 13, or any other transaction
contemplated under any Operative Agreement, the Refinancing
Agreement, any Refunding Agreement, the Note Purchase Agreement,
any Pass Through Trust Agreement, the Intercreditor Agreement,
the Liquidity Facilities or the Fee Letter (as defined in the
Intercreditor Agreement) whether such prohibited transaction
occurs before, on or after the Delivery Date.
10.1.2 Exceptions
Notwithstanding anything contained in Section 10.1.1,
Lessee shall not be required to indemnify, protect, defend and
hold harmless any Indemnitee pursuant to Section 10.1.1 in
respect of any Expense of such Indemnitee:
(a) For any Taxes (other than Taxes related to ERISA or
assessed under Section 4975 of the Code) or a loss of Tax
benefit, whether or not Lessee is required to indemnify therefor
pursuant to Section 10.3 or the Tax Indemnity Agreement;
(b) Except to the extent fairly attributable to acts or
events occurring or conditions or circumstances existing prior
thereto, acts or events (other than acts or events related to the
performance by Lessee of its obligations pursuant to the terms of
the Lessee Operative Agreements) that occur after the earliest
of: (i) with respect to the Airframe, any Engine or any Part, the
return of possession of such Airframe, Engine or Part pursuant to
the terms of and in compliance with the Lease (other than
pursuant to Section 15 thereof, in which case Lessee's liability
under this Section 10.1 shall survive for so long as Lessor shall
be entitled to exercise remedies under such Section 15), (ii) the
termination of the Term in accordance with Sections 9 or 17.3 of
the Lease or (iii) the termination of the Term in accordance with
Section 10.1.2 of the Lease and the payment by Lessee of all
amounts then due and payable under the Lease and hereunder as a
result of an Event of Loss with respect to the Aircraft;
provided, that nothing in this clause (b) shall be deemed to
exclude or limit any claim that any Indemnitee may have under
applicable Law by reason of a Lease Event of Default or for
damages from Lessee for breach of Lessee's covenants contained in
the Lessee Operative Agreements or to release Lessee from any of
its obligations under the Lessee Operative Agreements that
expressly provide for performance after termination of the Term;
39
(c) If such Indemnitee shall be a Loan Participant or any
Certificate Holder, for any Expense attributable to any Transfer
(voluntary or involuntary) by or on behalf of such Indemnitee of
any Loan Certificate or interest therein, except for
out-of-pocket costs and expenses incurred as a result of any such
Transfer pursuant to the exercise of remedies under any Operative
Agreement resulting from a Lease Event of Default or any such
Transfer required by an Operative Agreement;
(d) If such Indemnitee shall be Owner Participant, for any
Expense asserted against Owner Participant to the extent that the
same is so asserted by reason of any Transfer (voluntary or
involuntary) by or on behalf of Owner Participant of any interest
in the Aircraft, or the Trust Estate except for out-of-pocket
costs and expenses incurred as a result of such Transfer, if, at
the time of such Transfer, a Lease Event of Default shall have
occurred and be continuing;
(e) To the extent such Expense is attributable to the gross
negligence or willful misconduct of such Indemnitee or any
related Indemnitee (as defined below) (other than gross
negligence or willful misconduct imputed to such person by reason
of its interest in the Aircraft or any Operative Agreement);
(f) If such Indemnitee is Owner Trustee any Expense or other
amount that is enumerated in the proviso to Section 17;
(g) Any Expense to the extent attributable to the
incorrectness or breach of any representation or warranty of such
Indemnitee or related Indemnitee contained in or made pursuant to
any Operative Agreement, the Refinancing Agreement, any Refunding
Agreement, the Note Purchase Agreement, any Pass Through Trust
Agreement, the Intercreditor Agreement or any Liquidity Facility.
(h) Any Expense to the extent attributable to the failure
by such Indemnitee or any related Indemnitee to perform or
observe any agreement, covenant or condition on its part to be
performed or observed in any Operative Agreement, the Refinancing
Agreement (except with respect to the Owner Participant), any
Refunding Agreement (except with respect to the Owner
Participant), the Note Purchase Agreement, any Pass Through Trust
Agreement, the Intercreditor Agreement, any Liquidity Facility or
the Fee Letter (as defined in the Intercreditor Agreement);
(i) Any Expense to the extent attributable to the offer or
sale by such Indemnitee or any related Indemnitee of any interest
in the Aircraft, the Loan Certificates, the Trust Estate or the
Trust Agreement or any similar interest, in violation of the
Securities Act or other applicable federal, state or foreign
securities Laws, in each case, on or prior to the Delivery Date;
(j) (i) With respect to any Indemnitee (other than Loan
Trustee), any Expense to the extent attributable to the failure
of (X) the Loan Trustee to distribute funds received and
distributable by it in accordance with the Trust Indenture or (Y)
the Owner
40
Trustee to distribute funds received and distributable by it in
accordance with the Trust Agreement, (ii) with respect to any
Indemnitee (other than the Subordination Agent), any Expense to
the extent attributable to the failure of the Subordination Agent
to distribute funds received and distributable by it in
accordance with the Intercreditor Agreement, (iii) with respect
to any Indemnitee (other than the Pass Through Trustees), any
Expense to the extent attributable to the failure of a Pass
Through Trustee to distribute funds received and distributable by
it in accordance with the Pass Through Trust Agreements, (iv)
with respect to Loan Trustee, any Expense to the extent
attributable to the negligence or willful misconduct of Loan
Trustee in the distribution of funds received and distributable
by it in accordance with the Trust Indenture, (v) with respect to
the Subordination Agent, any Expense to the extent attributable
to the negligence or willful misconduct of the Subordination
Agent in the distribution of funds received and distributable by
it in accordance with the Intercreditor Agreement, and (vi) with
respect to the Pass Through Trustees, any Expense to the extent
attributable to the negligence or willful misconduct of a Pass
Through Trustee in the distribution of funds received and
distributable by it in accordance with the Pass Through Trust
Agreements.
(k) Other than during the continuation of a Lease Event of
Default, any Expense attributable to the authorization or giving
or withholding of any future amendments, supplements, waivers or
consents with respect to any Operative Agreement other than such
as have been requested by Lessee or as are required by or made
pursuant to the terms of the Operative Agreements (unless such
requirement results from the actions of an Indemnitee not
required by or made pursuant to the Operative Agreements);
(l) Any Expense or other amount which such Indemnitee
expressly agrees to pay or such Indemnitee expressly agrees shall
not be paid by or be reimbursed by Lessee including, without
limitation, with respect to Owner Participant, pursuant to
Section 15;
(m) Any Expense that is an ordinary and usual operating or
overhead expense;
(n) Any Expense by the Owner Participant or Owner Trustee
attributable to the deregistration of the Aircraft under the Act
as a result of Owner Participant's or Owner Trustee's (or any
related Indemnitee of either) not being a Citizen of the United
States as a result of any act (other than reregistration of the
Aircraft pursuant to Section 7.1.2 of the Lease) of Owner
Participant or Owner Trustee, or any related Indemnitee of either
of the foregoing (not taken at the request of the Lessee);
(o) For any Lessor Lien attributable to such Indemnitee or
any related Indemnitee;
(p) Any Expense to the extent constituting principal, Make-
Whole Amount or interest on the Loan Certificates attributable
41
solely to an Event of Default not constituting a Lease Event of
Default; or
(q) If such Indemnitee shall be a Loan Participant or a
Note Holder, or any related Indemnitee of either, for any Expense
incurred by or asserted against such Indemnitee as a result of
any "prohibited transaction", within the meaning of Section 406
of ERISA or Section 4975(c)(1) of the Code, including a
prohibited transaction described in Section 10.1.1(f); provided,
that this clause (q) shall not negate Lessee's obligation under
Section 10.1.1, or any other provision of any Lessee Operative
Agreement, to indemnify an Indemnitee, other than a Loan
Participant or a Note Holder, or any related Indemnitee of
either, for any Expense incurred by or asserted against such
Indemnitee as a result of a "prohibited transaction", within the
meaning of Section 406 of ERISA or Section 4975(c)(1) of the
Code, in any way relating to, resulting from, or arising out of
or in connection with, directly or indirectly, the Refinancing
Transaction, the offer, sale, resale, purchase, delivery or
holding of any Pass Through Certificate, any Loan Certificate or
Equipment Note (whether issued pursuant to the Original Indenture
or the Trust Indenture and whether issued on the Delivery Date or
in connection with the Refinancing Transaction or otherwise) or
any interest therein or represented thereby or any refunding
thereof pursuant to Section 13, or any other transaction
contemplated under any Operative Agreement, the Refinancing
Agreement, any Refunding Agreement, the Note Purchase Agreement,
any Pass Through Trust Agreement, the Intercreditor Agreement,
any Liquidity Facility or the Fee Letter (as defined in the
Intercreditor Agreement), whether such prohibited transaction
occurs before, on or after the Delivery Date; provided further,
that if The Boeing Company or any related Indemnitee thereof is
the Indemnitee, this clause (q) shall not apply (or negate
Lessee's obligation under Section 10.1.1, or any other provision
of any Lessee Operative Agreement to indemnify such Indemnitee)
with respect to any Expense of any kind or nature whatsoever in
any way relating to, resulting from or arising out of or in
connection with, directly or indirectly, any "prohibited
transaction" within the meaning of Section 406 of ERISA or
Section 4975(c)(1) of the Code, in any way relating to, resulting
from, or arising out of or in connection with, directly or
indirectly, the Refinancing Transaction, the offer, sale, resale,
purchase, delivery or holding of any Pass Through Certificate,
any Equipment Note issued in connection with the Refinancing
Transaction or any interest therein or represented thereby or any
refunding thereof pursuant to Section 13, or any other
transaction contemplated under the Refinancing Agreement, any
Refunding Agreement, the Note Purchase Agreement, any Pass
Through Trust Agreement, the Intercreditor Creditor, any
Liquidity Facility or the Fee Letter (as defined in the
Intercreditor Agreement).
For purposes of this Section 10.1, a Person shall be
considered a "related" Indemnitee with respect to an Indemnitee
if such Person is a director, officer, employee, agent, Affiliate
or employer thereof.
42
10.1.3 Separate Agreement
This Agreement constitutes a separate agreement with
respect to each Indemnitee and is enforceable directly by each
such Indemnitee.
10.1.4 Notice
If a claim for any material Expense that an Indemnitee
shall be indemnified against under this Section 10.1 is made,
such Indemnitee shall give prompt written notice thereof to
Lessee. Notwithstanding the foregoing, the failure of any
Indemnitee to notify Lessee as provided in this Section 10.1.4,
or in Section 10.1.5, shall not release Lessee from any of its
obligations to indemnify such Indemnitee hereunder, unless such
failure is solely responsible for effectively foreclosing
Lessee's right to contest such claim.
10.1.5 Notice of Proceedings; Defense of Claims;
Limitations
(a) In case any action, suit or proceeding shall be brought
against any Indemnitee for which Lessee is responsible under this
Section 10.1, such Indemnitee shall notify Lessee of the
commencement thereof and Lessee may, at its expense, participate
in and to the extent that it shall wish (subject to the
provisions of the following paragraph), assume and control the
defense thereof, with counsel reasonably satisfactory to such
Indemnitee and, subject to Section 10.1.5(c), settle or
compromise the same.
(b) Lessee or its insurer(s) shall have the right, at its
or their expense, to investigate or, if Lessee or its insurer(s)
shall agree not to dispute liability hereunder or under any
insurance policies pursuant to which coverage is sought, defend,
or participate in the defense of, any action, suit or proceeding,
with counsel reasonably satisfactory to the relevant Indemnitee,
relating to any Expense for which indemnification is sought
pursuant to this Section 10.1, and each Indemnitee shall
cooperate with Lessee or its insurer(s) with respect thereto;
provided, that Lessee shall not be entitled to control the
defense of any such action, suit, proceeding or compromise any
such Expense (i) during the continuance of any Lease Event of
Default, (ii) if in the reasonable judgment of any Indemnitee,
compromise of such Expense could have an adverse impact on the
business of such Indemnitee or involve the potential imposition
of criminal liability on such Indemnitee or (iii) if such defense
or compromise would at any time involve any material risk of the
sale, forfeiture or loss of, or the loss of use of, or the
creation of any Lien (other than a Permitted Lien) on, the
Aircraft, the Airframe, any Engine, any Part, the Trust Indenture
Estate or the Trust Estate unless Lessee shall have posted a bond
or other security reasonably satisfactory to Owner Participant,
Loan Trustee and such Indemnitee with respect to such risk. In
connection with any such action, suit or proceeding being
controlled by Lessee, such Indemnitee shall have the right to
participate therein, at its sole cost and expense,
43
with counsel of its choice; provided, that such Indemnitee's
participation does not, in the reasonable opinion of the
independent counsel appointed by the Lessee or its insurers to
conduct such proceedings, interfere with the defense of such
case. Lessee shall supply the Indemnitee with such information
reasonably requested by the Indemnitee as is necessary or
advisable for the Indemnitee to control or participate in any
proceeding to the extent permitted by this Section 10.1.
(c) In no event shall any Indemnitee enter into a
settlement or other compromise with respect to any Expense
without the prior written consent of Lessee (except during the
continuance of a Lease Event of Default when such consent shall
not be required, if the Indemnitee has given Lessee at least 30
days' prior written notice of the nature and scope of the
proposed settlement or compromise), which consent shall not be
unreasonably withheld or delayed, unless such Indemnitee waives
its right to be indemnified with respect to such Expense under
this Section 10.1. Lessee shall not enter into a settlement or
other compromise with respect to any Expense absent the giving to
such Indemnitee of prior written notice of such settlement or
compromise, and Lessee will not enter into such a settlement or
other compromise absent such Indemnitee's prior written consent,
which consent shall not be unreasonably withheld or delayed
(provided that such consent shall not be required if such
settlement or compromise provides for the total and irrevocable
release of such Indemnitee with respect to all claims relating to
such Expense without admission of any liability of such
Indemnitee with respect to such Expense and imposes no conditions
or restrictions upon such Indemnitee).
(d) In any circumstance in which Lessee shall not be
entitled to control the defense of any action, suit or proceeding
described above, or compromise any Expense, Lessee shall have the
right to participate therein, at its sole cost and expense, with
counsel reasonably acceptable to the involved Indemnitee;
provided, that Lessee's participation does not, in the reasonable
opinion of independent counsel appointed by such Indemnitee to
conduct such proceedings, interfere with the defense of such
case.
(e) In the case of any Expense indemnified by the Lessee
hereunder which is covered by a policy of insurance maintained by
Lessee pursuant to Section 11 of the Lease, at Lessee's expense,
each Indemnitee agrees to cooperate with the insurers in the
exercise of their rights to investigate, defend or compromise
such Expense as may be required to retain the benefits of such
insurance with respect to such Expense.
(f) If an Indemnitee is not a party to this Agreement,
Lessee may require such Indemnitee to agree in writing to the
terms of this Section 10 and Section 19.8 prior to making any
payment to such Indemnitee under this Section 10.
(g) Nothing herein shall be deemed to be an assumption by
Lessee of obligations of Owner Trustee with respect to, or a
guarantee by Lessee of, any amounts payable by Owner Trustee upon
44
Loan Certificates or a guarantee of any residual value of the
Aircraft.
(h) Nothing contained in this Section 10.1.5 shall be
deemed to require Indemnitee to contest any Expense or to assume
responsibility for or control of any judicial proceeding with
respect thereto.
10.1.6 Information
Lessee will provide the relevant Indemnitee with such
information not within the control of such Indemnitee, as is in
Lessee's control or is reasonably available to Lessee, which such
Indemnitee may reasonably request and will otherwise cooperate
with such Indemnitee so as to enable such Indemnitee to fulfill
its obligations under Section 10.1.5. The Indemnitee shall supply
Lessee with such information not within the control of Lessee, as
is in such Indemnitee's control or is reasonably available to
such Indemnitee, which Lessee may reasonably request to control
or participate in any proceeding to the extent permitted by
Section 10.1.5.
10.1.7 Effect of Other Indemnities; Subrogation;
Further Assurances
Lessee's obligations under the indemnities provided for in
this Agreement shall be those of a primary obligor whether or not
the person indemnified is also indemnified with respect to the
same matter under the terms of this Agreement, any Operative
Agreement or any other agreement, instrument or document, whether
or not related to the transactions contemplated hereby, and the
person seeking indemnification from Lessee pursuant to any
provision of this Agreement may proceed directly against Lessee
without first seeking to enforce any other right of
indemnification. Upon the payment in full by Lessee of any
indemnity provided for under this Agreement, Lessee, without any
further action and to the full extent permitted by Law, will be
subrogated to all rights and remedies of the person indemnified
(other than with respect to any of such Indemnitee's insurance
policies or in connection with any indemnity claim such
Indemnitee may have under Section 5.03 or 7.01 of the Trust
Indenture or Section 5.3 or 7 of the Trust Agreement) in respect
of the matter as to which such indemnity was paid. Each
Indemnitee will give such further assurances or agreements and
cooperate with Lessee to permit Lessee to pursue such claims, if
any, to the extent reasonably requested by Lessee and at Lessee's
expense.
45
10.1.8 Refunds
If an Indemnitee receives any refund, in whole or in part,
with respect to any Expense paid by Lessee hereunder, it will
promptly pay the amount refunded (but not an amount in excess of
the amount Lessee or any of its insurers has paid in respect of
such Expense) over to Lessee unless a Lease Event of Default
shall have occurred and be continuing, in which case such amounts
shall be paid over to Owner Trustee (or, so long as the Trust
Indenture shall not have been discharged, to Loan Trustee) to
hold as security for Lessee's obligations under the Lessee
Operative Agreements or, if requested by Lessee, applied to
satisfy such obligations.
10.2 Expenses
Whether or not all or any portion of the transactions
contemplated herein are consummated, Lessee shall pay on demand
all Transaction Expenses.
46
10.3 General Tax Indemnity
10.3.1 General
Except as provided in Section 10.3.2, Lessee agrees that
each payment of Rent paid by Lessee pursuant to the Lease, and
any other payment or indemnity paid by Lessee to a Tax Indemnitee
or Indemnitee under any Operative Agreement, shall be free of all
withholdings or deductions with respect to Taxes of any nature
(other than U.S. federal, state or local withholding taxes on,
based on or measured by gross or net income), and in the event
that Lessee shall be required by applicable law to make any such
withholding or deduction for any such payment, (x) the amount
payable by Lessee shall be increased so that after making all
required withholdings or deductions such Indemnitee or Tax
Indemnitee, as the case may be, receives the same amount that it
would have received had no such withholdings or deductions been
made, (y) Lessee shall make all such withholdings or deductions
and (z) Lessee shall pay the full amount withheld or deducted to
the relevant Taxing Authority in accordance with applicable law.
Except as provided in Section 10.3.2 and whether or not any of
the transactions contemplated hereby are consummated, Lessee
shall pay, indemnify, protect, defend and hold each Tax
Indemnitee harmless from all Taxes imposed by any Taxing
Authority that may from time to time be imposed on or asserted
against any Tax Indemnitee or the Aircraft, the Airframe, any
Engine or any Part or any interest in any of the foregoing
(whether or not indemnified against by any other Person), upon or
with respect to the Operative Agreements or the transactions or
payments contemplated thereby, including but not limited to any
Tax imposed upon or with respect to (x) the Aircraft, the
Airframe, any Engine, any Part, any Operative Agreement
(including without limitation any Loan Certificate) or any data
or any other thing delivered or to be delivered under an
Operative Agreement, (y) the purchase, manufacture, acceptance,
rejection, sale, transfer of title, return, ownership,
mortgaging, delivery, transport, charter, rental, lease,
re-lease, sublease, assignment, possession, repossession,
presence, use, condition, storage, preparation, maintenance,
modification, alteration, improvement, operation, registration,
transfer or change of registration, reregistration, repair,
replacement, overhaul, location, control, the imposition of any
Lien (other than a Lessor Lien), financing, refinancing requested
by the Lessee, abandonment or other disposition of the Aircraft,
the Airframe, any Engine, any Part, any data or any other thing
delivered or to be delivered under an Operative Agreement or (z)
rent, interest, fees or any other income, proceeds, receipts or
earnings, whether actual or deemed, arising upon, in connection
with, or in respect of, any of the Operative Agreements
(including the property or income or other proceeds with respect
to property held as part of the Trust Indenture Estate) or the
transactions contemplated thereby.
47
10.3.2 Certain Exceptions
The provisions of Section 10.3.1 shall not apply to, and
Lessee shall have no liability pursuant to Section 10.3.1 for,
Taxes:
(a) imposed on a Tax Indemnitee by the United States
Federal government on, based on or measured by gross or net
income (including any capital gains taxes, excess profits
taxes, minimum taxes from tax preferences, alternative
minimum taxes, branch profits taxes, accumulated earnings
taxes, personal holding company taxes, succession taxes and
estate taxes and any withholding taxes on, based on or
measured by net or gross income but excluding any Taxes in
the nature of sales, use, rental, ad valorem, license,
property, value added or similar Taxes);
(b) imposed on a Tax Indemnitee by any Taxing
Authority (other than the United States Federal government)
(i) on, based on, or measured by, the gross or net income
or gross or net receipts of any Tax Indemnitee, including
capital gains taxes, excess profits taxes, minimum taxes
from tax preferences, alternative minimum taxes, branch
profits taxes, accumulated earnings taxes, personal holding
company taxes, succession taxes and estate taxes, and any
state or local withholding taxes on, based on or measured
by gross or net income or (ii) on, or with respect to, or
measured by, the capital or net worth of any Tax Indemnitee
or in the nature of a franchise tax or a tax for the
privilege of doing business (other than, in the case of
clause (i) or (ii), (A) any such Taxes in the nature of
sales, use, rental, ad valorem, license, property, value
added or similar Taxes, (B) any withholding Taxes (other
than withholding taxes, imposed by any state or local
Taxing Authority within the United States, on, based on or
measured by gross or net income)
and (C) any such Tax if Taxes of such type would not have
been imposed on such Tax Indemnitee by such Taxing
Authority (other than any Taxing Authority within the
jurisdiction of which the Tax Indemnitee is incorporated or
maintains its principal place of business) but for (I) the
location, use or operation of the Aircraft, the Airframe,
any Engine or any Part by a Lessee Person within the
jurisdiction of the Taxing Authority imposing such Tax,
(II) the activities of any Lessee Person (except for
activities of a Lessee Person that is not an Affiliate,
successor or assign of the Lessee, which activities are
unrelated to the transactions contemplated by the Operative
Agreements) in such jurisdiction, including, but not
limited to, use of any other aircraft by Lessee in such
jurisdiction, (III) the status of any Lessee Person as a
foreign entity or as an entity owned in whole or in part by
foreign persons, or (IV) Lessee having made (or having been
deemed to have made) payments to such Tax Indemnitee from
the relevant jurisdiction);
(c) on, or with respect to, or measured by, any trustee
fees, commissions
48
or compensation received by Owner Trustee or Loan Trustee;
(d) on the Trust or the Trust Estate that result from
treatment of the Trust or the Trust Estate as an entity,
such as a corporation, separate and apart from the Owner
Participant, provided that such Taxes are not imposed in
lieu of indemnifiable Taxes that would have been imposed on
another Tax Indemnitee were it not for such treatment;
(e) that are being contested as provided in Section 10.3.4
hereof;
(f) imposed on any Tax Indemnitee to the extent that such
Taxes result from the gross negligence or willful
misconduct of such Tax Indemnitee or any Affiliate thereof;
(g) imposed on or with respect to a Tax Indemnitee
(including the transferee in those cases in which the Tax
on transfer is imposed on, or is collected from, the
transferee) as a result of a transfer or other disposition
by such Tax Indemnitee (or, in the case of the Owner
Participant, by Owner Trustee) of any interest in the
Aircraft, the Airframe, any Engine or any Part of any of
the foregoing, the Rent (other than the assignment of Rent
to the Loan Trustee pursuant to the Trust Indenture), the
Trust or the Trust Estate or any interest arising under the
Operative Agreements or any Loan Certificate or a transfer
of any interest in the Tax Indemnitee (other than (A) a
transfer to Lessee pursuant to Section 17.3 of the Lease or
a transfer otherwise initiated at the request of Lessee
(other than pursuant to Section 9 of the Lease), (B) a
substitution or replacement of the Aircraft, Airframe, any
Engine or any Part by a Lessee Person that is treated for
Tax purposes as a transfer or disposition, (C) a refunding
or refinancing pursuant to Section 13 that is treated for
Tax purposes as a transfer or disposition, (D) a transfer
pursuant to an exercise of remedies upon a Lease Event of
Default that shall have occurred and have been continuing,
(E) a transfer pursuant to Section 20.2 or (F) any
involuntary transfer or disposition of any of the foregoing
interests resulting from any bankruptcy, foreclosure or
other proceedings for the relief of debtors in which such
Tax Indemnitee is the debtor that is caused by a Lease
Event of Default that shall have occurred and be
continuing);
(h) imposed on the Owner Participant and indemnified by
Lessee pursuant to the Tax Indemnity Agreement;
(i) imposed with respect to any period after the later of
(A) the expiration or earlier termination of the Term and,
if required pursuant to the terms of the Lease, the return
of possession of the Aircraft to Lessor or placement in
storage at the request of Lessor in accordance with the
Lease and the satisfaction of all of Lessee's obligations
under the Lease (but, in the case of the time period after
termination or expiration of the Term and before such satis-
faction, Lessee will have liability only with respect to Taxes
49
imposed in connection with the satisfaction of or failure to
satisfy such obligations, and in the case of storage requested
by a Tax Indemnitee, only with respect to Taxes imposed up
through the time of delivery of the Aircraft to storage in
accordance with the terms of the Lease) or (B) the
discharge in full of Lessee's obligation, if any, to pay
Stipulated Loss Value or Termination Value, as the case may
be, for the Aircraft in accordance with the Lease, unless,
in each case, (I) such Taxes relate to events, obligations
or other matters arising or occurring prior to or
coincidental with such expiration, return or payment, as
the case may be, or (II) a Lease Event of Default shall
have occurred and be continuing;
(j) consisting of any interest, penalties or additions to
tax imposed on a Tax Indemnitee as a result of (in whole or
in part) failure of a Tax Indemnitee to file any return
properly and timely unless such failure shall be caused by
the failure of Lessee to fulfill its obligations, if any,
under Section 10.3.6 with respect to such return;
(k) resulting from, or that would not have been imposed but
for, any Lessor Liens arising as a result of claims
against, or acts or omissions of, or otherwise attributable
to such Tax Indemnitee or any Affiliate thereof;
(l) imposed on any Tax Indemnitee as a result of the breach
by such Tax Indemnitee or any Affiliate thereof of any
covenant of such Tax Indemnitee or any Affiliate thereof
contained in any Operative Agreement or the inaccuracy of
any representation or warranty by such Tax Indemnitee or
any Affiliate thereof in any Operative Agreement;
(m) imposed on any Tax Indemnitee solely as a result of any
Special Structure (as defined in Section 15.1) or
refinancing pursuant to Section 15 or redemption or
refinancing of the Loan Certificates other than at the
request of Lessee except to the extent that the amount of
such Taxes does not exceed the amount of Taxes similar in
nature and indemnifiable hereunder that would have been
imposed on another Tax Indemnitee were it not for such
Special Structure (but were not so imposed as a result
thereof);
(n) in the nature of an intangible or similar Tax (i) upon
or with respect to the value or principal amount of the
interest of Loan Participant or any Certificate Holder in
any Loan Certificate or the loan evidenced thereby or (ii)
upon or with respect to the value of the interest of the
Owner Participant in the Trust Estate or the Trust, in each
case only if such Taxes are in the nature of franchise
Taxes or result from the Tax Indemnitee doing business in
the taxing jurisdiction and are imposed because of the
place of incorporation or the activities in the taxing
jurisdiction of such Tax Indemnitee;
(o) that is included in Lessor's Cost and paid to the
appropriate Taxing Authority;
50
(p) imposed on any Tax Indemnitee that is incorporated or
has its principal place of business outside the United
States by any foreign government or political subdivision
or taxing authority thereof or any territory of possession
of the United States or by any international authority (a
"Foreign Jurisdiction"), other than any such Tax that would
not have been imposed but for, or the amount of which was
increased as a result of, the registration, operation,
location or use of the Aircraft or the operations of any
Lessee Person in the Foreign Jurisdiction imposing such Tax
(but only to the extent attributable to the registration,
operation, location or use of the Aircraft or activities of
the Lessee Person in such jurisdiction);
(q) Taxes described in the parenthetical of Section 10.1.2(a)
relating to ERISA and Section 4975 of the Code; or
(r) imposed on any Tax Indemnitee as a result of the
termination or revocation of the Trust Agreement and the
entering into of a new trust agreement with a New Trustee
as provided in Section 8.2.2(b).
10.3.3 Payment
(a) Lessee's indemnity obligation to a Tax Indemnitee under
this Section 10.3 shall equal the amount which, after taking into
account any Tax imposed upon the receipt or accrual of the
amounts payable under this Section 10.3 and any tax benefits
actually recognized by such Tax Indemnitee (including, without
limitation, any benefits recognized as a result of an
indemnifiable Tax being utilized by such Tax Indemnitee as a
credit against Taxes not indemnifiable under this Section 10.3),
as determined in good faith by the relevant Tax Indemnitee
(provided, that none of Loan Participant or any Certificate
Holder shall have any obligation to claim any benefits, credits
or deductions in priority to any other benefits, credits or
deductions available to it), shall equal the amount of the Tax
indemnifiable under this Section 10.3.
(b) At Lessee's request, the computation of the amount of
any indemnity payment owed by Lessee or any amount owed by a Tax
Indemnitee to Lessee pursuant to this Section 10.3 shall be
verified and certified by an independent public accounting firm
selected by such Tax Indemnitee and reasonably satisfactory to
Lessee. Such verification shall be binding. The costs of such
verification (including the fee of such public accounting firm)
shall be borne by Lessee unless such verification shall result in
an adjustment in Lessee's favor of 5% or more of the net present
value of the payment as computed by such Tax Indemnitee, in which
case the costs shall be paid by such Tax Indemnitee.
(c) Each Tax Indemnitee shall provide Lessee with such
certifications, information and documentation as shall be in such
Tax Indemnitee's possession and as shall be reasonably requested
by Lessee to minimize any indemnity payment pursuant to this Section
10.3; provided, that notwithstanding anything to the contrary
51
contained herein, no Tax Indemnitee shall be required to provide
Lessee with any Tax returns.
(d) If Owner Participant reimburses Owner Trustee or Loan
Trustee for any Tax for which indemnification by Lessee would be
required hereunder, Lessee will reimburse Owner Participant
therefor.
(e) Each Tax Indemnitee shall promptly forward to Lessee
any written notice, bill or advice received by it from any Taxing
Authority concerning any Tax for which it seeks indemnification
under this Section 10.3. Except as provided in the first sentence
of Section 10.3.1 or in Section 10.3.11, Lessee shall pay any
amount for which it is liable pursuant to this Section 10.3
directly to the appropriate Taxing Authority if legally
permissible or upon demand of a Tax Indemnitee, to such Tax
Indemnitee within 30 days of such demand (or, if a contest occurs
in accordance with Section 10.3.4, within 30 days after a Final
Determination (as defined below)), but in no event more than one
Business Day prior to the date the Tax to which such amount
payable hereunder relates is due. If requested by a Tax
Indemnitee in writing, Lessee shall furnish to the appropriate
Tax Indemnitee the original or a certified copy of a receipt for
Lessee's payment of any Tax paid by Lessee or such other evidence
of payment of such Tax as is acceptable to such Tax Indemnitee.
Lessee shall also furnish promptly upon written request such data
as any Tax Indemnitee may reasonably require to enable such Tax
Indemnitee to comply with the requirements of any taxing
jurisdiction unless such data is not reasonably available to
Lessee or, unless such data is specifically requested by a Taxing
Authority, is not customarily furnished by domestic air carriers
under similar circumstances. For purposes of this Section 10.3, a
"Final Determination" shall mean (i) a decision, judgment, decree
or other order by any court of competent jurisdiction that occurs
pursuant to the provisions of Section 10.3.4, which decision,
judgment, decree or other order has become final and
unappealable, (ii) a closing agreement or settlement agreement
entered into in accordance with Section 10.3.4 that has become
binding and is not subject to further review or appeal (absent
fraud, misrepresentation, etc.), or (iii) the termination of
administrative proceedings and the expiration of the time for
instituting a claim in a court proceeding.
(f) If any Tax Indemnitee shall actually recognize (as
determined in good faith by the relevant Tax Indemnitee) a tax
benefit by reason of any Tax paid or indemnified by Lessee
pursuant to this Section 10.3 (whether such tax benefit shall be
by means of a foreign tax credit, depreciation or cost recovery
deduction or otherwise) not otherwise taken into account in
computing such payment or indemnity such Tax Indemnitee shall pay
to Lessee an amount equal to the lesser of (i) the amount of such
tax benefit plus any tax benefit recognized as the result of any
payment made pursuant to this sentence, when, as, if, and to the
extent, recognized or (ii) the amount of all payments pursuant to
this Section 10.3 by Lessee to such Tax Indemnitee (less any pay-
ments previously made by such Tax Indemnitee to Lessee pursuant to
52
this Section 10.3.3 (f))(and the excess, if any, of the amount
described in clause (i) over the amount described in clause (ii)
shall be carried forward and applied to reduce pro tanto any
subsequent obligations of Lessee to make payments pursuant to
this Section 10.3); provided, that such Tax Indemnitee shall not
be required to make any payment pursuant to this sentence if and
so as long as a Lease Event of Default of a monetary nature has
occurred and is continuing. For purposes of the preceding
sentence, tax benefits shall be calculated on the assumption that
Owner Participant utilizes all deductions and credits available
to it otherwise than by reason of its having entered into the
transactions contemplated by the Operative Agreements before it
utilizes any deductions or credits available by reason of its
having entered into the transactions contemplated by the
Operative Agreements. If a tax benefit is later disallowed or
denied, the disallowance or denial shall be treated as a Tax
indemnifiable under Section 10.3.1 without regard to the
provisions of Section 10.3.2 (other than Section 10.3.2 (f)).
Each such Tax Indemnitee shall in good faith use reasonable
efforts in filing its tax returns and in dealing with Taxing
Authorities to seek and claim any such tax benefit (provided,
that none of Loan Participant or any Certificate Holder shall
have any obligation to claim any benefits, credits or deductions
in priority to any other benefits, credits or deductions
available to it).
53
10.3.4 Contest
(a) If a written claim is made against a Tax Indemnitee for
Taxes with respect to which Lessee could be liable for payment or
indemnity hereunder, or if a Tax Indemnitee makes a determination
that a Tax is due for which Lessee could have an indemnity
obligation hereunder, such Tax Indemnitee shall promptly give
Lessee notice in writing of such claim; (provided, that failure
to so notify Lessee shall not relieve Lessee of its indemnity
obligations hereunder unless such failure to notify effectively
forecloses Lessee's rights to require a contest of such claim)
and shall take no action with respect to such claim without the
prior written consent of Lessee for 30 days following the receipt
of such notice by Lessee; provided, further, that, in the case of
a claim made against a Tax Indemnitee, if such Tax Indemnitee
shall be required by law to take action prior to the end of such
30-day period, such Tax Indemnitee shall, in such notice to
Lessee, so inform Lessee, and such Tax Indemnitee shall take no
action for as long as it is legally able to do so (it being
understood that a Tax Indemnitee shall be entitled to pay the tax
claimed and sue for a refund prior to the end of such 30-day
period if (i)(A) the failure to so pay the tax would result in
substantial penalties (unless immediately reimbursed by Lessee)
and the act of paying the tax would not materially prejudice the
right to contest or (B) the failure to so pay would result in
criminal penalties and (ii) such Tax Indemnitee shall take any
action so required in connection with so paying the tax in a
manner that is the least prejudicial to the pursuit of the
contest). In addition, such Tax Indemnitee shall (provided, that
Lessee shall have agreed to keep such information confidential
other than to the extent necessary in order to contest the claim)
furnish Lessee with copies of any requests for information from
any Taxing Authority relating to such Taxes with respect to which
Lessee may be required to indemnify hereunder. If requested by
Lessee in writing within 30 days after its receipt of such
notice, such Tax Indemnitee shall, at the expense of Lessee
(including, without limitation, all reasonable costs, expenses
and reasonable attorneys' and accountants' fees and
disbursements), in good faith contest (or, if permitted by
applicable law and in such Tax Indemnitee's sole discretion,
allow Lessee to contest) through appropriate administrative and
judicial proceedings (including, without limitation, by pursuit
of appeals, other than an appeal to the U.S. Supreme Court) the
validity, applicability or amount of such Taxes by, in the
relevant Tax Indemnitee's sole discretion, (I) resisting payment
thereof, (II) not paying the same except under protest if protest
is necessary and proper or (III) if the payment is made, using
reasonable efforts to obtain a refund thereof in an appropriate
administrative and/or judicial proceeding. Such Tax Indemnitee
shall consult with Lessee in good faith regarding the manner of
contesting such claim and shall keep Lessee reasonably informed
regarding the progress of such contest. If and to the extent the
Tax Indemnitee is able to separate the contested issue or issues
from other issues arising in the same administrative or judicial
proceeding that are unrelated to the transactions contemplated by
the Operative Agreements without, in the good faith judgment of
54
such Tax Indemnitee, adversely affecting such Tax Indemnitee or any
Affiliate, agent or customer thereof, such Tax Indemnitee shall permit
Lessee to participate in the conduct of any such proceeding. A Tax
Indemnitee shall not fail to take any action expressly required by
this Section 10.3.4 (including, without limitation, any action regard-
ing any appeal of an adverse determination with respect to any claim)
or settle or compromise any claim without the prior written consent of
the Lessee (except as contemplated by Section 10.3.4(b) or (c)).
(b) Notwithstanding the foregoing, in no event shall a Tax
Indemnitee be required to pursue any contest (or to permit Lessee
to pursue any contest) unless (i) Lessee shall have agreed to pay
such Tax Indemnitee on demand all reasonable costs and expenses
incurred by such Tax Indemnitee in connection with contesting
such Taxes, including, without limitation, all reasonable out of
pocket costs and expenses and reasonable attorneys' and
accountants' fees and disbursements, (ii) if such contest shall
involve the payment of the claim, Lessee shall advance the amount
thereof (to the extent indemnified hereunder) plus interest,
penalties and additions to tax with respect thereto that are
required to be paid prior to the commencement of such contest on
an interest-free after-Tax basis to such Tax Indemnitee (and such
Tax Indemnitee shall promptly pay to the Lessee any net realized
tax benefits resulting from such advance including any tax
benefits resulting from making such payment to the extent Lessee
realizes any net tax detriment from having made the advance),
(iii) such Tax Indemnitee shall have reasonably determined that
the action to be taken will not result in any material risk of
forfeiture, sale or loss of the Aircraft (unless Lessee shall
have made provisions to protect the interests of any such Tax
Indemnitee in a manner reasonably satisfactory to such Tax
Indemnitee) (provided, that such Tax Indemnitee agrees to notify
Lessee in writing promptly after it becomes aware of any such
risk), (iv) no Lease Default relating to payments or bankruptcy
or Lease Event of Default shall have occurred and be continuing
unless Lessee has provided security for its obligations hereunder
by advancing to such Tax Indemnitee before proceeding or
continuing with such contest, the amount of the Tax being
contested, plus any interest and penalties and an amount
estimated in good faith by such Tax Indemnitee for expenses and
(v) prior to commencing any judicial action, Lessee shall have
acknowledged its liability for such claim hereunder, provided
that Lessee shall not be bound by its acknowledgment if the Final
Determination articulates conclusions of law and fact that
clearly and unambiguously demonstrate that Lessee has no
liability for the contested amounts hereunder. Notwithstanding
the foregoing, if any Tax Indemnitee shall release, waive,
compromise or settle any claim which may be indemnifiable by
Lessee pursuant to this Section 10.3 without the written
permission of Lessee, Lessee's obligation to indemnify such Tax
Indemnitee with respect to such claim (and all directly related
claims and claims based on the outcome of such claim) shall
terminate, subject to Section 10.3.4(c), and subject to Section
10.3.4(c), such Tax Indemnitee shall repay to Lessee any amount
previously paid or advanced to such Tax Indemnitee with respect
to such claim, plus interest at the rate that would have been
payable by the relevant Taxing Authority with respect to a
55
refund of such Tax.
(c) Notwithstanding anything contained in this Section
10.3, a Tax Indemnitee will not be required to contest the
imposition of any Tax and shall be permitted to settle or
compromise any claim without Lessee's consent if such Tax
Indemnitee (i) shall waive its right to indemnity under this
Section 10.3 with respect to such Tax (and any directly related
claim and any claim the outcome of which is determined based upon
the outcome of such claim), (ii) shall pay to Lessee any amount
previously paid or advanced by Lessee pursuant to this Section
10.3 with respect to such Tax, plus interest at the rate that
would have been payable by the relevant Taxing Authority with
respect to a refund of such Tax, and (iii) shall agree to discuss
with Lessee the views or positions of any relevant Taxing
Authority with respect to the imposition of such Tax; provided,
that if Lessee has agreed in writing to settle a claim for a
stated amount and the relevant Tax Indemnitee settles the claim
at a higher amount, such Tax Indemnitee shall not be required to
waive the indemnity for such claim to the extent of the amount
agreed to by Lessee.
10.3.5 Refund
If any Tax Indemnitee shall receive a refund of, or be
entitled to a credit against other liability for, all or any part
of any Taxes paid, reimbursed or advanced by Lessee, such Tax
Indemnitee shall pay to Lessee within 30 days of such receipt an
amount equal to the lesser of (a) the amount of such refund or
credit plus any net tax benefit (taking into account any Taxes
incurred by such Tax Indemnitee by reason of the receipt of such
refund or realization of such credit) actually recognized by such
Tax Indemnitee as a result of any payment by such Tax Indemnitee
made pursuant to this sentence (including this clause (a)) and
(b) such tax payment, reimbursement or advance by Lessee to such
Tax Indemnitee theretofore made pursuant to this Section 10.3
(and the excess, if any, of the amount described in clause (a)
over the amount described in clause (b) shall be carried forward
and applied to reduce pro tanto any subsequent obligation of
Lessee to make payments pursuant to this Section 10.3). If, in
addition to such refund or credit, such Tax Indemnitee shall
receive (or be credited with) an amount representing interest on
the amount of such refund or credit, such Tax Indemnitee shall
pay to Lessee within 30 days of such receipt or realization of
such credit that proportion of such interest that shall be fairly
attributable to Taxes paid, reimbursed or advanced by Lessee
prior to the receipt of such refund or realization of such
credit.
56
10.3.6 Tax Filing
If any report, return or statement is required to be filed
with respect to any Tax which is subject to indemnification under
this Section 10.3, Lessee shall timely file the same (except for
any such report, return or statement which a Tax Indemnitee has
timely notified the Lessee in writing that such Tax Indemnitee
intends to file, or for which such Tax Indemnitee is required by
law to file, in its own name); provided, that the relevant Tax
Indemnitee shall furnish Lessee with any information in such Tax
Indemnitee's possession or control that is reasonably necessary
to file any such return, report or statement and is reasonably
requested in writing by Lessee (it being understood that the Tax
Indemnitee shall not be required to furnish copies of its actual
tax returns, although it may be required to furnish relevant
information contained therein). Lessee shall either file such
report, return or statement and send a copy of such report,
return or statement to such Tax Indemnitee, and Owner Trustee if
the Tax Indemnitee is not Owner Trustee, or, where Lessee is not
permitted to file such report, return or statement, it shall
notify such Tax Indemnitee of such requirement and prepare and
deliver such report, return or statement to such Tax Indemnitee
in a manner satisfactory to such Tax Indemnitee within a
reasonable time prior to the time such report, return or
statement is to be filed.
10.3.7 Forms
Each Tax Indemnitee agrees to furnish from time to time to
Lessee or Loan Trustee or to such other person as Lessee or Loan
Trustee may designate, at Lessee's or Loan Trustee's request,
such duly executed and properly completed forms as may be
necessary or appropriate in order to claim any reduction of or
exemption from any withholding or other Tax imposed by any Taxing
Authority, if (x) such reduction or exemption is available to
such Tax Indemnitee and (y) Lessee has provided such Tax
Indemnitee with any information necessary to complete such form
not otherwise reasonably available to such Tax Indemnitee.
10.3.8 Non-Parties
If a Tax Indemnitee is not a party to this Agreement,
Lessee may require the Tax Indemnitee to agree in writing, in a
form reasonably acceptable to Lessee, to the terms of this
Section 10.3 and Section 19.8 prior to making any payment to such
Tax Indemnitee under this Section 10.3.
10.3.9 Subrogation
Upon payment of any Tax by Lessee pursuant to this Section
10.3 to or on behalf of a Tax Indemnitee, Lessee, without any
further action, shall be subrogated to any claims that such Tax
Indemnitee may have relating thereto. Such Tax Indemnitee shall
cooperate with Lessee (to the extent such cooperation does not
result in any unreimbursed cost, expense or liability to such Tax
Indemnitee) to permit Lessee to pursue such claims.
57
10.3.10 Foreign Withholding Tax On Loan Payments
If an Owner Participant is a resident of a country other
than the United States or of a territory, possession or
commonwealth of the United States (within the meaning of the tax
law of that foreign jurisdiction) or is participating in the
transactions contemplated by the Operative Agreements through a
branch or office outside the United States and if as a result of
such residence or branch or office participation any withholding
Taxes are imposed on or with respect to the Loan Certificates or
payments thereon, Owner Participant shall reimburse Lessee for
any payments Lessee is required to make to or on behalf of Loan
Participant or any Certificate Holder under this Section 10.3 as
a result of the imposition of such withholding Taxes. The amount
payable by Owner Participant to Lessee shall be an amount which,
after taking into account any such Taxes, any Tax imposed upon
the receipt or accrual by Lessee of such payment by Owner
Participant and any tax benefits or tax savings realized by
Lessee with respect to the payment of such withholding Tax or the
payment hereunder, shall equal the amount of Lessee's payment to
or on behalf of Loan Participant or such Certificate Holder.
10.3.11 Withholding Tax on Payments to Pass Through
Certificate Holders or Liquidity Provider
Notwithstanding anything to the contrary contained herein,
(a) if Owner Participant is required to pay or reimburse any
Person for any Non-Excluded Taxes (as defined in the Liquidity
Facilities) imposed by withholding or otherwise on any payment
required to be made to the Liquidity Provider under any Liquidity
Facility, any agreement contemplated by the Refinancing
Transaction or any Operative Agreement by the Subordination
Agent, Owner Trustee, Owner Participant or Lessee or (b) if at
any time while the holder of an Equipment Note is a Pass Through
Trustee, Owner Participant is required to pay or reimburse any
Person for any U.S. withholding Taxes with respect to an
Equipment Note or Pass Through Certificate and fails to withhold
or cause to be withheld such Taxes (other than to the extent
caused by the willful misconduct of the Owner Participant),
Lessee shall pay to the Owner Participant an amount sufficient to
cover any liability for such Non-Excluded Taxes and withholding
Taxes. The provisions of Section 10.3.3 through 10.3.5 and
Section 10.3.9 shall apply mutatis mutandis, except that Owner
Participant shall be subject to the rule contained in the proviso
to Section 10.3.3(a) and the last proviso to Section 13.3.3(f).
58
10.4 [INTENTIONALLY OMITTED]
10.5 Payments
Any payments made pursuant to this Section 10 shall be due
on demand therefor and shall be made directly to the relevant
Indemnitee or Tax Indemnitee or to Lessee, in immediately
available funds at such bank or to such account as specified by
such Indemnitee or Tax Indemnitee or Lessee, as the case may be,
in written directives to the payor, or, if no such direction
shall have been given, by check of the payor payable to the order
of, and mailed to, such Indemnitee or Tax Indemnitee or Lessee,
as the case may be, by certified mail, postage prepaid, at its
address as set forth in this Agreement.
10.6 Interest
If any amount, payable by Lessee, any Indemnitee or any Tax
Indemnitee under this Section 10 is not paid when due, Lessee,
such Indemnitee or such Tax Indemnitee shall pay on demand, to
the extent permitted by Law, to the person entitled thereto,
interest on any such amount for the period from and including the
due date for such amount to but excluding the date the same is
paid, at the Payment Due Rate. Such interest shall be paid in the
same manner as the unpaid amount in respect of which such
interest is due.
10.7 Benefit of Indemnities
The obligations of Lessee in respect of all indemnities,
obligations, adjustments and payments in this Section 10 are
expressly made for the benefit of, and shall be enforceable by,
the Indemnitee or Tax Indemnitee entitled thereto, without
declaring the Lease to be in default or taking other action
thereunder, and notwithstanding any provision of the Trust
Indenture.
SECTION 11. [INTENTIONALLY OMITTED]
SECTION 12. ASSIGNMENT OR TRANSFER OF INTERESTS
12.1 Participants, Owner Trustee and Certificate Holders
12.1.1 Owner Participant
(a) During the Term, Owner Participant shall not Transfer
any or all of its right, title or interest in the Trust Estate or
the Trust Agreement and to this Agreement unless:
(i) The Transferee shall have full power, authority and
legal right to execute and deliver and to perform whatever
obligations under this Agreement and the other Owner
Participant Agreements shall be assumed by such Transferee
and shall provide reasonably satisfactory evidence of such
power and authority to Lessee, Owner Trustee and Loan
Trustee;
(ii) The Transferee shall enter into one or more legal, valid,
59
binding and enforceable agreements (accompanied by an opinion
of counsel (who may be internal counsel for Owner Participant)
addressed to Lessee, Owner Trustee and Loan Trustee to the
effect that such agreement or agreements are legal, binding
and enforceable in accordance with its or their terms,
subject to customary bankruptcy and equitable remedies
exceptions) effective to confirm that such Transferee
agrees for the benefit of Lessee, Owner Trustee and Loan
Trustee to be bound by all the terms of and to undertake
all of the obligations arising after such Transfer of the
transferring Owner Participant under this Agreement and the
other Owner Participant Agreements, and in which it makes
representations and warranties comparable to those
contained in Section 7.2;
(iii) Owner Participant shall deliver to Lessee and Loan
Trustee an opinion of counsel (which may be internal
counsel for Owner Participant) to the effect that such
Transfer will not violate the Act, the Securities Act or
any other applicable Federal law, and is in accordance with
this Section 12.1;
(iv) The Transferee is a Citizen of the United States, if
such citizenship is necessary to maintain registration of
the Aircraft under the Act (it being understood that the
existence of any such requirement is to be determined
without giving consideration to Section 47.9 of the FAA
Regulations), or shall use a voting powers trust or similar
arrangement in order to hold an interest in the Trust
Estate such that the Aircraft can be registered in the
United States (without giving consideration to Section 47.9
of the FAA Regulations); and
(v) Its Transferee shall be either (A) a Permitted
Institution or (B) any other person (other than, without
Lessee's consent, a commercial air carrier or Affiliate
thereof that is in direct competition with Lessee) the
obligations of which under the Owner Participant Agreements
are guaranteed by a Permitted Institution or a guarantor
consented to by Lessee, Owner Trustee and Loan Trustee, in
any case, pursuant to a written guaranty, in form and
substance reasonably satisfactory to Lessee, Owner Trustee
and Loan Trustee.
(b) Notwithstanding anything to the contrary contained in
this Section 12.1:
(i) Owner Participant may at any time grant participations
in its interest in and to this Agreement, the Trust Estate
or the Trust Agreement to any person (hereinafter in this
Section 12.1.1(b) referred to as a "participant"), so long
as (A) no such participant shall be an Owner Participant of
record, it being agreed that Lessee, the Certificate
Holders, Owner Trustee and Loan Trustee shall be entitled
to deal solely with Owner Participant of record (who shall
not (unless such participant is the sole participant and is
a Permitted Institution) be required by contract to obtain the
consent of any such participant in order to take action under
60
the Operative Agreements) in connection with the transactions
contemplated by this Agreement and the other Operative
Agreements and (B) Owner Participant shall provide Lessee,
the Certificate Holders, Owner Trustee and Loan Trustee
with written notice of any such participation specifying
the name and address of the proposed participant and shall
reimburse Lessee, the Certificate Holders, Owner Trustee
and Loan Trustee for all reasonable Expenses incurred by
such party relating to any such participation;
(ii) Owner Participant may at any time Transfer any or all
of its right to receive payment of residual value of the
Aircraft (including, without limitation, with respect to a
Transfer of all or a portion of (y) any net proceeds from a
sale or release of the Aircraft whether at the end of the
Term or pursuant to any provision of the Lease or otherwise
or (z) the net proceeds received as a result of an Event of
Loss or an Event of Default), subject in each case to the
Lien of the Trust Indenture (to the extent applicable);
(iii) There shall be no more than two Owner Participants
of record at any one time; and
(iv) After the end of the Term, Owner Participant may
freely Transfer all or any of its right, title or interest
in and to this Agreement the Trust Estate and the Trust
Agreement;
provided, that (A) no participant under clause (i) above or
transferee under clause (ii) above shall have any direct rights
under the Operative Agreements or any Lien on all or any part of
the Aircraft, Trust Estate or Trust Indenture Estate, (B) Lessee
shall not have any increased liability or obligations as a result
of any participation under clause (i) above or Transfer under
clause (ii) above and (C) any participation under clause (i)
above or Transfer under clause (ii) above shall not cause the
Aircraft to be or become ineligible for registration in the name
of Owner Trustee under the Act and regulations then applicable
thereunder (without giving consideration to Section 47.9 of the
FAA Regulations).
(c) Owner Participant shall give written notice to Lessee,
Loan Trustee and Owner Trustee at least 10 days prior to any such
Transfer, specifying the name and address of the proposed
Transferee, and providing financial statements of the proposed
Transferee evidencing the requirements described in Section
12.1.1(a)(v)(A) or (B) above.
(d) Any fees, charges and expenses, including the
reasonable legal fees, charges and expenses incurred by Lessee,
Owner Participant, any Certificate Holder or Owner Trustee in
connection with any Transfer by Owner Participant permitted by
this Section 12.1.1, or by the Transferee in any such case, will
be paid for by Lessee, in the case of any Transfer by the initial
Owner Participant, and thereafter by the Owner Participant making
a transfer, or its Transferee.
61
12.1.2 Owner Trustee
Owner Trustee may transfer its interests in the Trust
Agreement pursuant to Section 9 thereof.
12.1.3 Loan Participant and Certificate Holders
Subject to Section 8.5.3 hereof (which is subject to
Section 21 hereof) and Section 2.07 of the Trust Indenture, Loan
Participant and any other Note Holder may, at any time and from
time to time, Transfer or grant participations in all or any
portion of the Equipment Notes and/or all or any portion of its
beneficial interest in its Equipment Note and the Trust Indenture
Estate to any person (it being understood that the sale or
issuance of Pass Through Certificates by a Pass Through Trustee
shall not be considered a Transfer or participation); provided,
that any participant in any such participations shall not have
any direct rights under the Operative Agreements or any Lien on
all or any part of the Aircraft or Trust Indenture Estate and
Lessee shall not have any increased liability or obligations as a
result of any such participation. Subject to Section 21, in the
case of any such Transfer, the Transferee, by acceptance of
Equipment Notes in connection with such Transfer, shall make each
of the representations applicable to it contained in Sections 7.4
and 8.5.3(b)(i) and each of the covenants set forth in Section
8.5.
62
12.2 Effect of Transfer
Upon any Transfer in accordance with Section 12.1.1, 12.1.2
or 12.1.3 (other than any Transfer (a) by Owner Participant
pursuant to Section 12.1.1(b)(i) or (ii), or (b) by Loan
Participant or any Certificate Holder, in each case, to the
extent it only grants participations in Loan Certificates or in
its beneficial interest therein), Transferee shall be deemed an
"Owner Participant," "Owner Trustee" or a "Certificate Holder,"
respectively, for all purposes of this Agreement and the other
Operative Agreements and, in the case of a Transferee of any
Participant or Certificate Holder, shall be deemed to have paid
its ratable portion of Lessor's Cost previously made by Owner
Participant or Loan Participant, respectively, making such
conveyance and represented by the interest being conveyed, and
each reference herein to Owner Participant, Owner Trustee or
Certificate Holder, respectively, shall thereafter be deemed a
reference to such Transferee for all purposes, and the
transferring Owner Participant, Owner Trustee, Loan Participant
or Certificate Holder shall be released (except, in the case of
Owner Participant, to the extent of any guaranty provided by it
under Section 12.1.1(a)(v)) from all of its liabilities and
obligations under this Agreement and any other Operative
Agreements to the extent such liabilities and obligations arise
after such Transfer and, in each case, to the extent such
liabilities and obligations are assumed by the transferee;
provided, that such transferring Owner Participant, Owner
Trustee, Loan Participant or Certificate Holder (and its
respective Affiliates, successors, assigns, agents, servants,
representatives, directors and officers) will continue to have
the benefit of any rights or indemnities under any Operative
Agreement vested or relating to circumstances, conditions, acts
or events prior to such Transfer.
12.3 Majority in Interest of Certificate Holders
For purposes of this Section 12, Loan Trustee shall only
act at the direction of a Majority in Interest of Certificate
Holders determined without reference to the second sentence of
the definition thereof.
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SECTION 13. REFUNDING AND CERTAIN OTHER MATTERS
13.1 Refunding Generally
Subject to Sections 13.3 and 13.4, in the event that at any
time Lessee shall have given written notice to Owner Participant,
Owner Trustee, and Loan Trustee that Lessee is requesting a
voluntary redemption of all, but not less than all, of the
outstanding Loan Certificates (in compliance with the provisions
of Sections 2.11 and 2.12 of the Trust Indenture) by Owner
Trustee as part of a refunding transaction, Owner Participant
agrees to negotiate in good faith and promptly conclude an
agreement, in form and substance reasonably satisfactory to Owner
Participant, with Lessee as to the terms of such refunding
transaction (including the terms of any debt to be issued in
connection with such refunding transaction and the documentation
to be executed in connection therewith), and after Lessee and
Owner Participant shall have concluded such an agreement:
13.1.1 Refunding Certificate
Within ten Business Days after reaching such agreement,
Owner Participant will deliver to Lessee a Refunding Certificate.
The terms of the Refunding Certificate shall not provide for an
increase in the then-outstanding principal amount of the Loan
Certificates. Within ten Business Days of its receipt of the
Refunding Certificate, Lessee may demand a verification pursuant
to Section 3.2.1(d) of the Lease of the information set forth in
the Refunding Certificate. Upon the acceptance by Lessee of the
accuracy of the information set forth in the Refunding
Certificate or the determination pursuant to such verification
procedures of the Refunding Information, the appropriate parties
will take the actions specified in Sections 13.1.2 through 13.1.7
below.
13.1.2 Financing Agreements
Owner Trustee, Loan Trustee and other appropriate parties
will enter into a financing or loan agreement in form and
substance satisfactory to Owner Participant with the institution
or institutions to be named therein providing for (a) the
issuance and sale by Owner Trustee to such institution or
institutions on the Refunding Date of the New Debt and (b) the
application of the proceeds of the sale of the New Debt to the
redemption of all such Loan Certificates on the Refunding Date.
13.1.3 Lease Amendments
As a condition to the closing of the refunding transaction,
Lessee and Owner Trustee will amend the Lease, as contemplated by
Section 3.2.1(b) of the Lease, to provide that (a) Basic Rent in
respect of the period from and after the Refunding Date shall be
as provided in the Refunding Information and (b) amounts payable
in respect of Stipulated Loss Value and Termination Value from
and after the Refunding Date shall be as provided in the
Refunding Information.
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13.1.4 Security Agreements
Owner Trustee will enter into an agreement to provide for
the securing thereunder of the New Debt in like manner as the
Loan Certificates and will enter into such amendments and
supplements to the Trust Indenture (or such new indenture or
other security agreement) as may be necessary to effect such
refunding).
13.1.5 Make-Whole Amount
At the closing of such refunding (and as indemnification
for the loss resulting therefrom), Owner Trustee shall pay, upon
receipt of the same from Lessee (which Lessee shall pay as
Supplemental Rent as a condition to the closing to the refunding
transaction), to each Certificate Holder, the Make-Whole Amount,
if any, payable to such Certificate Holder, except that if the
Debt Rate on any Loan Certificate is to be reset pursuant to
Paragraph A of Schedule 5, no Make-Whole Amount shall be required
to be paid by Owner Trustee or Lessee in connection with any
refunding transaction occurring within the period from and
including the date of commencement of the subsequent Funding
Period to and excluding the date sixty days following such date
of commencement.
13.1.6 Expenses
Whether or not such refunding transaction is consummated,
Lessee shall pay or reimburse all of the reasonable Expenses of
all parties to such refunding transaction, including, without
limitation, the reasonable fees and expenses of such parties'
counsel and any related loan or commitment fees and the
reasonable fees and expenses of one advisor to Owner Participant.
13.1.7 Return of Loan Certificates
Subject to compliance by Owner Trustee and Lessee with all
applicable terms and conditions for voluntary prepayment under
the Trust Indenture and this Agreement, each Certificate Holder
will transfer to Owner Trustee the Loan Certificates held by it
for cancellation (and Owner Trustee shall cancel the same),
against receipt by such Certificate Holder of the
then-outstanding principal amount of such Loan Certificates,
accrued and unpaid interest and Make-Whole Amount, if any,
thereon, together with payment in full of all other amounts then
payable to such Certificate Holder and Loan Trustee hereunder or
under the Trust Indenture.
13.1.8 [Intentionally Omitted]
13.2 Private Offering
No refunding shall involve a public offering of the New
Debt.
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13.3 Timing; Refunding Limit; Notice
No such optional refunding shall be permitted until after
the last day of the calendar year in which the fifth anniversary
of the Delivery Date occurs. Only one such refunding shall be
permitted during the Term. Lessee, acting on behalf of Owner
Trustee, shall give Loan Trustee at least 30 days' revocable
prior written notice of the proposed date of the optional
redemption.
13.4 Limitations on Obligation to Refund
Notwithstanding the foregoing, Owner Participant shall have
no obligation to proceed with any refunding transaction as
contemplated by this Section 13:
(a) If in Owner Participant's reasonable good faith
judgment, such transaction would have an adverse impact on it
(including, without limitation, the risk of adverse tax
consequences to Owner Participant for which it is not indemnified
by Lessee or the unavailability to Owner Trustee or Loan Trustee
of the benefits of Section 1110 with respect to the Aircraft);
(b) Unless a third party or parties, unaffiliated with
Lessee or Owner Participant, shall have committed to (and shall)
provide the financing needed to consummate the proposed refunding
transaction, it being understood that Owner Participant shall not
have any obligation to locate any such party or parties;
(c) Unless Lessee indemnifies Owner Trustee and Owner
Participant by agreement in form and substance satisfactory to
each of them for any liability, obligation (other than the
obligation to pay principal and interest and related payments in
respect of the New Debt), cost or expense (including, without
limitation, reasonable attorneys' fees) related to or arising out
of any such refunding transaction;
(d) [Intentionally Omitted]
(e) If a Lease Default or a Lease Event of Default shall have
occurred and be continuing; or
(f) If such refunding is to be denominated in any currency
other than Dollars.
13.5 All Loan Certificates
Any refinancing pursuant to this Section 13 shall be of all
Loan Certificates then outstanding.
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13.6 Execution of Certain Documents
Lessee, Owner Participant, Owner Trustee and Loan Trustee
each agree to execute any document necessary or advisable to
implement this Section 13 (including, without limitation, the
execution, delivery and/or provision of any appropriate
additional or modified amendment, representation, warranty,
certificate, opinion or other document that may reasonably be
requested by Lessee or any other person).
13.7 ERISA
Owner Participant shall not be obligated to conclude the
proposed refunding transaction unless the agreements utilized to
effect such refunding contain provisions satisfactory to Owner
Participant, and appropriate to the form of refunding being
employed, to reflect the agreement of Lessee and Owner
Participant that no funds constituting assets of a Plan shall at
any time be used to acquire or hold the New Debt, and the
indemnities in respect thereof have been revised, as appropriate,
to reflect any changes from such provisions as originally set
forth herein.
13.8 Consent to Optional Redemptions
Each of Owner Participant, Owner Trustee and Loan Trustee
agrees with Lessee not to cause an optional redemption of the
Loan Certificates that would cause an increase in Lessee's
periodic Rent obligations or adversely affect Lessee's voluntary
redemption rights under this Section 13 or any of Lessee's other
rights or obligations under the Operative Agreements without the
prior written consent of Lessee or at Lessee's expense except in
connection with the exercise of remedies under the Trust
Indenture upon the occurrence and continuation of a Lease Event
of Default.
13.9 [INTENTIONALLY OMITTED]
SECTION 14. LEASE FOR ALL PURPOSES; SECTION 1110
(a) Each of Lessee, Owner Participant, Loan Participant,
Owner Trustee and Loan Trustee agrees that the Lease constitutes
an agreement of lease and nothing contained therein shall be
construed as conveying to Lessee any right, title or interest in
the Aircraft except as a lessee only.
(b) It is the intention of each of Lessee, Owner
Participant, Loan Participant, the Certificate Holders (such
intention being evidenced by each of their acceptance of a Loan
Certificate), Owner Trustee and Loan Trustee that Owner Trustee,
as lessor under the Lease (and Loan Trustee as assignee of Owner
Trustee under the Trust Indenture), shall be entitled to the
benefits of Section 1110 with respect to the right to take
possession of the Aircraft, Airframe, Engines and Parts as
provided in the Lease in the event of a case under Chapter 11
of the Bankruptcy Code in which Lessee is a debtor, and in
any instance where more than one construction is possible
of the terms and conditions of the Lease or any other
67
pertinent Operative Agreement, each such party agrees that a
construction which would preserve such benefits shall control
over any construction which would not preserve such benefits.
SECTION 15. OWNER PARTICIPANT'S RIGHT TO RESTRUCTURE
15.1 General Right to Restructure
Lessee, Loan Participant and each Certificate Holder agree
that after the Delivery Date and subject to the limitations of
Section 15.2, the original Owner Participant (or any transferee
Owner Participant that is an Affiliate of the Owner Participant
Parent) shall have the right to restructure the Transactions
using (a) a "cross-border lease," a tax lease or a
head-lease/sublease structure and (b) any other type of
transaction, which may involve special structural arrangements,
as such Owner Participant may elect (any such structure described
above, a "Special Structure"). Any Special Structure may result
in additional persons participating in the Transactions, which
persons shall agree to provisions comparable to Sections 8.7.5(a)
and 8.7.14. Subject to the provisions of Sections 15.2 and 15.3,
Lessee, Loan Participant and each Certificate Holder agree to
cooperate in the implementation of any such restructuring and
take such action as may reasonably be requested by the original
Owner Participant to accomplish such restructuring, including
taking such actions as may be reasonable or customary in the type
of Special Structure selected. In connection with any proposed
Special Structure, Owner Participant shall provide all
information reasonably requested by Lessee, Loan Participant or
any Certificate Holder with respect thereto. The original Owner
Participant shall be entitled to retain all of the benefits of
any such transaction.
15.2 Limitations on Restructuring Provisions; Additional
Terms
15.2.1 Lessee
(a) Notwithstanding Section 15.1 or 15.2.1(b), in no event
shall any such Special Structure (a) change the terms and
conditions of Lessee's rights and obligations, from those which
Lessee would otherwise possess or be subject to in the absence of
any such Special Structure, in a manner which is materially
adverse to Lessee, (b) expose Lessee to any additional risks
(including overall tax risks) beyond those to which Lessee would
be exposed in the absence of any such Special Structure unless
Lessee shall have been indemnified against such additional risks
by Owner Participant Parent, or other participants in such
transaction (so long as such other participants shall, as to
their creditworthiness at the time any such indemnity is given,
be reasonably acceptable to Lessee) in a manner reasonably
satisfactory to Lessee. In no event shall Lessee be required to
provide an indemnity with respect to any foreign tax benefit of a
Special Structure or to indemnify against the failure of a head
lease not to constitute a true lease for U.S.
federal income tax purposes.
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(b) In any Special Structure that may be entered into
pursuant to this Section 15, the Termination Values under the
Lease (as the same may be restructured) shall not be affected by
the termination values under any head-lease, except that any
prepayment premiums and any funding or swap breakage costs under
such head-lease or similar arrangement will be added in
calculating the Termination Values and Stipulated Loss Values
under the Lease (as the same may be restructured). Further, upon
implementation of any Special Structure, the Stipulated Loss
Values payable by Lessee under the Lease (as the same may be
restructured) shall in no event be less than the stipulated loss
values payable under the applicable head-lease or similar
arrangement.
15.2.2 Loan Participant and Certificate Holders
Notwithstanding Section 15.1, any such Special Structure
shall not, and prior to the exercise of its rights thereunder,
the Owner Participant shall deliver an officer's certificate to
the Loan Trustee and, after the Refinancing Transaction is
consummated, to the Pass Through Trustee that provides that any
such Special Structure shall not, (a) change the terms and
conditions of Loan Participant's or any Note Holder's rights and
obligations under the Operative Agreements or rights and
obligations of holders of Pass Through Certificates issued in
connection with the Refinancing Transaction, from those which
Loan Participant, Note Holders and such Pass Through Certificate
holders would otherwise possess or be subject to in the absence
of such Special Structure (including, without limitation, the
amount and timing of any payment of principal, interest and
Make-Whole Amount under the Equipment Notes, the relative rights
of the Note Holders with respect to such payments and such holder
of Pass Through Certificates and the priority of Loan Trustee's
Lien on the Trust Indenture Estate under the Trust Indenture) or
(b) expose Loan Participant, any such Note Holder or any such
holder of Pass Through Certificates to any additional risks
beyond those to which Loan Participant, such Note Holder or such
holder of Pass Through Certificates would be exposed in the
absence of such Special Structure. In addition, in no event shall
any Special Structure be permitted unless a written confirmation
from the Rating Agencies is obtained prior to the implementation
of such Special Structure to the effect that such Special
Structure will not adversely affect the ratings of the Pass
Through Certificates.
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15.2.3 [INTENTIONALLY OMITTED]
15.3 Transaction Expenses
Whether or not any proposed restructuring transaction under
this Section 15 is consummated, the original Owner Participant
shall pay (or cause to be paid) the reasonable costs and expenses
incurred by all parties in connection therewith; provided, that,
only in connection with a consummated transaction (unless Lessee
shall have, by failing to act in good faith, caused a transaction
not to be consummated), Lessee shall pay or reimburse such Owner
Participant for the original Owner Participant's reasonable
estimate of the costs and expenses that would have been incurred
by all parties if the Transactions had been restructured as a
head-lease/sublease transaction in which the original Owner
Participant, or an Affiliate or designee thereof, were the head
lessee/sublessor and Lessee were the sublessee.
SECTION 16. CHANGE OF CITIZENSHIP
16.1 Generally
Without prejudice to the representations, warranties or
covenants regarding the status of any party hereto as a Citizen
of the United States:
(a) Each of Lessee, First Security, WTC and Loan Trustee
agrees that it will, immediately upon obtaining knowledge of any
facts that would cast doubt upon its continuing status as a
Citizen of the United States and promptly upon public disclosure
of negotiations in respect of any transaction which would or
might adversely affect such status, notify in writing all parties
hereto of all relevant matters in connection therewith; and
(b) Owner Participant agrees that, in the event its status
is to change or has changed as a Citizen of the United States, or
it makes public disclosure of circumstances as a result of which
it believes that such status is likely to change, it will notify
all the other parties to this Participation Agreement of (i) such
change in status promptly after obtaining Actual Knowledge
thereof or (ii) such belief as soon as practicable after such
public disclosure but in any event within ten Business Days after
such public disclosure.
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16.2 Owner Participant
Owner Participant agrees, solely for the benefit of Lessee
and Loan Participant that if, during such time as the Aircraft is
registered in the United States, (a) it shall not be a Citizen of
the United States and (b) the Aircraft shall be, or would
therefore become, ineligible for registration in the name of
Owner Trustee under the Act and regulations then applicable
thereunder (without giving consideration to Section 47.9 of the
FAA Regulations), then Owner Participant shall as soon as is
reasonably practicable, but in any event within 30 days after
obtaining Actual Knowledge of such ineligibility and of such loss
of citizenship, (y) effect voting trust or other similar
arrangements (in which case any provisions contained in the
Operative Agreements restricting Owner Participant's or Owner
Trustee's ability to amend the Trust Agreement shall not apply to
the extent necessary to permit the use of such a voting trust or
other similar arrangement) or take any other action as may be
necessary to prevent any deregistration or maintain the United
States registration of the Aircraft or (z) transfer in accordance
with the terms of this Agreement all its right, title and
interest in and to this Agreement, the Trust Estate and the Trust
Agreement in accordance with Section 12.1.
16.3 Owner Trustee
Upon First Security giving any notice in accordance with
Section 16.1(a), Owner Trustee shall, subject to Section 9.1.1 of
the Trust Agreement, resign as Owner Trustee. Upon its receipt of
such notice, Owner Participant shall as promptly as practicable
appoint a Citizen of the United States as successor Owner Trustee
pursuant to Section 9.1 of the Trust Agreement.
16.4 Loan Trustee
Upon WTC giving any notice in accordance with Section
16.1(a), Loan Trustee shall (if and so long as such citizenship
is necessary under the Act as in effect at such time or, if it is
not necessary, if and so long as Loan Trustee's citizenship could
have any adverse effect on Lessee, any Participant or any
Certificate Holder), subject to Section 8.02 of the Trust
Indenture, resign as Loan Trustee promptly upon its ceasing to be
such a citizen.
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SECTION 17. CONCERNING OWNER TRUSTEE
It is understood and agreed that, except as otherwise
expressly provided herein or in the Trust Agreement or the Trust
Indenture, Owner Trustee is entering into this Agreement solely
in its capacity as trustee as provided in the Trust Agreement and
not in its individual capacity and in no case whatsoever will it
be liable or accountable in its individual capacity for any of
the statements, representations, warranties, agreements or
obligations of Owner Trustee hereunder, or for any loss in
respect thereof, as to all of which the parties agree to look
solely to the Trust Estate; provided, that nothing in this
Section 17 shall be deemed to limit in scope or substance the
personal liability of First Security (a) to Owner Participant as
expressly set forth in the Trust Agreement, (b) in respect of the
representations, warranties and agreements of First Security
expressly made as such herein or in any other Operative Agreement
to which it is a party, and (c) for the consequences of its own
gross negligence, willful misconduct, and, in receiving, handling
or remitting of funds only, its willful misconduct or simple
negligence as a trustee.
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SECTION 18. CONFIDENTIALITY
So long as such documents shall be provided to such party
marked confidential on the cover page thereof, Lessee, Owner
Participant, Certificate Holders, Owner Trustee and Loan Trustee
shall keep Annexes B, C and D and Schedules 1, 2, 3 and 4 to the
Lease, the Participation Agreement, the Purchase Agreement
Assignment and the Tax Indemnity Agreement confidential and shall
not disclose, or cause to be disclosed, the same to any Person,
except (A) to prospective and permitted transferees of Lessee's,
Owner Participant's, a Certificate Holder's, Owner Trustee's or
Loan Trustee's interest or their respective counsel or special
counsel, independent insurance brokers, auditors, or other agents
who agree to hold such information confidential, (B) to Lessee's,
Owner Participant's, a Certificate Holder's, Owner Trustee's or
Loan Trustee's counsel or special counsel, independent insurance
brokers, auditors, or other agents, Affiliates or investors who
agree to hold such information confidential, (C) as may be
required by any statute, court or administrative order or decree,
legal process or governmental ruling or regulation, including
those of any applicable insurance regulatory bodies (including,
without limitation, the National Association of Insurance
Commissioners), federal or state banking examiners, Internal
Revenue Service auditors or any stock exchange, (D) with respect
to Lessee and Owner Participant, by mutual agreement of such
parties, to prospective participants in future aircraft
transactions of Lessee in which Owner Participant Parent or any
Affiliate thereof is to be a party, which prospective
participants agree to hold such information confidential, (E)
with respect to a Certificate Holder, to a nationally recognized
rating agency for the purpose of obtaining a rating on the Loan
Certificates or to support an NAIC rating for the Loan
Certificates or (F) such other Persons as are reasonably deemed
necessary by the disclosing party in order to protect the
interests of such party or for the purposes of enforcing such
documents by such party; provided, that any and all disclosures
permitted by clauses (C), (D), (E) or (F) above shall be made
only to the extent necessary to meet the specific requirements or
needs of the Persons making such disclosures.
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SECTION 19. MISCELLANEOUS
19.1 Amendments
No provision of this Agreement may be amended,
supplemented, waived, modified, discharged, terminated or
otherwise varied orally, but only by an instrument in writing
that specifically identifies the provision of this Agreement that
it purports to amend, supplement, waive, modify, discharge,
terminate or otherwise vary and is signed by the party against
which the enforcement of the amendment, supplement, waiver,
modification, discharge, termination or variance is sought. Each
such amendment, supplement, waiver, modification, discharge,
termination or variance shall be effective only in the specific
instance and for the specific purpose for which it is given. No
provision of this Agreement shall be varied or contradicted by
oral communication, course of dealing or performance or other
manner not set forth in an agreement, document or instrument in
writing and signed by the party against which enforcement of the
same is sought.
19.2 Severability
If any provision hereof shall be held invalid, illegal or
unenforceable in any respect in any jurisdiction, then, to the
extent permitted by Law, (a) all other provisions hereof shall
remain in full force and effect in such jurisdiction and (b) such
invalidity, illegality or unenforceability shall not affect the
validity, legality or enforceability of such provision in any
other jurisdiction. If, however, any Law pursuant to which such
provisions are held invalid, illegal or unenforceable may be
waived, such Law is hereby waived by the parties hereto to the
full extent permitted, to the end that this Agreement shall be
deemed to be a valid and binding agreement in all respects,
enforceable in accordance with its terms.
19.3 Survival
The representations, warranties, indemnities and covenants
set forth herein shall survive the making available of the
respective Commitments by Participants, the delivery or return of
the Aircraft, the Transfer of any interest of Owner Participant
in this Agreement, the Trust Estate and the Trust Agreement, the
Transfer of any interest by any Certificate Holder of its Loan
Certificate and the expiration or other termination of this
Agreement or any other Operative Agreement.
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19.4 Reproduction of Documents
This Agreement, all annexes, schedules and exhibits hereto
and all agreements, instruments and documents relating hereto,
including, without limitation, (a) consents, waivers and
modifications that may hereafter be executed and (b) financial
statements, certificates and other information previously or
hereafter furnished to any party hereto, may be reproduced by
such party by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process, and
such party may destroy any original documents so reproduced. Any
such reproduction shall be as admissible in evidence as the
original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not
such reproduction was made by such party in the regular course of
business) and any enlargement, facsimile or further reproduction
of such reproduction likewise is admissible in evidence.
19.5 Counterparts
This Agreement and any amendments, waivers, consents or
supplements hereto may be executed in any number of counterparts
(or upon separate signature pages bound together into one or more
counterparts), each of which when so executed shall be deemed to
be an original, and all of which counterparts, taken together,
shall constitute one and the same instrument.
19.6 No Waiver
No failure on the part of any party hereto to exercise, and
no delay by any party hereto in exercising, any of its respective
rights, powers, remedies or privileges under this Agreement or
provided at Law, in equity or otherwise shall impair, prejudice
or constitute a waiver of any such right, power, remedy or
privilege or be construed as a waiver of any breach hereof or
default hereunder or as an acquiescence therein nor shall any
single or partial exercise of any such right, power, remedy or
privilege preclude any other or further exercise thereof by it or
the exercise of any other right, power, remedy or privilege by
it. No notice to or demand on any party hereto in any case shall,
unless otherwise required under this Agreement, entitle such
party to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of any
party hereto to any other or further action in any circumstances
without notice or demand.
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19.7 Notices
Unless otherwise expressly permitted by the terms hereof,
all notices, requests, demands, authorizations, directions,
consents, waivers and other communications required or permitted
to be made, given, furnished or filed hereunder shall be in
writing (it being understood that the specification of a writing
in certain instances and not in others does not imply an
intention that a writing is not required as to the latter), shall
refer specifically to this Agreement or other applicable
Operative Agreement, and shall be personally delivered, sent by
facsimile or telecommunication transmission (which in either case
provides written confirmation to the sender of its delivery),
sent by registered mail or certified mail, return receipt
requested, postage prepaid, or sent by overnight courier service,
in each case to the respective address, or facsimile number set
forth for such party in Schedule 1, or to such other address,
facsimile or other number as each party hereto may hereafter
specify by notice to the other parties hereto. Each such notice,
request, demand, authorization, direction, consent, waiver or
other communication shall be effective when received or, if made,
given, furnished or filed (a) by facsimile or telecommunication
transmission, when confirmed, or (b) by registered or certified
mail, three Business Days after being deposited, properly
addressed, with the U.S. Postal Service.
19.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE
(a) THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAWS. THIS AGREEMENT IS BEING DELIVERED
IN THE STATE OF NEW YORK.
(b)(i) EXCEPT AS PROVIDED IN SECTION 19.8(b)(ii), EACH
PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS TO,
FOR ITSELF AND IN RESPECT OF ANY OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE 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 OR ANY OTHER OPERATIVE AGREEMENT, EXCEPT AS PROVIDED IN
SECTION 19.8(g). TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH
PARTY HERETO AGREES FIRST TO SEEK JURISDICTION AGAINST ANY OTHER
PARTY HERETO WITH RESPECT TO ANY SUCH ACTION, SUIT OR PROCEEDING
IN SUCH COURTS OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF
NEW YORK.
(ii) NOTWITHSTANDING THE FOREGOING AGREEMENT AS TO THE
EXCLUSIVE NATURE OF SUCH JURISDICTION, IF ANY PARTY HERETO OTHER
THAN LESSEE SHALL IN THE FIRST INSTANCE BRING ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THE OPERATIVE AGREEMENTS
IN THE COURTS DESCRIBED IN SECTION 19.8(b)(i), AND IF EACH OF SUCH
COURTS OF THE UNITED STATES AND OF THE STATE OF NEW YORK REFUSES TO
ACCEPT JURISDICTION WITH RESPECT THERETO, SUCH SUIT, ACTION OR
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PROCEEDING MAY BE BROUGHT IN ANY OTHER COURT WITH JURISDICTION.
(iii) NO PARTY TO THIS AGREEMENT MAY MOVE TO (x) TRANSFER
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE
OPERATIVE AGREEMENTS BROUGHT IN SUCH COURTS OF THE UNITED STATES
OR OF THE STATE OF NEW YORK TO ANOTHER JURISDICTION, (y)
CONSOLIDATE ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH
COURTS OF THE UNITED STATES OR OF THE STATE OF NEW YORK WITH A
SUIT, ACTION OR PROCEEDING IN ANOTHER JURISDICTION OR (z) DISMISS
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH COURTS OF THE
UNITED STATES OR OF THE STATE OF NEW YORK FOR THE PURPOSE OF
BRINGING THE SAME IN ANOTHER JURISDICTION.
(c) EACH PARTY HERETO HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS,
SUITS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT BROUGHT IN ANY OF THE
AFORESAID COURTS, AND HEREBY FURTHER IRREVOCABLY AND
UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM THAT ANY
SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
(d)(i) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND
AGREES THAT SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS,
NOTICES AND DOCUMENTS OF ANY OF THE AFOREMENTIONED COURTS IN ANY
SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY MAILING COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT THE
ADDRESS IN THE STATE, CITY AND COUNTY OF NEW YORK SET FORTH IN
SECTION 19.7 OR, IN THE CASE OF LESSEE, AT THE ADDRESS SET FORTH
IN SCHEDULE 2, OR AT SUCH OTHER ADDRESS OR UPON SUCH AGENT AS MAY
BE DETERMINED PURSUANT TO SECTION 19.8(d)(ii). EACH PARTY HERETO
HEREBY AGREES THAT SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH
CASE IN ACCORDANCE WITH THIS SECTION 19.8(d), SHALL CONSTITUTE
VALID AND EFFECTIVE PERSONAL SERVICE UPON SUCH PARTY, AND EACH
SUCH PARTY HEREBY AGREES THAT THE FAILURE OF ANY OF ITS AGENTS TO
GIVE ANY NOTICE OF SUCH SERVICE TO SUCH PARTY SHALL NOT IMPAIR OR
AFFECT IN ANY WAY THE VALIDITY OF SUCH SERVICE ON SUCH PARTY OR
ANY JUDGMENT RENDERED IN ANY ACTION OR PROCEEDING BASED THEREON.
(ii) LESSEE SHALL GIVE EACH OTHER PARTY TO THIS AGREEMENT
30 DAYS' PRIOR WRITTEN NOTICE OF ANY CHANGE IN THE LOCATION, OR
CLOSING, OF LESSEE'S PLACE OF BUSINESS SET FORTH IN SCHEDULE 2.
ANY SUCH NOTICE SHALL (y) IF LESSEE SHALL CONTINUE TO MAINTAIN A
PLACE OF BUSINESS IN THE STATE, CITY AND COUNTY OF NEW YORK,
SPECIFY THE ADDRESS OF SUCH PLACE OF BUSINESS OR (z) IF LESSEE
SHALL NO LONGER MAINTAIN A PLACE OF BUSINESS IN THE STATE, CITY
AND COUNTY OF NEW YORK, AND, UNDER THE LAW OF THE STATE OF NEW
YORK AS THEN IN EFFECT, ANY PARTY HERETO SHALL NOT BE PERMITTED
TO EFFECT OUT-OF-STATE SERVICE UPON LESSEE BY MAIL IN THE MANNER
SPECIFIED IN SECTION 19.8(d)(i) (AND SHALL SO NOTIFY LESSEE),
DESIGNATE AN AGENT (WHICH AGENT SHALL BE REASONABLY ACCEPTABLE TO
OWNER TRUSTEE AND LOAN TRUSTEE), IN EITHER CASE, IN THE STATE,
CITY AND COUNTY OF NEW YORK, AT OR UPON WHICH ANY OF THE PARTIES
HERETO MAY SERVE PROCESS ON LESSEE PERSONALLY OR IN ACCORDANCE
WITH THIS SECTION 19.8(d).
77
IF LESSEE DESIGNATES AN AGENT IN ACCORDANCE WITH CLAUSE (z)
ABOVE, LESSEE SHALL PROMPTLY PROVIDE EACH OTHER PARTY HERETO
EVIDENCE OF THE APPOINTMENT OF SUCH AGENT (FOR THE THEN-REMAINING
TERM) AND THE ACCEPTANCE THEREOF BY SUCH AGENT.
(e) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN ANY COURT IN
ANY JURISDICTION BASED UPON OR ARISING OUT OF OR RELATING TO THIS
AGREEMENT. EACH PARTY HERETO ACKNOWLEDGES THAT THE WAIVER OF JURY
TRIAL BY IT IN THIS SECTION 19.8(e) IS A MATERIAL INDUCEMENT TO
THE OTHER PARTIES HERETO TO ENTER INTO A BUSINESS RELATIONSHIP
WITH IT AND THAT THE OTHER PARTIES HERETO HAVE RELIED ON THIS
SECTION 19.8(e) IN ENTERING INTO THIS AGREEMENT AND THE OTHER
OPERATIVE AGREEMENTS.
(f) EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY AGREES
THAT FINAL JUDGMENT AGAINST IT RENDERED BY SUCH COURTS IN ANY OF
THE AFORESAID ACTIONS, SUITS OR PROCEEDINGS SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN ANY OTHER JURISDICTION, WITHIN OR WITHOUT
THE UNITED STATES, BY SUIT ON THE JUDGMENT, A CERTIFIED OR
EXEMPLIFIED COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE
FACT AND AMOUNT OF ITS OBLIGATIONS AND LIABILITIES.
(g) NOTHING HEREIN SHALL, OR SHALL BE CONSTRUED SO AS TO,
LIMIT THE RIGHT OF LESSEE, ANY PARTICIPANT, GUARANTOR, OWNER
TRUSTEE OR LOAN TRUSTEE TO DEFEND OR TO ASSERT A COUNTERCLAIM IN,
OR TO SEEK RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT RENDERED
IN, ANY ACTION, SUIT OR PROCEEDING IN THE COURTS OF WHATEVER
JURISDICTION THAT MAY BE APPROPRIATE IN THE OPINION OF LESSEE,
SUCH PARTICIPANT, GUARANTOR, OWNER TRUSTEE OR LOAN TRUSTEE, AS
THE CASE MAY BE.
(h) EACH PARTY HERETO REPRESENTS AND WARRANTS THAT IT HAS
REVIEWED THIS SECTION 19.8 WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY ACCEPTS AND AGREES TO THIS SECTION 19.8
FOLLOWING CONSULTATION WITH SUCH LEGAL COUNSEL. THIS SECTION 19.8
IS IRREVOCABLE AND UNCONDITIONAL AND SHALL APPLY TO ANY
AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
19.9 Third-Party Beneficiary
This Agreement is not intended to, and shall not, provide
any person not a party hereto (other than the Liquidity Provider,
the Subordination Agent and the Pass Through Trustees, which are
intended third-party beneficiaries with respect to the provisions
of Section 10.1) with any rights of any nature whatsoever against
any of the parties hereto, and no person not a party hereto
(other than the Liquidity Provider, the Subordination Agent and
the Pass Through Trustees, with respect to the provisions of
Section 10.1) shall have any right, power or privilege in respect
of, or have any benefit or interest arising out of, this
Agreement.
78
19.10 Entire Agreement
This Agreement, together with the other Operative
Agreements, on and as of the date hereof, constitutes the entire
agreement of the parties hereto with respect to the subject
matter hereof, and all prior or contemporaneous understandings or
agreements, whether written or oral, among any of the parties
hereto with respect to such subject matter are hereby superseded
in their entireties.
19.11 Further Assurances
Each party hereto shall execute, acknowledge and deliver or
shall cause to be executed, acknowledged and delivered, all such
further agreements, instruments, certificates or documents, and
shall do and cause to be done such further acts and things, in
any case, as any other party hereto shall reasonably request in
connection with the administration of, or to carry out more
effectually the purposes of, or to better assure and confirm into
such other party the rights and benefits to be provided under
this Agreement and the other Operative Agreements.
SECTION 20. ERISA
20.1 Generally
Without prejudice to the representations, warranties or
covenants regarding the Law relating to any Plan, including
Sections 7.2.9, 7.3.3, 7.6.3 and 8.5.3(b)(i), but subject to
Section 21, each of Lessee, Owner Participant, each Note Holder,
First Security, Owner Trustee, the Pass Through Trustee, the
Subordination Agent, WTC and Loan Trustee agrees that it will,
immediately upon obtaining Actual Knowledge (with respect to
Lessee, Owner Participant, First Security, Owner Trustee, WTC and
Loan Trustee) or actual knowledge of a Vice President or more
senior officer, or any other officer having responsibility for
the Transactions (with respect to any Note Holder (or any
beneficial owner of a Equipment Note) that, with respect to a
Note Holder, its source of funding with respect to the Equipment
Notes it then holds or, with respect to Lessee, Owner
Participant, First Security, Owner Trustee, the Pass Through
Trustee, the Subordination Agent, WTC or Loan Trustee, its
continued participation in the Transaction has resulted in a
"prohibited transaction" within the meaning of Section 406 of
ERISA or Section 4975(c)(1) of the Code, promptly notify in
writing all other parties hereto. In addition, if any such party
obtains any such Knowledge or knowledge with respect to another
party, such party shall promptly notify in writing all such other
parties hereto.
79
20.2 Owner Participant
If, at any time, Owner Participant becomes a "party in
interest" (as defined in Section 3(14) of ERISA) or a
"disqualified person" (as defined in Section 4975(e)(2) of the
Code) with respect to Plan assets so as to cause such a
prohibited transaction, and Owner Participant has decided to
Transfer, under Section 12.1.1(a), in order to correct such
prohibited transaction, then for purposes of such Transfer only
(and not any subsequent Transfer unless the provisions of this
Section 20.2 are applicable) a "Permitted Institution" shall only
be required to have a combined capital and surplus or combined
net worth of $15 million).
20.3 Certificate Holders
Subject to Section 21, upon any Note Holder (including Loan
Participant, whether or not it has elected or elects to have its
Equipment Note(s) registered in the name of a nominee, the Pass
Through Trustee and the Subordination Agent) giving any notice in
accordance with the first sentence of Section 20.1, such Note
Holder shall comply with Section 8.5.3(c).
20.4 [Intentionally Omitted]
20.5 Owner Trustee
Upon First Security giving any notice in accordance with
the first sentence of Section 20.1, Owner Trustee shall, subject
to Section 9.1.1 of the Trust Agreement, resign as Owner Trustee.
Upon its receipt of such notice, Owner Participant shall as soon
as is reasonably practicable appoint a successor Owner Trustee
pursuant to Section 9.1 of the Trust Agreement.
20.6 Loan Trustee
Upon WTC giving any notice in accordance with the first
sentence of Section 20.1, Loan Trustee shall, subject to Section
8.02 of the Trust Indenture, resign as Loan Trustee.
20.7 ERISA--Pass Through Trustee
Subject to Section 21, upon WTC giving any notice in
accordance with the first sentence of Section 20.1, the Pass
Through Trustee shall resign; provided, however, that if it is
the Pass Through Trustee's source of funding with respect to a
Equipment Note, rather than the Pass Through Trustee's continued
participation in the Transaction, that has caused the prohibited
transaction, then the Pass Through Trustee shall not resign, but
shall comply with Section 8.5.3(c).
80
20.8 Certain Agreements
Subject to Section 21, Owner Participant shall not be
entitled to give the notice described in Section 8.5.3(c)(ii)
unless, as a result of the occurrence of a prohibited transaction
as described in Section 8.5.3(c), Owner Participant would be
exposed to any material risk of liability, cost or other Expense
(after taking into account the indemnity of Lessee under Section
10.1.1(f) and the creditworthiness of Lessee at such time). If
the procedures specified in Section 8.5.3(c)(ii) are invoked,
Owner Participant shall, upon request of Lessee, use reasonable
efforts to confirm to Lessee whether or not it believes a
transfer to a proposed transferee would correct such prohibited
transaction and whether or not such transfer, immediately upon
its consummation, would result in another prohibited transaction.
A copy of any notice given by either Lessee or Owner Participant
under Section 8.5.3(c)(ii) shall, within one Business Day, be
delivered by such party to the other. If, after Owner Participant
provides a Note Holder that is the Pass Through Trustee with
notice that it is invoking the procedures specified in Section
8.5.3(c)(ii), the Note Holder is able to establish to the
reasonable satisfaction of Owner Participant that the transfer of
the Note Holder's Equipment Note would not correct the prohibited
transaction, then Owner Participant shall rescind its notice to
the Note Holder. Such rescission shall not preclude delivery of
another such notice by Owner Participant (or Lessee) pursuant to
Section 8.5.3(c)(ii).
SECTION 21. REFINANCING TRANSACTION
In connection with the Refinancing Transaction,
notwithstanding anything to the contrary contained herein, it is
expressly agreed and understood that the provisions of Sections
7.4.2 (to the extent such Section refers to Section 8.5.3(a)(ii),
(b) and (c)), 8.5.3(a)(ii), (b) and (c), 12.1.3, 13.7 and 20 of
the Participation Agreement shall not apply to (i) the issuance
of Equipment Notes by the Owner Trustee to the Pass Through
Trustees (as beneficial owners) and the Subordination Agent (as
record owner) in connection with the Refinancing Transaction,
(ii) the acquisition and holding of Equipment Notes by the Pass
Through Trustees (as beneficial owners) and the Subordination
Agent (as record owner) in connection with the Refinancing
Transaction, (iii) the issuance by each Pass Through Trust of the
Pass Through Certificates, (iv) the acquisition, holding or
transfer of Pass Through Certificate(s) by a holder thereof or a
prospective transferee thereof or (v) any sale, assignment,
conveyance, exchange or other transfer of any Equipment Note or
any interest in, or represented by, any Equipment Note from the
Pass Through Trustee to a subsequent Pass Through Trustee. The
parties further agree that so long as any Pass Through
Certificate shall remain outstanding, the provisions of 7.1.18,
7.2.13 and 8.5.4 shall be of no force or effect.
The parties agree that the Refinancing Transaction shall
not constitute a refunding transaction under Section 13.1 of the
Participation Agreement.
81
In addition, the disclosure of certain confidential
documents specified in Section 18 of the Participation Agreement
shall be permitted to the extent necessary or advisable to
consummate the Refinancing Transaction.
[This space intentionally left blank]
82
IN WITNESS WHEREOF, each of the parties hereto confirms
that it has had an opportunity to review, become familiar with
and negotiate this Participation Agreement, including, without
limitation, Section 19.8, and has caused this Participation
Agreement to be duly executed and delivered as of the day and
year first above written.
CONTINENTAL AIRLINES, INC.,
Lessee
By________________________________
Name:
Title:
GAUCHO-2 INC.,
Owner Participant
By________________________________
Name:
Title:
WILMINGTON TRUST COMPANY, not in
its individual capacity, but
solely as Subordination Agent
under the Intercreditor
Agreement Loan Participant
By________________________________
Name:
Title:
83
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, not in its individual
capacity, except as expressly
provided herein, but solely as
Owner Trustee, Owner Trustee
By________________________________
Name:
Title:
WILMINGTON TRUST COMPANY, not in
its individual capacity, except
as expressly provided herein,
but solely as Loan Trustee, Loan
Trustee
By________________________________
Name:
Title:
84
SCHEDULE 1
TO
AMENDED AND RESTATED
PARTICIPATION AGREEMENT
ACCOUNTS; ADDRESSES
Account for Payments Address for Notices
-------------------- -------------------
Continental The Chase Manhattan Bank Continental Airlines, Inc.
Airlines, (National Association) 2929 Allen Parkway
Inc. New York, New York 10081 Suite 2010
Account No.: 910-2-499291 Houston, Texas 77019
ABA#: 021-000021 Attention: Senior Vice
Attention: Pat Settembrino President and Chief
Reference: Continental Financial Officer
Lease 114 Facsimile: (713) 520-6329
Gaucho-2 Inc. c/o The Boeing Company Gaucho-2 Inc.
The Chase Manhattan Bank 7755 East Marginal Way South
(National Association) Seattle, Washington 98108
New York, New York 10081 Attention: Treasurer
Account No.: 910-1-012764 M/S 68-34
ABA#: 021-000021 Facsimile: (206) 237-8746
Attention: Pat Settembrino
Reference: Continental
Lease 114
First First Security Bank of Utah, First Security Bank of Utah,
Security Bank National Association National Association
of Utah, 79 South Main Street 79 South Main Street
National Salt Lake City, Utah 84111 Salt Lake City, Utah 84111
Association Account No.: 051-0922115 Attention: Corporate Trust
Corporate Trust Department Department
ABA#: 124-0000-12 Facsimile: (801) 246-5053
Reference: Continental
Lease 114
Wilmington The Chase Manhattan Bank Wilmington Trust Company
Trust Company (National Association) Rodney Square North
New York, New York 10081 1100 North Market Street
Account No.: 920-1-014363 Wilmington, Delaware 19890
ABA#: 021-000021 Attention: Corporate Trust
Attention: Corporate Trust Administration
Administration Facsimile: (302) 651-1576
Reference: Continental
Lease 114
1
SCHEDULE 2
TO
AMENDED AND RESTATED
PARTICIPATION AGREEMENT
LESSEE'S ADDRESS FOR SERVICE OF PROCESS
Continental Airlines, Inc.
65 East 55th Street
14th Floor
New York, New York 10022
1
SCHEDULE 3
TO
AMENDED AND RESTATED
PARTICIPATION AGREEMENT
COMMITMENTS
Participant Percentage of Lessor's Dollar Amount
Cost
Owner Participant Owner Participant's
Percentage
Gaucho-2 Inc. 20% $ 9,619,307.00
Original Loan Loan Participant's
Participant Percentage
Fleet National Bank 80% $38,474,000.00
Total 100% $48,093,307.00
1
SCHEDULE 4
TO
AMENDED AND RESTATED
PARTICIPATION AGREEMENT
CERTAIN TERMS
Defined Term Definition
BFE Amount $166,215.00
Commitment Termination Date May 24, 1996
Debt Rate 7.75% with respect to the
Equipment Notes designated
as "Series A"; 8.56% with
respect to the Equipment
Notes designated as
"Series B"; 10.22% with
respect to the Equipment
Notes designated as
"Series C"; and 11.50%
with respect to the
Equipment Notes designated
as "Series D".
Lessor's Cost $48,093,307.00
1
SCHEDULE 5
TO
AMENDED AND RESTATED
PARTICIPATION AGREEMENT
[Intentionally Omitted]
1
[Exhibits A-L Intentionally Omitted]
1
- --------------------------------------------------------------------------
CONFIDENTIAL: Annexes B, C and D and Schedules 1, 2, 3 and 4 of this
Lease Agreement are subject to Restrictions on Dissemination
Set Forth in Section 18 of the Participation Agreement (as defined herein)
- --------------------------------------------------------------------------
AMENDED AND RESTATED LEASE AGREEMENT 114
Dated as of July 1, 1995
Between
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
Not in its Individual Capacity,
except as expressly provided herein,
but solely as Owner Trustee,
Lessor
and
CONTINENTAL AIRLINES, INC.,
Lessee
--------------------------------------------------------
One Boeing Model 757-224 Aircraft
Bearing United States Registration No. N12114 and
Bearing Manufacturer's Serial No. 27556
with two Rolls-Royce Model RB211-535E4-B-37 Engines
Bearing Engine Manufacturer's Serial Nos. 31319 and 31278
-------------------------------------------------------------
The right, title and interest of Lessor in and to, among
other things, this Lease Agreement has been assigned to and is
subject to a security interest in favor of Wilmington Trust
Company, a Delaware banking corporation, as Mortgagee, under the
Trust Indenture and Mortgage 114, dated as of July 1, 1995, as
amended, for the benefit of the holders of the Loan Certificates
referred to in such Trust Indenture, all to the extent provided
in such Trust Indenture. This Lease Agreement has been executed
in multiple counterparts; to the extent, if any, that this Lease
Agreement constitutes chattel paper (as defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no
security interest in Lessor's right, title and interest in and to
this Lease Agreement may be perfected through the delivery or
possession of any counterpart of this Lease Agreement other than
the counterpart of this Lease Agreement that contains the
original receipt executed by Wilmington Trust Company, as
Mortgagee.
1
CONTENTS
SECTION 1. DEFINITIONS AND CONSTRUCTION..................... 1
SECTION 2. DELIVERY AND ACCEPTANCE.......................... 1
2.1 Delivery and Lease of Aircraft................... 1
2.2 Acceptance by Lessee............................. 1
SECTION 3. TERM AND RENT.................................... 2
3.1 Term............................................. 2
3.2 Rent............................................. 2
3.3 Payments......................................... 5
SECTION 4. DISCLAIMER; CERTAIN AGREEMENTS OF
LESSOR; SECTION 1110 MATTERS..................... 6
4.1 Computation of Stipulated Loss and
Termination Values............................... 6
4.2 Disclaimer....................................... 6
4.3 Certain Agreements of Lessor..................... 7
4.4 Quiet Enjoyment.................................. 8
4.5 Investment of Funds Held as Security............. 8
4.6 Title Transfers by Lessor........................ 9
4.7 Lessor's Interest in Certain Engines............. 9
4.8 Lease For U.S. Federal Income Tax Law
Purposes; Section 1110 of Bankruptcy
Code.............................................10
SECTION 5. RETURN OF AIRCRAFT...............................10
5.1 Compliance with Annex B..........................10
5.2 Storage and Related Matters......................11
5.3 Return of Other Engines..........................11
5.4 Failure to Return Aircraft.......................11
SECTION 6. LIENS............................................12
SECTION 7. REGISTRATION, OPERATION, POSSESSION,
SUBLEASING AND RECORDS...........................13
7.1 Registration and Operation.......................13
7.2 Possession.......................................15
7.3 Certain Limitations on Subleasing or Other
Relinquishment of Possession.....................21
i
SECTION 8. MAINTENANCE; REPLACEMENT AND POOLING OF
PARTS; ALTERATIONS, MODIFICATIONS AND
ADDITIONS; OTHER LESSEE COVENANTS................22
8.1 Maintenance; Replacement and Pooling of
Parts; Alterations, Modifications and
Additions........................................22
8.2 Information, Certificates, Notices and
Reports..........................................22
8.3 Certain Agreements of Lessee.....................25
SECTION 9. VOLUNTARY TERMINATION UPON OBSOLESCENCE........ 25
9.1 Right of Termination.............................25
9.2 Election by Lessor to Sell.......................26
9.3 Retention of Aircraft by Lessor..................29
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC.............30
10.1 Event of Loss With Respect to Aircraft...........30
10.2 Event of Loss With Respect to an Engine..........33
10.3 Conditions to any Replacement....................33
10.4 Conveyance to Lessee.............................37
10.5 Application of Payments..........................37
10.6 Requisition of Aircraft for Use..................38
10.7 Requisition of an Engine for Use.................38
10.8 Application of Payments..........................39
10.9 Application of Payments During Existence
of Default.....................................39
SECTION 11. INSURANCE....................... ...............39
11.1 Lessee's Obligation to Insure....................39
11.2 Lessor's Right to Maintain Insurance.............40
11.3 Insurance for Own Account........................40
11.4 Indemnification by Government in Lieu of
Insurance........................................40
11.5 Application of Insurance Proceeds................41
11.6 Application of Payments During Existence
of Default.......................................41
SECTION 12. INSPECTION......................................42
SECTION 13. ASSIGNMENT; MERGER; SUCCESSOR OWNER
TRUSTEE.........................................43
13.1 In General.......................................43
13.2 Merger of Lessee.................................43
13.3 Assignment Security for Lessor's
Obligations......................................44
13.4 Successor Owner Trustee..........................45
ii
SECTION 14. LEASE EVENTS OF DEFAULT.........................45
14.1 Payments.........................................46
14.2 Insurance........................................46
14.3 Corporate Existence..............................46
14.4 Certain Covenants................................46
14.5 Other Covenants..................................46
14.6 Representations and Warranties...................47
14.7 Bankruptcy and Insolvency........................47
SECTION 15. REMEDIES AND WAIVERS............................48
15.1 Remedies.........................................48
15.2 Limitations Under CRAF...........................51
15.3 Right to Perform for Lessee......................52
15.4 Determination of Fair Market Rental Value
and Fair Market Sales Value......................52
15.5 Lessor Appointed Attorney-in-Fact................53
15.6 Remedies Cumulative..............................53
SECTION 16. LESSEE'S OBLIGATIONS; NO SETOFF,
COUNTERCLAIM, ETC...............................54
SECTION 17. RENEWAL AND PURCHASE OPTIONS....................55
17.1 Notices Generally................................55
17.2 Renewal Options..................................56
17.3 Purchase Option..................................58
17.4 Appraisals.......................................59
SECTION 18. MISCELLANEOUS...................................60
18.1 Amendments.......................................60
18.2 Severability.....................................60
18.3 Survival.........................................60
18.4 Reproduction of Documents........................61
18.5 Counterparts.....................................61
18.6 No Waiver........................................61
18.7 Notices..........................................61
18.8 GOVERNING LAW; SUBMISSION TO JURISDICTION;
VENUE............................................62
18.9 Third-Party Beneficiary..........................64
18.10 Entire Agreement...............................65
ANNEXES, EXHIBITS AND SCHEDULES
- -------------------------------
ANNEX A Definitions
ANNEX B Return Conditions
ANNEX C Maintenance
ANNEX D Insurance
EXHIBIT A Form of Lease Supplement
iii
SCHEDULE 1 Certain Terms
SCHEDULE 2 Basic Rent
SCHEDULE 3 Stipulated Loss Value Schedule
SCHEDULE 4 Termination Value Schedule
SCHEDULE 5 Permitted Air Carriers
SCHEDULE 6 Placards
iv
AMENDED AND RESTATED LEASE AGREEMENT 114
AMENDED AND RESTATED LEASE AGREEMENT 114, dated as of July
1, 1995 (this "Amended and Restated Lease Agreement" or
"Agreement" or "Lease"), between (a) FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, except as expressly provided herein, but
solely as Owner Trustee (this and all other capitalized terms
used but not defined herein shall have the respective meanings
ascribed thereto in Section 1 below) ("Lessor" or "Owner
Trustee"), and (b) CONTINENTAL AIRLINES, INC., a Delaware
corporation ("Lessee").
RECITALS
A. Lessor and Lessee are parties to the Lease Agreement
114 (the "Original Lease") dated as of July 1, 1995 as
supplemented by Lease Supplement No. 1 as recorded by the
Federal Aviation Administration on July 5, 1995 and assigned
Conveyance No. Y41473.
B. Lessor and Lessee desire by this Amended and Restated
Lease Agreement to amend and restate in its entirety the Original
Lease in connection with the Refinancing Transaction.
C. Lessor and Lessee are parties to the Participation
Agreement, pursuant to which, among other things, Lessor and
Lessee have agreed to enter into this Agreement.
D. Pursuant to the Trust Agreement, Owner Participant
has authorized Lessor to enter into this Agreement.
NOW, THEREFORE, for and in consideration of the premises
and the mutual agreements contained herein and for other good and
valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS AND CONSTRUCTION
1.1 Definitions
Capitalized terms used but not defined herein shall have
the respective meanings set forth or incorporated by reference,
and shall be construed and interpreted in the manner described,
in Annex A.
1
1.2 Finance Lease Parties
The parties agree, to the extent permitted by applicable
Law, that no right or remedy granted solely by reason of Article
2A of the UCC shall be available to Lessor or Lessee as against
each other unless expressly set forth in this Lease; and to the
extent the foregoing waiver is not wholly effective, the parties
agree that this Lease shall constitute a "Finance Lease" for
purposes of Article 2A of, and as defined by Section 2A-103(g) of
the UCC.
SECTION 2. DELIVERY AND ACCEPTANCE
2.1 Delivery and Lease of Aircraft
Lessor hereby agrees to lease to Lessee for the Term and
Lessee hereby agrees to lease from Lessor for the Term, the
Aircraft, commencing immediately upon acquisition of the Aircraft
by Lessor pursuant to the Purchase Agreement Assignment.
2.2 Acceptance by Lessee
(a) By executing and delivering Lease Supplement No. 1,
Lessee confirms to Lessor that (i) Lessee has duly and
irrevocably accepted delivery of the Aircraft for all purposes
of this Agreement, (ii) Lessee has duly and irrevocably accepted
the Aircraft as being in satisfactory condition and in good
working order, without defect in design, operation or fitness for
use, whether or not discoverable by Lessee as of the Delivery
Date, and (iii) the Aircraft has been duly marked in accordance
with Section 7.1.3(a).
(b) Lessor has authorized one or more employees of Lessee,
designated by Lessee in writing, as the authorized representative
or representatives of Lessor to accept delivery of the Aircraft
on behalf of Lessor pursuant to the Purchase Agreement Assignment
and the Participation Agreement. Lessee hereby agrees that if
delivery of the Aircraft shall be accepted by an employee or
employees of Lessee pursuant to such authorization by Lessor,
such acceptance of delivery by such employee or employees on
behalf of Lessor shall, without further act, irrevocably
constitute acceptance by Lessee of the Aircraft for all purposes
of this Agreement.
SECTION 3. TERM AND RENT
3.1 Term
The Aircraft shall be leased hereunder for the Term, unless
this Agreement or the leasing of the Aircraft is earlier
terminated in accordance with any provision of this Agreement.
Lessee shall have the option to renew the leasing of the Aircraft
hereunder pursuant to, and subject to the terms and conditions
of, Section 17, for the Renewal Lease Term.
2
3.2 Rent
3.2.1 Basic Rent; Adjustments to Basic Rent,
Stipulated Loss Value and Termination
Value
(a) During the Base Lease Term, Lessee shall pay to Lessor,
on each Payment Date, in the manner and in funds of the type
specified in Section 3.3, Basic Rent in advance and in the amount
equal to the percentage of Lessor's Cost specified in Schedule 2
for such Payment Date, as such amount may be (i) adjusted
pursuant to Section 3.2.1(b) or (ii) increased in an amount equal
to any increase in the amount of interest due on the Equipment
Notes on the relevant Payment Date pursuant to Section 2(e) of
the Registration Rights Agreement. Each installment of Basic Rent
shall, for all purposes hereof, be accrued on a daily basis over
the three-month period beginning on the Payment Date on which
such installment is scheduled to be paid; and as security for the
obligations of Lessee under this Lease and the other Lessee
Operative Documents, Lessee hereby grants to Lessor a security
interest in all amounts of Basic Rent which may be paid but
unaccrued hereunder from time to time.
(b) The percentages of (i) Basic Rent, Stipulated Loss
Value and Termination Value set forth in Schedules 2, 3 and 4,
respectively, shall be appropriately adjusted (upward or
downward) in the manner set forth in Section 3.2.1(c), (x) to
reflect any Post-Delivery Change in Tax Law (but without any
optimization of the Amortization Schedule)or (y) as contemplated
by Section 13 of the Participation Agreement, to reflect a
transaction described in such Section and subject to the terms
therein and (ii) Stipulated Loss Value and Termination Value
shall be adjusted and recomputed in accordance with, and to the
extent required by, the Tax Indemnity Agreement. Any adjustment
described in this Section 3.2.1(b) shall be set forth in an
amendment to this Lease to be prepared by Lessor, executed and
delivered by Lessor and Lessee, and filed with the FAA, all at
the sole cost and expense of Lessee, and a copy of such amendment
shall be provided to Mortgagee; provided, however, that the
execution, delivery and filing of such amendment shall not be a
condition to the effectiveness of any adjustment required by the
terms hereof.
(c) All adjustments pursuant to Section 3.2.1(b) shall be
made as promptly as practicable after either Owner Participant or
Lessee gives notice to the other that an event has occurred that
requires an adjustment. Owner Participant and Lessee shall give
prompt notice to each other of any event requiring an adjustment,
but in any event, in the case of a Post-Delivery Change in Tax
Law, not later than the end of the fourteenth month following the
month in which the Delivery Date occurs. All such adjustments
shall be made in a manner that (i) maintains the Net Economic
Return to Owner Participant and (ii) to the extent possible
consistent with clause (i), minimizes the Net Present Value of
Rents to Lessee; provided, however, that payments of Basic Rent
3
hereunder shall, notwithstanding any such adjustment, be payable
in consecutive quarterly installments, subject always to the
provisions of Section 3.2.1(e). Any recalculation of the
percentages of Basic Rent, Stipulated Loss Value and Termination
Value shall be prepared by Owner Participant, subject to
verification at the request of Lessee in accordance with Section
3.2.1(d), on the basis of the same methodology and assumptions
used by Owner Participant in determining the percentages of Basic
Rent, Stipulated Loss Value and Termination Value as of the
Delivery Date (including compliance with Revenue Procedures 75-21
and 75-28 and Section 467 of the Code), except as such
assumptions have been modified to reflect the events giving rise
to adjustments hereunder. Promptly after an adjustment is made
hereunder, Owner Participant shall deliver to Lessee a
description of such adjustment, setting forth in reasonable
detail the calculation thereof. All adjustments shall (y) be made
so as to avoid characterization of the Lease as a "disqualified
leaseback or long-term agreement" within the meaning of Section
467 of the Code and to avoid any additional risk of such
characterization and (z) be in compliance with the requirements
of Revenue Procedure 75-21 and Sections 4.02(5), 4.07(1) and, on
a prospective basis, 4.08(1) or (2) of Revenue Procedure 75-28.
Notwithstanding the foregoing, adjustments to Basic Rent shall
not be required to comply with Section 467 and shall be permitted
to result in recharacterization of the Lease as a "disqualified
leaseback or long-term agreement" if (i) application of Section
467 does not result in acceleration of recognition of rental
income, or (ii) Section 467 does require acceleration of
recognition of rental income, but the adjustments to Basic Rent
maintain Owner Participant's Net Economic Return (taking into
account the after-Tax effect of Section 467) notwithstanding such
acceleration.
(d) If Lessee believes that any calculations by Owner
Participant pursuant to Section 3.2.1(c) are in error, and if,
after consultation, Lessee and Owner Participant are unable to
agree on an adjustment, then a nationally recognized firm of
accountants selected by Owner Participant and reasonably
satisfactory to Lessee (which may be Owner Participant's
independent public accountants) shall verify such calculations.
Owner Participant will make available to such firm, but not, in
any circumstances, to Lessee or any representative of Lessee, the
methodology and assumptions referred to in Section 3.2.1(c) and
any modifications thereto made to reflect the events giving rise
to adjustments hereunder (subject to the execution by such firm
of a confidentiality agreement, reasonably acceptable to Owner
Participant, prohibiting disclosure of such methodology and
assumptions to any third party). The determination by such firm
of accountants shall be final. Lessee will pay the reasonable
costs and expenses of such further verification by such
accountants, provided that if it results in a decrease in Basic
Rent which decreases the remaining Net Present Value of Rents by
more than twenty basis points from the remaining Net Present
Value of Rents as recalculated by the Owner Participant, then the
Owner Participant will pay such costs and expenses.
4
(e) Notwithstanding anything to the contrary in any
Operative Agreement, the amount of the payment of Basic Rent due
and payable on each Payment Date shall be at least sufficient to
pay in full, as of such Payment Date (assuming timely payment of
the Loan Certificates prior to such Date), the aggregate
principal amount of scheduled installments due on the Loan
Certificates outstanding on such Payment Date, together with the
accrued and unpaid interest thereon, due on such Payment Date in
respect of the Loan Certificates; provided, however, that no
installment of Basic Rent shall be increased to the extent such
increase would be based upon (i) any judicial attachment or
diversion of Basic Rent on account of Lessor Liens attributable
to Lessor or Owner Participant, (ii) any modification of the
amount or due date of any scheduled payment required to be made
in respect of the Loan Certificates, other than as required or
permitted by any Operative Agreement (including, without
limitation, as permitted upon the occurrence of a Lease Event of
Default) or (iii) the acceleration of any Loan Certificate or
Loan Certificates due solely to the occurrence of an Indenture
Event of Default that does not constitute a Lease Event of
Default.
3.2.2 Supplemental Rent
Lessee shall pay to Lessor, or to whosoever shall be
entitled thereto, any and all Supplemental Rent when and as the
same shall become due and owing. Lessee will also pay to Lessor,
or to whosoever shall be entitled thereto, on demand, as
Supplemental Rent, to the extent permitted by applicable law,
interest at the Payment Due Rate on any part of any amount of
Rent (including, without limitation, Supplemental Rent) not paid
by 12:00 noon, New York City time, on the date when due, for the
period from and including the date on which the same was due to,
but excluding, the date of payment in full.
3.3 Payments
(a) Payments of Rent and any and all other amounts payable
by Lessee hereunder and under any other Operative Agreement shall
be paid from an account maintained by Lessee at a bank or other
financial institution in the United States by wire transfer of
immediately available Dollars, not later than 12:00 noon, New
York City time, on the date when due, to the account of Lessor
specified in Schedule 1 to the Participation Agreement or to such
other account in the United States as directed by Lessor to
Lessee in writing or, in the case of any payment of Supplemental
Rent expressly payable to a person other than Lessor, to the
person that shall be entitled thereto to such account in the
United States as such person may specify from time to time to
Lessee.
(b) Except as otherwise expressly provided herein, whenever
any payment of Rent, or any other amount payable under this
Agreement, the Participation Agreement or any other Operative
Agreement shall be due on a day that is not a Business Day, such
payment shall be made on the next day that is a Business Day, and, if
5
such payment is made on such next Business Day, no interest
shall accrue on the amount of such payment during such extension.
(c) So long as the Trust Indenture has not been discharged
pursuant to Section 10.01 thereof, and notwithstanding Section
3.3(a), Lessor hereby directs, and Lessee agrees, that all
payments of Rent and all other amounts payable by Lessee
hereunder, other than Excluded Payments, shall be paid directly
to Mortgagee on behalf of Lessor by wire transfer of immediately
available Dollars to the account of Mortgagee specified in
Schedule 1 to the Participation Agreement, or to such other
account in the United States as Mortgagee may specify by written
notice to Lessor and Lessee from time to time.
(d) Excluded Payments shall be paid by wire transfer of
immediately available Dollars to the account of the person
specified in the Participation Agreement or, if not so specified,
to such account in the United States as may be specified by such
person by written notice to Lessor and Lessee from time to time.
(e) All computations of interest under this Agreement shall
be made on the basis of a year of 360 days comprised of twelve
30-day months.
SECTION 4. DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR; SECTION
1110 MATTERS
4.1 Computation of Stipulated Loss and Termination
Values
Lessor and Lessee acknowledge and agree that,
notwithstanding the second sentence of Section 3.2.1(a), the
percentages set forth in Schedules 3 and 4 hereto, with respect
to Stipulated Loss Value Dates and Termination Value Dates which
are not Payment Dates, have been computed on the assumption that
the Basic Rent payable on the Payment Date immediately preceding
any such Stipulated Loss Value Date or Termination Value Date, as
the case may be, has been paid to and will be retained by Lessor,
such that if such computations did not assume payment and
retention of such Basic Rent, the Stipulated Loss Values and
Termination Values corresponding to such Stipulated Loss Value
Dates and Termination Value Dates, respectively, would be
commensurately higher than those set forth in Schedules 3 and 4
hereto.
6
4.2 Disclaimer
LESSOR LEASES AND LESSEE TAKES THE AIRCRAFT "AS-IS,
WHERE-IS." LESSEE ACKNOWLEDGES AND AGREES THAT AS BETWEEN LESSEE
AND EACH OF LESSOR, MORTGAGEE AND ANY PARTICIPANT (i) THE
AIRFRAME AND EACH ENGINE ARE OF A SIZE, DESIGN, CAPACITY AND
MANUFACTURE SELECTED BY AND ACCEPTABLE TO LESSEE, (ii) LESSEE IS
SATISFIED THAT THE AIRFRAME AND EACH ENGINE ARE SUITABLE FOR
THEIR RESPECTIVE PURPOSES, AND (iii) NONE OF LESSOR, MORTGAGEE
AND ANY PARTICIPANT MAKES, HAS MADE OR SHALL BE DEEMED TO HAVE
MADE, AND EACH WILL BE DEEMED TO HAVE EXPRESSLY DISCLAIMED, AND
LESSEE HEREBY WAIVES, RELEASES AND RENOUNCES, ANY WARRANTY,
REPRESENTATION, GUARANTY, LIABILITY AND OBLIGATION OF LESSOR,
MORTGAGEE AND ANY PARTICIPANT AND ANY RIGHT, CLAIM AND REMEDY OF
LESSEE AGAINST SUCH PARTIES, EXPRESS OR IMPLIED, ARISING BY
OPERATION OF LAW, COURSE OF PERFORMANCE, COURSE OF DEALING, USAGE
OF TRADE OR OTHERWISE, AS TO:
(w) THE TITLE, AIRWORTHINESS, VALUE, CONDITION, DESIGN,
OPERATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR USE OR FOR ANY PARTICULAR PURPOSE OF THE
AIRFRAME, ANY ENGINE, ANY PART, ANY DATA OR ANY OTHER
THING DELIVERED, SOLD OR TRANSFERRED
HEREUNDER,
(x) THE QUALITY OF THE MATERIAL OR WORKMANSHIP WITH
RESPECT TO THE AIRFRAME, ANY ENGINE, ANY PART, ANY
DATA OR ANY OTHER THING DELIVERED, SOLD OR
TRANSFERRED HEREUNDER,
(y) THE ABSENCE OF LATENT OR ANY OTHER DEFECT OR
NONCONFORMANCE IN THE AIRFRAME, ANY ENGINE, ANY
PART, ANY DATA OR ANY OTHER THING DELIVERED, SOLD OR
TRANSFERRED HEREUNDER, WHETHER OR NOT DISCOVERABLE,
OR
(z) THE ABSENCE OF ANY ACTUAL OR ALLEGED INFRINGEMENT OF
ANY PATENT, TRADEMARK OR COPYRIGHT OR THE LIKE.
LESSEE FURTHER WAIVES, DISCLAIMS, RELEASES AND RENOUNCES ANY
LIABILITY, RIGHT, CLAIM, REMEDY OR OBLIGATION BASED ON TORT,
INCLUDING STRICT LIABILITY, WHETHER OR NOT ARISING FROM THE
NEGLIGENCE (WHETHER ACTIVE, PASSIVE OR IMPUTED) OF LESSOR,
MORTGAGEE OR ANY PARTICIPANT, ANY OBLIGATION, LIABILITY, RIGHT,
CLAIM OR REMEDY FOR LOSS OF OR DAMAGE TO THE AIRFRAME, ANY
ENGINE, ANY PART, ANY DATA OR ANY OTHER THING DELIVERED, SOLD OR
TRANSFERRED HEREUNDER, OR ANY OTHER REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRFRAME, ANY
ENGINE, ANY PART, ANY DATA OR ANY OTHER THING DELIVERED, SOLD OR
TRANSFERRED HEREUNDER.
7
4.3 Certain Agreements of Lessor
Unless a Lease Event of Default shall have occurred and be
continuing, Lessor agrees to make available to Lessee such rights
as Lessor may have under any warranty with respect to the
Aircraft made, or made available, by Airframe Manufacturer or
Engine Manufacturer or any of their respective subcontractors or
suppliers, as the case may be, pursuant to and in accordance with
the terms of the Purchase Agreement Assignment.
4.4 Quiet Enjoyment
So long as no Lease Event of Default shall have occurred
and be continuing, Lessor shall not interfere with Lessee's
rights hereunder to possession and use of the Aircraft during the
Term. The foregoing, however, shall not be construed or deemed to
modify or condition in any respect the obligations of Lessee
pursuant to Section 16, which obligations are absolute and
unconditional.
4.5 Investment of Funds Held as Security
4.5.1 Investment
Any moneys required to be paid to or retained by Lessor
that are not required to be paid to Lessee pursuant to Section
10.9 or 11.6 solely because a Lease Default or a Lease Event of
Default shall have occurred and be continuing, or that are held
by Lessor pending payment to Lessee pursuant to Section 10.5,
10.8 or 11.5, or that are required to be paid to Lessee pursuant
to Section 10.5, 10.8 or 11.5 after completion of a replacement
to be made pursuant to Sections 10.1, 10.2 and 10.3, shall, until
paid to Lessee as provided in Section 10 or 11 or applied as
provided herein, be held by Lessor as security for the
obligations of Lessee under this Lease and the other Lessee
Operative Agreements (and Lessee hereby grants to Lessor a
security interest in such moneys) and shall be invested by Lessor
from time to time as directed in writing by Lessee (or, if Lessee
fails to so direct, by or as directed by Lessor in its sole
discretion) and at the expense and risk of Lessee in Cash
Equivalents so long as such Cash Equivalents specified by Lessee
or Lessor, as the case may be, can be acquired by Lessor using
its best efforts; provided, that so long as the Lien of the Trust
Indenture shall not have been discharged under Section 10.01
thereof, such moneys shall be invested and held by Mortgagee, as
assignee of Lessor, as security for the obligations of Lessee
under this Lease and the other Lessee Operative Agreements and
shall be invested by Mortgagee pursuant to the first sentence of
Section 5.09 of the Trust Indenture.
8
4.5.2 Payment of Gain or Loss
Any net gain (including interest received) realized as the
result of investments pursuant to Section 4.5.1 (net of any fees,
commissions and other expenses, if any, incurred in connection
with such investment) shall be held and applied in the same
manner as the principal amount is to be held and applied
hereunder. Lessee will promptly pay to Lessor, on demand, the
amount of any loss realized as the result of any such investment
(together with any fees, commissions and other expenses, if any,
incurred in connection with such investment), such amount so paid
to be held and applied by Lessor as contemplated in Section 4.5.1
above.
4.5.3 Limitation of Liability
All investments under this Section 4.5, and under the first
sentence of Section 5.09 of the Trust Indenture, shall be at the
expense and risk of Lessee, and Lessor and Mortgagee shall not be
liable for any loss resulting from any investment made under this
Section 4.5, or under the first sentence of Section 5.09 of the
Trust Indenture, other than by reason of its willful misconduct
or gross negligence. Any such investment may be sold (without
regard to its maturity) by Lessor without instructions whenever
such sale is necessary to make a distribution required by this
Lease or the Trust Indenture.
4.6 Title Transfers by Lessor
If Lessor shall be required to transfer title to the
Aircraft, Airframe or any Engine to Lessee or any other person
pursuant to Section 5.3, 9, 10 or 17.3, then (a) Lessor shall (1)
transfer to Lessee or such other person, as the case may be, all
of Lessor's right, title and interest in and to the Aircraft,
Airframe or such Engine, as the case may be, (2) assign to Lessee
or such other person, as the case may be, if and to the extent
permitted under the Purchase Agreement, all warranties of
Airframe Manufacturer and Engine Manufacturer with respect to the
Aircraft, Airframe or such Engine, and (3) assign to Lessee or
such other person, as the case may be, if and to the extent
permitted, all claims, if any, for damage to the Aircraft,
Airframe or such Engine, in each case free of Lessor Liens
attributable to Lessor or Owner Participant, and without recourse
or warranty of any kind whatsoever (except as to the transfer
described in clause (1) above and as to the absence of such
Lessor Liens, as aforesaid), and (b) Lessor shall promptly
deliver to Lessee or such other person, as the case may be, a
bill of sale and agreements of assignment, as aforesaid, and such
other instruments of transfer, all in form and substance
reasonably satisfactory to Lessor and Lessee (or such other
person, as the case may be), as Lessee (or such other person, as
the case may be) may reasonably request.
9
4.7 Lessor's Interest in Certain Engines
In the event Lessee shall have received from the lessor,
conditional seller, indenture trustee or secured party of any
airframe leased to, or purchased by, Lessee or any Permitted
Sublessee subject to a lease, conditional sale, trust indenture
or other security agreement a written agreement complying with
clause (b) of Section 7.2.5, Lessor hereby agrees for the benefit
of such lessor, conditional seller, indenture trustee or secured
party that Lessor will not acquire or claim, as against such
lessor, conditional seller, indenture trustee or secured party,
any right, title or interest in any engine as the result of such
engine being installed on the Airframe at any time while such
engine is subject to such lease, conditional sale, trust
indenture or other security agreement and owned by such lessor or
conditional seller or subject to a trust indenture or security
interest in favor of such indenture trustee or secured party.
4.8 Lease For U.S. Federal Income Tax Law Purposes;
Section 1110 of Bankruptcy Code
(a) Lessee and Lessor agree that this Lease is, and
shall be treated as, a lease for U.S. federal income tax
purposes of the Aircraft, Airframe, Engines and Parts.
(b) It is the intention of each of Lessee and Lessor that
Lessor (and Mortgagee as assignee of Lessor under the Trust
Indenture) shall be entitled to the benefits of Section 1110 with
respect to the right to take possession of the Aircraft,
Airframe, Engines and Parts as provided in this Lease, and in any
instance where more than one construction of the terms and
conditions of this Lease or any other pertinent Operative
Agreement is possible, or of the facts and circumstances
underlying the transactions contemplated herein or therein,
Lessor and Lessee agree that a construction which would create
and preserve such benefits shall control over any construction
which would not create and preserve such benefits.
(c) Lessor and Lessee agree that, for all purposes of
applicable Law, this Lease constitutes an agreement of lease and
nothing contained herein shall be construed as conveying to
Lessee any right, title or interest in the Aircraft, Airframe,
Engines, Parts or Aircraft Documents except as a lessee only.
SECTION 5. RETURN OF AIRCRAFT
5.1 Compliance with Annex B
Lessee shall comply with each of the provisions of Annex B
hereto, which provisions are hereby incorporated by this
reference as if set forth in full herein. Without limiting any
other rights of Lessor under this Lease or any other Operative
Agreement, Lessee acknowledges that the provisions of this
Section 5 and of Annex B, are of the essence of this Lease and
the transactions contemplated herein.
10
5.2 Storage and Related Matters
If Lessee receives from Lessor a written request for
storage of the Aircraft upon its return hereunder, Lessee will
promptly (and in any event within ten (10) days following such
request) provide Lessor, or cause Lessor to be provided, with
outdoor storage facilities for the Aircraft for a period not
exceeding one hundred eighty (180) days, commencing on the date
of such return, at Mojave, California or Marana, Arizona, as
Lessor may specify, or if Lessor elects not to store the Aircraft
at either of such locations, then the Aircraft shall be stored at
such storage facility in the 48 contiguous states of the United
States as Lessee may select and which is used as a location for
the storage of large commercial aircraft. Lessee shall, at
Lessor's written request, maintain insurance (if available) for
the Aircraft during such storage period. Such storage shall be at
Lessor's risk (subject to Lessee's insurance obligations, as
aforesaid); provided that Lessee shall pay all applicable storage
fees; and provided further that Lessee's obligation to provide
storage shall be subject to Lessor entering into an agreement
prior to the commencement of the storage period with the storage
facility which agreement shall provide, among other things, that
Lessor shall bear all maintenance charges (other than maintenance
required as a result of Lessee's failure to comply with the
provisions of Annex B hereto) and all storage fees incurred after
the initial 180 day storage period. In addition, upon the return
of the Aircraft, Lessor shall have no obligation with respect to
the amount of any fuel or oil contained in the fuel or oil tanks
of the Aircraft.
5.3 Return of Other Engines
In the event that any Engine owned by Lessor shall not be
installed on the Airframe at the time of return hereunder, such
Engine shall be deemed to have suffered an Event of Loss as of
the sixty-first day prior to the date of such return, with the
effect that Lessee shall be required to return the Airframe
hereunder with a Replacement Engine meeting the requirements of,
and in accordance with, Section 10 hereof and Annex B hereto.
5.4 Failure to Return Aircraft
If Lessee shall, for any reason whatsoever, fail to return
the Aircraft and the Aircraft Documents at the time specified
herein, all obligations of Lessee under this Lease shall continue
in effect with respect to the Aircraft until the Aircraft is
returned to Lessor; provided, however, that this Section 5.4
shall not be construed as permitting Lessee to fail to meet its
obligation to return the Aircraft or the Aircraft Documents in
accordance with the requirements hereof or constitute, or be
deemed to constitute, a waiver of any Lease Event of Default
resulting from Lessee's failure to return the Aircraft or the
Aircraft Documents or otherwise.
11
SECTION 6. LIENS
Lessee shall not, directly or indirectly, create, incur,
assume or suffer to exist any Lien on or with respect to the
Aircraft, the Airframe, any Engine, any Part or any Aircraft
Documents, title to any of the foregoing or any interest therein,
or this Lease or any interest of Lessor herein, or any amount
payable hereunder, including, without limitation, any Rent,
except (a) the respective rights of Lessor, Mortgagee, the
Participants or Lessee under the Operative Agreements, or of any
Permitted Sublessee under any Permitted Sublease; (b) Lessor
Liens attributable to Owner Trustee (both in its capacity as
trustee under the Trust Agreement and in its individual
capacity), Mortgagee (both in its capacity as trustee under the
Trust Indenture and in its individual capacity) or Owner
Participant; (c) the rights of others under agreements or
arrangements to the extent expressly permitted by the terms of
Sections 7.2 and 7.3 and Section F of Annex C; (d) Liens for
Taxes of Lessee (and its U.S. federal tax law consolidated
group), or Liens for Taxes of any Tax Indemnitee (and its U.S.
federal tax law consolidated group) for which Lessee is obligated
to indemnify such Tax Indemnitee under any of the Lessee
Operative Agreements, in any such case either not yet due or
being contested in good faith by appropriate proceedings so long
as such Liens and such proceedings do not involve any material
risk of the sale, forfeiture or loss (including loss of use) of
the Aircraft, the Airframe, any Engine or any of the Aircraft
Documents, or any interest therein or any discernible risk of
criminal liability or any material risk of civil penalty against
Lessor, Mortgagee or any Participant; (e) materialmen's,
mechanics', workers', repairers', employees' or other like Liens
arising in the ordinary course of business for amounts the
payment of which is either not yet delinquent or is being
contested in good faith by appropriate proceedings, so long as
such Liens and such proceedings do not involve any material risk
of the sale, forfeiture or loss (including loss of use) of the
Aircraft, the Airframe, any Engine or any of the Aircraft
Documents, or any interest therein or any discernible risk of
criminal liability or any material risk of civil penalty against
Lessor, Mortgagee or any Participant; and (f) Liens arising out
of any judgment or award against Lessee (or any Permitted
Sublessee), so long as such judgment shall, within 30 days after
the entry thereof, have been discharged or vacated, or execution
thereof stayed pending appeal or shall have been discharged,
vacated or reversed within 30 days after the expiration of such
stay, and so long as during any such 30-day period there is not,
or any such judgment or award does not involve, any material risk
of the sale, forfeiture or loss (including loss of use) of the
Aircraft, the Airframe, any Engine or any of the Aircraft
Documents, or any interest therein or any discernible risk of
criminal liability or any material risk of civil penalty against
Lessor, Mortgagee or any Participant. Lessee shall promptly take
such action as may be necessary duly to pay, satisfy, remove and
discharge any Lien not excepted above if the same shall at any
time arise in respect of the Aircraft, the Airframe, any Engine,
any Part, the Aircraft Documents or all or any other part of
12
the Trust Estate and shall promptly provide to Lessor evidence of
such payment, satisfaction, removal or discharge.
SECTION 7. REGISTRATION, OPERATION, POSSESSION, SUBLEASING
AND RECORDS
7.1 Registration and Operation
7.1.1 Registration and Recordation
Subject to the compliance by Lessor and Owner Participant
with their respective obligations under Section 16 of the
Participation Agreement, Lessee shall cause the Aircraft to be,
and at all times during the Term to remain, duly registered with
the FAA under the Act or with such other country of registry as
shall be permitted under Section 7.1.2 below, in the name of
Lessor as owner and lessor (except to the extent that such
registration under the Act cannot be effected with the FAA
because of Lessor's or Owner Participant's failure to comply with
the citizenship requirements for registration of the Aircraft
under the Act). Unless the Trust Indenture has been discharged in
accordance with its terms, Lessee shall also cause the Trust
Indenture to be duly recorded and at all times maintained of
record as a first-priority perfected mortgage (subject to
Permitted Liens) on the Aircraft, the Airframe and each of the
Engines (except to the extent such perfection or priority cannot
be maintained solely as a result of the failure by Lessor or
Mortgagee to execute and deliver any necessary documents).
7.1.2 Reregistration
So long as no Lease Default or Lease Event of Default shall
have occurred and be continuing, Lessee may, by written notice to
Lessor, request to change the country of registration of the
Aircraft. Any such change in registration shall be effected, if
at all, only in compliance with, and subject to all of the
conditions set forth in, Section 8.7.12 of the Participation
Agreement.
7.1.3 Markings
(a) On or prior to the Delivery Date, Lessee will cause to
be affixed to, and maintained in, the cockpit of the Airframe and
on each Engine, in each case, in a clearly visible location (it
being understood that the location of such placards, as
identified to the Owner Participant prior to the Delivery Date,
shall be deemed to be in compliance with this requirement), a
placard of a reasonable size and shape bearing the legend, in
English, set forth in Schedule 6. Lessee shall not remove or
permit the removal of such placards, except that such placards
may be removed temporarily, if necessary, in the course of
maintenance of the Airframe or Engines. If any such placard is
damaged or becomes illegible, Lessee shall promptly replace it
with a placard complying with the requirements of this Section
7.1.3.
(b) During the Term, Lessee may letter, paint or mark
13
the Aircraft with the name and logo of Lessee or any Permitted
Sublessee and may cause the Aircraft to bear insignia plates or
other markings identifying the supplier or manufacturer of the
Airframe or the Engines or any Parts. Except as provided above,
Lessee will not allow the name of any person to be placed on the
Airframe or on any Engine as a designation that could reasonably
be interpreted as a claim of ownership.
7.1.4 Compliance With Laws
Lessee shall not, and shall not allow any other person to,
operate, use, maintain, service, repair, overhaul or otherwise
similarly deal with the Aircraft (a) in violation of any Law
binding on or applicable to the Lessee or to the Aircraft, the
Airframe or any Engine, or any of the Aircraft Documents, or to
the operation, use, maintenance, service, repair or overhaul of,
or similar dealings in, the Aircraft, Airframe or any Engine, or
(b) in violation of any airworthiness certificate, license or
registration of any Government Entity relating to Lessee or to
the Aircraft, the Airframe or any Engine, except (1) immaterial
or non-recurring violations of which Lessee or any Permitted
Sublessee had no prior knowledge or information and with respect
to which corrective measures are taken promptly by Lessee or a
Permitted Sublessee, as the case may be, upon discovery thereof,
and (2) to the extent Lessee or any Permitted Sublessee is
contesting the validity or application of any such law, rule,
regulation, order, certificate, license or registration in good
faith in any reasonable manner which does not involve any
material risk of the sale, forfeiture or loss (including loss of
use) of the Aircraft, the Airframe, any Engine or any of the
Aircraft Documents or any interest therein or any discernible
risk of criminal liability or any material risk of civil penalty
against Lessor, Mortgagee or any Participant.
7.1.5 Operation
Lessee agrees not to operate, use or locate the Aircraft,
the Airframe or any Engine, or allow the Aircraft, the Airframe
or any Engine to be operated, used or located (a) in any area
excluded from coverage by any insurance required by the terms of
Section 11, except in the case of a requisition by the U.S.
Government where Lessee obtains an indemnity in lieu of such
insurance from the U.S. Government, or insurance from the U.S.
Government, covering such area, in accordance with Section 11.4
or (b) in any recognized or threatened area of hostilities unless
fully covered in accordance with Annex D by war-risk insurance as
required by the terms of Section 11, unless the Aircraft is only
temporarily located in such area as a result of an emergency,
equipment malfunction, navigational error, hijacking, weather
condition or other similar unforeseen circumstances, so long as
Lessee diligently and in good faith proceeds to remove the
Aircraft from such area immediately.
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7.2 Possession
Lessee will not, without the prior written consent of
Lessor and Mortgagee, sublease or otherwise in any manner
deliver, transfer or relinquish possession of the Aircraft, the
Airframe or any Engine or install any Engine, or permit any
Engine to be installed, on any airframe other than the Airframe;
provided, however, subject to the provisions of Section 7.3, that
if and for so long as (a) no Lease Event of Default shall have
occurred and be continuing, (b) with respect to any sublease or
transfer contemplated by Section 7.2.7 or 7.2.8 below, no Lease
Default or Lease Event of Default shall have occurred and be
continuing at the time of such sublease or transfer and (c) all
approvals, consents or authorizations required in connection with
any such sublease or such delivery, transfer or relinquishment of
possession by the Aviation Authority have been obtained and
remain in full force and effect, then Lessee may, without such
prior written consent:
7.2.1 Interchange and Pooling
Subject or permit any Permitted Sublessee to subject any
Engine to normal interchange agreements or pooling agreements or
arrangements, in each case customary in the commercial airline
industry and entered into in writing by Lessee or such Permitted
Sublessee, as the case may be, in the ordinary course of business
and with (a) any U.S. Air Carrier or (b) any other air carrier
organized and having its principal place of business in a country
with which the United States then maintains normal diplomatic
relations and which recognizes and gives effect to the rights,
title and interests of Lessor and Mortgagee in, and with respect
to, such Engine; provided, however, that no such agreements or
arrangements shall require, contemplate or result in any transfer
of Lessor's title to such Engine. If, notwithstanding the
foregoing, Lessor's title to any such Engine is divested under
any such agreement or arrangement, then such Engine shall be
deemed to have suffered an Event of Loss as of the date of such
divestiture, with the effect that Lessee shall be required to
replace such Engine with a Replacement Engine meeting the
requirements of, and in accordance with, Section 10.
15
7.2.2 Testing and Service
Deliver or permit any Permitted Sublessee to deliver
possession of the Aircraft, Airframe, any Engine or any Part to
the manufacturer thereof or, to the extent permitted by Section B
of Annex C, to any third-party maintenance provider, for testing,
service, repair, maintenance or overhaul work on the Aircraft,
Airframe, any Engine or any Part, or, to the extent required or
permitted by the terms of Section D of Annex C, for alterations
or modifications in or additions to the Aircraft, Airframe or any
Engine, it being understood that, with respect to Engines and
Parts, delivery may be accomplished by transport on licensed or
bonded common carriers qualified in the shipping and transport of
such items.
7.2.3 Civil Reserve Air Fleet Program
Transfer or permit any Permitted Sublessee, if required by
Law to do so, to transfer possession of the Aircraft, Airframe or
any Engine to the U.S. Government pursuant to CRAF, in which
event Lessee shall promptly notify Lessor and Mortgagee in
writing of any such transfer of possession and in such
notification shall identify by name, address and telephone
numbers of the Contracting Office Representative or
Representatives for the Military Airlift Command of the United
States Air Force to whom notices must be given and to whom
requests or claims must be made; provided, however, that any such
transfer of possession shall not continue, and shall not be
permitted to continue, beyond the end of the Term. If,
notwithstanding the foregoing, such transfer does continue beyond
the end of the Term, then (without limiting any other right of
Lessor with respect to such event) Lessor may, in accordance with
Section 10.6, deem the Aircraft, Airframe or Engines, as the case
may be, to have suffered an Event of Loss with the effect that
Lessee would be required to pay, in accordance with Section 10.6,
the amounts specified in Section 10.1.2.
7.2.4 Installation of Engines on Owned
Aircraft
Install or permit any Permitted Sublessee to install an
Engine on an airframe owned by Lessee or such Permitted
Sublessee, as the case may be, free and clear of all Liens,
except (a) those of the type permitted under clauses (d), (e) and
(f) of Section 6 and those that apply only to the engines (other
than Engines) and/or only to parts, appliances, instruments,
appurtenances, accessories, furnishings and other equipment
(other than Parts), and (b) the rights of third parties under
normal interchange or pooling agreements and arrangements of the
type that would be permitted under Section 7.2.1.
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7.2.5 Installation of Engines on Other
Airframes
Install or permit any Permitted Sublessee to install an
Engine on an airframe leased to Lessee or such Permitted
Sublessee, or purchased by Lessee or such Permitted Sublessee
subject to a mortgage, security agreement, conditional sale or
other secured financing arrangement, but only if (a) such
airframe is free and clear of all Liens, except (i) the rights of
the parties to such lease, or any such secured financing
arrangement, covering such airframe and (ii) Liens of the type
permitted by clauses (a) and (b) of Section 7.2.4 and (b) Lessee
shall have received from the lessor, mortgagee, secured party or
conditional seller, in respect of such airframe, a written
agreement (which may be a copy of the lease, mortgage, security
agreement, conditional sale or other agreement covering such
airframe), whereby such Person agrees, for the effective and
enforceable benefit of, among others, Lessor, that neither such
Person nor its successors or assigns will acquire or claim any
right, title or interest in, or Lien on, such Engine by reason of
such Engine being installed on such airframe.
7.2.6 Installations of Engines on Financed
Aircraft
Install or permit any Permitted Sublessee to install an
Engine on an airframe owned by Lessee or such Permitted
Sublessee, leased to Lessee or such Permitted Sublessee, or
purchased by Lessee or such Permitted Sublessee subject to a
conditional sale or other security agreement under circumstances
where neither Section 7.2.4 or 7.2.5 is applicable; provided,
however, that in the event of any such installation, such Engine
shall be deemed to have suffered an Event of Loss as of the date
of such installation, with the effect that Lessee shall be
required to replace such Engine with a Replacement Engine meeting
the requirements of, and in accordance with, Section 10. Until
Section 10 has been fully complied with, Lessor's interest in any
such Engine shall continue in full force and effect.
7.2.7 Subleasing
With respect to the Aircraft, Airframe or any Engine, enter
into a sublease with any Permitted Air Carrier, but only if:
(a) Lessee shall provide 15 days' advance written notice
to Lessor and Mortgagee;
(b) At the time that Lessee enters into such sublease, no
such Permitted Air Carrier shall be insolvent or subject to any
bankruptcy, insolvency, liquidation, reorganization, dissolution
or similar proceeding, or any similar non-ordinary course
transaction, shall be seeking any reorganization or any
readjustment of its debts or shall be, or shall have
substantially all of its property, in the possession of any
liquidator, trustee, receiver or similar person;
17
(c) No such sublease shall provide for payment of rent, or
any amount in lieu of rent, (i) more than three months in
advance, or (ii) less frequently than once every three months;
(d) Any such sublease (i) shall include provisions for the
registration, maintenance, operation, possession, inspection and
insurance of the Aircraft that are substantially the same as, or
(from a lessor's perspective) more favorable than, the applicable
provisions of Sections 7, 11 and 12, (ii) shall provide that such
Permitted Air Carrier may not further sublease or transfer its
interests (except transfers of the type permitted in Sections
7.2.1 through 7.2.6, inclusive) in the Aircraft, Airframe or
Engines, (iii) shall be for a period not in excess of 60 months
(inclusive of all renewal periods) and not extending beyond the
date which is one year prior to the end of the Term, and (iv)
shall be expressly subject and subordinate to all the terms of
this Agreement and to the rights, powers and remedies of Lessor
hereunder, including, without limitation, Lessor's rights under
Section 15 to repossess the Aircraft, Airframe and Engines and to
terminate such sublease, upon the occurrence of a Lease Event of
Default;
(e) In connection with a sublease to a Permitted Air
Carrier which is not a U.S. Air Carrier, all necessary
governmental approvals, if any, required for the Aircraft,
Airframe or Engines to be imported to, and exported from (upon
repossession thereof by Lessor or other termination or expiration
of such sublease), the applicable jurisdiction shall have been
obtained prior to commencement of any such sublease, and any
foreign exchange permits necessary to allow all rent and other
payments provided for under such sublease shall be in full force
and effect; and Lessee shall have provided to Lessor a
power-of-attorney, reasonably satisfactory in form and substance
to Lessor and, to the extent permitted by applicable Law, valid
and enforceable in the applicable jurisdiction, permitting Lessor
to exercise all rights of Lessee under such sublease in such
jurisdiction, upon the occurrence and continuation of a Lease
Event of Default;
(f) In connection with a sublease to a Permitted Air
Carrier which is not a U.S. Air Carrier, Lessee shall have
furnished Lessor, Mortgagee and Owner Participant a favorable
opinion of counsel, satisfactory to Lessor, Mortgagee and Owner
Participant, in the country of domicile of such Permitted Air
Carrier, in form and substance satisfactory to Lessor, Mortgagee
and Owner Participant, that (i) the terms of such sublease, this
Lease and the Trust Indenture are the legal, valid and binding
obligations of the parties thereto enforceable under the laws of
such jurisdiction, (ii) it is not necessary for Owner
Participant, Lessor or Mortgagee to register or qualify to do
business in such jurisdiction, if not already so registered or
qualified, as a result, in whole or in part, of the proposed
sublease, (iii) Lessor's title to, and Mortgagee's Lien in
respect of, the Aircraft, Airframe and Engines will be recognized
in such jurisdiction, (iv) such jurisdiction maintains normal
18
diplomatic relations with the United States and the Laws of
such jurisdiction of domicile require fair compensation by the
government of such jurisdiction, payable in a currency freely
convertible into Dollars, for the loss of use of or title to the
Aircraft, Airframe or Engines in the event of the requisition by
such government of such use or title (unless Lessee shall provide
insurance in the amounts required with respect to hull insurance
under Section 11 covering the requisition of use of or title to
the Aircraft, Airframe or Engines by the government of such
jurisdiction so long as the Aircraft, Airframe or Engines are
subject to such sublease) and (v) the agreement of such Permitted
Air Carrier that its rights under the sublease are subject and
subordinate to all the terms of this Lease is enforceable against
such Permitted Air Carrier under applicable law and Lessor shall
be able to repossess the Aircraft, Airframe and Engines, and
return it to the United States, without undue expense, penalty or
delay, upon the occurrence of a Lease Event of Default;
(g) Lessee shall furnish to Lessor, Mortgagee and Owner
Participant evidence reasonably satisfactory to Lessor, Mortgagee
and Owner Participant that the insurance required by Section 11
remains in effect;
(h) All necessary action, if any, shall have been taken to
continue in full force and effect (i) the perfection of (y)
Lessor's title to and interest in the Aircraft, Airframe and
Engines and (z) Mortgagee's first-priority perfected Lien on the
Aircraft, Airframe and Engines (subject to Permitted Liens) and
(ii) Lessor's and Mortgagee's rights under this Lease;
(i) All necessary documents shall have been duly filed,
registered or recorded in such public offices as may be required
fully to preserve the title of, and the priority of the interest
of, Lessor and Mortgagee in the Aircraft, Airframe and Engines;
(j) Each such sublease shall be assigned by Lessee to
Lessor as security for the performance of all of Lessee's
obligations under this Lease (with Lessee retaining all rights of
sublessor thereunder, to the extent consistent with this Section
7.2.7, (i) except the right to receive rents and (ii) if and for
so long as there shall not have occurred and be continuing a
Lease Event of Default) and, if the Trust Indenture is then in
effect, such sublease shall be further assigned without
representation or warranty by Lessor to the Mortgagee as security
for the performance of all of Lessor's obligations under the
Trust Indenture, in each case, with the express consent of such
Permitted Air Carrier;
(k) No such sublease shall be made to Permitted Air
Carriers, other than U.S. Air Carriers, prior to the close of the
calendar year in which the seventh anniversary of the Delivery
Date occurs, or if a Lessee Act (as defined in the Tax Indemnity
Agreement) as a result of which indemnification has been required
under the Tax Indemnity Agreement has created a longer Tax
19
Attribute Period (as defined in the Tax Indemnity
Agreement), prior to the close of the Tax Attribute Period,
unless in either case Lessee prepays any liability Owner
Participant determines would be due under the Tax Indemnity
Agreement as a result of such sublease based upon the assumption
that such sublease were to continue for the remainder of the term
of such sublease.
(l) Lessee shall reimburse the reasonable out-of-pocket
fees and expenses, including, without limitation, reasonable fees
and disbursements of counsel, incurred by Lessor, each
Participant and Mortgagee in connection with any such sublease
and;
(m) For all purposes of this Section 7.2.7, the term
"sublease" shall be deemed to include interchange agreements with
respect to the Aircraft or Airframe.
7.2.8 Transfer to U.S. Government
Transfer or permit the transfer of possession of the
Aircraft, Airframe or any Engine to the U.S. Government pursuant
to a sublease under which the sublessee's obligations are
guaranteed or supported by the full faith and credit of the
United States, but only if such sublease complies, or Lessee
shall comply, as the case may be, with the requirements of
clauses (a), (d)(i) (other than with respect to insurance),
(d)(ii)-(iii), (j) and (l) of Section 7.2.7.
7.3 Certain Limitations on Subleasing or Other
Relinquishment of Possession
Notwithstanding anything to the contrary in Section 7.2:
(a) The rights of any person that receives possession of
the Aircraft in accordance with Section 7.2 shall be subject and
subordinate to all the terms of this Lease, and to Lessor's
rights, powers and remedies hereunder, including, without
limitation (i) Lessor's right to repossess the Aircraft pursuant
to Section 15, (ii) Lessor's right to terminate and avoid such
sublease, delivery, transfer or relinquishment of possession upon
the occurrence of a Lease Event of Default and (iii) the right to
require such person to forthwith deliver the Aircraft, the
Airframe and Engines subject to such transfer upon the occurrence
of a Lease Event of Default;
(b) Lessee shall remain primarily liable hereunder for the
performance of all the terms of this Lease to the same extent as
if such transfer had not occurred and no transfer of possession
of the Aircraft, the Airframe or any Engine any Part or any
Aircraft Documents shall in any way discharge or diminish any of
Lessee's obligations to Lessor hereunder or under any Operative
Agreement;
(c) Lessee shall ensure that no sublease, delivery,
transfer or relinquishment permitted under Section 7.2 shall
affect the United States registration of the Aircraft, unless
also made in accordance with the provisions of Section 7.1.2.
20
(d) Any event that constitutes or would, with the passage
of time, constitute an Event of Loss under paragraph (c), (d), or
(e) of the definition of such term (as set forth in Annex A)
shall not be deemed to violate the provisions of Section 7.2;
(e) Any Wet Lease shall not constitute a delivery,
transfer or relinquishment of possession for purposes of
Section 7.2; and
(f) To the extent permitted by applicable Law, the terms of
Section 2A-303 of the UCC shall not apply to Section 7.2.
SECTION 8. MAINTENANCE; REPLACEMENT AND POOLING OF PARTS;
ALTERATIONS, MODIFICATIONS AND ADDITIONS; OTHER
LESSEE COVENANTS
8.1 Maintenance; Replacement and Pooling of Parts;
Alterations, Modifications and Additions
At all times during the Term, Lessee shall comply with, or
cause to be complied with, each of the provisions of Annex C,
which provisions are hereby incorporated by this reference as if
set forth in full herein. Without limiting any other rights of
Lessor under this Lease or any other Operative Agreement, Lessee
acknowledges that the provisions of this Section 8 and of Annex C
are of the essence of this Lease and the transactions
contemplated herein.
8.2 Information, Certificates, Notices and Reports
8.2.1 Financial Information
Lessee will furnish to Lessor, Mortgagee and Owner
Participant, to the extent not already provided to such persons
pursuant to Section 8.2.3:
(a) Within 60 days after the end of each of the first
three fiscal quarters in each fiscal year of Lessee,
a consolidated balance sheet of Lessee as of the end
of such quarter and related statements of income and
cash flows for the period commencing at the end of
the previous fiscal year and ending with the end of
such quarter, setting forth in each case in
comparative form the corresponding figures for the
corresponding period in the preceding fiscal year,
prepared in accordance with GAAP; provided that so
long as Lessee is subject to the reporting
requirements of the Securities Exchange Act of 1934,
a copy of Lessee's report on Form 10-Q for such
fiscal quarter (together with all documents
containing such financial information incorporated
by reference therein) will satisfy this
paragraph (a).
(b) Within 120 days after the end of each fiscal year of
Lessee, a consolidated balance sheet of Lessee as of
the end of such fiscal year and related statements
21
of income and cash flows of Lessee for such fiscal
year, in comparative form with the preceding fiscal
year, prepared in accordance with GAAP, together with
a report of Lessee's independent certified public
accountants with respect to their audit of such
financial statements; provided that so long as Lessee
is subject to the reporting requirements of the
Securities Exchange Act of 1934, a copy of Lessee's
report on Form 10-K for such fiscal year (including
all corresponding publicly-available annual reports to
stockholders, if not previously furnished) will
satisfy this paragraph (b).
8.2.2 Annual Certificate
Within 120 days after the close of each fiscal year of
Lessee, Lessee shall deliver to Lessor, Owner Participant and
Mortgagee a certificate of Lessee, signed by any Vice President
of Lessee, to the effect that such Vice President is familiar
with or has reviewed or caused to be reviewed the relevant terms
of this Lease and the other Operative Agreements and has made, or
caused to be made under his or her supervision, a review of the
transactions and condition of Lessee during the preceding fiscal
year, and that such review has not disclosed the existence during
such fiscal year, nor does such Vice President have knowledge of
the existence as at the date of such certificate, of any Lease
Default or Lease Event of Default or, if any such Lease Default
or Lease Event of Default existed or exists, specifying the
nature and period of existence thereof and the action Lessee has
taken or is taking or proposes to take with respect thereto.
8.2.3 SEC Reports
Lessee will furnish to Lessor, Owner Participant and
Mortgagee:
(a) promptly after filing with the SEC, copies of Lessee's
annual reports on Form 10-K (including all
corresponding publicly-available annual reports to
stockholders, if not previously furnished), and
quarterly reports on Form 10-Q (in each case,
excluding exhibits unless any such recipient requests
otherwise); and
(b) if provided by Lessee from time to time to aircraft
lessors and other aircraft creditors generally, then
(i) promptly after filing with the SEC, copies of
current reports on Form 8-K, or any similar reports
filed with the SEC (in each case, excluding exhibits
unless any such recipient requests otherwise), and
(ii) promptly upon distribution thereof, copies of
all periodic reports furnished by Lessee, or any
parent company of Lessee, to its respective
stockholders generally.
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8.2.4 Notice of Default
Lessee will furnish to Lessor, each Participant and
Mortgagee, immediately upon any senior officer or financial
officer of Lessee, or other administrative officer of Lessee
having any material responsibility for Lessee's day-to-day
compliance with its obligations under this Lease, becoming aware
that a Lease Default or a Lease Event of Default has occurred, a
certificate of Lessee, signed by any such officer of Lessee,
describing such Lease Default or Lease Event of Default in
reasonable detail, with a statement describing the action Lessee
has taken or is taking or proposes to take with respect thereto.
8.2.5 Information for Filings
Lessee shall promptly furnish to Owner Participant or
Lessor such information (other than with respect to the
citizenship of Owner Participant and Lessor) within Lessee's or
any Permitted Sublessee's possession, or reasonably available to
or obtainable by Lessee or such Permitted Sublessee, as may be
required to enable Lessor timely to file any reports required to
be filed by it as lessor under the Lease or to enable Owner
Participant to timely file any reports required to be filed by
it, as the beneficiary of the Trust Estate, in either case, with
any Government Entity because of, or in connection with, the
interest of Owner Participant or Lessor in the Aircraft, Airframe
or Engines, this Lease or any other part of the Trust Estate;
provided, however, that with respect to any such information
which Lessee reasonably deems commercially sensitive or
confidential, Owner Participant or Lessor, as the case may be,
shall afford Lessee a reasonable opportunity to seek from any
such Government Entity a waiver of the obligation of Owner
Participant or Lessor to file any such information, or shall
consent to the filing of such information directly by Lessee in
lieu of filing by Owner Participant or Lessor and if any such
waiver or consent is evidenced to the reasonable satisfaction of
Owner Participant or Lessor, as the case may be, then Lessee
shall not be required to furnish such information to Owner
Participant or Lessor.
8.2.6 Other Information
Lessee shall provide to Lessor, Mortgagee and each
Participant, from time to time such other information or data as
Lessor, Mortgagee or any such Participant may reasonably request
concerning the Aircraft, Airframe or Engines, or Lessee's
financial condition, or otherwise relating to the transactions or
matters contemplated herein and in the other Operative
Agreements, in each case if and to the extent within Lessee's or
any Permitted Sublessee's possession, or reasonably available to
or obtainable by Lessee or such Permitted Sublessee (unless
Lessee reasonably deems the same to be commercially sensitive or
confidential).
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8.3 Certain Agreements of Lessee
Lessee hereby agrees with Lessor that it shall perform the
agreements, covenants and indemnities set forth in the
Participation Agreement and the Tax Indemnity Agreement, and
hereby restates Lessee's representations and warranties set forth
in the Participation Agreement, in each case as fully and to the
same extent and with the same force and effect as if set forth in
full in this Section 8.3.
SECTION 9. VOLUNTARY TERMINATION UPON OBSOLESCENCE
9.1 Right of Termination
(a) Lessee shall have the right at its option to terminate
this Lease during the Base Lease Term, effective only on a
Termination Date occurring after the tenth anniversary of the
Delivery Date and on or before the date one year prior to the
Scheduled Expiration Date, if:
(i) the Aircraft is not then subject to any sublease or
other possessory interests of another person (including,
without limitation, interests of the type permitted under
Section 7.2) and either has become economically obsolete or
is surplus to Lessee's requirements and the Chief Financial
Officer or Treasurer of Lessee so certifies in writing to
Lessor;
(ii) Lessee's termination of this Lease shall be made on
a nondiscriminatory basis with respect to the Aircraft and
all Similar Aircraft which are then owned, leased or
otherwise operated by Lessee and which are then eligible
for termination or disposition under any applicable
agreements of Lessee relating to the purchase, ownership,
lease or operation thereof, with the effect that the
disposition of the Aircraft and any Similar Aircraft shall
be determined and effected on a random basis; and Lessee
shall provide such information to Lessor, as Lessor may
reasonably request to establish that such dispositions have
been so determined;
(iii) written notice of Lessee's exercise of its option
to terminate this Agreement shall be given to Lessor,
Mortgagee and Owner Participant not less than six months
nor more than eighteen months prior to the proposed
Termination Date specified in such notice; and
(iv) on the date of any notice described in clause (iii)
no Lease Event of Default shall have occurred and be
continuing, and on such proposed Termination Date no Lease
Default or Lease Event of Default shall have occurred and
be continuing.
(b) Lessor shall notify Lessee and Mortgagee of Lessor's
intention to sell or retain the Aircraft, as provided in this
Section 9, no later than 10 days prior to the proposed
Termination Date. Any such notice of an intention to retain the
Aircraft shall include assurances reasonably satisfactory
24
to Mortgagee of Lessor's ability to make the payments required by
Section 9.3(a). Any failure by Lessor to give such notice of its
election shall be deemed to be an election to sell the Aircraft,
as provided in this Section 9.
(c) Any termination pursuant to this Section 9 shall become
effective on the date of the sale, if any, pursuant to Section
9.2 or upon the date of termination and payment by Lessee and
Lessor in accordance with Section 9.3 if Lessor elects to retain
the Aircraft.
9.2 Election by Lessor to Sell
9.2.1 Bids; Closing of Sale
If Lessor elects to sell the Aircraft, Lessee, as agent for
Lessor, shall, from the date of such election until the date 30
days prior to the proposed Termination Date, use its best
reasonable efforts to obtain bids for a cash purchase of the
Aircraft and Lessor may, if it desires to do so, also seek to
obtain such bids. In the event Lessee receives any bid, Lessee
shall promptly, and in any event at least 25 days prior to the
proposed date of sale, certify to Lessor in writing the amount
and terms of such bid, the proposed date of such sale and the
name and address of the person (who shall not be Lessee or any
Affiliate of Lessee or any person with whom Lessee or any such
Affiliate of Lessee has any agreement or understanding with
respect to the purchase, lease, use or operation by Lessee or any
such Affiliate of the Aircraft, Airframe or any Engine)
submitting such bid. In the event Lessor receives any bid, Lessor
shall, at least 25 days prior to the proposed date of sale,
certify to Lessee in writing the amount and terms of such bid,
the proposed date of such sale and the name and address of the
person submitting such bid.
9.2.2 Closing of Sale
(a) On the proposed Termination Date (i) Lessee shall
deliver the Airframe and Engines or engines constituting part of
the Aircraft to the bidder, if any, which shall have submitted
the highest bid on or before the date 30 days prior to such
Termination Date, in the same manner as if delivery were made to
Lessor pursuant to Section 5 and Annex B and in full compliance
with the terms thereof, and shall duly transfer to Lessor title
to any such engines not owned by Lessor, all in accordance with
the terms of Section 5 and Annex B, and (ii) Lessor shall
simultaneously therewith transfer the Airframe and Engines or
engines to such bidder, in the manner described in Section 4.6,
against cash paid to Lessor in the amount of such highest bid and
in the manner and in funds of the type specified in Section 3.3.
(b) All proceeds of any sale described in Section 9.2.2(a)
shall be paid to and retained by Lessor and, on such Termination
Date, and as a condition precedent to such sale and the delivery
of the Aircraft and Engines or engines to such bidder, Lessee
shall pay to Lessor, in the manner and in funds of the type
specified in Section 3.3:
25
(i) all unpaid Basic Rent due at any time prior to
such Termination Date; plus
(ii) an amount equal to the excess, if any, of the
Termination Value for the Aircraft, computed as of such
Termination Date, over the proceeds of such sale; plus
(iii) as provided in Section 3.2.2, interest on the
amounts specified in the foregoing clause (i) at the
Payment Due Rate from and including the date on which any
such amount was due to the date of payment of such amount
in full.
As a further condition precedent to such sale and delivery,
Lessee shall pay all other amounts due and payable by Lessee to
Lessor, Mortgagee or the Participants under this Lease (other
than any Basic Rent due on such Termination Date), the
Participation Agreement or any other Operative Agreement
(including, without limitation, (A) Supplemental Rent in respect
of Make-Whole Amount, if any, payable pursuant to Section 2.10(b)
of the Trust Indenture in connection with a prepayment of the
Loan Certificates upon such sale, and (B) all interest charges
provided for hereunder or under any other Lessee Operative
Agreement with respect to the late payment of any amounts so
payable), and (C) the out-of-pocket fees and expenses incurred by
Lessor, Mortgagee and each Participant in connection with such
termination and sale).
(c) Upon and subject to any such sale and receipt of
proceeds by Lessor, and full and final payment of all amounts
described in Section 9.2.2(b), and compliance by Lessee with all
the other provisions of this Section 9.2,
(i) Lessor will transfer to Lessee, in accordance with
Section 4.6, any Engines constituting part of the Aircraft
but which were not then installed on the Airframe and sold
therewith; and
(ii) the obligation of Lessee to pay Basic Rent, on or
after the Payment Date with reference to which Termination
Value is computed, shall cease, and the Term for the
Aircraft shall end effective as of the date of such sale.
(d) A sale of the Aircraft pursuant to this Section 9.2.2
shall take place only on a Termination Date. Subject to Section
9.3, if no sale shall have occurred on or as of the proposed
Termination Date, this Agreement shall continue in full force and
effect, and all of Lessee's obligations shall continue,
including, without limitation, its obligation to pay Rent, in
each case, as if the notice under Section 9.1 shall not have been
given and, subject to Section 9.2.3(b), Lessee may give another
notice pursuant to Section 9.1.
(e) Lessor shall be under no duty to solicit bids, to
inquire into the efforts of Lessee to obtain bids or otherwise to
take any action in connection with any such sale other than
26
to transfer to the purchaser named in the highest bid referred to
above (or to such purchaser and, in the case of Engines described
in Section 9.2.2(c), to Lessee) the Airframe and Engines or
engines against receipt of the payments described in Section
9.2.2(b).
9.2.3 Withdrawal of Notice of Termination
(a) Lessee may withdraw any notice given pursuant to
Section 9.1 at any time on or before the date 25 days prior to
the proposed Termination Date if it has determined that no bid of
a reasonable amount has been received, whereupon this Agreement
shall continue in full force and effect and all of Lessee's
obligations shall continue, including, without limitation, its
obligation to pay Rent, in each case, as if the notice under
Section 9.1 shall not have been given and, subject to Section
9.2.3(b), Lessee may give another notice pursuant to Section 9.1.
(b) Anything herein to the contrary notwithstanding, Lessee
shall not be entitled to give more than three notices pursuant to
Section 9.1.
(c) Lessee shall pay any and all out-of-pocket fees and
expenses of Lessor, Mortgagee and each Participant in connection
with any notice of termination withdrawn by Lessee or in
connection with any notice of termination pursuant to which a
sale of the Aircraft fails to occur.
9.3 Retention of Aircraft by Lessor
(a) If Lessor shall elect to retain the Aircraft in
accordance with Section 9.1, on the proposed Termination Date:
(i) Lessor shall pay, or cause to be paid, in the
manner and in funds of the type specified in Section 3.3,
to the Mortgagee an amount sufficient to prepay all
outstanding Loan Certificates pursuant to Section 2.10(b)
of the Trust Indenture;
(ii) subject to receipt by Mortgagee of the funds
described in paragraph (i) above, Lessee shall deliver the
Airframe and Engines or engines constituting part of the
Aircraft to Lessor pursuant to Section 5 and Annex B and in
full compliance with the terms thereof, and shall duly
transfer to Lessor title to any such engines not owned by
Lessor, all in accordance with the terms of Section 5 and
Annex B; and
(iii) Lessee shall pay to Lessor, in the manner and
in funds of the type specified in Section 3.3:
(1) all unpaid Basic Rent due at any time prior to
such Termination Date; plus
(2) the excess, if any, of (A) the Termination Value
of the Aircraft, computed as of such Termination
Date, over (B) an amount equal to
27
the highest bona fide cash bid made for the
Aircraft by a person that is not a person
described in the parenthetical of the second
sentence of Section 9.2.1; plus
(3) as provided in Section 3.2.2, interest on the
amounts specified in the foregoing clause (1) at
the Payment Due Rate from and including the date
on which any such amount was due to the date of
payment of such amount in full; plus
(iv) Lessee shall also pay all other amounts due and
payable by Lessee to Lessor or Owner Participant under this
Lease (other than any Basic Rent due on such Termination
Date), the Participation Agreement or any other Operative
Agreement (including, without limitation, (A) Supplemental
Rent in respect of Make-Whole Amount, if any, payable
pursuant to Section 2.10(b) of the Trust Indenture in
connection with a prepayment of the Loan Certificates upon
such sale, (B) all interest charges provided for hereunder
or under any other Operative Agreement with respect to the
late payment of any amounts, so payable, and (C) the
out-of-pocket fees and expenses incurred by Lessor and
Owner Participant in connection with such termination and
sale).
(b) Upon full and final payment to Lessor, Mortgagee and
the Participants of the amounts described in Section 9.3(a), and
compliance by Lessee with all the other applicable provisions of
this Section 9.3,
(i) Lessor will transfer to Lessee, in accordance with
Section 4.6, any Engines constituting part of the Aircraft
but which were not then installed on the Airframe and sold
therewith; and
(ii) The obligation of Lessee to pay Basic Rent
otherwise due on or after the Payment Date with reference
to which Termination Value is computed shall cease, and the
Term for the Aircraft shall end effective as of such
Termination Date.
28
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC.
10.1 Event of Loss With Respect to Aircraft
10.1.1 Notice and Election
(a) Upon the occurrence of an Event of Loss with respect to
the Airframe, and any Engine or Engines installed thereon at the
time of such Event of Loss, Lessee shall promptly (and in any
event within 10 days after such occurrence) give Lessor,
Mortgagee and Owner Participant written notice of such Event of
Loss. Within 20 days after such occurrence, Lessee shall give
Lessor, Mortgagee and Owner Participant written notice of
Lessee's election to make payment in respect of such Event of
Loss, as provided in Section 10.1.2 (which notice or any
subsequent notice shall specify the date, which shall be at least
25 days after the date of such notice, on which such payment
shall be made), or to replace the Airframe, and any such Engines,
as provided in Section 10.1.3.
(b) Any failure by Lessee to give such notice of its
election shall be deemed to be an election of the option set
forth in Section 10.1.2. In addition, Lessee shall not be
entitled to elect the option set forth in Section 10.1.3 if, at
the time Lessor receives such notice from Lessee, there shall
have occurred and be continuing a Lease Default (other than with
respect to Section 14.5 or 14.6) or a Lease Event of Default.
(c) For purposes of Section 10.1.2, an Event of Loss with
respect to the Airframe shall be deemed to constitute an Event of
Loss with respect to the Aircraft. For purposes of Section
10.1.3, any Engine not actually suffering an Event of Loss shall
not be required to be replaced.
10.1.2 Payment of Loss and Termination of Lease
(a) If Lessee elects, in accordance with Section 10.1.1, to
make payment in respect of any such Event of Loss, then Lessee
shall pay, in the manner and in funds of the type specified in
Section 3.3, the following amounts:
(i) On or before the Business Day next following the
earlier of (x) the sixty-first day following the date of
the occurrence of such Event of Loss, and (y) the second
Business Day following the receipt of insurance proceeds
with respect to such occurrence (but in any event not
earlier than the date specified in Lessee's notice under
Section 10.1.1(a) on which payment in respect of such Event
of Loss shall be made), Lessee shall pay to Lessor:
(1) all unpaid Basic Rent or Renewal Rent, as the
case may be, (A) due at any time prior to the
Stipulated Loss Value Date immediately preceding
the date of such Event of Loss, or (B) if such
Event of Loss occurs on a Stipulated Loss Value
Date, due at any time prior to such Date; plus
29
(2) the Stipulated Loss Value of the Aircraft
computed as of the Stipulated Loss Value Date
used in the foregoing clause (1) for the
computation of unpaid Rent; plus
(3) as provided in Section 3.2.2, interest on the
amount specified in the foregoing clause (1) at
the Payment Due Rate from and including the date
on which any such amount was due to the date of
payment of such amount in full; plus
(4) interest on the amounts specified in the
foregoing clause (2) at the SLV Rate from and
including the Stipulated Loss Value Date, used
in the foregoing clause (1) for the computation
of unpaid Rent, to the date such amount is due,
and thereafter at the Payment Due Rate to the
date of payment of such amounts in full;
provided that, in the event that a Payment Date shall occur
(x) on or after the Stipulated Loss Value Date used in the
foregoing clause (1) for the computation of unpaid Rent,
and (y) on or before the date of payment of the amounts
specified above in this subparagraph (i), then Lessee shall
pay the Basic Rent or the Renewal Rent, as the case may be,
due on such Payment Date, and thereupon such amounts
payable under this subparagraph (i) shall be reduced by the
amount of such payment of Basic Rent or Renewal Rent, as
the case may be; and
(ii) on or before the date required for payment of the
amounts specified in paragraph (i) above, Lessee shall also
pay to Lessor, Mortgagee and the Participants all other
amounts due and payable by Lessee to Lessor, Mortgagee and
the Participants under this Lease, the Participation
Agreement or any other Operative Agreement (including,
without limitation, (A) any interest charges provided for
hereunder or thereunder with respect to the late payment of
any such other amounts, and (B) all out-of-pocket fees and
expenses of Lessor, each Participant and Mortgagee in
connection with such Event of Loss).
(b) Upon payment in full of all amounts described
in the foregoing paragraph (a),(i) the obligation of Lessee to
pay Basic Rent or Renewal Rent hereunder with respect to the
Aircraft shall terminate, (ii) the Term for the Aircraft shall
end, and (iii) Lessor will transfer the Aircraft to Lessee, as-is
and where-is, and subject to any insurer's salvage rights, but
otherwise in the manner described in Section 4.6.
30
10.1.3 Replacement of Airframe and Engines
(a) If Lessee elects, in accordance with Section 10.1.1, to
replace the Airframe, and any Engines actually suffering the
Event of Loss, then Lessee shall, as promptly as possible and in
any event within 60 days after the occurrence of such Event of
Loss, convey or cause to be conveyed to Lessor, in compliance
with Section 10.3 and as replacement for the Airframe, and any
such Engine, title to a Replacement Airframe (which shall comply
with paragraph (b) below), and for each such Engine a Replacement
Engine, in each case free and clear of all Liens other than
Permitted Liens. If Lessee makes such election, but for any
reason fails or is unable to effect such replacement within such
time period and in compliance with the requirements set forth in
Section 10.3, then Lessee shall be deemed to have initially made
the election set forth in Section 10.1.2 with the effect that
Lessee shall immediately pay, in the manner and in funds of the
type specified in Section 3.3, the amounts required under, and in
accordance with, Section 10.1.2.
(b) Any such Replacement Airframe shall be an airframe (i)
that is manufactured by Airframe Manufacturer under that certain
Purchase Agreement No. 1782 dated March 18, 1993 between The
Boeing Company and Lessee, and delivered thereunder on any date
occurring after the Delivery Date, and (ii) that is the same
model as the Airframe to be replaced thereby, or an improved
model, and that has performance and durability characteristics,
and a value and utility and remaining useful life, at least equal
to, and is in at least as good operating condition as, the
Airframe to be replaced thereby (assuming that such Airframe was
of the value and utility and in the condition and repair required
by the terms hereof immediately prior to the occurrence of the
Event of Loss). Any such Replacement Engine shall meet the
requirements of, and be conveyed by Lessee to Lessor in
accordance with, Section 10.2 (other than the notice requirement
set forth in Section 10.2.1).
10.2 Event of Loss With Respect to an Engine
10.2.1 Notice
Upon the occurrence of an Event of Loss with respect to an
Engine under circumstances in which an Event of Loss with respect
to the Airframe has not occurred, Lessee shall promptly (and in
any event within 15 days after such occurrence) give Lessor,
Mortgagee and Owner Participant written notice of such Event of Loss.
31
10.2.2 Replacement of Engine
Lessee shall, as promptly as possible and in any event
within 60 days after the occurrence of such Event of Loss, convey
or cause to be conveyed to Lessor, in compliance with Section
10.3 and as replacement for the Engine with respect to which any
Event of Loss occurred, title to a Replacement Engine free and
clear of all Liens other than Permitted Liens. Such Replacement
Engine shall be an engine manufactured by Engine Manufacturer
that is the same model as the Engine to be replaced thereby, or
an improved model, and that is suitable for installation and use
on the Airframe, and that has performance and durability
characteristics, and a value and utility and remaining useful
life, at least equal to, and is in at least as good operating
condition as, the Engine to be replaced thereby (assuming that
such Engine was of the value and utility and in the condition and
repair required by the terms hereof immediately prior to the
occurrence of the Event of Loss).
10.3 Conditions to any Replacement
10.3.1 Documents
Prior to or at the time of conveyance of title to any
Replacement Airframe or Replacement Engine to Lessor, Lessee
shall promptly take each of the following actions, and shall
promptly furnish the following agreements, instruments,
certificates and documents to (and in each case reasonably
satisfactory in form and substance to) Lessor, Mortgagee and
Owner Participant:
(a) furnish Lessor with a full warranty bill of sale duly
conveying to Lessor such Replacement Airframe or Replacement
Engine, together with such evidence of title as Lessor may
reasonably request;
(b) cause such Replacement Airframe to be duly
registered in the name of Lessor pursuant to the Act;
(c) cause (i) a Lease Supplement subjecting such
Replacement Airframe or Replacement Engine to this Lease, duly
executed by Lessee, to be delivered to Lessor for execution and,
upon such execution, to be filed for recordation with the FAA
pursuant to the Act, (ii) a Trust Indenture Supplement,
subjecting such Replacement Airframe or Replacement Engine to the
Trust Indenture, to be delivered to Lessor for execution and,
upon execution, to be filed for recordation with the FAA pursuant
to the Act and (iii) such Financing Statements and other filings,
as Lessor, Mortgagee or Owner Participant may reasonably request,
duly executed by Lessee and, to the extent applicable, Lessor and
Mortgagee (and Lessor and Mortgagee shall execute and deliver the
same), to be filed in such locations as any such party may
reasonably request;
(d) furnish such evidence of compliance with the insurance
provisions of Section 11 with respect to such Replacement
32
Airframe or Replacement Engine as Lessor, Mortgagee or Owner
Participant may reasonably request;
(e) furnish an opinion or opinions of Lessee's counsel
reasonably satisfactory to Lessor, Mortgagee and Owner
Participant to the effect that (i) upon such conveyance, Lessor
will acquire good title to such Replacement Airframe or
Replacement Engine free and clear of all Liens other than
Permitted Liens, (ii) such Replacement Airframe or Replacement
Engine will be leased hereunder and made subject to the Trust
Indenture to the same extent as the Airframe or Engine replaced
thereby, (iii) Lessor and Mortgagee, as assignee of Lessor, shall
be entitled to the benefits of Section 1110 with respect to such
Replacement Airframe, (iv) (if and to the extent that such
opinion, in view of applicable Law, can be rendered) Lessor and
Mortgagee, as assignee of Lessor, shall be entitled to the
benefits of Section 1110 with respect to such Replacement Engine
to the extent that the Lessor and the Mortgagee were entitled to
the benefits of Section 1110 with respect to the Engine so
replaced, and (v) to such further effect as Lessor, Mortgagee or
Owner Participant may reasonably request;
(f) furnish an opinion of Lessee's aviation law counsel
reasonably satisfactory to Lessor, Mortgagee and Owner
Participant as to the due registration of any such Replacement
Airframe and the due recordation of each Lease Supplement and
Trust Indenture Supplement with respect to such Replacement
Airframe or Replacement Engine and as to such other matters
concerning the Act as Lessor, Mortgagee or Owner Participant may
reasonably request;
(g) with respect to any Replacement Airframe, furnish an
opinion of tax counsel, selected by Owner Participant and
reasonably satisfactory to Lessee, as to the tax consequences to
Lessor and Owner Participant of any such replacement;
(h) with respect to the replacement of any Engine (other
than in connection with replacement of the Airframe), furnish a
certificate of a qualified aircraft engineer (who may be an
employee of Lessee) certifying that such Replacement Engine has
performance and durability characteristics, and a value and
utility and remaining useful life, at least equal to, and is in
at least as good operating condition as, the Engine so replaced,
assuming such Engine was of the value and utility and in the
condition and repair required by the terms hereof immediately
prior to the occurrence of such Event of Loss; and
(i) with respect to the replacement of the Airframe, and
any Engine installed thereon at the time of the subject Event of
Loss, furnish a certified report of a qualified independent
aircraft appraiser, satisfactory to Lessor and Owner Participant,
setting forth such appraiser's opinion as to the fair market
value, as of the date of conveyance hereunder, of such
Replacement Airframe and any such Replacement Engine, and
certifying that such Replacement Airframe and any such
Replacement Engine have performance and durability
characteristics, and a value and utility (including, but not
limited to, equivalent current value, estimated residual value
33
at the end of the Term (and at any relevant interval thereof, as
may be specified by the Lessor) and estimated remaining useful
life) at least equal to, and are in at least as good operating
condition as, the Airframe and Engines so replaced (assuming the
Airframe and Engines were in the condition and repair required by
the terms hereof immediately prior to the occurrence of such
Event of Loss); and
(j) take such other actions and furnish such other
certificates and documents as Lessor, Mortgagee or Owner
Participant may reasonably request in order that such Replacement
Airframe or Replacement Engine be duly and properly titled in
Lessor, leased hereunder and subjected to the Lien of the Trust
Indenture to the same extent as initially required under the
Operative Agreements with respect to the Airframe or Engine so
replaced.
Lessor and Lessee understand and agree that if at the time
of any replacement of the Airframe or any Engine, as contemplated
in this Section 10, the Airframe was registered in a jurisdiction
other than the United States, then the requirements set forth
above in this Section 10.3.1 relating to compliance with the
requirements of the Act or the FAA, shall be deemed to refer to
the comparable applicable Law of, and the Aviation Authority of,
such other jurisdiction.
10.3.2 Other Conditions
Lessee shall not be entitled to replace the Airframe under
Section 10.1.3 and this Section 10.3, and shall be deemed to have
initially made the election set forth in Section 10.1.2, if at
the time of such replacement
(a) there shall have occurred and be continuing any Lease
Default (other than with respect to Section 14.5 or 14.6) or
Lease Event of Default; or
(b) under applicable Law and notwithstanding any actions by
Lessor and Lessee under Section 10.3.3(a), (i) Lessor or
Mortgagee, as assignee of Lessor, shall for any reason not be
entitled to the benefits of Section 1110 with respect to such
Replacement Airframe or (ii) with respect to any Replacement
Engine which replaces an Engine installed on the Airframe at the
time of such Event of Loss, Lessor or Mortgagee, as assignee of
Lessor, shall for any reason not be entitled to the benefits of
Section 1110 with respect to such Replacement Engine to the same
extent that the Lessor and the Mortgagee were entitled to the
benefits of Section 1110 with respect to the Engine so replaced.
34
10.3.3 Other Obligations
(a) Lessor and Lessee agree that, upon any Replacement
Airframe becoming the Airframe hereunder, and upon any
Replacement Engine becoming an Engine hereunder, this Lease shall
continue to be, and shall be treated as, a lease for U.S. federal
income tax purposes of, among other things, such Replacement
Airframe and such Replacement Engine. Without limiting the
foregoing, Lessee and Lessor intend that Lessor shall, in all
events, be entitled to the benefits of Section 1110 with respect
to any Replacement Airframe or Replacement Engine and Lessee and
Lessor shall cooperate and take such action as the other may
reasonably request so as to ensure that Lessor shall be entitled
to such benefits.
(b) No Event of Loss with respect to an Engine, or with
respect to an Airframe, shall result in, or otherwise allow or
permit (other than as provided in Section 10.1.2(b)), any
reduction, deferral, discharge or other change in the timing or
amount of any Rent payable by Lessee hereunder or any other
amount payable by Lessee under any other Operative Agreement, and
(subject to such Section 10.1.2(b)) Lessee shall pay all such
Rent and other amounts as though such Event of Loss had not
occurred.
10.4 Conveyance to Lessee
Upon full compliance by Lessee with the applicable terms of
Sections 10.1.3, 10.2 and 10.3, Lessor will transfer to Lessee
the Airframe or Engine, as the case may be, with respect to which
such Event of Loss occurred, in accordance with Section 4.6,
provided that Lessor shall not be required to effect any such
transfer if and for so long as there shall have occurred and be
continuing any Lease Default (other than with respect to Section
14.5 or 14.6) or Lease Event of Default.
10.5 Application of Payments
Any amounts, other than insurance proceeds in respect of
damage or loss not constituting an Event of Loss (the application
of which is provided for in Section 11), received at any time by
Lessor, Lessee or any Permitted Sublessee from any Government
Entity or any other Person in respect of any Event of Loss will
be applied as follows:
35
10.5.1 Replacement of Airframe and Engines
If such amounts are received with respect to the Airframe,
and any Engine installed thereon at the time of such Event of
Loss, such amounts shall be paid over to, or retained by, Lessor
(or until the Lien of the Trust Indenture is discharged in
accordance with Section 10.01 thereof, the Mortgagee), and shall
be held in accordance with Section 4.5, and if, and at such time
as, Lessee shall have fully complied with the applicable terms of
Sections 10.1, 10.2 and 10.3 with respect to the Event of Loss
for which such amounts are received, such amounts shall, subject
to Section 10.9, be paid to Lessee.
10.5.2 Loss of Engine
If such amounts are received with respect to an Engine
(other than an Engine installed on the Airframe at the time such
Airframe suffers an Event of Loss), such amounts shall be paid
over to, or retained by, Lessor (or, until the Lien of the Trust
Indenture is discharged in accordance with Section 10.01 thereof,
the Mortgagee) and shall be held in accordance with Section 4.5,
and if, and at such time as, Lessee shall have fully complied
with the applicable terms of Section 10.1, 10.2 and 10.3 with
respect to the Event of Loss for which such amounts are received,
such amounts shall, subject to Section 10.9, be paid to Lessee.
10.5.3 Payment of Loss
If such amounts are received, in whole or in part, with
respect to the Airframe, and Lessee makes, has made or is deemed
to have made the election set forth in Section 10.1.2, such
amounts shall be applied as follows:
(a) first, if the sum described in Section 10.1.2 has not
then been paid in full by Lessee, such amounts shall be paid to
Lessor to the extent necessary to pay in full such sum;
(b) second, the remainder, if any, shall, subject to
Section 10.9, be paid to Lessee.
36
10.6 Requisition of Aircraft for Use
If any Government Entity shall requisition for use the
Airframe and the Engines or engines installed thereon, and if the
same does not constitute an Event of Loss, Lessee shall promptly
notify Lessor and Mortgagee of such requisition and all of
Lessee's obligations under this Agreement shall continue to the
same extent as if such requisition had not occurred; provided,
however, that if the Airframe and Engines or engines installed
thereon are not returned by such Government Entity prior to the
end of the Term, Lessor, upon notice given not less than 30 days
nor more than 120 days before the end of the Term, may elect to
treat such event as constituting an Event of Loss with respect to
the Aircraft and Lessee shall then be deemed to have made the
election set forth in Section 10.1.2 with the effect that Lessee
shall be obligated upon expiration of the Term to pay the
Stipulated Loss Value and all other amounts payable pursuant to
Section 10.1.2 with respect to the Aircraft as if an Event of
Loss had earlier occurred and such amounts were payable on such
date. If Lessor does not elect to treat such event as an Event of
Loss, Lessee shall be obligated to return the Airframe and
Engines or engines to Lessor pursuant to, and in all other
respects to comply with the provisions of, Section 5 promptly
upon their return by such Government Entity.
10.7 Requisition of an Engine for Use
If any Government Entity shall requisition for use any
Engine but not the Airframe, Lessee will replace such Engine by
complying with the applicable terms of Sections 10.2 and 10.3 to
the same extent as if an Event of Loss had occurred with respect
to such Engine, and any payments received by Lessor or Lessee
from such Government Entity with respect to such requisition
shall be paid or retained in accordance with Section 10.5.2.
10.8 Application of Payments
All payments received by Lessor or Lessee, or any Permitted
Sublessee, from any Government Entity for the use of the Airframe
and Engines or engines installed thereon during the Term shall be
paid over to, or retained by, Lessee and all payments received by
Lessor or Lessee from any Government Entity for the use of the
Airframe and Engines or engines installed thereon after the Term
shall be paid over to, or retained by, Lessor; provided that, if
such requisition constitutes an Event of Loss, or Lessor has
elected under Section 10.6 to treat such requisition as an Event
of Loss, then all such payments shall be paid over to Lessor, and
held as provided in Section 10.5 and applied as provided in
Sections 10.1, 10.2, 10.3 and 10.5.
37
10.9 Application of Payments During Existence of
Default
Any amount described in this Section 10 that is payable or
creditable to, or retainable by, Lessee shall not be paid or
credited to, or retained by, Lessee if at the time such payment,
credit or retention would otherwise occur a Lease Default or a
Lease Event of Default shall have occurred and be continuing, but
shall instead be held by or paid over to Lessor (or to Mortgagee
so long as the Trust Indenture has not been duly discharged) as
security for the obligations of Lessee under this Lease and the
other Operative Agreements and shall be invested pursuant to
Section 4.5 hereof unless and until such amount is applied, at
the option of Lessor, or upon the written request of Lessee to
Lessor, from time to time during the continuance of a Lease Event
of Default, to Lessee's obligations under this Lease and the
other Lessee Operative Agreements as and when due, it being
understood that any such application shall be made to such
obligations of Lessee as Lessor may determine in its sole
discretion. At such time as there shall not be continuing any
Lease Default or any Lease Event of Default, such amount shall be
paid to Lessee to the extent not previously applied in accordance
with this Section 10.9.
SECTION 11. INSURANCE
11.1 Lessee's Obligation to Insure
Lessee shall comply with, or cause to be complied with,
each of the provisions of Annex D, which provisions are hereby
incorporated by this reference as if set forth in full herein.
Without limiting any other rights of Lessor under this Lease or
any other Operative Agreement, Lessee acknowledges that the
provisions of this Section 11 and of Annex D are of the essence
of this Lease and the transactions contemplated herein.
11.2 Lessor's Right to Maintain Insurance
In the event that Lessee shall fail to maintain, or cause
to be maintained, insurance as herein provided, Lessor, Mortgagee
or any Participant may at its option (but shall not be obligated
to) provide such insurance and, in such event, Lessee shall, upon
demand, reimburse such person, as Supplemental Rent, for the cost
thereof. No such payment, performance or compliance shall be
deemed to cure any Lease Default or Lease Event of Default or
otherwise relieve Lessee of its obligations with respect thereto.
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11.3 Insurance for Own Account
Nothing in Section 11 shall limit or prohibit (a) Lessee
from maintaining the policies of insurance required under Annex D
with higher limits than those specified in Annex D, or (b)
Lessor, Mortgagee or any Participant from obtaining insurance for
its own account (and any proceeds payable under such separate
insurance shall be payable as provided in the policy relating
thereto); provided, however, that no insurance may be obtained or
maintained by Lessee or Lessor that would limit or otherwise
adversely affect the coverage of any insurance required to be
obtained or maintained by Lessee pursuant to this Section 11 and
Annex D.
11.4 Indemnification by Government in Lieu of Insurance
During any period that the Aircraft, Airframe or any Engine
shall have been requisitioned for use by, or possession of the
Aircraft shall have been transferred to, the U.S. Government,
Lessor agrees to accept, in lieu of insurance against any risk
with respect to the Aircraft described in Sections B and C (but,
with respect to Section C, as to hull coverage only) of Annex D,
indemnification from, or insurance provided by, the U.S.
Government against such risk in an amount that, when added to the
amount of insurance, if any, against such risk that Lessee (or
any Permitted Sublessee) may continue to maintain, in accordance
with this Section 11, during the period of such requisition or
transfer, shall be at least equal to the amount of insurance
against such risk otherwise required by this Section 11. Any such
indemnification or insurance provided by the U.S. Government
shall provide protection no less favorable to the Indemnitees,
after taking into account any insurance the Lessee or any
Permitted Sublessee may continue to maintain, than insurance
coverage that would comply with the terms of this Section 11.
Lessee shall furnish to Lessor, Mortgagee and Owner Participant,
in advance of the attachment of such indemnity or insurance (a) a
certificate of a responsible Vice President of Lessee stating
that such indemnification or insurance complies with the
preceding sentence and (b) any other information, documentation
or certificates relating to such indemnity or insurance as
Lessor, Mortgagee or Owner Participant shall reasonably request.
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11.5 Application of Insurance Proceeds
As between Lessor and Lessee, all insurance proceeds
received as a result of the occurrence of an Event of Loss with
respect to the Aircraft or any Engine under policies required to
be maintained by Lessee pursuant to this Section 11 will be
applied in accordance with Section 10.5. All proceeds of
insurance required to be maintained by Lessee, in accordance with
Section 11 and Section B of Annex D, in respect of any property
damage or loss not constituting an Event of Loss with respect to
the Aircraft, Airframe or any Engine will be applied in payment
(or to reimburse Lessee) for repairs or for replacement property
in accordance with the terms of Section 8.1, and any balance
remaining after compliance with said Section 8.1 with respect to
such damage or loss shall be paid over to, or retained by,
Lessee.
11.6 Application of Payments During Existence of
Default
Any amount described in this Section 11 that is payable or
creditable to, or retainable by, Lessee shall not be paid or
credited to, or retained by, Lessee if at the time such payment,
credit or retention would otherwise occur a Lease Default or a
Lease Event of Default shall have occurred and be continuing, but
shall instead be held by or paid over to Lessor (or to Mortgagee
so long as the Trust Indenture has not been duly discharged) as
security for the obligations of Lessee under this Lease and the
other Operative Agreements and shall be invested pursuant to
Section 4.5 hereof unless and until such amount is applied, at
the option of Lessor, or upon the written request of Lessee to
Lessor, from time to time during the continuance of a Lease Event
of Default, to Lessee's obligations under this Lease and the
other Lessee Operative Agreements as and when due, it being
understood that any such application shall be made to such
obligations of Lessee as Lessor may determine in its sole
discretion. At such time as there shall not be continuing any
Lease Default or any Lease Event of Default, such amount shall be
paid to Lessee to the extent not previously applied in accordance
with this Section 11.6.
SECTION 12. INSPECTION
(a) At all reasonable times Lessor, Mortgagee, each
Participant, and their respective authorized representatives (the
"Inspecting Parties") may inspect the Aircraft, Airframe and
Engines (including, without limitation, the Aircraft Documents)
and Lessee shall cooperate, and shall cause any Permitted
Sublessee to cooperate, with the Inspecting Parties in connection
with any such inspection (including, without limitation,
permitting any such Inspecting Party to make copies of such
Aircraft Documents not reasonably deemed confidential by Lessee
or such Permitted Sublessee).
(b) Any inspection of the Aircraft hereunder shall be a
visual, walk-around inspection that may include going on board
the Aircraft and examining the contents of any open panels,
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bays or other components of the Aircraft, Airframe and Engines
(but shall not include the opening of any unopened panels, bays
or other components).
(c) With respect to such rights of inspection, Lessor,
Participants and Mortgagee shall not:
(i) have any duty or liability to make, or any duty or
liability arising out of, any such visit, inspection or
survey or failure to make any such visit, inspection or
survey; or
(ii) so long as no Lease Event of Default has occurred
and is continuing, exercise its inspection rights hereunder
other than on reasonable notice and so as not to
unreasonably interfere with Lessee's maintenance and
operation of the Aircraft, Airframe and Engines.
(d) Each person inspecting the Aircraft, Airframe or
Engines hereunder shall bear its own expenses in connection with
any such inspection, unless such person discovers, in connection
therewith, any material failure by Lessee or any Permitted
Sublessee to comply with the provisions of this Lease, in which
case Lessee shall bear all such expenses.
(e) If requested by Lessor, Lessee shall give, or shall
cause any Permitted Sublessee to give, reasonable prior notice to
Lessor of the date upon which the Aircraft, Airframe or any
Engine undergoes its next scheduled maintenance visit and next
major check, and with respect to any Engine the next off-the-
wing maintenance, and shall advise Lessor of the name and
location of the relevant maintenance performer and shall, at
least 5 days prior to commencement of such major check or
maintenance, make available for inspection by Lessor all relevant
Aircraft Documents at Lessee's records facility in the United
States, or at such Permitted Sublessee's records facility, or at
the premises of the maintenance performer.
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SECTION 13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE
13.1 In General
This Lease and the other Operative Agreements shall be
binding upon and inure to the benefit of Lessor and Lessee and
their respective successors and permitted assigns. Except as
otherwise expressly permitted in Section 7.2 or 7.3, or as
required in the case of any requisition by the U.S. Government
referred to in Section 7.1.5, or as permitted by Section 13.2.1,
Lessee will not, without the prior written consent of Lessor,
Mortgagee and each Participant, assign any of its rights under
this Lease. Except as otherwise provided herein (including,
without limitation, under the provisions of Section 15 hereof),
Lessor may not assign or convey any of its right, title and
interest in and to this Lease or the Aircraft without the prior
written consent of Lessee, such consent not to be unreasonably
withheld. To the extent permitted by applicable Law, the terms of
Section 2A-303 of the UCC shall not apply to this Section 13.
13.2 Merger of Lessee
13.2.1 In General
Lessee shall not consolidate or merge with or into any
other Person under circumstances in which Lessee is not the
surviving corporation, or convey, transfer or lease in one or
more transactions all or substantially all of its assets to any
other Person, unless:
(a) such person is organized, existing and in good standing
under the Laws of the United States, any State of the United
States or the District Columbia;
(b) such person is a U.S. Air Carrier;
(c) such person executes and delivers to Lessor, Mortgagee
and Owner Participant a duly authorized, legal, valid, binding
and enforceable agreement, reasonably satisfactory in form and
substance to each of them, containing an effective assumption by
such person of the due and punctual performance and observance of
each covenant, agreement and condition in the Lessee Operative
Agreements to be performed or observed by Lessee;
(d) such person makes such filings and recordings,
including, without limitation, any filing or recording with the
FAA pursuant to the Act, as shall be necessary or desirable to
evidence such consolidation or merger;
(e) immediately after giving effect to such consolidation
or merger (i) no Lease Event of Default shall have occurred and
be continuing and (ii) the Net Worth of such person shall not be
less than the Net Worth of Lessee immediately prior to such
consolidation or merger; and
(f) Lessee shall deliver to Owner Participant, Lessor
42
and Mortgagee a certificate signed by the President or any Vice
President of Lessee, and an opinion of special counsel
satisfactory to Owner Participant, Lessor and Mortgagee, together
stating that such consolidation or merger and the assumption
agreement described in clause (c) above comply with this Section
13.2, that the agreements entered into to effect such
consolidation or merger and such assumption agreement are legal,
valid and binding obligations of such person, and such other
matters as Owner Participant, Lessor and Mortgagee may reasonably
request.
13.2.2 Effect of Merger
Upon any such consolidation or merger of Lessee with or
into, or the conveyance, transfer or lease by Lessee of all or
substantially all of its assets to, any Person in accordance with
this Section 13.2, such Person will succeed to, and be
substituted for, and may exercise every right and power of,
Lessee under the Lessee Operative Agreements with the same effect
as if such person had been named as "Lessee" therein. No such
consolidation or merger, or conveyance, transfer or lease, shall
have the effect of releasing Lessee or such Person from any of
the obligations, liabilities, covenants or undertakings of Lessee
under the Lessee Operative Agreements.
43
13.3 Assignment Security for Lessor's Obligations
In order to secure the indebtedness evidenced by the Loan
Certificates, Lessor has agreed in the Trust Indenture, among
other things, to assign to Mortgagee this Lease and to mortgage
the Aircraft, Airframe and Engines in favor of Mortgagee, subject
to the reservations and conditions therein set forth. Lessee
hereby accepts and consents to the assignment of all Lessor's
right, title and interest in and to this Lease pursuant to the
terms of the Trust Indenture. In accordance with Section 3.3(c),
Lessee agrees to pay directly to Mortgagee (or, after receipt by
Lessee of notice from Mortgagee of the discharge of the Trust
Indenture, to Lessor), all amounts of Rent (other than Excluded
Payments) due or to become due hereunder and assigned to
Mortgagee and Lessee agrees that Mortgagee's right to such
payments hereunder shall be absolute and unconditional and shall
not be affected by any circumstance, including, without
limitation, the circumstances set forth in Section 16 hereof.
Notwithstanding the foregoing assignment of this Lease, the
obligations of Lessee to Lessor to perform the terms and
conditions of this Lease shall remain in full force and effect.
Lessee further acknowledges that the Trust Indenture provides
that so long as the Loan Certificates are outstanding the Lessor
may not consent to any amendment, modification or waiver to this
Lease without the prior consent of Mortgagee (except as provided
in Section 5.02 of the Trust Indenture and Section 3.2.1(b)
hereof) and Lessee agrees to provide to Mortgagee a copy of all
notices, consents, certificates or other information provided
hereunder to Lessor. To the extent provided in the Trust
Indenture (but excluding Excluded Payments), Mortgagee shall have
the sole right to exercise all rights, privileges and remedies
(either in its own name or in the name of Lessor for the use and
benefit of Mortgagee) which by the terms of this Lease or by
applicable Law are permitted or provided to be exercised by
Lessor. Lessee acknowledges receipt of a copy of, and consents to
all of the terms and provisions of, the Trust Indenture (such
acknowledgment not creating any rights in the Lessee to approve
amendments to the same except as otherwise provided herein or in
the Trust Indenture).
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13.4 Successor Owner Trustee
Lessee agrees that in the case of the appointment of any
successor Owner Trustee pursuant to the terms of the
Participation Agreement and the Trust Agreement, such successor
Owner Trustee shall, upon written notice by such successor Owner
Trustee to Lessee, succeed to all the rights, powers and title of
Lessor hereunder and shall be deemed to be Lessor and the owner
of the Aircraft and the other assets of the Trust Estate for all
purposes hereof without the necessity of any consent or approval
by Lessee and without in any way altering the terms of this Lease
or Lessee's obligations hereunder. An appointment and designation
of a successor Owner Trustee shall not exhaust the right to
appoint and designate further successor or additional Owner
Trustees pursuant to the Participation Agreement and the Trust
Agreement, and such right may be exercised repeatedly as long as
this Lease shall be in effect.
SECTION 14. LEASE EVENTS OF DEFAULT
The occurrence of any one or more of the following
circumstances, conditions, acts or events, for any reason
whatsoever and whether any such circumstance, condition, act or
event shall be voluntary or involuntary or come about or be
effected by operation of Law or pursuant to or in compliance with
any judgment, decree, order, rule or regulation of any Government
Entity, shall constitute a Lease Event of Default:
14.1 Payments
Lessee shall fail to pay any amount of Basic Rent, Renewal
Rent, Stipulated Loss Value or Termination Value within five (5)
Business Days after the same shall have become due, or Lessee
shall fail to pay any other amount of Supplemental Rent and such
failure shall continue for a period in excess of five (5)
Business Days from and after the date of any written demand
therefor from Lessor; provided that any such failure to pay any
Excluded Payment or any Additional Excluded Amounts shall not
constitute a Lease Event of Default until written notice is given
by the Owner Participant to Lessee and Mortgagee that such
failure constitutes a Lease Event of Default and such failure
shall have continued for a period in excess of five (5) Business
Days after such notice.
14.2 Insurance
Lessee shall fail to carry and maintain, or cause to be
carried and maintained, insurance on and in respect of the
Aircraft, Airframe and Engines in accordance with the provisions
of Section 11, or Lessee shall operate the Aircraft, Airframe or
Engines, or permit the Aircraft, Airframe or Engines to be
operated, at any time when such insurance shall not be in effect.
45
14.3 Corporate Existence
Lessee shall fail to maintain at all times its corporate
existence (except as permitted by Section 13.2), or Lessee shall
otherwise wind-up, liquidate or dissolve, or Lessee shall take or
fail to take any action that would have the effect of any of the
foregoing.
14.4 Certain Covenants
Lessee shall not observe, perform or comply with, or shall
otherwise breach, any of its obligations under Section 7.1 (other
than Sections 7.1.3 and 7.1.4, which shall be subject to Section
14.5), 7.2 (in respect of the Aircraft or Airframe) or 13.
14.5 Other Covenants
Lessee shall fail to observe, perform or comply with, or
shall otherwise breach, any other covenant, agreement or
obligation set forth herein or in any other Lessee Operative
Agreement (other than the covenants, agreements and obligations
set forth in the first sentence of Section 4.8(a) and in the
first sentence of Section 10.3.3(a) of this Lease, and in Section
3 of the Tax Indemnity Agreement and in Section 8.3 of this Lease
insofar as it relates to Section 3 of the Tax Indemnity
Agreement), and such failure shall continue unremedied for a
period of 30 days (or any shorter period as may be expressly set
forth in such other Lessee Operative Agreement) from and after
the date of written notice thereof to Lessee.
14.6 Representations and Warranties
Any representation or warranty made by Lessee herein, in
the Participation Agreement or in any other Lessee Operative
Agreement (other than the representations and warranties of
Lessee in Section 3 of the Tax Indemnity Agreement and in Section
8.3 of this Lease insofar as it relates to Section 3 of the Tax
Indemnity Agreement) (a) shall prove to have been untrue,
inaccurate or misleading in any material respect as of the date
made, (b) such untrue, inaccurate or misleading representation or
warranty is material at the time in question, (c) and the same
shall remain uncured for a period in excess of 30 days from and
after the date of written notice thereof to Lessee.
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14.7 Bankruptcy and Insolvency
(a) Lessee shall consent to the appointment of or the
taking of possession by a receiver, trustee or liquidator of
itself or of a substantial part of its property, or Lessee shall
admit in writing its inability to pay its debts generally as they
come due, or does not pay its debts generally as they become due
or shall make a general assignment for the benefit of creditors,
or Lessee shall file a voluntary petition in bankruptcy or a
voluntary petition or an answer seeking reorganization,
liquidation or other relief in a case under any bankruptcy Laws
or other insolvency Laws (as in effect at such time) or an answer
admitting the material allegations of a petition filed against
Lessee in any such case, or Lessee shall seek relief by voluntary
petition, answer or consent, under the provisions of any other
bankruptcy or other similar Law providing for the reorganization
or winding-up of corporations (as in effect at such time) or
Lessee shall seek an agreement, composition, extension or
adjustment with its creditors under such Laws, or Lessee's board
of directors shall adopt a resolution authorizing corporate
action in furtherance of any of the foregoing; or
(b) an order, judgment or decree shall be entered by any
court of competent jurisdiction appointing, without the consent
of Lessee, a receiver, trustee or liquidator of Lessee or of any
substantial part of its property, or any substantial part of the
property of Lessee shall be sequestered, or granting any other
relief in respect of Lessee as a debtor under any bankruptcy Laws
or other insolvency Laws (as in effect at such time), and any
such order, judgment or decree of appointment or sequestration
shall remain in force undismissed, unstayed and unvacated for a
period of 60 days after the date of entry thereof; or
(c) a petition against Lessee in a case under any
bankruptcy Laws or other insolvency Laws (as in effect at such
time) is filed and not withdrawn or dismissed within 60 days
thereafter, or if, under the provisions of any Law providing for
reorganization or winding-up of corporations which may apply to
Lessee, any court of competent jurisdiction assumes jurisdiction,
custody or control of Lessee or of any substantial part of its
property and such jurisdiction, custody or control remains in
force unrelinquished, unstayed and unterminated for a period of
60 days.
SECTION 15. REMEDIES AND WAIVERS
15.1 Remedies
If any Lease Event of Default shall occur and be
continuing, Lessor may, at its option and at any time and from
time to time, exercise any one or more of the following remedies
as Lessor in its sole discretion shall elect:
47
15.1.1 Return and Repossession
Lessor may cause Lessee, upon giving written notice to
Lessee, to return promptly, and Lessee shall return promptly, all
or any part of the Aircraft, Airframe and Engines as Lessor may
so demand, to Lessor or its order in the manner and condition
required by, and otherwise in accordance with, all the provisions
of Section 5 as if the Aircraft or such part were being returned
at the end of the Base Lease Term or any Renewal Lease Term or
Lessor, at its option, may enter upon the premises where the
Aircraft, Airframe or any Engine, or any part thereof, are
located and take immediate possession of and remove the same by
summary proceedings or otherwise, all without liability accruing
to Lessor for or by reason of such entry or taking of possession,
whether for the restoration of damage to property caused by such
taking or otherwise, and Lessee expressly waives any right it may
have under applicable Law to a hearing prior to repossession of
the Aircraft, Airframe or any Engine, or any part thereof.
15.1.2 Sale and Use
Lessor may sell the Aircraft, Airframe or any Engine, or
any part thereof, at public or private sale, at such times and
places, and to such Persons (including Lessor, Mortgagee or any
Participant), as Lessor may determine and, without limiting the
generality of the provisions of this Section 15, Lessor may hold
Lessee liable for the payment of any Basic Rent or Renewal Rent
remaining unpaid at the time of such sale and relating to any
period prior to the date of such sale; or Lessor may otherwise
dispose of, hold, use, operate, lease to others or keep idle the
Aircraft, Airframe or any Engine, or any part thereof, as Lessor,
in its sole discretion, may determine, all free and clear of any
rights of Lessee, except as hereinafter set forth in this Section
15, and without any duty to account to Lessee with respect to
such action or inaction or for any proceeds with respect thereto
(except in connection with any calculation of liquidated damages
under Section 15.1.3(b) below and except to the extent that such
proceeds would constitute, under applicable Law, a mitigation of
Lessor's damages suffered or incurred as a result of the subject
Lease Event of Default).
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15.1.3 Certain Liquidated Damages
Whether or not Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under Section
15.1.1 or 15.1.2 with respect to the Aircraft, Airframe or any
Engine, or any part thereof, Lessor, by written notice to Lessee
specifying a payment date (which shall be a Termination Value
Date occurring not less than 10 days after the date of such
notice), may demand Lessee to pay to Lessor, and Lessee shall pay
to Lessor, on the payment date so specified and in the manner and
in funds of the type specified in Section 3.3, as liquidated
damages for loss of a bargain and not as a penalty (in lieu of
the Basic Rent or Renewal Rent, as the case may be, for the
Aircraft in respect of all periods commencing on or after the
date specified for payment in such notice), the following
amounts:
(a) all unpaid Basic Rent or Renewal Rent, as the case may
be, due at any time prior to the Termination Value Date specified
in such notice; plus
(b) whichever of the following amounts Lessor, in its sole
discretion shall specify in such notice:
(i) an amount equal to the excess, if any, of the
Termination Value for the Aircraft, Airframe or any Engine,
or any part thereof, as the case may be, computed as of the
Termination Value Date specified in such notice, over the
Fair Market Rental Value of the Aircraft, Airframe or any
Engine, or any part thereof, as the case may be, for the
remainder of the Term, after discounting such Fair Market
Rental Value to its then present value (at a rate equal to
ten percent per annum, compounded quarterly) as of the
Termination Value Date specified in such notice, or
(ii) an amount equal to the excess, if any, of the
Termination Value for the Aircraft, Airframe or any Engine,
or any part thereof, as the case may be, computed as of the
Termination Value Date specified in such notice, over the
Fair Market Sales Value of the Aircraft, Airframe or any
Engine, or any part thereof, as the case may be, as of the
Termination Value Date specified in such notice; plus
(c) interest on the amounts specified in the foregoing
clause (a) at the Payment Due Rate from and including the date on
which any such amount was due to the date of payment of such
amount in full; plus
(d) interest on the amount specified in the foregoing
clause (b)(i) or (b)(ii), according to Lessor's election, at the
Payment Due Rate from and including the Termination Value Date
specified in such notice to the date of payment of such amount in
full.
Lessee and Lessor hereby acknowledge and agree that the
amounts provided for in this Section 15.1.3 are reasonable and
49
are calculated on the basis of, and are intended only to
compensate for, the anticipated harm likely to be suffered as a
result of a Lease Event of Default.
15.1.4 Liquidated Damages Upon Sale
If Lessor, pursuant to Section 15.1.2 or applicable Law,
shall have sold the Aircraft, Airframe or any Engine, or any part
thereof, Lessor, in lieu of exercising its rights under Section
15.1.3 with respect to the Aircraft, Airframe or any Engine, or
any part thereof, as the case may be, may, if Lessor shall so
elect, upon giving written notice to Lessee, demand Lessee to pay
Lessor, and Lessee shall pay to Lessor, on the date of such sale
and in the manner and in funds of the type specified in Section
3.3, as liquidated damages for loss of a bargain and not as a
penalty (in lieu of the Basic Rent or Renewal Rent, as the case
may be, for the Aircraft in respect of all periods commencing on
or after the date of such sale), the following amounts:
(a) all unpaid Basic Rent or Renewal Rent, as the case may
be, (i) due at any time prior to the Termination Value
Date immediately preceding the date of such sale, or
(ii) if such sale occurs on a Termination Value Date,
due at any time prior to such Date; plus
(b) an amount equal to the excess, if any, of the
Termination Value of the Aircraft, Airframe or any
Engine, or any part thereof, as the case may be,
computed as of the Termination Value Date used in
the foregoing clause (a) for the computation of
unpaid Rent, over (i) the proceeds of such sale, or
(ii) if such sale is a private sale and is made to
Lessor, Mortgagee, a Participant or any Affiliate
thereof, the Fair Market Sales Value of the
Aircraft, Airframe or any Engine, or any part
thereof, as the case may be, determined as of the
date of such sale; plus
(c) all brokerage and other out-of-pocket fees and
expenses incurred by Lessor, Mortgagee and any
Participant in connection with such sale; plus
(d) interest on the amounts specified in the foregoing
clause (a) at the Payment Due Rate from and including
the date on which any such amount was due to the date
of payment of such amount in full; plus
(e) interest on the sum of the amounts specified in the
foregoing clauses (b) and (c), at the Payment Due Rate
from and including the date of such sale to the date
of payment of such amounts in full.
Lessee and Lessor hereby acknowledge and agree that the
amounts provided for in this Section 15.1.4 are reasonable and
are calculated on the basis of, and are intended only to
compensate for, the anticipated harm likely to be suffered as a
result of a Lease Event of Default.
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15.1.5 Rescission
Lessor may (i) at its option, rescind or terminate this
Lease as to the Aircraft, Airframe or any Engine, or any part
thereof, or (ii) exercise any other right or remedy that may be
available to it under applicable Law or proceed by appropriate
court action to enforce the terms hereof or to recover damages
for the breach hereof, including, without limitation, Lessee's
agreement to lease the Aircraft for the Term and to pay Rent.
15.1.6 Other Remedies
In addition to the foregoing remedies (but without
duplication of amounts otherwise paid under this Section 15),
Lessee shall be liable for any and all unpaid Rent due hereunder
before, during or after (except as otherwise provided herein) the
exercise of any of the foregoing remedies and for all attorneys'
fees and other costs and expenses of Lessor, Mortgagee and the
Participants, including, without limitation, interest on overdue
Rent at the rate as herein provided, incurred by reason of the
occurrence of any Lease Event of Default or the exercise of
Lessor's remedies with respect thereto, including all costs and
expenses incurred in connection with the return of the Aircraft,
Airframe or any Engine, or any part thereof, in accordance with
the terms of Section 5 or in placing the Aircraft, Airframe or
any Engine, or any part thereof, in the condition and
airworthiness required by Section 5.
15.2 Limitations Under CRAF
Notwithstanding the provisions of Section 15.1, during any
period that the Aircraft, Airframe or any Engine is subject to
CRAF in accordance with the provisions of Section 7.2.3 and in
the possession of the U.S. Government, Lessor shall not, as a
result of any Lease Event of Default, exercise its remedies
hereunder in such manner as to limit Lessee's control under this
Lease (or any Permitted Sublessee's control under any Permitted
Sublease) of the Aircraft, Airframe or such Engine, unless at
least 30 days' (or such other period as may then be applicable
under CRAF) written notice of default hereunder shall have been
given by Lessor by registered or certified mail to Lessee (and
any Permitted Sublessee) with a copy to the Contracting Officer
Representative or Representatives for the Military Airlift
Command of the United States Air Force to whom notices must be
given under the contract governing Lessee's (or any Permitted
Sublessee's) participation in CRAF with respect to the Aircraft,
Airframe or any Engine.
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15.3 Right to Perform for Lessee
If Lessee fails to make any payment of Rent required to be
made by it hereunder or fails to perform or comply with any of
its agreements contained herein, Lessor, Mortgagee or Owner
Participant may (but shall not be obligated to) make such payment
or perform or comply with such agreement, and the amount of such
payment and the amount of the expenses of Lessor, Mortgagee or
Owner Participant incurred in connection with such payment or the
performance of or compliance with such agreement, as the case may
be, together with interest thereon at the Payment Due Rate, shall
be deemed Supplemental Rent, payable by Lessee upon demand. No
such payment, performance or compliance shall be deemed to cure
any Lease Default or Lease Event of Default or otherwise relieve
Lessee of its obligations with respect thereto.
15.4 Determination of Fair Market Rental Value and Fair
Market Sales Value
For the purpose of this Section 15, the "Fair Market Rental
Value" or the "Fair Market Sales Value" of the Aircraft, Airframe
or any Engine, or any part thereof shall be determined on an "as
is, where is" basis and shall take into account customary
brokerage and other out-of-pocket fees and expenses which
typically would be incurred in connection with a re-lease or sale
of the Aircraft, Airframe or any Engine. Any such determination
shall be made by an Appraiser selected by Lessor and the costs
and expenses associated therewith shall be borne by Lessee,
unless Lessor does not obtain possession of the Aircraft,
Airframe and Engines pursuant to this Section 15, in which case
an Appraiser shall not be appointed and Fair Market Rent and Fair
Market Value for purposes of this Section 15 shall be zero.
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15.5 Lessor Appointed Attorney-in-Fact
Lessee hereby appoints Lessor as the attorney-in-fact of
Lessee, with full authority in the place and stead of Lessee and
in the name of Lessee or otherwise, for the purpose of carrying
out the provisions of this and any other Operative Agreement and
taking any action and executing any instrument that Lessor may
deem necessary or advisable to accomplish the purposes hereof;
provided, however, that Lessor may only take action or execute
instruments under this Section 15.5 after a Lease Event of
Default has occurred and is continuing. Lessee hereby declares
that the foregoing powers are granted for valuable consideration,
constitute powers granted as security for the performance of the
obligations of Lessee hereunder, are coupled with an interest and
shall be irrevocable. Without limiting the generality of the
foregoing or any other rights of Lessor under the Operative
Agreements, Lessor shall upon the occurrence and during the
continuation of a Lease Event of Default have the sole and
exclusive right and power to (i) settle, compromise, compound,
adjust or defend any actions, suits or proceedings relating to or
pertaining to the Aircraft, Airframe or any Engine, or this Lease
and (ii) make proof of loss, appear in and prosecute any action
arising from any policy or policies of insurance maintained
pursuant to this Lease, and settle, adjust or compromise any
claims for loss, damage or destruction under, or take any other
action in respect of, any such policy or policies.
15.6 Remedies Cumulative
Nothing contained in this Lease shall be construed to limit
in any way any right, power, remedy or privilege of Lessor
hereunder or under any other Operative Agreement or now or
hereafter existing at law or in equity. Each and every right,
power, remedy and privilege hereby given to, or retained by,
Lessor in this Lease shall be in addition to and not in
limitation of every other right, power, remedy and privilege
given under the Operative Agreements or now or hereafter existing
at law or in equity. Each and every right, power, remedy and
privilege of Lessor under this Lease and any other Operative
Agreement may be exercised from time to time or simultaneously
and as often and in such order as may be deemed expedient by
Lessor. All such rights, powers, remedies and privileges shall be
cumulative and not mutually exclusive, and the exercise of one
shall not be deemed a waiver of the right to exercise any other.
Lessee hereby waives to the extent permitted by applicable Law
any right which it may have to require Lessor to choose or elect
remedies.
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SECTION 16. LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM,
ETC.
(a) Lessee's obligation to pay Rent and all other amounts
payable hereunder, under the Participation Agreement or under any
other Lessee Operative Agreement shall be absolute and
unconditional, and shall be construed as covenants separate and
independent from the agreements or undertakings of any other
Person, including, without limitation, Lessor, Mortgagee or any
Participant, and shall not be affected by any event or
circumstance, including, without limitation: (i) any setoff,
counterclaim, recoupment, defense or other right that Lessee may
have against Lessor, Mortgagee, any Participant, any Certificate
Holder, Airframe Manufacturer, Engine Manufacturer, any
Indemnitee or any other Person for any reason whatsoever; (ii)
any defect in the title, airworthiness, condition, design,
operation or fitness for use of, or any damage to or loss or
destruction of, the Aircraft, Airframe or any Engine, or any
interruption or cessation in the use or possession thereof by
Lessee for any reason whatsoever; (iii) any insolvency,
bankruptcy, reorganization or similar proceedings by or against
Lessee or any other Person; (iv) any restriction, prevention or
curtailment of or interference with any use of the Aircraft,
Airframe or any Engine, or any part thereof; (v) any change,
waiver, extension, indulgence or other action or omission in
respect of any obligation or liability of Lessee or Lessor; (vi)
any claim that Lessee has or might have against any Person; (vii)
any failure on the part of Lessor, Mortgagee or any Participant
to perform or comply with any of the terms of this Lease or any
other Operative Agreement; (viii) any invalidity or
unenforceability or disaffirmance of this Lease or any provision
hereof or any of the other Operative Agreements or any provision
thereof, in each case whether against or by Lessee or otherwise;
or (ix) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
(b) If for any reason whatsoever this Lease shall be
terminated in whole or in part by operation of law or otherwise
except as specifically provided herein, Lessee nonetheless agrees
to pay an amount equal to each Basic Rent, Renewal Rent and
Supplemental Rent payment at the time such payment would have
become due and payable in accordance with the terms hereof had
this Agreement not been terminated in whole or in part. All Rent
payable by Lessee shall be paid without notice or demand (except
as otherwise expressly provided) and without abatement,
suspension, deferment, deduction, diminution or proration by
reason of any circumstance or occurrence whatsoever. Lessee
hereby waives, to the extent permitted by applicable law, any and
all rights that it may now have or that at any time hereafter may
be conferred upon it, by statute or otherwise, to terminate,
cancel, quit or surrender this Agreement or any part hereof, or
to any abatement, suppression, deferment, diminution, reduction
or proration of Rent, except in accordance with the express terms
hereof. Each payment of Rent made by Lessee shall be final as to
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Lessor and Lessee and, except for any manifest clerical
computational error, Lessee will not seek to recover all or any
part of any such payment of Rent for any reason whatsoever.
(c) All obligations, liabilities, covenants and
undertakings of Lessee in this Agreement or in any other
Operative Agreement shall be performed, observed and complied
with at Lessee's sole cost and expense, whether or not so
expressed, unless otherwise expressly provided.
(d) Nothing set forth in this Section 16 shall be construed
to prohibit Lessee from separately pursuing any claim that it may
have from time to time against Lessor or any other Person with
respect to any matter (other than the absolute and unconditional
nature of Lessee's obligations hereunder to pay Rent, and other
than the matters specified in paragraphs (b) and (c) above).
SECTION 17. RENEWAL AND PURCHASE OPTIONS
17.1 Notices Generally
(a) At least 180 days but not more than 360 days prior to
the Scheduled Expiration Date, Lessee may provide notice to
Lessor that Lessee may exercise either the option to extend the
leasing of the Aircraft for the First Renewal Lease Term pursuant
to Section 17.2 or the option to purchase the Aircraft on the
Scheduled Expiration Date pursuant to Section 17.3. At least 180
days but not more than 360 days prior to the First Renewal Term
Expiration Date, Lessee may, if it has leased the Aircraft during
the First Renewal Lease Term, provide notice to Lessor that
Lessee may exercise either the option to extend the leasing of
the Aircraft for the Second Renewal Lease Term pursuant to
Section 17.2, or the option to purchase the Aircraft on the First
Renewal Term Expiration Date pursuant to Section 17.3. Any such
notice (a "Preliminary Notice") shall be irrevocable.
(b) If any such Preliminary Notice is given by Lessee, then
Lessee may provide a further notice specifying which option it
intends to elect, with respect to the relevant period, pursuant
to Section 17.2.1 or 17.3.1, as the case may be.
(c) At least 180 days but not more than 360 days prior to
the last day of the Second Renewal Lease Term, Lessee may provide
notice (the "Definitive Purchase Notice") to Lessor that Lessee
shall exercise the option to purchase the Aircraft on the Second
Renewal Term Expiration Date pursuant to Section 17.3. Any such
Definitive Purchase Notice shall be irrevocable.
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17.2 Renewal Options
17.2.1 Renewal Notice
(a) If Lessee has given a Preliminary Notice, as specified
in Section 17.1, and subject to the terms and conditions of this
Section 17.2, Lessee may exercise its option to extend the
leasing of the Aircraft hereunder, on the same terms, provisions
and conditions (except as contemplated by this Section 17) set
forth herein and in the other Lessee Operative Agreements with
respect to the Base Lease Term, by delivery of a notice (a
"Renewal Notice") to Lessor:
(i) in the case of the First Renewal Lease Term, not
more than 180 days nor less than 120 days prior to the
Scheduled Expiration Date, and
(ii) in the case of the Second Renewal Lease Term, not
more than 180 days nor less than 120 days prior to the
First Renewal Term Expiration Date.
(b) Notwithstanding anything to the contrary in this
Agreement or any other Operative Agreement:
(i) No Preliminary Notice or Renewal Notice shall be
binding on Lessor or oblige Lessor to extend the leasing of
the Aircraft hereunder for the First Renewal Lease Term or
the Second Renewal Lease Term, as the case may be, if any
Lease Default or Lease Event of Default shall have occurred
and be continuing on and as of either the date of such
Preliminary Notice or Renewal Notice or the date that such
Renewal Lease Term would otherwise commence.
(ii) Any Renewal Notice shall be irrevocable and shall
constitute an unconditional obligation of Lessee to extend
the leasing of the Aircraft hereunder for the First Renewal
Lease Term or the Second Renewal Lease
Term, as the case may be.
(iii) Lessee shall not be entitled to give any Renewal
Notice if it has (i) not delivered a Preliminary Notice or
(ii) delivered a Purchase Notice to Lessor.
17.2.2 Renewal Rent
(a) During the Renewal Lease Term, Lessee shall pay to
Lessor on each Payment Date, in the manner and in the funds of
the type specified in Section 3.3, Renewal Rent in advance. Each
installment of Renewal Rent shall, for all purposes hereof
(including, without limitation, for purposes of Section 467 of
the Code), be accrued on a daily basis over the three-month
period beginning on the Payment Date on which such installment is
scheduled to be made; and as security for the obligations of
Lessee under this Lease and the other Lessee Operative
Agreements, Lessee hereby grants to lessor a security interest in
all amounts of Renewal Rent which may be paid but unaccrued
hereunder from time to time.
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(b) The Renewal Rent payable by Lessee on each Payment Date
during any First or Second Renewal Lease Term shall be the lower
of (i) an amount equal to one-quarter of the average annual Basic
Rent payable during the Interim Term and the Base Lease Term, or
(ii) the Fair Market Rental Value of the Aircraft for such First
or Second Renewal Lease Term. Any such Fair Market Rental Value
shall be determined not more than 170 days and not less than 150
days prior to the date of commencement of such First or Second
Renewal Lease Term, as the case may be, by mutual agreement of
Lessor and Lessee or, if they shall be unable to agree, by an
appraisal in accordance with Section 17.4.
17.2.3 Stipulated Loss and Termination Values
(a) For any First or Second Renewal Lease Term, Stipulated
Loss Value Dates and Termination Value Dates shall be extended
throughout such Renewal Lease Term on the same days and for the
same months as during the Base Lease Term.
(b) Stipulated Loss Value and Termination Value amounts
that are payable during any such First or Second Renewal Lease
Term shall be determined at the same time that the Renewal Rent
for such Renewal Lease Term is determined under Section 17.2.2.
Stipulated Loss Values for any such Lease Term shall, throughout
such Renewal Lease Term, be equal to the greater of (i) the Fair
Market Sales Value of the Aircraft, computed as of the first day
of such Renewal Lease Term, and (ii) the Minimum Residual
Percentage. Termination Values for any such Renewal Lease Term
shall, throughout such Renewal Lease Term, be equal to the
greater of (i) the Fair Market Sales Value of the Aircraft,
computed as of the first day of such Renewal Lease Term, and (ii)
the Minimum Value Percentage.
(c) Any Fair Market Sales Value of the Aircraft, for
purposes of calculating Stipulated Loss Value and Termination
Value amounts applicable during any such Renewal Lease Term,
shall be determined by mutual agreement of Lessor and Lessee or,
if they shall be unable to agree, by an appraisal in accordance
with Section 17.4.
17.3 Purchase Option
17.3.1 Purchase Notice
(a) Subject to Section 17.1 and the terms and conditions of
this Section 17.3, Lessee may elect to purchase the Aircraft, on
any Purchase Date, at a purchase price equal to the Fair Market
Sales Value of the Aircraft computed as of the Purchase Date.
(b) Lessee may exercise such option to purchase the
Aircraft, by delivery of a notice (a "Purchase Notice") to Lessor
not more than 180 days nor less than 120 days prior to the
Purchase Date specified in such Purchase Notice.
(c) Notwithstanding anything to the contrary in this
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Agreement or any other Operative Agreement:
(i) No Preliminary Notice, Definitive Purchase Notice
or Purchase Notice shall be binding on Lessor or oblige
Lessor to sell the Aircraft to Lessee hereunder if any
Lease Default or Lease Event of Default shall have occurred
and be continuing on and as of either the date of such
Preliminary Notice, Definitive Purchase Notice or Purchase
Notice or the proposed Purchase Date.
(ii) Any Purchase Notice (whether delivered or deemed to
have been delivered) shall be irrevocable and shall
constitute an unconditional obligation of Lessee to
purchase the Aircraft under this Section 17.3.
(iii) No Preliminary Notice, Definitive Purchase Notice
or Purchase Notice shall be binding on Lessor or oblige
Lessor to sell the Aircraft to Lessee hereunder if the Fair
Market Sales Value of the Aircraft is determined to be less
than an amount equal to the Minimum Residual Percentage
multiplied by Lessor's Cost.
(iv) Lessee shall not be entitled to give any Purchase
Notice in respect of any Purchase Date if it has delivered
a Renewal Notice for a Renewal Lease Term that would
commence immediately following such Purchase Date.
17.3.2 Purchase Price
The Fair Market Sales Value of the Aircraft shall be
determined not more than 170 days and not less than 150 days
prior to the applicable Purchase Date by mutual agreement of
Lessor and Lessee or, if they shall be unable to agree, by an
appraisal in accordance with Section 17.4.
17.3.3 Title
Upon full and final payment by Lessee of (a) the applicable
Fair Market Sales Value of the Aircraft, (b) all unpaid Rent due
and payable through and including the Purchase Date and (c) all
other amounts due and payable by Lessee under this Agreement, the
Participation Agreement or any other Operative Agreement, Lessor
will transfer to Lessee title to the Aircraft in accordance with
Section 4.6.
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17.4 Appraisals
Whenever Fair Market Rental Value or Fair Market Sales
Value of the Aircraft is required to be determined by an
appraisal under this Section 17, Lessee and Lessor shall appoint
a mutually satisfactory Appraiser to conduct such appraisal. If
Lessee and Lessor fail to agree upon a satisfactory Appraiser
then each shall promptly appoint a separate Appraiser and such
Appraisers shall jointly determine such amount. If either Lessee
or Lessor fails to so appoint an Appraiser, the determination of
the single Appraiser appointed shall be final. If two Appraisers
are appointed and within 7 days after the appointment of the
latter of such two Appraisers, they cannot agree upon such
amount, such two Appraisers shall, within 8 days after such
latter appointment, appoint a third Appraiser and such amount
shall be determined by such three Appraisers, who shall make
their separate appraisals within 7 days following the appointment
of the third Appraiser, and any determination so made shall be
conclusive and binding upon Lessor and Lessee. If no such third
Appraiser is appointed within such 8-day period, either Lessor or
Lessee may apply to the American Arbitration Association to make
such appointment, and both parties shall be bound by such
appointment. The foregoing appraisal procedure shall in any event
be completed no less than 125 days before the end of the Base
Lease Term or the Renewal Lease Term, as the case may be. If
three Appraisers are appointed and the difference between the
determination which is farther from the middle determination and
the middle determination is more than 125% of the difference
between the middle determination and the third determination,
then such farther determination shall be excluded, the remaining
two determinations shall be averaged and such average shall be
final and binding upon Lessor and Lessee. Otherwise, the average
of all three determinations shall be final and binding upon
Lessor and Lessee. The fees and expenses of all such Appraisers
and such appraisal procedure, together with the reasonable
out-of-pocket fees and expenses of Lessor (including, without
limitation, attorney's fees and expenses) shall be borne by
Lessee.
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SECTION 18. MISCELLANEOUS
18.1 Amendments
No provision of this Agreement may be amended,
supplemented, waived, modified, discharged, terminated or
otherwise varied orally, but only by an instrument in writing
that specifically identifies the provision of this Agreement that
it purports to amend, supplement, waive, modify, discharge,
terminate or otherwise vary and is signed by Lessor and Lessee.
Each such amendment, supplement, waiver, modification, discharge,
termination or variance shall be effective only in the specific
instance and for the specific purpose for which it is given. No
provision of this Agreement shall be varied or contradicted by
oral communication, course of dealing or performance or other
manner not set forth in an agreement, document or instrument in
writing and signed by Lessor and Lessee.
18.2 Severability
If any provision hereof shall be held invalid, illegal or
unenforceable in any respect in any jurisdiction, then, to the
extent permitted by Law (a) all other provisions hereof shall
remain in full force and effect in such jurisdiction and (b) such
invalidity, illegality or unenforceability shall not affect the
validity, legality or enforceability of such provision in any
other jurisdiction. If, however, any Law pursuant to which such
provisions are held invalid, illegal or unenforceable may be
waived, such Law is hereby waived by the parties hereto to the
full extent permitted, to the end that this Agreement shall be
deemed to be a valid and binding agreement in all respects,
enforceable in accordance with its terms.
18.3 Survival
The representations, warranties, indemnities and covenants
set forth herein shall survive the making available of the
respective Commitments by Participants, the delivery or return of
the Aircraft, the Transfer of any interest of Owner Participant
in this Agreement, the other Operative Agreements, the Trust
Estate and the Trust Agreement, the Transfer of any interest by
any Certificate Holder of its Loan Certificate and the expiration
or other termination of this Agreement or any other Operative
Agreement.
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18.4 Reproduction of Documents
This Agreement, all annexes, schedules and exhibits hereto
and all agreements, instruments and documents relating hereto,
including, without limitation (a) consents, waivers and
modifications that may hereafter be executed and (b) financial
statements, certificates and other information previously or
hereafter furnished to any party hereto, may be reproduced by
such party by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process, and
such party may destroy any original documents so reproduced. Any
such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or
not the original is in existence and whether or not such
reproduction was made by such party in the regular course of
business) and any enlargement, facsimile or further reproduction
of such reproduction likewise is admissible in evidence.
18.5 Counterparts
This Agreement and any amendments, waivers, consents or
supplements hereto may be executed in any number of counterparts
(or upon separate signature pages bound together into one or more
counterparts), each of which when so executed shall be deemed to
be an original, and all of which counterparts, taken together,
shall constitute one and the same instrument.
18.6 No Waiver
No failure on the part of Lessor to exercise, and no delay
by Lessor in exercising, any of its rights, powers, remedies or
privileges under this Agreement or provided at Law, in equity or
otherwise shall impair, prejudice or constitute a waiver of any
such right, power, remedy or privilege or be construed as a
waiver of any breach hereof or default hereunder or as an
acquiescence therein, nor shall any single or partial exercise of
any such right, power, remedy or privilege preclude any other or
further exercise thereof by Lessor or the exercise of any other
right, power, remedy or privilege by Lessor. No notice to or
demand on Lessee in any case shall, unless otherwise required
under this Agreement, entitle Lessee to any other or further
notice or demand in similar or other circumstances or constitute
a waiver of the rights of Lessor to any other or further action
in any circumstances without notice or demand.
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18.7 Notices
Unless otherwise expressly permitted by the terms hereof,
all notices, requests, demands, authorizations, directions,
consents, waivers and other communications required or permitted
to be made, given, furnished or filed hereunder shall be in
writing (it being understood that the specification of a writing
in certain instances and not in others does not imply an
intention that a writing is not required as to the latter), shall
refer specifically to this Agreement and shall be personally
delivered, sent by facsimile or telecommunication transmission
(which in either case provides written confirmation to the sender
of its delivery), sent by registered mail or certified mail,
return receipt requested, postage prepaid, or sent by overnight
courier service, in each case to the respective address or
facsimile number set forth for such party in Schedule 1 to the
Participation Agreement, or to such other address or number as
either party hereto may hereafter specify by notice to the other
party hereto. Each such notice, request, demand, authorization,
direction, consent, waiver or other communication shall be
effective when received or, if made, given, furnished or filed
(a) by facsimile or telecommunication transmission, when
confirmed, or (b) by registered or certified mail, three Business
Days after being deposited, properly addressed, with the U.S.
Postal Service.
18.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE
(a) THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT
TO PRINCIPLES OF CONFLICTS OF LAWS. THIS AGREEMENT IS BEING
DELIVERED IN THE STATE OF NEW YORK.
(b) (i) EXCEPT AS PROVIDED IN SECTION 18.8(b)(ii), EACH
PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS TO,
FOR ITSELF AND IN RESPECT OF ANY OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE 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 OR ANY OTHER OPERATIVE AGREEMENT, EXCEPT AS
PROVIDED IN SECTION 18.8(g). TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH PARTY HERETO AGREES FIRST TO SEEK
JURISDICTION AGAINST THE OTHER PARTY HERETO WITH RESPECT TO ANY
SUCH ACTION, SUIT OR PROCEEDING IN SUCH COURTS OF THE UNITED
STATES FOR THE SOUTHERN DISTRICT OF NEW YORK.
(ii) NOTWITHSTANDING THE FOREGOING AGREEMENT AS TO THE
EXCLUSIVE NATURE OF SUCH JURISDICTION, IF LESSOR SHALL IN THE
FIRST INSTANCE BRING ANY SUIT, ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THE OPERATIVE AGREEMENTS IN THE COURTS
DESCRIBED IN SECTION 18.8.(b)(i), AND IF EACH OF SUCH COURTS OF
THE UNITED STATES AND OF THE STATE OF NEW YORK REFUSES TO ACCEPT
62
JURISDICTION WITH RESPECT THERETO, SUCH SUIT, ACTION OR
PROCEEDING MAY BE BROUGHT IN ANY OTHER COURT WITH JURISDICTION.
(iii) NO PARTY TO THIS AGREEMENT MAY MOVE TO (x)
TRANSFER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THE OPERATIVE AGREEMENTS BROUGHT IN SUCH COURTS OF
THE UNITED STATES AND OF THE STATE OF NEW YORK TO ANOTHER
JURISDICTION, (y) CONSOLIDATE ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN SUCH COURTS OF THE UNITED STATES AND OF THE STATE OF
NEW YORK WITH A SUIT, ACTION OR PROCEEDING IN ANOTHER
JURISDICTION OR (z) DISMISS ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN SUCH COURTS OF THE UNITED STATES AND OF THE STATE OF
NEW YORK FOR THE PURPOSE OF BRINGING THE SAME IN ANOTHER
JURISDICTION.
(c) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY OF THE AFORESAID ACTIONS, SUITS OR PROCEEDINGS
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
OPERATIVE AGREEMENT BROUGHT IN ANY OF THE AFORESAID COURTS, AND
HEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES
NOT TO PLEAD OR CLAIM THAT ANY SUCH ACTION, SUIT OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
(d)(i) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND
AGREES TO THE SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS,
NOTICES AND DOCUMENTS OF ANY OF THE AFOREMENTIONED COURTS IN ANY
SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY MAILING COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT THE
ADDRESS SET FORTH IN SECTION 18.7 OR, IN THE CASE OF LESSEE, AT
THE ADDRESS IN THE STATE, CITY AND COUNTY OF NEW YORK SET FORTH
IN SCHEDULE 2 TO THE PARTICIPATION AGREEMENT, OR AT SUCH OTHER
ADDRESS OR UPON SUCH AGENT AS MAY BE DETERMINED PURSUANT TO
SECTION 18.8(d)(ii). EACH PARTY HERETO HEREBY AGREES THAT SERVICE
UPON IT, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH
THIS SECTION 18.8(d), SHALL CONSTITUTE VALID AND EFFECTIVE
PERSONAL SERVICE UPON SUCH PARTY, AND EACH PARTY HERETO HEREBY
AGREES THAT THE FAILURE OF ANY OF ITS AGENTS TO GIVE ANY NOTICE
OF SUCH SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT IN
ANY WAY THE VALIDITY OF SUCH SERVICE ON SUCH PARTY OR ANY
JUDGMENT RENDERED IN ANY ACTION OR PROCEEDING BASED THEREON.
(ii) LESSEE SHALL GIVE LESSOR 30 DAYS' PRIOR WRITTEN NOTICE
OF ANY CHANGE IN THE LOCATION, OR OF THE CLOSING, OF LESSEE'S
PLACE OF BUSINESS SET FORTH IN SCHEDULE 2 TO THE PARTICIPATION
AGREEMENT. ANY SUCH NOTICE SHALL (y) IF LESSEE SHALL CONTINUE TO
MAINTAIN A PLACE OF BUSINESS IN THE STATE, CITY AND COUNTY OF NEW
YORK, SPECIFY THE ADDRESS OF SUCH PLACE OF BUSINESS OR (z) IF
LESSEE SHALL NO LONGER MAINTAIN A PLACE OF BUSINESS IN THE STATE,
CITY AND COUNTY OF NEW YORK, AND, UNDER THE LAW OF THE STATE OF
NEW YORK AS THEN IN EFFECT, LESSOR SHALL NOT BE PERMITTED TO
EFFECT OUT-OF-STATE SERVICE UPON LESSEE BY MAIL IN THE MANNER
SPECIFIED IN SECTION 18.8(d)(i) (AND SHALL SO NOTIFY LESSEE),
DESIGNATE AN AGENT (WHICH AGENT SHALL BE REASONABLY ACCEPTABLE TO
LESSOR), IN EITHER CASE, IN THE STATE, CITY AND COUNTY OF NEW
63
YORK, AT OR UPON WHICH LESSOR MAY SERVE PROCESS ON LESSEE
PERSONALLY OR IN ACCORDANCE WITH THIS SECTION 18.8(d). IF LESSEE
DESIGNATES AN AGENT IN ACCORDANCE WITH CLAUSE (z) ABOVE, LESSEE
SHALL PROMPTLY PROVIDE LESSOR EVIDENCE OF THE APPOINTMENT OF SUCH
AGENT (FOR THE THEN-REMAINING TERM) AND THE ACCEPTANCE THEREOF BY
SUCH AGENT.
(e) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN ANY COURT IN
ANY JURISDICTION BASED UPON OR ARISING OUT OF OR RELATING TO THIS
AGREEMENT. EACH PARTY HERETO ACKNOWLEDGES THAT THE WAIVER OF JURY
TRIAL BY IT IN THIS SECTION 18.8(e) IS A MATERIAL INDUCEMENT TO
THE OTHER PARTY HERETO TO ENTER INTO A BUSINESS RELATIONSHIP WITH
IT AND THAT THE OTHER PARTY HERETO HAS RELIED ON THIS SECTION
18.8(e) IN ENTERING INTO THIS AGREEMENT.
(f) EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT FINAL JUDGMENT AGAINST IT IN ANY OF THE AFORESAID
ACTIONS, SUITS OR PROCEEDINGS SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN ANY OTHER JURISDICTION, WITHIN OR OUTSIDE THE UNITED
STATES OF AMERICA, BY SUIT ON THE JUDGMENT, A CERTIFIED OR
EXEMPLIFIED COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE
FACT AND AMOUNT OF ITS OBLIGATIONS AND LIABILITIES.
(g) NOTHING HEREIN SHALL, OR SHALL BE CONSTRUED SO AS TO,
LIMIT THE RIGHT OF EITHER PARTY HERETO TO DEFEND OR TO ASSERT A
COUNTERCLAIM IN, OR TO SEEK RECOGNITION OF OR ENFORCEMENT OF ANY
JUDGMENT RENDERED IN, ANY ACTION, SUIT OR PROCEEDING IN THE
COURTS OF WHATEVER JURISDICTION THAT MAY BE APPROPRIATE IN THE
OPINION OF EITHER SUCH PARTY.
(h) EACH PARTY HERETO REPRESENTS AND WARRANTS THAT IT HAS
REVIEWED THIS SECTION 18.8 WITH ITS LEGAL COUNSEL, AND THAT IT
KNOWINGLY AND VOLUNTARILY ACCEPTS AND AGREES TO THIS SECTION 18.8
FOLLOWING CONSULTATION WITH SUCH LEGAL COUNSEL. THIS SECTION 18.8
IS IRREVOCABLE AND UNCONDITIONAL AND SHALL APPLY TO ANY
AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
18.9 Third-Party Beneficiary
This Agreement is not intended to, and shall not, provide
any person not a party hereto (other than Mortgagee and the
Participants) with any rights of any nature whatsoever against
either of the parties hereto, and no person not a party hereto
(other than Mortgagee and the Participants) shall have any right,
power or privilege in respect of, or have any benefit or interest
arising out of, this Agreement.
64
18.10 Entire Agreement
This Agreement, together with the other Operative
Agreements, on and as of the date hereof constitutes the entire
agreement of the parties hereto with respect to the subject
matter hereof, and all prior or contemporaneous understandings or
agreements, whether written or oral, between the parties hereto
with respect to such subject matter are hereby superseded in
their entireties.
[This space intentionally left blank.]
65
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Amended and Restated Lease Agreement to be duly executed as of
the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
as Lessor, not in its individual
capacity, except as
expressly provided herein, but
solely as Owner Trustee under
the Trust Agreement
By________________________________
Name:
Title:
CONTINENTAL AIRLINES, INC.,
as Lessee
By_______________________________
Name:
Title:
Receipt of this original counterpart of the foregoing Lease
Agreement is hereby acknowledged on this ____ day of _________,
1996.
WILMINGTON TRUST COMPANY,
as Mortgagee
By_______________________________
Name:
Title:
66
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Amended and Restated Lease Agreement to be duly executed as of
the day and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
as Lessor, not in its
individual capacity, except
as expressly provided herein,
but solely as Owner Trustee
under the Trust Agreement
By_____________________________
Name:
Title:
CONTINENTAL AIRLINES, INC.,
as Lessee
By_____________________________
Name:
Title:
67
[N12114 757]
ANNEX A
DEFINITIONS
GENERAL PROVISIONS
(a) In each Operative Agreement, unless otherwise expressly
provided, a reference to:
(i) each of "Lessee," "Lessor," "Owner Trustee,"
"Owner Participant," "Loan Participant," "Loan Trustee,"
"Note Holder" or any other person includes, without
prejudice to the provisions of any Operative Agreement, any
successor in interest to it and any permitted transferee,
permitted purchaser or permitted assignee of it;
(ii) words importing the plural include the singular
and words importing the singular include the plural;
(iii) any agreement, instrument or document, or any
annex, schedule or exhibit thereto, or any other part
thereof, includes, without prejudice to the provisions of
any Operative Agreement, that agreement, instrument or
document, or annex, schedule or exhibit, or part,
respectively, as amended, modified or supplemented from
time to time in accordance with its terms and in accordance
with the Operative Agreements, and any agreement,
instrument or document entered into in substitution or
replacement therefor;
(iv) any provision of any Law includes any such
provision as amended, modified, supplemented, substituted,
reissued or reenacted prior to the Delivery Date, and
thereafter from time to time;
(v) the words "Agreement," "this Agreement," "hereby,"
"herein," "hereto," "hereof" and "hereunder" and words of
similar import when used in any Operative Agreement refer
to such Operative Agreement as a whole and not to any
particular provision of such Operative Agreement;
(vi) the words "including," "including, without
limitation," "including, but not limited to," and terms or
phrases of similar import when used in any Operative
Agreement, with respect to any matter or thing, mean
including, without limitation, such matter or thing; and
(vii) a "Section," an "Exhibit," an "Annex" or a
"Schedule" in any Operative Agreement, or in any annex
thereto, is a reference to a section of, or an exhibit, an
annex or a schedule to, such Operative Agreement or such
annex, respectively.
(b) Each exhibit, annex and schedule to each Operative
Agreement is incorporated in, and shall be deemed to be a part
of, such Operative Agreement.
(c) Unless otherwise defined or specified in any Operative
Agreement, all accounting terms therein shall be construed and
all accounting determinations thereunder shall be made in
accordance with GAAP.
(d) Headings used in any Operative Agreement are for
convenience only and shall not in any way affect the construction
of, or be taken into consideration in interpreting, such
Operative Agreement.
DEFINED TERMS
"Act" means 49 U.S.C. ss.ss. 40101-46507.
"Actual Knowledge" means (a) as it applies to Owner Trustee
or Loan Trustee, as the case may be, actual knowledge of a
responsible officer in the Corporate Trust Department or the
Corporate Trust Office, respectively, and (b) as it applies to
Lessee or Owner Participant, actual knowledge of a Vice President
or more senior officer of Owner Participant or Lessee,
respectively, or any other officer of Owner Participant or
Lessee, respectively, in each case having responsibility for the
transactions contemplated by the Operative Agreements; provided
that each of Lessee, Owner Participant, Owner Trustee and Loan
Trustee shall be deemed to have "Actual Knowledge" of any matter
as to which it has received notice from Lessee, Owner
Participant, any Note Holder, Owner Trustee or Loan Trustee, such
notice having been given pursuant to Section 19.7 of the
Participation Agreement.
"Additional Excluded Amounts" means (1) all amounts of
Supplemental Rent payable, under clause (a) of the definition of
such term set forth in this Annex A, to any Indemnitees described
in clauses (vii), (viii), (ix), (xi), (xiii) and (xv) of the
definition of "Indemnitee" set forth in this Annex A, (2) all
amounts of Supplemental Rent payable, under clause (b)(iii) of
the definintion of such term set forth in this Annex A, to the
extent that such amounts in any single instance or in the
aggregate exceed $250,000, and (3) all amounts of Supplemental
Rent payable under clauses (b)(iv), (c) and (d) of the definition
of such term set forth in this Annex A.
"Additional Insured" is defined by reference to Section 11
of the Lease.
2
"Adverse Change in Tax Law" means (a) for Lessee, a Change
in Tax Law that Lessee regards as one that could adversely affect
the economic consequences of the transactions contemplated by the
Participation Agreement and the other Operative Agreements
anticipated by Lessee or (b) for Owner Participant, any Change in
Tax Law that would adversely affect any of the following tax
assumptions:
(i) For federal income tax purposes, the Lease will be
a "true" lease for purposes of the Code and Owner
Participant will be treated as the owner of the Aircraft
and Lessee will be treated as the lessee thereof;
(ii) For federal income tax purposes, Owner
Participant will be entitled to depreciation or cost
recovery deductions with respect to Lessor's Cost of the
Aircraft; and
(iii) For federal income tax purposes, Owner
Participant will be entitled to deductions for interest
payments on the Equipment Notes.
"Affiliate" means, with respect to any person, any other
person directly or indirectly controlling, controlled by or under
common control with such person. For purposes of this definition,
"control" means the power, directly or indirectly, to direct or
cause the direction of the management and policies of such
person, whether through the ownership of voting securities or by
contract or otherwise and "controlling," "controlled by" and
"under common control with" have correlative meanings.
"Aircraft" means, collectively, the Airframe and Engines.
"Aircraft Bill of Sale" means the full warranty bill of
sale covering the Aircraft delivered by Airframe Manufacturer to
Owner Trustee on the Delivery Date.
"Aircraft Documents" means all technical data, manuals and
log books, and all inspection, modification and overhaul records
and other service, repair, maintenance and technical records that
are required by the FAA (or the relevant Aviation Authority), the
Lease or the Maintenance Program to be maintained with respect to
the Aircraft, Airframe, Engines or Parts, or that are of a type
required to be delivered by Lessee upon return of the Aircraft,
Airframe or Engines under Section 5 of the Lease; and such term
shall include all additions, renewals, revisions and replacements
of any such materials from time to time made, or required to be
made, in accordance with the Lease, the Maintenance Program or
such FAA (or other Aviation Authority) regulations, and in each
case in whatever form and by whatever means or medium (including,
without limitation, microfiche, microfilm, paper or computer
disk) such materials may be maintained or retained by or on
3
behalf of Lessee (provided that all such materials shall be
maintained in the English language); and such term shall include,
without limitation, the documents described in Section N of Annex
B to the Lease.
"Airframe" means (a) the aircraft (excluding Engines or
engines from time to time installed thereon) manufactured by
Airframe Manufacturer and identified by Airframe Manufacturer's
model number, United States registration number and Airframe
Manufacturer's serial number set forth in Lease Supplement No. 1
and any Replacement Airframe and (b) any and all Parts
incorporated or installed in or attached or appurtenant to such
airframe, and any and all Parts removed from such airframe,
unless title to such Parts shall not be vested in Lessor in
accordance with Section 8.1 and Annex C of the Lease. Upon
substitution of a Replacement Airframe under and in accordance
with the Lease, such Replacement Airframe shall become subject to
the Lease and shall be the "Airframe" for all purposes of the
Lease and the other Operative Agreements and thereupon the
Airframe for which the substitution is made shall no longer be
subject to the Lease, and such replaced Airframe shall cease to
be the "Airframe."
"Airframe Manufacturer" means The Boeing Company, a
Delaware corporation, solely in its capacity as manufacturer or
seller of the Aircraft, Airframe, Engines or Parts (other than
BFE and other than any Parts incorporated or installed in or
attached or appurtenant to the Aircraft, Airframe or any Engine
after delivery of the Aircraft, Airframe and Engines to Tramco,
Inc. prior to the Delivery Date) under the Purchase Agreement or
any other contract or other services provided for thereunder or
related thereto.
"Amortization Amount" means, with respect to any Equipment
Note, as of any Payment Date, the amount determined by
multiplying the percentage set forth opposite such Date on the
Amortization Schedule by the Original Amount of such Equipment
Note.
"Amortization Schedule" means, with respect to each
Equipment Note, the amortization schedule for the Equipment Notes
delivered pursuant to Section 2.02 of the Trust Indenture or, if
a revised amortization schedule shall be established pursuant to
Section 13 of the Participation Agreement, the amortization
schedule so established.
"Appraiser" means a firm of internationally recognized,
independent aircraft appraisers.
"APU" means the auxiliary power unit installed on the
Aircraft on the Delivery Date, whether or not installed on the
4
Aircraft from time to time thereafter, unless title to such APU
shall not be vested in Lessor in accordance with Section 8.1 of
the Lease, and any replacement or substituted auxiliary power
unit installed on the Aircraft in accordance with the Lease.
"Average Life Date" for any Equipment Note shall be the
date which follows the time of determination by a period equal to
the Remaining Weighted Average Life of such Equipment Note.
"Remaining Weighted Average Life" on a given date with respect to
any Equipment Note shall be the number of days equal to the
quotient obtained by dividing (a) the sum of each of the products
obtained by multiplying (i) the amount of each then remaining
scheduled payment of principal of such Equipment Note by (ii) the
number of days from and including such determination date to but
excluding the date on which such payment of principal is
scheduled to be made, by (b) the then outstanding principal
amount of such Equipment Note.
"Aviation Authority" means the FAA or, if the Aircraft is
permitted to be, and is, registered with any other Government
Entity under and in accordance with Section 7.1.2 of the Lease,
such other Government Entity.
"Bankruptcy Code" means the United States Bankruptcy Code,
11 U.S.C. Sections 102 et seq.
"Base Lease Term" means the period beginning on and
including the Commencement Date and ending on the Scheduled
Expiration Date, or such earlier date on which the Term
terminates in accordance with the provisions of the Lease.
"Basic Rent" means the rent payable for the Aircraft
pursuant to Section 3.2.1(a) of the Lease.
"Beneficial Owner" when used in relation to an Equipment
Note means a Person that, by reason of direct ownership,
contract, share ownership or otherwise, has the right to receive
or participate in receiving, directly or indirectly, payments of
principal, interest or Make-Whole Amount in respect of such
Equipment Note; provided that a Person shall not be deemed to be
a Beneficial Owner of an Equipment Note solely because another
Person in which such a Person owns common stock or other equity
securities is a registered holder or Beneficial Owner of such
Equipment Note unless such Person is an Affiliate of such other
Person.
"BFE" means all appliances, parts, instruments,
appurtenances, accessories, furnishings or other equipment of
whatever nature sold by Lessee to Owner Trustee pursuant to the
BFE Bill of Sale.
5
"BFE Amount" means the amount paid by Owner Trustee to
Lessee to purchase the BFE, and is designated by Dollar amount in
Schedule 4 to the Participation Agreement.
"BFE Bill of Sale" means the full warranty bill of sale
executed by Lessee in favor of Owner Trustee, dated the Delivery
Date, identifying and covering the BFE.
"Bills of Sale" means the FAA Bill of Sale, the Aircraft
Bill of Sale and the BFE Bill of Sale.
"Business Day" means any day other than a Saturday, Sunday
or other day on which commercial banks are authorized or required
by law to close in New York, New York, Houston, Texas or Salt
Lake City, Utah.
"Cash Equivalents" means the following securities (which
shall mature within 90 days of the date of purchase thereof): (a)
direct obligations of the U.S. Government; (b) obligations fully
guaranteed by the U.S. Government; (c) certificates of deposit
issued by, or bankers' acceptances of, or time deposits or a
deposit account with, Owner Trustee, Loan Trustee or any bank,
trust company or national banking association incorporated or
doing business under the laws of the United States or any state
thereof having a combined capital and surplus and retained
earnings of at least $500,000,000 and having a rate of "C" or
better from the Thomson BankWatch Service; or (d) commercial
paper of any issuer doing business under the laws of the United
States or one of the states thereof and in each case having a
rating assigned to such commercial paper by Standard & Poor's
Corporation or Moody's Investors Service, Inc. equal to A1 or
higher.
"Certificate Holder" means Note Holder.
"Change in Tax Law" means any amendment, modification,
addition or change in or to the provisions of the Code, any other
federal tax statutes, the Treasury Regulations promulgated
thereunder, the Internal Revenue Service Revenue Rulings, Revenue
Procedures or other administrative or judicial interpretations of
the Code or the federal tax statutes that affects the tax
assumptions set forth in the Tax Indemnity Agreement or otherwise
affects Owner Participant's anticipated Net Economic Return
(other than a change in the alternative minimum tax or other
change that results in Owner Participant being subject to
alternative minimum tax or unable to fully utilize tax benefits
because of its particular tax situation).
"Citizen of the United States," unless otherwise defined, is
as defined in 49 U.S.C. ss.40102(a)(15) and in the FAA Regulations.
6
"Closing" means the closing of the transactions contemplated
by the Participation Agreement on the Delivery Date.
"Code" means the Internal Revenue Code of 1986, as amended;
provided that, when used in relation to a Plan, "Code" shall mean
the Internal Revenue Code of 1986 and any regulations and rulings
issued thereunder, all as amended and in effect from time to
time.
"Commencement Date" is defined in Schedule 1 to the Lease.
"Commitment" means, for any Participant, the amount of its
participation in the payment of Lessor's Cost.
"Commitment Termination Date" is defined in Schedule 4 to
the Participation Agreement.
"Consent and Agreement" means the Manufacturer Consent and
Agreement 114, dated as of even date with the Participation
Agreement, of Airframe Manufacturer.
"Continuous Stay Period" is defined in Section 4.04(a) of
the Trust Indenture.
"Corporate Trust Department" or "Trust Office" means the
principal corporate trust office of Owner Trustee located from
time to time at Owner Trustee's address for notices under the
Participation Agreement or such other office at which Owner
Trustee's corporate trust business shall be administered which
Owner Trustee shall have specified by notice in writing to
Lessee, Loan Trustee and each Note Holder.
"Corporate Trust Office" means the principal office of Loan
Trustee located at Loan Trustee's address for notices under the
Participation Agreement or such other office at which Loan
Trustee's corporate trust business shall be administered which
Loan Trustee shall have specified by notice in writing to Lessee,
Owner Trustee and each Note Holder.
"CRAF" means the Civil Reserve Air Fleet Program
established pursuant to 10 U.S.C. Section 9511-13 or any similar
substitute program.
"Damage Payment Threshold" is defined in Schedule 1 to the
Lease.
"Debt" means any liability for borrowed money, or any
liability for the payment of money in connection with any letter
of credit transaction or any other liabilities evidenced or to be
evidenced by bonds, debentures, notes or other similar
instruments.
7
"Debt Rate" means, with respect to any Series, the rate per
annum specified for such Series under the heading "Interest Rate"
in Schedule I to the Trust Indenture.
"Default" means any event or condition that with the giving
of notice or the lapse of time or both would become an Event of
Default.
"Definitive Purchase Notice" is defined in Section 17.1 of
the Lease.
"Delayed Delivery Date" means a delayed Delivery Date
notified to each Participant, Owner Trustee and Loan Trustee by
Lessee pursuant to Section 5.3.1 of the Participation Agreement,
which delayed Delivery Date shall be a Business Day not later
than the Commitment Termination Date.
"Delivery Date" means the Business Day specified in Lease
Supplement No. 1 as the date on which, among other things, the
Aircraft is delivered to and accepted by Lessee under the Lease
and the Closing occurs.
"Dollars," "United States Dollars" or "$" means the lawful
currency of the United States.
"DOT" means the Department of Transportation of the United
States or any Government Entity succeeding to the functions of
such Department of Transportation.
"Enforcement Date" is defined in Section 4.03 of the Trust
Indenture.
"Engine" means (a) each of the engines manufactured by
Engine Manufacturer and identified by Engine Manufacturer's model
number and Engine Manufacturer's serial number set forth in Lease
Supplement No. 1 and originally installed on the Airframe on
delivery thereof pursuant to the Lease, and any Replacement
Engine, in any case whether or not from time to time installed on
such Airframe or installed on any other airframe or aircraft, and
(b) any and all Parts incorporated or installed in or attached or
appurtenant to such engine, and any and all Parts removed from
such engine, unless title to such Parts shall not be vested in
Lessor in accordance with Section 8.1 and Annex C of the Lease.
Upon substitution of a Replacement Engine under and in accordance
with the Lease, such Replacement Engine shall become subject to
the Lease and shall be an "Engine" for all purposes of the Lease
and the other Operative Agreements and thereupon the Engine for
which the substitution is made shall no longer be subject to the
Lease, and such replaced Engine shall cease to be an "Engine."
"Engine Consent and Agreement" means the Engine Manufacturer
8
Consent and Agreement 114 dated as of even date with the
Participation Agreement, of Engine Manufacturer.
"Engine Manufacturer" means Rolls-Royce plc, a corporation
organized under the laws of England.
"Equipment Note Register" is defined in Section 2.07 of the
Trust Indenture.
"Equipment Notes" means and includes any equipment notes
issued under the Trust Indenture in the form specified in Section
2.01 thereof (as such form may be varied pursuant to the terms of
the Trust Indenture) and any Equipment Note issued under the
Trust Indenture in exchange for or replacement of any other
Equipment Note.
"ERISA" means the Employee Retirement Income Security Act
of 1974 and any regulations and rulings issued thereunder all as
amended and in effect from time to time.
"Event of Default" is defined in Section 4.02 of the Trust
Indenture.
"Event of Loss" means, with respect to the Aircraft,
Airframe or any Engine, any of the following circumstances,
conditions or events with respect to such property, for any
reason whatsoever:
(a) the destruction of such property, damage to such
property beyond practical or economic repair or
rendition of such property permanently unfit for
normal use;
(b) the actual or constructive total loss of such property
or any damage to such property, or requisition of
title or use of such property, which results in an
insurance settlement with respect to such property on
the basis of a total loss or constructive or
compromised total loss;
(c) any loss of such property or loss of use of such
property for a period of 90 days or more as a
consequence of any theft, hijacking or disappearance
of such property;
(d) any seizure, condemnation, confiscation, taking or
requisition of title to such property by any Government
Entity or purported non-U.S. Government Entity;
(e) any seizure, condemnation, confiscation, taking or
requisition of use of such property that continues
9
until the earliest of (i) the last day of the Term,
(ii) the date upon which the Aircraft is modified,
altered or adapted in such a manner as would render
conversion of such property for use in normal
commercial passenger service impractical or
uneconomical, (iii) the date on which such property is
operated or located in any area excluded from coverage
by any insurance policy required to be maintained in
respect of such property pursuant to the Lease (unless
an indemnity in lieu of insurance is provided to
Lessor and Loan Trustee in accordance with Section
11.4 of the Lease) or (iv) the date that is 90 days
following the commencement of such loss of use (unless
such loss of use results from action by the U.S.
Government, in which case this clause (iv) shall not
apply to such loss of use); and
(f) as a result of any law, rule, regulation, order or
other action by the Aviation Authority or by any
Government Entity of the government of registry of the
Aircraft or by any Government Entity otherwise having
jurisdiction over the operation or use of the Aircraft,
the use of such property in the normal course of
Lessee's business of passenger air transportation is
prohibited for a period expiring on the earlier to
occur of (i) the last day of the Term or (ii) the date
that is 180 days following commencement of such
prohibition, provided that if Lessee, prior to the
--------
expiration of such 180-day period, shall have
undertaken and shall be diligently carrying forward all
steps which are necessary or desirable to permit the
normal use of such property by Lessee, then the date
that is 360 days following commencement of such
prohibition.
The date of such Event of Loss shall be the date of such loss,
damage, insurance settlement, seizure, condemnation,
confiscation, taking or requisition of title or use or
prohibition, except that, for purposes of clauses (c), (e) and
(f) above, no Event of Loss shall be deemed to have occurred
until the date of expiration of the applicable period referred to
therein.
"Excluded Payments" means (i) indemnity payments paid or
payable by Lessee to or in respect of Owner Participant, or Owner
Trustee in its individual capacity, their respective Affiliates,
successors and permitted assigns and their directors, officers,
employees, servants and agents pursuant to Section 10 of the
Participation Agreement or any corresponding payments under the
Trust Indenture, (ii) proceeds of public liability insurance paid
or payable as a result of insurance claims made, or losses
10
suffered, by Owner Trustee in its individual capacity or by Owner
Participant, that are payable directly to Owner Trustee in its
individual capacity, or Owner Participant, respectively, for
their own account, (iii) proceeds of insurance maintained with
respect to the Aircraft by Owner Participant or any Affiliate
thereof for its or their own account or benefit (whether directly
or through Owner Trustee) and permitted under Section 11.3 of the
Lease, (iv) all payments required to be made under the Tax
Indemnity Agreement by Lessee whether or not denominated as
Supplemental Rent, (v) any interest that pursuant to the
Operative Agreements may from time to time accrue in respect of
any of the amounts described in clauses (i) through (iv) above,
(vi) any right to enforce the payment of any amount described in
clauses (i) through (v) above (provided, that the rights referred
to in this clause (vi) shall not be deemed to include the
exercise of any remedies provided for in the Lease other than the
right to sue for specific performance of any covenant to make
such payment or to sue for damages in respect of the breach of
any such covenant) and (vii) any right to exercise any election
or option or make any decision or determination, or to give or
receive any notice, consent, waiver or approval, or to take any
other action in respect of, but in each case, only to the extent
relating to, any Excluded Payments.
"Expenses" means any and all liabilities, obligations,
losses, damages, settlements, penalties, claims (including,
without limitation, claims or liabilities based or asserted upon
(a) negligence, (b) strict or absolute liability, (c) liability
in tort, (d) infringement of patent, trademark or other property
or other right and (e) liabilities arising out of violation of
any Law), actions, suits, costs, expenses and disbursements
(including, without limitation, reasonable fees and disbursements
of legal counsel, accountants, appraisers, inspectors or other
professionals, and costs of investigation), including, without
limitation, all such costs, expenses and disbursements incurred
by any person in asserting or establishing, or in defending any
claims arising out of its assertion of, any rights it may have
under, or its cooperation in connection with any Expenses
indemnified pursuant to, Section 10 of the Participation
Agreement.
"FAA" means the Federal Aviation Administration of the
United States or any Government Entity succeeding to the
functions of such Federal Aviation Administration.
"FAA Bill of Sale" means a bill of sale for the Aircraft on
AC Form 8050-2 (or such other form as may be approved by the FAA)
delivered to Owner Trustee on the Delivery Date by Airframe
Manufacturer.
"FAA Filed Documents" means the Lease, Lease Supplement No.
11
1, the Trust Indenture, the Trust Agreement, the Trust Indenture
Supplement, the FAA Bill of Sale and an application for
registration of the Aircraft with the FAA in the name of Owner
Trustee.
"FAA Regulations" means the Federal Aviation Regulations
issued or promulgated pursuant to the Act from time to time.
"Fair Market Rental Value" means the fair market rental
value in Dollars for the Aircraft that would apply in an
arm's-length transaction between an informed and willing lessee
under no compulsion to lease, and an informed and willing lessor
under no compulsion to lease, the Aircraft, for the First Renewal
Lease Term or Second Renewal Lease Term, as the case may be,
assuming that (a) the Aircraft has been maintained in accordance
with, and is in the condition required by, the Lease, (b)
payments of rent would be made quarterly, and (c) the Aircraft
would be leased during any such Renewal Term on the same terms
and conditions as are set forth in the Lease with respect to the
Base Lease Term.
"Fair Market Sales Value" means the fair market sales value
in Dollars for the Aircraft that would apply in an arm's-length
transaction between an informed and willing buyer under no
compulsion to buy, and an informed and willing seller under no
compulsion to sell, the Aircraft, in a transaction that would
close on or about the relevant time of determination, assuming
that (a) the Aircraft has been maintained in accordance with, and
is in the condition required by, the Lease and (b) the Aircraft
would be delivered to such informed and willing buyer in the
return condition required by the Lease.
"Financing Statements" means, collectively, UCC-1 (and,
where appropriate, UCC-3) financing statements (a) covering the
Trust Indenture Estate, by Owner Trustee, as debtor, showing Loan
Trustee as secured party, for filing in Utah and each other
jurisdiction that, in the opinion of Loan Trustee, is necessary
to perfect its Lien on the Trust Indenture Estate, (b) covering
the Lease and the Aircraft, as a precautionary matter, by Lessee,
as lessee, showing Owner Trustee as lessor and Loan Trustee as
assignee of Owner Trustee, for filing in Texas and each other
jurisdiction that, in the opinion of Owner Trustee and Loan
Trustee, is reasonably desirable and (c) for purposes of Section
6.1.2 of the Participation Agreement only, terminating the lien
of (i) the Purchase Contract Security Agreement dated December 7,
1993, between Lessee and Engine Manufacturer and (ii) the 757
Purchase Agreement Assignment dated February 7, 1994 between
Lessee and Airframe Manufacturer.
"First Renewal Lease Term" means, if Lessee exercises its
option to renew the Lease at the end of the Base Lease Term
12
pursuant to and in accordance with Section 17.2 of the Lease, the
period commencing on the first day following the Scheduled
Expiration Date, and ending on the First Renewal Term Expiration
Date or such earlier date on which the Term terminates in
accordance with the provisions of the Lease.
"First Renewal Term Expiration Date" means the first
anniversary of the Scheduled Expiration Date.
"First Security" means First Security Bank of Utah,
National Association, a national banking association, not in its
capacity as Owner Trustee under the Trust Agreement, but in its
individual capacity.
"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 SEC 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.
"Government Entity" means (a) any federal, state,
provincial or similar government, and any body, board,
department, commission, court, tribunal, authority, agency or
other instrumentality of any such government or otherwise
exercising any executive, legislative, judicial, administrative
or regulatory functions of such government or (b) any other
government entity having jurisdiction over any matter
contemplated by the Operative Agreements or relating to the
observance or performance of the obligations of any of the
parties to the Operative Agreements.
"GTA" means the Purchase Contract reference RR/CAL/DEG 2124
dated December 7, 1993, by and between Engine Manufacturer and
Lessee (including all exhibits thereto, together with all letter
agreements that by their terms constitute part of such Purchase
Contract), to the extent assigned pursuant to the Purchase
Agreement Assignment.
"Inclusion Event" is defined in the Tax Indemnity Agreement.
"Indemnitee" means (i) First Security and Owner Trustee,
(ii) WTC and Loan Trustee, (iii) each separate or additional
trustee appointed pursuant to the Trust Agreement or the Trust
Indenture, (iv) each Participant, (v) Owner Participant Parent
(but only in its capacity as issuer of the Owner Participant
Guaranty), (vi) the Trust Estate and the Trust Indenture Estate,
(vii) the Subordination Agent, (viii) the Liquidity Provider,
13
(ix) the Pass Through Trustees, (x) each Affiliate of the persons
described in clauses (i) through (v), inclusive, (xi) each
Affiliate of the persons described in clauses (vii), (viii) and
(ix), (xii) the respective directors, officers, employees, agents
and servants of each of the persons described in clauses (i)
through (v) inclusive and in clause (x), (xiii) the respective
directors, officers, employees, agents and servants of each of
the persons described in clauses (vii), (viii), (ix) and (xi),
(xiv) the successors and permitted assigns of the persons
described in clauses (i) through (v), inclusive, and in clauses
(x) and (xii), and (xv) the successors and permitted assigns of
the persons described in clauses (vii), (viii), (ix), (xi) and
(xiii); provided that the persons described in clauses (vii),
(viii), (ix), (xi), (xiii) and (xv) are Indemnitees only for
purposes of Section 10.1 of the Participation Agreement. If any
Indemnitee is Airframe Manufacturer or Engine Manufacturer or any
subcontractor or supplier of either thereof, such Person shall be
an Indemnitee only in its capacity as Owner Participant, Owner
Participant Parent, Loan Participant or Note Holder.
"Indenture Default" means any condition, circumstance, act
or event that, with the giving of notice, the lapse of time or
both, would constitute an Indenture Event of Default.
"Indenture Agreements" means the Participation Agreement,
the Lease, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the Engine Consent and
Agreement, the Bills of Sale and any other contract, agreement or
instrument from time to time assigned or pledged under the Trust
Indenture.
"Indenture Event of Default" means any one or more of the
conditions, circumstances, acts or events set forth in Section
4.02 of the Trust Indenture.
"Independent Tax Counsel" means independent tax counsel of
recognized reputation selected by Owner Participant and
reasonably acceptable to Lessee.
"Intercreditor Agreement" means that certain Intercreditor
Agreement among the Pass Through Trustees, the Liquidity Provider
and the Subordination Agent.
"Interim Lease Term" means the period commencing on and
including the Delivery Date, and ending on and including the day
immediately preceding the Commencement Date or such earlier date
on which the Term terminates in accordance with the provisions of
the Lease.
"Interim Term Value Date" is defined in Schedule 1 to the
Lease.
14
"IRS" means the Internal Revenue Service of the United
States or any Government Entity succeeding to the functions of
such Internal Revenue Service.
"Law" means (a) any constitution, treaty, statute, law,
decree, regulation, order, rule or directive of any Government
Entity, and (b) any judicial or administrative interpretation or
application of, or decision under, any of the foregoing.
"Lease" or "Lease Agreement" means the Lease Agreement 114,
dated as of even date with the Participation Agreement, between
Owner Trustee and Lessee.
"Lease Default" means any condition, circumstance, act or
event that, with the giving of notice, the lapse of time or both,
would constitute a Lease Event of Default.
"Lease Event of Default" means any one or more of the
conditions, circumstances, acts or events set forth in Section 14
of the Lease.
"Lease Supplement" means a supplement to the Lease, in the
form of Exhibit A to the Lease.
"Lease Supplement No. 1" means the initial Lease Supplement,
dated the Delivery Date.
"Lessee" means Continental Airlines, Inc., a Delaware
corporation.
"Lessee Operative Agreements" means the Participation
Agreement, the Lease, Lease Supplement No. 1, the Tax Indemnity
Agreement, the BFE Bill of Sale, the Purchase Agreement
Assignment and each other agreement between Lessee and any other
party to the Participation Agreement, relating to the
Transactions, delivered on the Delivery Date.
"Lessee Person" means Lessee, any sublessee, assignee,
successor or other user or person in possession of the Aircraft,
Airframe or an Engine with or without color of right, or any
Affiliate of any of the foregoing (other than any Indemnitee or
any related Indemnitee with respect thereto, or any person using
or claiming any rights with respect to the Aircraft, Airframe or
an Engine directly by or through any of the persons in this
parenthetical).
"Lessor" means Owner Trustee in its capacity as lessor under
the Lease.
"Lessor Lien" means, with respect to any person and in
respect of any property (including, without limitation, the
15
Aircraft, Airframe, Engines, Parts or Aircraft Documents), any
Lien on such property which (a) arises from claims against such
person (if such person is a trustee, whether in its individual
capacity or in its capacity as a trustee) not related to or
arising out of, directly or indirectly (i) its ownership of, Lien
on or other interest in the Aircraft, Airframe, Engines, Parts or
Aircraft Documents or all or any other part of the Trust Estate
or Indenture Estate or (ii) any of the transactions contemplated
by the Operative Agreements, (b) results from actions taken by
such person (if such person is a trustee, whether in its
individual capacity or in its capacity as a trustee) (i) in
violation of such person's obligations under any of the terms of
the Operative Agreements, (ii) not participated in or consented
to by Lessee and (iii) not taken in connection with or by reason
of the occurrence of a Lease Default or a Lease Event of Default,
or (c) is imposed as a result of Taxes against such person (if
such person is a trustee, whether in its individual capacity or
in its capacity as a trustee) or any of its Affiliates not
required to be indemnified by Lessee under the Participation
Agreement, the Tax Indemnity Agreement or any other Operative
Agreement; provided that for purposes of Sections 8.2.1 and 8.3.1
of the Participation Agreement, any Lien that is attributable
solely to Owner Participant, First Security or Lessor and would
otherwise constitute a Lessor Lien thereunder shall not
constitute a Lessor Lien thereunder, so long as (A) the existence
of such Lien poses no material risk of the sale, forfeiture or
loss of the Aircraft, Airframe or any Engine or any interest
therein, (B) the existence of such Lien does not interfere in any
way with the use or operation of the Aircraft by Lessee (or any
Permitted Sublessee), (C) the existence of such Lien does not
affect the priority or perfection of, or otherwise jeopardize,
the Lien of the Trust Indenture, (D) First Security, Lessor or
Owner Participant, as the case may be, is diligently contesting
such Lien by appropriate proceedings, (E) the existence of such
Lien does not result in actual interruption in the receipt and
distribution by Loan Trustee in accordance with the Trust
Indenture of Rent assigned to Loan Trustee for the benefit of the
Note Holders, and (F) any property subject to such Lien is not
then required to be conveyed to any other Person pursuant to
Section 4.6 of the Lease.
"Lessor's Cost" means the aggregate of the amounts paid by
Owner Trustee to Airframe Manufacturer, and, with respect to BFE,
Lessee, to purchase the Aircraft pursuant to the Purchase
Agreement and the Purchase Agreement Assignment, and is
designated by Dollar amount in Schedule 4 to the Participation
Agreement.
"Liability Deductible" is defined in Schedule 1 to the
Lease.
16
"Lien" means any mortgage, pledge, lien, charge, claim,
encumbrance, lease or security interest affecting the title to or
any interest in property.
"Liquidity Facilities" means the three Revolving Credit
Agreements between the Subordination Agent, as borrower, and the
Liquidity Provider, and any replacement thereof, in each case as
the same may be amended, modified or supplemented.
"Liquidity Provider" means De Nationale Investeringsbank
N.V., as Class A Liquidity Provider, Class B Liquidity Provider
and Class C Liquidity Provider (as such terms are defined in the
Intercreditor Agreement) under the Liquidity Facilities, or any
successor thereto.
"Loan Certificate Register" means the Equipment Note
Register.
"Loan Certificates" means the Equipment Notes.
"Loan Participant" means, on or prior to the Delivery Date,
the Person executing the Participation Agreement as Loan
Participant and thereafter, each Note Holder.
"Loan Participant Agreements" means the Participation
Agreement and each other agreement or document delivered by Loan
Participant under the Participation Agreement or any other
Operative Agreement.
"Loan Participant's Percentage" with respect to the Loan
Participant, means the Percentage of Lessor's Cost allocated to
such Loan Participant in Schedule 3 to the Participation
Agreement.
"Loan Trustee" means Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as
loan trustee under the Trust Indenture.
"Loan Trustee Event" means in the event of a reorganization
proceeding involving the Lessee under Chapter 11 of the
Bankruptcy Code, (i) the trustee in such proceeding or the Lessee
not agreeing to perform its obligations under the Lease, as
contemplated under Section 1110, during the 60-day period under
Section 1110(a)(1)(A) of the Bankruptcy Code (or such longer
period as may apply under Section 1110(b) of the Bankruptcy
Code), (ii) at any time after so agreeing to perform such
obligations, such trustee or the Lessee ceasing to perform such
obligations with the result that the Continuous Stay Period comes
to an end or (iii) Loan Trustee taking action or notifying Owner
Trustee that it intends to take action to foreclose the Lien of
the Trust Indenture in accordance with Section 4.04(a) of the
17
Trust Indenture.
"MACRS Deductions" is defined in the Tax Indemnity
Agreement.
"Maintenance Program" is defined in Annex C to the Lease.
"Majority in Interest of Note Holders" means as of a
particular date of determination, the holders of a majority in
aggregate unpaid Original Amount of all Equipment Notes
outstanding as of such date (excluding any Equipment Notes held
by Owner Trustee, Lessee, Loan Trustee or Owner Participant or
any Affiliate of any such party or any interests of Owner Trustee
or Owner Participant therein by reason of subrogation pursuant to
Section 4.03 of the Trust Indenture (unless all Equipment Notes
then outstanding shall be held by Owner Trustee, Owner
Participant or any Affiliate of any thereof)); provided that for
the purposes of directing any action or casting any vote or
giving any consent, waiver or instruction hereunder, any Note
Holder of an Equipment Note or Equipment Notes may allocate, in
such Note Holder's sole discretion, any fractional portion of the
principal amount of such Equipment Note or Equipment Notes in
favor of or in opposition to any such action, vote, consent,
waiver or instruction.
"Make-Whole Amount" means, with respect to any Equipment
Note, an amount (as determined by an independent investment
banker of national standing) equal to the excess, if any, of (a)
the present value of the remaining scheduled payments of
principal and interest to maturity of such Equipment Note
computed by discounting such payments on a quarterly basis on
each Payment Date (assuming a 360-day year of twelve 30-day
months) using a discount rate equal to the Treasury Yield over
(b) the outstanding principal amount of such Equipment Note plus
accrued interest to the date of determination. For purposes of
determining the Make-Whole Amount, "Treasury Yield" means, at the
date of determination with respect to any Equipment Note, the
interest rate (expressed as a quarterly equivalent and as a
decimal and, in the case of United States Treasury bills,
converted to a bond equivalent yield) determined to be the per
annum rate equal to the semi-annual yield to maturity for United
States Treasury securities maturing on the Average Life Date of
such Equipment Note and trading in the public securities markets
either as determined by interpolation between the most recent
weekly average yield to maturity for two series of United States
Treasury securities, trading in the public securities markets,
(A) one maturing as close as possible to, but earlier than, the
Average Life Date of such Equipment Note and (B) the other
maturing as close as possible to, but later than, the Average
Life Date of such Equipment Note, in each case as published in
the most recent H.15(519) or, if a weekly average yield to
18
maturity for United States Treasury securities maturing on the
Average Life Date of such Equipment Note is reported on the most
recent H.15(519), such weekly average yield to maturity as
published in such H.15(519). "H.15(519) " means the weekly
statistical release designated as such, or any successor
publication, published by the Board of Governors of the Federal
Reserve System. The date of determination of a Make-Whole Amount
shall be the third Business Day prior to the applicable payment
or redemption date and the "most recent H.15(519)" means the
H.15(519) published prior to the close of business on the third
Business Day prior to the applicable payment or redemption date.
"Material Adverse Change" means, with respect to any
person, any event, condition or circumstance that materially and
adversely affects such person's business or consolidated
financial condition, or its ability to observe or perform its
obligations, liabilities and agreements under the Operative
Agreements.
"Minimum Liability Insurance Amount" is defined in Schedule
1 to the Lease.
"Minimum Residual Percentage" is defined in Schedule 1 to
the Lease.
"Minimum Value Percentage" is defined in Schedule 1 to the
Lease.
"Mortgaged Property" is defined in Section 3.03 of the Trust
Indenture.
"Mortgagee" means Loan Trustee.
"Mortgagee Agreements" means, collectively, the
Participation Agreement, the Trust Indenture and each other
agreement between Loan Trustee and any other party to the
Participation Agreement, relating to the Transactions, delivered
on the Delivery Date.
"Mortgagee Event" means Loan Trustee Event.
"Net Economic Return" means Owner Participant's net
after-tax yield and aggregate after-tax cash flow computed on the
basis of the same methodology and assumptions as were used by the
initial Owner Participant in determining Basic Rent, Stipulated
Loss Value percentages and Termination Value percentages as of
the Delivery Date, as such assumptions may be adjusted for events
that have been the basis for adjustments to Basic Rent pursuant
to Section 3.2.1(b) of the Lease or events giving rise to
indemnity payments pursuant to Section 5.1 of the Tax Indemnity
Agreement; provided that if the initial Owner Participant shall
19
have transferred its interest as Owner Participant, Net Economic
Return shall be calculated as if the initial Owner Participant
had retained its interests; provided further, that,
notwithstanding the preceding proviso, solely for purposes of
Section 13 of the Participation Agreement and calculating any
adjustments to Basic Rent, Stipulated Loss Values and Termination
Values in connection with a refunding pursuant to such Section 13
at a time when Owner Participant is a transferee (other than an
Affiliate of the initial Owner Participant), the after-tax yield
(but not the after-tax cash flow) component of Net Economic
Return shall be calculated on the basis of the methodology and
assumptions utilized by the transferee Owner Participant as of
the date on which it acquired its interest.
"Net Present Value of Rents" means the present value, as of
the date of determination, discounted at ten percent per annum,
compounded quarterly to the date of determination, of all unpaid
Basic Rent payments during the then-remaining portion of the Base
Lease Term, expressed as a percentage of Lessor's Cost.
"Net Worth" means, for any person, the excess of its total
assets over its total liabilities.
"New Debt" means debt securities in an aggregate principal
amount specified in the Refunding Information, which amount shall
be no greater than the aggregate principal amount of all
Equipment Notes outstanding on the Refunding Date.
"Non-U.S. Person" means any Person other than a United
States person, as defined in Section 7701(a)(30) of the Code.
"Note Holder" means at any time each registered holder of
one or more Equipment Notes.
"Note Purchase Agreement" means the Note Purchase
Agreement, dated as of May 20, 1996, among Continental Airlines,
Inc., the Pass Through Trustee under each Pass Through Trust
Agreement and the Loan Trustee, providing for, among other
things, the issuance and sale of certain equipment notes.
"Officer's Certificate" means, in respect of any party to
the Participation Agreement, a certificate signed by the
Chairman, the President, any Vice President or Assistant Vice
President, the Treasurer or the Secretary of such party.
"Operative Agreements" means, collectively, the
Participation Agreement, the Trust Agreement, the Purchase
Agreement Assignment, the Consent and Agreement, the Engine
Consent and Agreement, the Lease, Lease Supplement No. 1, the
Trust Indenture, the initial Trust Indenture Supplement, the
Bills of Sale, the Tax Indemnity Agreement, the Owner Participant
20
Guaranty, the Equipment Notes and each other Lessee Operative
Agreement.
"Operative Leases" means each of the lease agreements
between Lessor and Lessee identified on Schedule 1 to this Annex
A.
"Original Amount," with respect to an Equipment Note, means
the stated original principal amount of such Equipment Note and,
with respect to all Equipment Notes, means the aggregate stated
original principal amounts of all Equipment Notes.
"Original Indenture" means the Trust Indenture and Mortgage
114, dated as of even date with the Participation Agreement,
between the Owner Trustee and the Loan Trustee.
"Owner Participant" means the person executing the
Participation Agreement as "Owner Participant" or, if a second
person becomes an "Owner Participant" pursuant to Section 12.1.1
of the Participation Agreement, both of such persons; provided
that if an Owner Participant Transfers 100% of its interest to a
successor Owner Participant, such transferring Owner Participant
shall thereafter no longer be considered an "Owner Participant."
"Owner Participant Agreements" means, collectively, the
Participation Agreement, the Tax Indemnity Agreement, the Trust
Agreement and each other agreement between Owner Participant and
any other party to the Participation Agreement relating to the
Transactions, delivered on the Delivery Date.
"Owner Participant Guaranty" means the Guaranty by
Corporate Affiliate of Owner Participant 114 dated the Delivery
Date from Owner Participant Parent to the beneficiaries named
therein.
"Owner Participant Parent" means the person executing the
Owner Participant Guaranty.
"Owner Participant's Percentage" means the percentage of
Lessor's Cost allocated to the Owner Participant in Schedule 3 to
the Participation Agreement.
"Owner Trustee" means First Security Bank of Utah, National
Association, a national banking association, not in its
individual capacity, except as expressly provided in any
Operative Agreement, but solely as Owner Trustee under the Trust
Agreement.
"Owner Trustee Agreements" means, collectively, the
Participation Agreement, the Lease, Lease Supplement No. 1, the
Trust Agreement, the Trust Indenture, the initial Trust Indenture
Supplement, the Equipment Notes, the Purchase Agreement
21
Assignment, and each other agreement between Owner Trustee and
any other party to the Participation Agreement, relating to the
Transactions, delivered on the Delivery Date.
"Participants" means, collectively, Owner Participant and
Loan Participant and "Participant" means Owner Participant or
Loan Participant, individually.
"Participation Agreement" means the Participation Agreement
114 dated as of July 1, 1995 among Lessee, Owner Participant,
Loan Participant, Owner Trustee, Loan Trustee et al.
"Parts" means all appliances, parts, components,
instruments, appurtenances, accessories, furnishings, seats and
other equipment of whatever nature (including, without
limitation, all BFE, avionics, the APU and Passenger Convenience
Equipment, but excluding Engines or engines), that may from time
to time be installed or incorporated in or attached or
appurtenant to the Airframe or any Engine; provided that the term
"Parts" shall not be deemed to include any Passenger Convenience
Equipment if and for so long as such Equipment shall be owned by,
or shall be subject to a security interest, license or other
interest of, another Person (other than any Affiliate of Lessee)
as provided under Section D.3 of Annex C to the Lease.
"Pass Through Certificates" means the pass through
certificates to be issued by the Pass Through Trusts (and any
other pass through certificates for which such pass through
certificates may be exchanged) in connection with the Refinancing
Transaction.
"Pass Through Trust Agreement" means each of the four
separate pass through trust agreements to be entered into by and
between the Lessee and the Pass Through Trustee in connection
with the Refinancing Transaction.
"Pass Through Trustee" means Wilmington Trust Company, a
Delaware banking corporation, in its capacity as trustee under
each Pass Through Trust Agreement, and each other person which
may from time to time be acting as successor trustee under any
such Pass Through Trust Agreement.
"Passenger Convenience Equipment" means components or
systems installed on or affixed to the Airframe that are used to
provide individual telecommunications or electronic entertainment
to passengers aboard the Aircraft.
"Payment Date" is defined in Schedule 1 to the Lease.
"Payment Due Rate" is defined in Schedule 1 to the Lease.
22
"Permitted Air Carrier" means any U.S. Air Carrier or any
air carrier listed on Schedule 5 to the Lease.
"Permitted Institution" means (a) any bank, trust company,
insurance company, pension trust, finance or leasing corporation,
financial institution or other person (other than, without
Lessee's consent, a commercial air carrier or Affiliate thereof
that is in direct competition with Lessee), in each case with a
combined capital and surplus or net worth of at least
$50,000,000, or (b) any Affiliate of any person described in
clause (a) in respect of which such person has provided a written
guarantee of the obligations assumed by such Affiliate under the
Owner Participant Agreements in form and substance reasonably
satisfactory to Lessee, Owner Trustee and Loan Trustee.
"Permitted Lien" means any Lien described in clauses (a)
through (f), inclusive, of Section 6 of the Lease.
"Permitted Sublease" means a sublease permitted under
Section 7.2.7 of the Lease.
"Permitted Sublessee" means the sublessee under a Permitted
Sublease.
"Persons" or "persons" means individuals, firms,
partnerships, joint ventures, trusts, trustees, Government
Entities, organizations, associations, corporations, government
agencies, committees, departments, authorities and other bodies,
corporate or incorporate, whether having distinct legal status or
not, or any member of any of the same.
"Plan" means any employee benefit plan within the meaning
of Section 3(3) of ERISA, and any plan within the meaning of
Section 4975(e)(1) of the Code.
"Post-Delivery Change in Tax Law" means a Change in Tax Law
that is enacted, promulgated or issued after the Delivery Date
and on or prior to the first anniversary of the Delivery Date
that is based on or similar in substance or effect to one or more
elements of the provisions of a proposal made after April 27,
1993 and on or before the Delivery Date by the President, the
Department of the Treasury, the Majority Leader or Minority
Leader of the House of Representatives or the staff or any member
of the House Ways and Means Committee, the Senate Finance
Committee or the Joint Committee on Taxation; provided, that such
proposal was active or pending on the Delivery Date.
"Preliminary Notice" is defined in Section 17.1 of the
Lease.
"Premium Termination Date" means (i) with respect to Series
23
A Equipment Notes, Series B Equipment Notes and Series C
Equipment Notes, September 22, 2006 and (ii) with respect to
Series D Equipment Notes, June 26, 2003.
"Purchase Agreement" means the Purchase Agreement No. 1783,
dated March 18, 1993, between Airframe Manufacturer and Lessee
(including all exhibits thereto, together with all letter
agreements entered into that by their terms constitute part of
such Purchase Agreement), to the extent assigned pursuant to the
Purchase Agreement Assignment.
"Purchase Agreement Assignment" means the Purchase
Agreement and Engine Warranties Assignment 114 dated as of even
date with the Participation Agreement, between Lessee and Owner
Trustee.
"Purchase Date" means the last Business Day of any of the
Base Lease Term, First Renewal Lease Term or Second Renewal Lease
Term, as specified in any Purchase Notice.
"Purchase Notice" is defined in Section 17.3.1 of the Lease.
"QIB" is defined in Section 2.08 of the Trust Indenture.
"Refinancing Transaction" means the refinancing transaction
effected in accordance with the Refunding Agreement.
"Refunding Agreement" means Refunding Agreement 114, dated
as of May 20, 1996, entered into by and among the Lessee, the
Owner Participant, the Owner Trustee, the Pass Through Trustee
under each Pass Through Trust Agreement and the Loan Trustee,
providing for, among other things, the issuance and sale of the
Equipment Notes.
"Refunding Certificate" means a certificate of an
authorized representative of Owner Participant delivered pursuant
to Section 13.1.1 of the Participation Agreement, setting forth
(a) the Refunding Date and (b) the following information, subject
to the limitations set forth in Section 13 of the Participation
Agreement: (i) the principal amount of debt to be issued by Owner
Trustee on the Refunding Date and (ii) the proposed revised
schedules of Basic Rent, Stipulated Loss Value percentages and
Termination Value percentages and the proposed Amortization
Schedules.
"Refunding Date" means the proposed date on which the
outstanding Equipment Notes will be redeemed and refinanced
pursuant to Section 13 of the Participation Agreement.
"Refunding Information" means the information set forth in
the Refunding Certificate (other than the Refunding Date) as such
information may have been revised by any verification procedures
24
demanded by Lessee pursuant to Section 3.2.1(d) of the Lease.
"Registration Rights Agreement" means the registration
rights agreement to be entered into by and among the Lessee and
certain initial purchasers of the Pass Through Certificates to be
issued pursuant to the Refunding Agreement, providing for, among
other things, the exchange offer with respect to such Pass
Through Certificates to be registered under the Securities Act or
the shelf registration of such Pass Through Certificates for a
period to be specified therein.
"Renewal Lease Term" means, collectively, the First Renewal
Lease Term and the Second Renewal Lease Term, in each case, if
any.
"Renewal Notice" is defined in Section 17.2.1 of the Lease.
"Renewal Rent" for the Aircraft means the rent payable
therefor in respect of a Renewal Lease Term determined pursuant
to Section 17.2.2 of the Lease.
"Rent" means, collectively, Basic Rent, Renewal Rent and
Supplemental Rent.
"Replacement Airframe" means any airframe substituted for
the Airframe pursuant to Section 10 of the Lease.
"Replacement Engine" means an engine substituted for an
Engine pursuant to Section 5.3, 7.2, 9 or 10 of the Lease.
"Return Acceptance Supplement" means a Return Acceptance
Supplement, dated as of the date the Aircraft is returned to
Lessor pursuant to Section 5 of the Lease, by Lessor and Lessee
substantially in the form of Exhibit B to the Lease.
"Scheduled Delivery Date" means the expected Delivery Date
notified to each Participant, Owner Trustee and Loan Trustee by
Lessee pursuant to Section 5.1(a) of the Participation Agreement,
which expected Delivery Date shall be a Business Day not later
than the Commitment Termination Date.
"Scheduled Expiration Date" means the Business Day next
preceding the twentieth anniversary of the Delivery Date.
"SEC" means the Securities and Exchange Commission of the
United States, or any Government Entity succeeding to the
functions of such Securities and Exchange Commission.
"Second Renewal Lease Term" means, if Lessee exercises its
option to renew the Lease at the end of the First Renewal Lease
Term pursuant to and in accordance with Section 17.2 of the
25
Lease, the period commencing on the first day following the First
Renewal Term Expiration Date, and ending on the second
anniversary of the Scheduled Expiration Date or such earlier date
on which the Term terminates in accordance with the provisions of
the Lease.
"Section 1110" means 11 U.S.C. Section 1110 of the
Bankruptcy Code or any successor or analogous section of the
federal bankruptcy Law in effect from time to time.
"Secured Obligations" is defined in Section 2.06 of the
Trust Indenture.
"Securities Act" means the Securities Act of 1933, as
amended.
"Security" means a "security" as defined in Section 2(1) of
the Securities Act.
"Senior Holder" is defined in Section 2.15(c) of the Trust
Indenture.
"Series" means any of Series A, Series B, Series C or
Series D.
"Series A" or "Series A Equipment Notes" means Equipment
Notes issued under the Trust Indenture and designated as "Series
A" thereunder, in the Original Amount and maturities and bearing
interest as specified in Schedule I to the Trust Indenture under
the heading "Series A."
"Series B" or "Series B Equipment Notes" means Equipment
Notes issued under the Trust Indenture and designated as "Series
B" thereunder, in the Original Amount and maturities and bearing
interest as specified in Schedule I to the Trust Indenture under
the heading "Series B."
"Series C" or "Series C Equipment Notes" means Equipment
Notes issued under the Trust Indenture and designated as "Series
C" thereunder, in the Original Amount and maturities and bearing
interest as specified in Schedule I to the Trust Indenture under
the heading "Series C."
"Series D" or "Series D Equipment Notes" means Equipment
Notes issued under the Trust Indenture and designated as "Series
D" thereunder, in the Original Amount and maturities and bearing
interest as specified in Schedule I to the Trust Indenture under
the heading "Series D."
"Similar Aircraft" means a Boeing Model 757-200 aircraft
(other than the Aircraft) having a passenger compartment
26
configuration (of the type used in Block Nos. ND301-325 as
specified in Boeing Detail Specification D924N104-3 dated as of
March 18, 1993, as amended or supplemented) most similar to the
Aircraft.
"SLV Rate" is defined in Schedule 1 to the Lease.
"Stipulated Loss Value" means, with respect to the
Aircraft, (a) during the Base Lease Term, the amount determined
by multiplying (i) the percentage set forth in Schedule 3 to the
Lease (as adjusted from time to time in accordance with Section
3.2.1 of the Lease) opposite the Stipulated Loss Value Date by
(ii) Lessor's Cost and (b) during any Renewal Term, the amount
determined pursuant to Section 17.2.3 of the Lease.
Notwithstanding anything to the contrary in any Operative
Agreement, Stipulated Loss Value shall always be sufficient to
pay in full, as of the date of payment thereof (assuming timely
payment of the Equipment Notes prior to such date), the aggregate
unpaid principal amount of all Equipment Notes outstanding as of
such date, together with accrued and unpaid interest on all such
Equipment Notes as of such date.
"Stipulated Loss Value Date" means for any month, the day
in such month specified in Schedule 3 to the Lease or, if such
day is not a Business Day, the immediately succeeding Business
Day.
"Subordination Agent" means Wilmington Trust Company, as
subordination agent under the Intercreditor Agreement, or any
successor thereto.
"Supplemental Rent" means, without duplication (a) all
Expenses, Transaction Expenses and all other amounts,
liabilities, indemnities and obligations (other than Basic Rent
or Renewal Rent but including Make-Whole Amount, if any) that
Lessee assumes or becomes obligated to or agrees to pay under any
Lessee Operative Agreement to or on behalf of Lessor or any other
person, including, without limitation, payments of Stipulated
Loss Value, Termination Value and payments of indemnities under
Section 10 of the Participation Agreement, (b) (i) an amount
equal to the fees payable to the Liquidity Provider under Section
2.03 of each Liquidity Facility and the related Fee Letter (as
defined in the Intercreditor Agreement) multiplied by a fraction
the numerator of which shall be the then outstanding aggregate
principal amount of the Series A Equipment Notes, Series B
Equipment Notes and Series C Equipment Notes and the denominator
of which shall be the then outstanding aggregate principal amount
of all "Series A Equipment Notes", "Series B Equipment Notes" and
"Series C Equipment Notes" (as defined in each of the Operative
Leases and in the Indenture referred to in the Note Purchase
Agreement); (ii) (x) the amount equal to interest on any
Downgrade Advance (other than any Applied Downgrade Advance)
27
payable under Section 3.07(a)(i) of each Liquidity Facility minus
Investment Earnings from such Downgrade Advance multiplied by (y)
the fraction specified in the foregoing clause (i); (iii) if any
payment default shall have occurred and be continuing with
respect to interest on any Series A Equipment Note, Series B
Equipment Note or Series C Equipment Note, (x) the amount equal
to interest on any Unpaid Advance or Applied Downgrade Advance
payable under Section 3.07(a)(i) of each Liquidity Facility minus
Investment Earnings from any Final Advance multiplied by (y) a
fraction the numerator of which shall be the then aggregate
overdue amounts of interest on the Series A Equipment Notes,
Series B Equipment Notes and Series C Equipment Notes (other than
interest becoming due and payable solely as a result of
acceleration of any such Equipment Notes) and the denominator of
which shall be the aggregate overdue amounts of interest on all
"Series A Equipment Notes", "Series B Equipment Notes" and
"Series C Equipment Notes" (as defined in each of the Operative
Leases and in the Indenture referred to in the Note Purchase
Agreement) (other than interest becoming due and payable solely
as a result of acceleration of any such "Equipment Notes");
provided that any amounts payable at any time or from time to
time pursuant to clause (iii) in any single instance or in the
aggregate in excess of $250,000 shall be paid by Lessee directly
to the Subordination Agent; and (iv) Lessee's pro rata share of
any other amounts owed to the Liquidity Provider by the
Subordination Agent as borrower under each Liquidity Facility
(other than amounts due as repayment of advances thereunder or as
interest on such advances, except to the extent payable pursuant
to clause (ii) or (iii) above) and any other amounts owed to the
Liquidity Provider under Section 11 of each Refunding Agreement
and Section 9 of the Note Purchase Agreement, (c) Lessee's pro
rata share of all compensation and reimbursement of expenses,
disbursements and advances payable by Lessee under the Pass
Through Trust Agreements and (d) Lessee's pro rata share of all
compensation and reimbursement of expenses and disbursements
payable to the Subordination Agent under the Intercreditor
Agreement except with respect to any income or franchise taxes
incurred by the Subordination Agent in connection with the
transactions contemplated by the Intercreditor Agreement. As used
herein, "Lessee's pro rata share" means as of any time a
fraction, the numerator of which is the principal balance then
outstanding of Equipment Notes and the denominator of which is
the aggregate principal balance then outstanding of (x) all
"Equipment Notes" (as such term is defined in each of the
Operative Leases) and (y) all "Equipment Notes" issued under (and
as defined in) the Note Purchase Agreement. For purposes of this
definition, the terms "Applied Downgrade Advance", "Cash
Collateral Account", "Downgrade Advance", "Final Advance",
"Investment Earnings" and "Unpaid Advance" shall have the
meanings specified in each Liquidity Facility.
28
"Tax Attribute Period" is defined in Section 3.4 of the Tax
Indemnity Agreement.
"Tax Indemnitee" means (a) First Security and Owner
Trustee, (b) WTC and Loan Trustee, (c), each separate or
additional trustee appointed pursuant to the Trust Agreement or
the Trust Indenture, (d) each Participant, (e) the Trust Estate
and the Trust Indenture Estate and (f) the respective successors,
assigns, agents and servants of the foregoing. For purposes of
this definition, the term "Owner Participant" shall include any
member of an affiliated group (within the meaning of Section 1504
of the Code) of which Owner Participant is, or may become, a
member if consolidated, joint or combined returns are filed for
such affiliated group for federal, state or local income tax
purposes. If the Tax Indemnitee is the Airframe Manufacturer or
Engine Manufacturer, such Person shall be a Tax Indemnitee only
in its capacity as Owner Participant, Owner Participant Parent,
Loan Participant or Certificate Holder.
"Tax Indemnity Agreement" means the Tax Indemnity Agreement
114, dated as of even date with the Participation Agreement,
between Lessee and Owner Participant.
"Taxes" means all license, recording, documentary,
registration and other similar fees and all taxes, levies,
imposts, duties, charges, assessments or withholdings of any
nature whatsoever imposed by any Taxing Authority, together with
any penalties, additions to tax, fines or interest thereon or
additions thereto.
"Taxing Authority" means any federal, state or local
government or other taxing authority in the United States, any
foreign government or any political subdivision or taxing
authority thereof, any international taxing authority or any
territory or possession of the United States or any taxing
authority thereof.
"Term" means the term, commencing on the Delivery Date, for
which the Aircraft is leased pursuant to Section 3 of the Lease,
and shall include the Interim Lease Term, the Base Lease Term
and, if applicable, any Renewal Lease Term.
"Termination Date" means any Payment Date occurring after
the tenth anniversary of the Delivery Date and on or before the
date one year prior to the Scheduled Expiration Date on which the
Lease shall terminate in accordance with Section 9 of the Lease.
"Termination Value" means, with respect to the Aircraft,
the amount determined by multiplying (a) the percentage set forth
in Schedule 4 to the Lease (as adjusted from time to time in
accordance with Section 3.2.1 of the Lease) opposite the
29
Termination Value Date by (b) Lessor's Cost. Notwithstanding
anything to the contrary in any Operative Agreement, Termination
Value shall always be sufficient to pay in full, as of the date
of payment thereof (assuming timely payment of the Equipment
Notes prior to such date), the aggregate unpaid principal amount
of all Equipment Notes outstanding as of such date, together with
accrued and unpaid interest on all such Equipment Notes as of
such date.
"Termination Value Date" means for any month, the day in
such month specified in Schedule 4 to the Lease or, if such day
is not a Business Day, the immediately succeeding Business Day.
"Transaction Expenses" means all costs and expenses
incurred by Owner Participant, Loan Participant, Owner Trustee
and Loan Trustee in connection with (a) the preparation,
execution and delivery of the Operative Agreements and all
agreements and documents entered into in connection with the
Refinancing Transaction and the recording or filing of any
documents, certificates or instruments in accordance with any
Operative Agreement, including, without limitation, the FAA Filed
Documents and the Financing Statements, (b) any sublease or
transfer of possession of the Aircraft or Airframe or any Engine,
any Event of Loss with respect to the Aircraft, any Engine or any
Part, any payment of Stipulated Loss Value or Termination Value
and any replacement of any Engine or Part pursuant to the Lease,
(c) any refunding of the Equipment Notes pursuant to Section 13
of the Participation Agreement or, pursuant to Section 15.3 of
the Participation Agreement, any restructuring of the
transactions in accordance with Section 15 of the Participation
Agreement, (d) any transfer of title to the Aircraft or any
Engine contemplated by Section 4.6 of the Lease, (e) all waivers,
amendments or other agreements in connection with the Operative
Agreements and all agreements and documents entered into in
connection with the Refinancing Transaction or the transactions
contemplated thereby, in each case, except during the
continuation of a Lease Event of Default, only to the extent
requested by Lessee or required by or made pursuant to the terms
of the Operative Agreements or such agreements and documents
entered into in connection with the Refinancing Transaction
(unless such requirement results from the actions of the party
incurring such costs or expenses not required by or made pursuant
to the Operative Agreements or such agreements and documents
entered into in connection with the Refinancing Transaction),
whether or not any of the same are also indemnified against by
any other person, and (f) with respect to Owner Trustee and Loan
Trustee, otherwise in connection with the administration of the
transactions contemplated by the Participation Agreement,
including, without limitation, in each such case (a) through (f),
(i) the reasonable fees and disbursements of counsel for each
Participant, counsel for Owner Trustee, counsel for Loan Trustee
and special counsel in Oklahoma City, Oklahoma, in each case,
30
in connection with the Closing, (ii) all initial and ongoing fees,
disbursements and expenses of Owner Trustee and Loan Trustee, and
(iii) except as may be expressly provided in the Lease the fees,
expenses and disbursements of any Appraiser retained under or as
contemplated by the Participation Agreement or the Lease.
"Transactions" means the transactions contemplated by the
Participation Agreement and the other Operative Agreements.
"Transfer" means the transfer, sale, assignment or other
conveyance of all or any interest in any property, right or
interest.
"Transferee" means a person to which any Owner Participant,
Owner Trustee or any Loan Participant or Note Holder purports or
intends to Transfer any or all of its right, title or interest in
the Trust Estate or in its Equipment Note and the Trust Indenture
Estate, respectively, as described in Section 12.1.1(a), 12.1.2
or 12.1.3 (but excluding participants in any participation
referred to in Section 12.1.3), respectively, of the
Participation Agreement.
"Trust" means the trust created by the Trust Agreement.
"Trust Agreement" means the Trust Agreement 114, dated as
of even date with the Participation Agreement, between Owner
Participant and Owner Trustee.
"Trust Estate" means all estate, right, title and interest
of Owner Trustee in and to the Aircraft, the Lease, any Lease
Supplement, the Purchase Agreement and the GTA including, without
limitation, all amounts of Basic Rent and Supplemental Rent
including, without limitation, insurance proceeds (other than
insurance proceeds payable to or for the benefit of Owner
Participant, Loan Participant, Note Holders or WTC) and
requisition, indemnity or other payments of any kind for or with
respect to the Aircraft (except amounts owing to Owner
Participant, Loan Participant, Note Holders or WTC, or to any of
their respective directors, officers, employees, servants and
agents, pursuant to Section 10 of the Participation Agreement).
Notwithstanding the foregoing, "Trust Estate" shall not include
any Excluded Payment.
"Trust Indenture" means the Amended and Restated Trust
Indenture and Mortgage 114, dated as of May 20, 1996, between
Owner Trustee and Loan Trustee, which amends and restates the
Original Indenture.
"Trust Indenture Estate" is defined in the "Granting Clause"
of the Trust Indenture.
31
"Trust Indenture Supplement" means a Trust Indenture and
Mortgage 114 Supplement, substantially in the form of Exhibit A
to the Trust Indenture, with appropriate modifications to reflect
the purpose for which it is being used.
"UCC" means the Uniform Commercial Code as in effect in any
applicable jurisdiction.
"United States" or "U.S." means the United States of
America; provided that for geographic purposes, "United States"
means, in aggregate, the 50 states and the District of Columbia
of the United States of America.
"U.S. Air Carrier" means any United States air carrier that
is a Citizen of the United States holding an air carrier
operating certificate issued by the Secretary of Transportation
pursuant to chapter 447 of title 49 of the United States Code for
aircraft capable of carrying 10 or more individuals or 6000
pounds or more of cargo, and as to which there is in force an air
carrier operating certificate issued pursuant to Part 121 of the
FAA Regulations, or which may operate as an air carrier by
certification or otherwise under any successor or substitute
provisions therefor or in the absence thereof.
"U.S. Government" means the federal government of the United
States, or any instrumentality or agency thereof the obligations
of which are guaranteed by the full faith and credit of the
federal government of the United States.
"U.S. Person" means any Person described in Section
7701(a)(30) of the Code.
"Wet Lease" means any arrangement whereby Lessee agrees to
furnish the Airframe and Engines or engines installed thereon to
a third party pursuant to which the Airframe and such Engines or
engines (i) shall at all times be in the sole possession and
control of Lessee, (ii) shall be operated in all respects solely
by regular employees of Lessee possessing all current
certificates and licenses that are required under the Act or any
FAA Regulations for the possession, use and operation of the
Airframe and such Engines or engines (or, if the Airframe is then
under foreign registration, in accordance with Section 7.1.2 of
the Lease, the foregoing requirement shall apply in respect of
all certificates and licenses required by such government of
registration and the applicable Aviation Authority for the
possession, use and operation of the Airframe and such Engines or
engines), and (iii) shall in all events be maintained, insured
and otherwise used and operated in compliance with the terms and
provisions of the Lease.
"WTC" means Wilmington Trust Company, a Delaware banking
32
corporation, not in its capacity as Loan Trustee under the Trust
Indenture, but in its individual capacity.
33
SCHEDULE 1
OPERATIVE LEASES
1. Lease Agreement 114, dated as of July 1, 1995 between
First Security Bank of Utah, National Association and Continental
Airlines, Inc.
2. Lease Agreement 115, dated as of July 1, 1995 between
First Security Bank of Utah, National Association and Continental
Airlines, Inc.
3. Lease Agreement 116, dated as of March 15, 1996, between
First Security Bank of Utah, National Association and Continental
Airlines, Inc.
4. Lease Agreement 117, dated as of April 15, 1996,
between First Security Bank of Utah, National Association and
Continental Airlines, Inc.
----------------------------
EXHIBIT A - LEASE SUPPLEMENT
AMENDED AND RESTATED LEASE
AGREEMENT 114
----------------------------
LEASE SUPPLEMENT NO.__
LEASE SUPPLEMENT No. __, dated _________, 199_, between
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national
banking association, not in its individual capacity, but solely
as Owner Trustee under the Trust Agreement 114, dated as of July
1, 1995, with the Owner Participant named therein (such Owner
Trustee, in its capacity as such Owner Trustee being herein
called "Lessor"), and CONTINENTAL AIRLINES, INC., a Delaware
corporation, as Lessee ("Lessee").
Lessor and Lessee have heretofore entered into that certain
Amended and Restated Lease Agreement 114, Dated as of July 1,
1995, relating to one Boeing Model 757-224 aircraft (herein
called the "Lease" and the defined terms therein being
hereinafter used with the same meanings). The Lease provides for
the execution and delivery of this Lease Supplement for the
purpose of leasing the Airframe and Engines under the Lease as
and when delivered by Lessor to Lessee in accordance with the
terms thereof.
The Lease relates to the Airframe and Engines described
below, and a counterpart of the Lease to which this Lease
Supplement is attached and of which this Lease Supplement is a
part, is being filed for recordation on the date hereof with the
Federal Aviation Administration as one document.
NOW, THEREFORE, in consideration of the premises and other
good and sufficient consideration, Lessor and Lessee hereby agree
as follows:
1. Lessee has been duly authorized by Lessor to accept, and
does hereby irrevocably accept on behalf of Lessor delivery of
the Aircraft from Airframe Manufacturer under, and for all
purposes of, the Aircraft Bill of Sale, the Participation
Agreement and the Purchase Agreement Assignment.
2. Lessor hereby delivers and leases to Lessee under the
Lease and Lessee hereby accepts and leases from Lessor under the
Lease the following described Boeing 757-224 aircraft (the
"Aircraft"), which Aircraft as of the date hereof consists of the
following components:
(i) Airframe: U.S. Registration No. N12114;
manufacturer's serial no. 27556; and
(ii) Engines: two (2) Rolls-Royce Model RB211-
535E4-B-37 engines bearing, respectively, manufacturer's
serial nos. 31319 and 31278 (each of which engines has
750 or more rated takeoff horsepower or the equivalent of
such horsepower).
3. The Delivery Date of the Aircraft is the date of
this Lease Supplement set forth in the opening paragraph
hereof.
4. Lessee hereby confirms its agreement to pay Lessor
1
Rent for the Aircraft in accordance with Sections 3 and 17, and
the other provisions, of the Lease.
5. Lessee hereby confirms to Lessor that Lessee has duly
and irrevocably accepted the Aircraft under and for all purposes
hereof, of the Lease and of the other Lessee Operative
Agreements.
6. All of the terms and provisions of this Lease Supplement
are hereby incorporated by reference in the Lease to the same
extent as if fully set forth therein.
7. This Lease Supplement may be executed by the parties
hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
8. To the extent, if any, that this Lease Supplement
constitutes chattel paper (as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction), no
security interest in this Lease Supplement may be created through
the transfer or possession of any counterpart other than the
original executed counterpart, which shall be identified as the
counterpart containing the receipt therefor executed by the
Mortgagee on the signature page thereof.
[This space intentionally left blank.]
2
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Lease Supplement to be duly executed as of the day and year first
above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
as Lessor, not in its
individual capacity, except
as expressly provided herein,
but solely as Owner Trustee
under the Trust Agreement
By_____________________________
Name:
Title:
CONTINENTAL AIRLINES, INC.,
as Lessee
By______________________________
Name:
Title:
3
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Lease Supplement to be duly executed as of the day and year first
above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
as Lessor, not in its individual capacity, except as
expressly provided herein, but
solely as Owner Trustee under
the Trust Agreement
By_____________________________
Name:
Title:
CONTINENTAL AIRLINES, INC.,
as Lessee
By____________________________
Name:
Title:
Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this ____ day of _________,
1996.
WILMINGTON TRUST COMPANY,
as Mortgagee
By____________________________
Name:
Title:
4
--------------------------
SCHEDULE 1 - CERTAIN TERMS
AMENDED AND RESTATED LEASE
AGREEMENT 114
--------------------------
CERTAIN TERMS
Defined Term Definition
------------ ----------
Commencement Date October 2, 1995
Damage Payment Threshold $3,000,000
Liability Deductible $1,000,000
Minimum Liability Insurance Amount $450,000,000
Minimum Residual Percentage 20% of Lessor's Cost
Minimum Value Percentage 25% of Lessor's Cost
Payment Date October 2, 1995, January
2, 1996, April 2, 1996,
May 20, 1996, July 2, 1996
and each July 2, October
2, January 2 and April 2
thereafter during the Term
or, if any such day is not
a Business Day, the
immediately succeeding
Business Day.
Payment Due Rate With respect to (i) any
payment made to a Note
Holder under any Series
of Equipment Notes, the
lesser of (a) the Debt
Rate applicable to such
Series plus 2% and (b)
the maximum rate
permitted under
applicable Law and (ii)
any payment made under
any Operative Agreement
to any other person,
10.76%.
SLV Rate The lesser of (a)
8.76% or (b) the maximum
rate permitted under
applicable Law.
1
---------------------------
SCHEDULE 2 - BASIC RENT
AMENDED AND RESTATED LEASE
AGREEMENT 114
---------------------------
BASIC RENT
Percentage of
Payment Date Lessor's Cost
------------ -------------
[Intentionally omitted from the version of this document filed
with the FAA as containing confidential financial information]
1
Percentage of
Payment Date Lessor's Cost
------------ -------------
2
----------------------------
SCHEDULE 3 - STIPULATED LOSS
VALUE
AMENDED AND RESTATED LEASE
AGREEMENT 114
----------------------------
STIPULATED LOSS VALUE
Percentage of Percentage of
Date Lessor's Cost Date Lessor's Cost
---- ------------- ---- -------------
[Intentionally omitted from the version of this document filed
with the FAA as containing confidential financial information]
1
Percentage of Percentage of
Date Lessor's Cost Date Lessor's Cost
---- ------------- ---- -------------
2
Percentage of Percentage of
Date Lessor's Cost Date Lessor's Cost
---- ------------- ---- -------------
3
------------------------------
SCHEDULE 4 - TERMINATION VALUE
AMENDED AND RESTATED LEASE
AGREEMENT 114
------------------------------
TERMINATION VALUE
Percentage of Percentage of
Date Lessor's Cost Date Lessor's Cost
---- ------------- ---- -------------
[Intentionally omitted from the version of this document filed
with the FAA as containing confidential financial information]
1
Percentage of Percentage of
Date Lessor's Cost Date Lessor's Cost
---- ------------- ---- -------------
2
Percentage of Percentage of
Date Lessor's Cost Date Lessor's Cost
---- ------------- ---- -------------
3
PERMITTED AIR CARRIERS
Aer Lingus
Air Canada
Air France
Air New Zealand
Alitalia
All Nippon
Ansett Airlines of Australia
Australian Airlines
Braathens S.A.F.E.
British Airways
British Midland
Britannia Airways
Canadian Airlines, International
Cathay Pacific Air Lines Ltd.
Condor (Sub of Lufthansa)
Finnair
Icelandair
Iberia Air Lines of Spain
Japan Air Lines
Japan Air System
KLM
Lufthansa
Lux Air
Malaysian Airlines
Martinair
Monarch Airlines
Olympic
Phillipine Airlines
Qantas Airways Ltd.
Sabena
Scandinavian Airlines System
Singapore Airlines Limited
Swissair
TAP (Portugal)
Thai Airways
Transavia
1
------------------------------
SCHEDULE 6 - PLACARDS
AMENDED AND RESTATED LEASE
AGREEMENT 114
------------------------------
PLACARDS
Leased from
First Security Bank of Utah, National Association,
not in its individual capacity but solely as
Owner Trustee, Owner and Lessor
and
Mortgaged to
Wilmington Trust Company,
not in its individual capacity but solely as Mortgagee
1
- -------------------------------------------------------------------
AMENDED AND RESTATED TRUST INDENTURE AND MORTGAGE 114
Dated as of May 20, 1996
Between
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly stated herein,
but solely as Owner Trustee,
Owner Trustee
and
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly stated herein,
but solely as Loan Trustee,
Loan Trustee
- -------------------------------------------------------------------
EQUIPMENT NOTES COVERING
ONE BOEING 757-224 AIRCRAFT
BEARING U.S. REGISTRATION MARK N12114
LEASED BY CONTINENTAL AIRLINES, INC.
- -------------------------------------------------------------------
TABLE OF CONTENTS
Page
GRANTING CLAUSE.................................................... 2
ARTICLE I
DEFINITIONS........................................................ 8
ARTICLE II
THE EQUIPMENT NOTES...................... 8
SECTION 2.01. Form of Equipment Notes.................. 8
SECTION 2.02. Issuance and Terms of Equipment Notes.... 14
SECTION 2.03. Payments from Trust Indenture Estate
Only..................................... 16
SECTION 2.04. Method of Payment........................ 18
SECTION 2.05. Application of Payments.................. 20
SECTION 2.06. Termination of Interest in Trust
Indenture Estate......................... 21
SECTION 2.07. Registration Transfer and Exchange of
Equipment Notes.......................... 21
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Equipment Notes.......................... 22
SECTION 2.09. Payment of Expenses on Transfer;
Cancellation............................. 23
SECTION 2.10. Mandatory Redemptions of Equipment
Notes.................................... 23
SECTION 2.11. Voluntary Redemptions of Equipment
Notes.................................... 24
SECTION 2.12. Redemptions; Notice of Redemption........ 24
SECTION 2.13. [Intentionally Omitted.] ............... 25
SECTION 2.14. Option to Purchase Equipment Notes....... 25
SECTION 2.15. Subordination............................ 26
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE............. 27
SECTION 3.01. Basic Rent Distribution.................. 27
SECTION 3.02. Event of Loss; Replacement; Voluntary
Termination; Optional Redemption......... 29
SECTION 3.03. Payments After Event of Default.......... 30
SECTION 3.04. Certain Payments......................... 33
SECTION 3.05. Other Payments........................... 34
SECTION 3.06. Payments to Owner Trustee................ 34
ARTICLE IV
ii
COVENANTS OF OWNER TRUSTEE; EVENTS OF
DEFAULT; REMEDIES OF LOAN TRUSTEE............... 35
SECTION 4.01. Covenants of Owner Trustee............... 35
SECTION 4.02. Event of Default......................... 36
SECTION 4.03. Certain Rights........................... 38
SECTION 4.04. Remedies................................. 40
SECTION 4.05. Return of Aircraft, Etc.................. 42
SECTION 4.06. Remedies Cumulative...................... 44
SECTION 4.07. Discontinuance of Proceedings............ 44
SECTION 4.08. Waiver of Past Defaults.................. 44
SECTION 4.09. Appointment of Receiver.................. 45
SECTION 4.10. Loan Trustee Authorized to Execute
Bills of Sale, Etc....................... 45
SECTION 4.11. Rights of Note Holders to Receive
Payment.................................. 45
ARTICLE V
DUTIES OF THE LOAN TRUSTEE................... 45
SECTION 5.01. Notice of Event of Default............... 45
SECTION 5.02. Action Upon Instructions; Certain
Rights and Limitations................... 46
SECTION 5.03. Indemnification.......................... 49
SECTION 5.04. No Duties Except as Specified in
Trust Indenture or Instructions.......... 50
SECTION 5.05. No Action Except Under Lease, Trust
Indenture or Instructions................ 50
SECTION 5.06. Replacement Airframes and Replacement
Engines.................................. 50
SECTION 5.07. Indenture Supplements for
Replacements............................. 51
SECTION 5.08. Effect of Replacement.................... 51
SECTION 5.09. Investment of Amounts Held by Loan
Trustee.................................. 51
ARTICLE VI
THE OWNER TRUSTEE AND THE LOAN TRUSTEE............. 52
SECTION 6.01. Acceptance of Trusts and Duties.......... 52
SECTION 6.02. Absence of Duties........................ 52
SECTION 6.03. No Representations or Warranties as
to Aircraft or Documents................. 53
SECTION 6.04. No Segregation of Monies; No Interest.... 54
SECTION 6.05. Reliance; Agreements; Advice of
Counsel.................................. 54
SECTION 6.06. Capacity in Which Acting................. 55
SECTION 6.07. Compensation............................. 55
SECTION 6.08. Instructions from Note Holders........... 55
iii
ARTICLE VII
INDEMNIFICATION OF LOAN TRUSTEE BY OWNER TRUSTEE........ 55
SECTION 7.01. Scope of Indemnification................. 55
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES................ 57
SECTION 8.01. Notice of Successor Owner Trustee........ 57
SECTION 8.02. Resignation of Loan Trustee;
Appointment of Successor................. 57
SECTION 8.03. Appointment of Additional and
Separate Trustees........................ 58
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS...................... 60
SECTION 9.01. Instructions of Majority; Limitations.... 60
SECTION 9.02. Trustees Protected....................... 62
SECTION 9.03. Documents Mailed to Note Holders......... 62
SECTION 9.04. No Request Necessary for Lease
Supplement or Trust Indenture
Supplement............................... 63
ARTICLE X
MISCELLANEOUS......................... 63
SECTION 10.01. Termination of Trust Indenture.......... 63
SECTION 10.02. No Legal Title to Trust Indenture
Estate in Note Holders.................. 63
SECTION 10.03. Sale of Aircraft by Loan Trustee Is
Binding................................. 64
SECTION 10.04. Trust Indenture for Benefit of Owner
Trustee, Loan Trustee, Owner
Participant and Note Holders............ 64
SECTION 10.05. Notices................................. 64
SECTION 10.06. Severability............................ 65
SECTION 10.07. No Oral Modification or Continuing
Waivers................................. 65
SECTION 10.08. Successors and Assigns.................. 65
SECTION 10.09. Headings................................ 65
SECTION 10.10. Normal Commercial Relations............. 66
SECTION 10.11. Governing Law; Counterpart Form......... 66
SECTION 10.12. Voting By Note Holders.................. 66
SECTION 10.13. Bankruptcy.............................. 66
iv
EXHIBIT A Form of Trust Indenture and Mortgage Supplement
SCHEDULE I Equipment Notes Amortization
AMENDED AND RESTATED TRUST INDENTURE AND MORTGAGE 114
AMENDED AND RESTATED TRUST INDENTURE AND MORTGAGE 114,
dated as of May 20, 1996 ("Trust Indenture"), between FIRST
SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity, except as expressly
stated herein, but solely as Owner Trustee under the Trust
Agreement referred to below (together with its successors under
the Trust Agreement, the "Owner Trustee"), and WILMINGTON TRUST
COMPANY, a Delaware banking corporation, not in its individual
capacity, except as expressly stated herein, but solely as Loan
Trustee hereunder (together with its successors hereunder, the
"Loan Trustee").
W I T N E S S E T H
WHEREAS, all capitalized terms used herein shall have
the respective meanings set forth or referred to in Article I
hereof;
WHEREAS, the Owner Participant and the Owner Trustee
in its individual capacity have entered into the Trust Agreement
whereby, among other things, (i) the Owner Trustee has
established a certain trust for the use and benefit of the Owner
Participant subject, however, to the Trust Indenture Estate
created pursuant hereto for the use and benefit of, and with the
priority of payment to, the holders of Equipment Notes issued
hereunder, and (ii) the Owner Trustee has been authorized and
directed to execute and deliver this Agreement;
WHEREAS, (i) the Owner Trustee and Wilmington Trust
Company, as Mortgagee, entered into the Trust Indenture and
Mortgage 114 dated as of July 1, 1995 between the Owner Trustee
and the Mortgagee (the "Original Indenture"), (ii) the Owner
Trustee and the Mortgagee entered into the Trust Indenture and
Mortgage 114 Supplement No. 1 (the "Supplement") dated July 3,
1995 to the Original Indenture, (iii) the Original Indenture and
the Supplement were recorded by the Federal Aviation
Administration on July 3, 1995 and were assigned Conveyance No.
Y41472 and (iv) the Lease Agreement 114 dated as of even date
with the Original Indenture between the Owner Trustee and Lessee
(the "Lease") and the Lease Supplement No. 1 were recorded by the
Federal Aviation Administration on July 3, 1996 and were assigned
Conveyance No. Y41473 and (v) pursuant to the Original Indenture,
the Owner Trustee issued and sold to Fleet National Bank,
formerly named Shawmut Bank Connecticut National Association, as
loan participant ("Fleet"), Loan Certificates (as defined in the
Original Indenture);
WHEREAS, the parties have agreed that subject to
certain conditions, Lessee shall have the right to cause the
1
implementation of the Refinancing Transaction pursuant to which,
among other things, the Equipment Notes issued to Fleet on the
date of the Original Indenture (the "Initial Equipment Notes")
shall be redeemed and new Equipment Notes (the "Refinancing
Equipment Notes") shall be issued to the Pass Through Trustees
(or their designee);
WHEREAS, in light of the foregoing, the parties desire
by this Trust Indenture, among other things, (i) to amend and
restate in its entirety the Original Indenture, (ii) to provide
for the issuance by the Owner Trustee of the Refinancing
Equipment Notes and (iii) to provide for the assignment, mortgage
and pledge by the Owner Trustee to the Loan Trustee, as part of
the Trust Indenture Estate hereunder, among other things, of all
of the Owner Trustee's right, title and interest in and to the
Aircraft and, except as hereinafter expressly provided, all of
the Owner Trustee's right, title and interest in, to and under
the Lease and all payments and other amounts received hereunder
or thereunder in accordance with the terms hereof or thereof, as
security for, among other things, the Owner Trustee's obligations
to the Loan Trustee, for the ratable benefit and security of the
Note Holders;
WHEREAS, all things have been done to make the
Equipment Notes, when executed by the Owner Trustee and
authenticated and delivered by the Loan Trustee hereunder, the
valid, binding and enforceable obligations of the Owner Trustee;
and
WHEREAS, all things necessary to make this Trust
Indenture the valid, binding and legal obligation of the Owner
Trustee for the uses and purposes herein set forth, in accordance
with its terms, have been done and performed and have happened;
GRANTING CLAUSE
NOW, THEREFORE, THIS TRUST INDENTURE AND MORTGAGE
WITNESSETH, that, to secure the prompt payment of the Original
Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to, all Equipment Notes from time to
time outstanding hereunder according to their tenor and effect
and to secure the performance and observance by the Owner Trustee
of all the agreements, covenants and provisions contained herein
and in the Participation Agreement and the Equipment Notes, for
the benefit of the Note Holders and the Loan Participants and the
prompt payment of all amounts from time to time owing under the
Participation Agreement to the Loan Participants and/or the Note
Holders by the Owner Trustee and for the uses and purposes and
subject to the terms and provisions hereof, and in consideration
of the premises and of the covenants herein contained, and of the
acceptance of the Equipment Notes by the holders thereof, and for
other good and valuable consideration the receipt and adequacy
2
whereof are hereby acknowledged, the Owner Trustee has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged,
pledged and confirmed, and does hereby grant, bargain, sell,
assign, transfer, convey, mortgage, pledge and confirm, unto the
Loan Trustee, its successors in trust and assigns, for the
security and benefit of the Loan Participants and the Note
Holders, a first priority security interest in and mortgage lien
on all right, title and interest of the Owner Trustee in, to and
under the following described property, rights and privileges,
whether now or hereafter acquired, other than Excluded Payments
(which, collectively, excluding Excluded Payments but including
all property hereafter specifically subject to the Lien of this
Trust Indenture by the terms hereof or any supplement hereto, are
included within, and are referred to as, the "Trust Indenture
Estate"), to wit:
(1) The Airframe which is one Boeing 757-224 aircraft
with the FAA Registration number of N12114 and the manufacturer's
serial number of 27556 and Engines, each of which Engines is a
Rolls-Royce RB211-535E4-B-37 engine with the manufacturer's
serial numbers of 31319 and 31278, is of 750 or more rated
takeoff horsepower or the equivalent of such horsepower (such
Airframe and Engines more particularly described in the Indenture
Supplement executed and delivered as provided in the Original
Indenture) as the same is now and will hereafter be constituted,
whether now owned by the Owner Trustee or hereafter acquired,
leased or intended to be leased under the Lease, and in the case
of such Engines, whether or not any such Engine shall be
installed in or attached to the Airframe or any other airframe,
together with (a) all Parts of whatever nature, which are from
time to time included within the definitions of "Airframe" or
"Engines", whether now owned or hereafter acquired, including all
substitutions, renewals and replacements of and additions,
improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and
accumulations which constitute appliances, parts, instruments,
appurtenances, accessories, furnishings or other equipment
excluded from the definition of Parts) and (b) all Aircraft
Documents;
(2) All right, title, interest, claims and demands of
the Owner Trustee, as lessor, in, to and under the Lease,
including the Interim Lease Term, the Base Lease Term and any
Renewal Lease Term, together with all rights, powers, privileges,
options and other benefits of the Owner Trustee as lessor under
the Lease, including the immediate and continuing right to
receive and collect all Rent, income, revenues, issues, profits,
insurance proceeds, condemnation awards and other payments,
tenders and security now or hereafter payable to or receivable by
the lessor under the Lease pursuant thereto, and, subject to
Section 5.02 hereof, the right to make all waivers and
agreements, to give and receive copies of all notices and other
3
instruments or communications, to accept surrender or redelivery
of the Aircraft or any part thereof, as well as all the rights,
powers and remedies on the part of the Owner Trustee as lessor
under the Lease, to take such action upon the occurrence of a
Lease Event of Default thereunder, including the commencement,
conduct and consummation of legal, administrative or other
proceedings, as shall be permitted by the Lease or by Law, and to
do any and all other things whatsoever which the Owner Trustee or
any lessor is or may be entitled to do under or in respect of the
Lease and any right to restitution from the Lessee or any other
Person in respect of any determination of invalidity of the
Lease;
(3) All right, title, interest, claims and demands of
the Owner Trustee in, to and under:
(a) the Purchase Agreement and the GTA;
(b) the Purchase Agreement Assignment with the Consent
and Agreement and the Engine Consent and Agreement
attached thereto;
(c) the Bills of Sale; and
(d) any and all other contracts, agreements and
instruments relating to the Airframe and Engines
or any rights or interests therein to which the
Owner Trustee is now or may hereafter be a party;
together with all rights, powers, privileges, licenses,
easements, options and other benefits of the Owner Trustee under
each contract, agreement and instrument referred to in this
clause (3), including the right to receive and collect all
payments to the Owner Trustee thereunder now or hereafter payable
to or receivable by the Owner Trustee pursuant thereto and,
subject to Section 5.02 hereof, the right to make all waivers and
agreements, to give and receive notices and other instruments or
communications, or to take any other action under or in respect
of any thereof or to take such action upon the occurrence of a
default thereunder, including the commencement. conduct and
consummation of legal, administrative or other proceedings, as
shall be permitted thereby or by Law, and to do any and all other
things which the Owner Trustee is or may be entitled to do
thereunder and any right to restitution from the Lessee, the
Owner Participant or any other Person in respect of any
determination of invalidity of any thereof;
(4) All rents, issues, profits, revenues and other
income of the property subjected or required to be subjected to
the Lien of this Trust Indenture, including all payments or
proceeds payable to the Owner Trustee after termination of the
Lease with respect to the Aircraft as the result of the sale,
4
lease or other disposition thereof, and all estate, right, title
and interest of every nature whatsoever of the Owner Trustee in
and to the same;
(5) Without limiting the generality of the foregoing,
all insurance and requisition proceeds with respect to the
Aircraft or any part thereof, including the insurance required
under Section 11 of the Lease;
(6) Without limiting the generality of the foregoing,
all rights of the Owner Trustee to amounts paid or payable by
Lessee to the Owner Trustee under the Participation Agreement and
all rights of the Owner Trustee to enforce payments of any such
amounts thereunder;
(7) Without limiting the generality of the foregoing,
all monies and securities from time to time deposited or required
to be deposited with the Loan Trustee pursuant to any terms of
this Trust Indenture or the Lease or required hereby or by the
Lease to be held by the Loan Trustee hereunder as security for
the obligations of the Lessee under the Lease or of the Owner
Trustee hereunder; and
(8) All proceeds of the foregoing.
Excluding, however, in all events from each of
foregoing clauses (1) through (8) inclusive all Excluded Payments
and the right to specifically enforce the same or to sue for
damages for the breach thereof as provided in Section 5.02
hereof.
Concurrently with the delivery of the Original
Indenture, the Owner Trustee has delivered to the Loan Trustee
the original executed counterpart of the Lease and the Lease
Supplement No. 1 (to each of which a chattel paper receipt is
attached), and executed copies of the Participation Agreement,
the Purchase Agreement and the GTA (to the extent assigned by the
Purchase Agreement Assignment) the Purchase Agreement Assignment
with the Consent and Agreement and the Engine Consent and
Agreement attached thereto.
TO HAVE AND TO HOLD all and singular the aforesaid
property unto the Loan Trustee, and its successors and assigns,
in trust for the equal and proportionate benefit and security of
the Note Holders, except as provided in Section 2.15 and Article
III hereof without any preference, distinction or priority of any
one Equipment Note over any other by reason of priority of time
of issue, sale, negotiation, date of maturity thereof or
otherwise for any reason whatsoever, and for the uses and
purposes and in all cases and as to all property specified in
paragraphs (1) through (8) inclusive above, subject to the terms
and provisions set forth in this Trust Indenture.
5
It is expressly agreed that anything herein contained
to the contrary notwithstanding, the Owner Trustee shall remain
liable under the Indenture Agreements, to perform all of the
obligations assumed by it thereunder, except to the extent
prohibited or excluded from doing so pursuant to the terms and
provisions thereof, and the Loan Trustee, the Loan Participants
and the Note Holders shall have no obligation or liability under
the Indenture Agreements, by reason of or arising out of the
assignment hereunder, nor shall the Loan Trustee, the Loan
Participants or the Note Holders be required or obligated in any
manner to perform or fulfill any obligations of the Owner Trustee
under or pursuant to the Indenture Agreements, or, except as
herein expressly provided, to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received
by it, or present or file any claim, or take any action to
collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or
times.
The Owner Trustee does hereby constitute the Loan
Trustee the true and lawful attorney of the Owner Trustee,
irrevocably, granted for good and valuable consideration and
coupled with an interest and with full power of substitution, and
with full power (in the name of the Owner Trustee or otherwise)
to ask for, require, demand, receive, compound and give
acquittance for any and all monies and claims for monies (in each
case including insurance and requisition proceeds but in all
cases excluding Excluded Payments) due and to become due under or
arising out of the Indenture Agreements, and all other property
which now or hereafter constitutes part of the Trust Indenture
Estate, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or to take any action
or to institute any proceedings which the Loan Trustee may deem
to be necessary or advisable in the premises. Without limiting
the generality of the foregoing, but subject to the rights of the
Owner Trustee and the Owner Participant under Sections 2.14, 4.03
and 4.04(a) hereof, during the continuance of any Event of
Default under this Trust Indenture, the Loan Trustee shall have
the right under such power of attorney to accept any offer in
connection with the exercise of remedies as set forth herein of
any purchaser to purchase the Airframe and Engines and upon such
purchase to execute and deliver in the name of and on behalf of
the Owner Trustee an appropriate bill of sale and other
instruments of transfer relating to the Airframe and Engines,
when purchased by such purchaser, and to perform all other
necessary or appropriate acts with respect to any such purchase,
and in its discretion to file any claim or take any other action
or proceedings, either in its own name or in the name of the
Owner Trustee or otherwise, which the Loan Trustee may deem
necessary or appropriate to protect and preserve the right, title
and interest of the Loan Trustee in and to such Rents and other
sums and the security intended to be afforded hereby; provided,
6
however, that no action of the Loan Trustee pursuant to this
paragraph shall increase the obligations or liabilities of the
Owner Trustee to any Person beyond those obligations and
liabilities specifically set forth in this Trust Indenture and in
the other Operative Agreements. Under the Lease, Lessee is
directed, so long as this Trust Indenture shall not have been
fully discharged, to make all payments of Rent (other than
Excluded Payments) and all other amounts which are required to be
paid to or deposited with the Owner Trustee pursuant to the Lease
(other than Excluded Payments) directly to, or as directed by,
the Loan Trustee at such address or addresses as the Loan Trustee
shall specify, for application as provided in this Trust
Indenture. The Owner Trustee agrees that promptly upon receipt
thereof, it will transfer to the Loan Trustee any and all monies
from time to time received by it constituting part of the Trust
Indenture Estate, for distribution by the Loan Trustee pursuant
to this Trust Indenture, except that the Owner Trustee shall
accept for distribution pursuant to the Trust Agreement any
amounts distributed to it by the Loan Trustee under this Trust
Indenture.
The Owner Trustee agrees that at any time and from
time to time, upon the written request of the Loan Trustee, the
Owner Trustee will promptly and duly execute and deliver or cause
to be duly executed and delivered any and all such further
instruments and documents as the Loan Trustee may reasonably deem
necessary or desirable to perfect, preserve or protect the
mortgage, security interests and assignments created or intended
to be created hereby or to obtain for the Loan Trustee the full
benefits of the assignment hereunder and of the rights and powers
herein granted.
The Owner Trustee does hereby warrant and represent
that it has not assigned or pledged, and hereby covenants and
agrees that it will not assign or pledge, so long as the
assignment hereunder shall remain in effect, and the Lien hereof
shall not have been released pursuant to Section 10.01 hereof,
any of its right, title or interest hereby assigned, to anyone
other than the Loan Trustee, and that it will not, except as
otherwise provided in this Trust Indenture and except with
respect to Excluded Payments to which it is entitled, (i) accept
any payment from Lessee under any Indenture Agreement, (ii) enter
into any agreement amending or supplementing any Indenture
Agreement, (iii) execute any waiver or modification of, or
consent under, the terms of, or exercise any rights, powers or
privileges under, any Indenture Agreement, (iv) settle or
compromise any claim arising under any Indenture Agreement or (v)
submit or consent to the submission of any dispute, difference or
other matter arising under or in respect of any Indenture
Agreement to arbitration thereunder.
7
The Owner Trustee does hereby agree that it will not
without the written consent of the Loan Trustee:
(a) receive or collect or agree to the receipt or
collection of any payment of Rent, including Basic
Rent, Stipulated Loss Value, Termination Value or
any other payment to be made pursuant to Section 9
or 10 of the Lease prior to the date for the
payment thereof provided for by the Lease or
assign, transfer or hypothecate (other than to the
Loan Trustee hereunder) any payment of Rent,
including Basic Rent, Stipulated Loss Value,
Termination Value or any other payment to be made
pursuant to Section 9 or 10 of the Lease, then due
or to accrue in the future under the Lease in
respect of the Airframe and Engines; or
(b) except as contemplated by the Trust Agreement in
connection with the appointment of a successor
owner trustee, sell, mortgage, transfer. assign or
hypothecate (other than to the Loan Trustee
hereunder) its interest in the Airframe and
Engines or any part thereof or in any amount to be
received by it from the use or disposition of the
Airframe and Engines, other than amounts
distributed to it pursuant to Article III hereof.
It is hereby further agreed that any and all property
described or referred to in the granting clauses hereof which is
hereafter acquired by the Owner Trustee shall ipso facto, and
without any other conveyance, assignment or act on the part of
the Owner Trustee or the Loan Trustee, become and be subject to
the Lien herein granted as fully and completely as though
specifically described herein, but nothing contained in this
paragraph shall be deemed to modify or change the obligations of
the Owner Trustee contained in the foregoing paragraphs.
The Owner Trustee does hereby ratify and confirm the
Lease and does hereby agree that it will not violate any covenant
or agreement made by it therein, herein or in any other Owner
Trustee Agreement.
IT IS HEREBY COVENANTED AND AGREED by and between the
parties hereto as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used but not defined herein shall
have the respective meanings set forth or incorporated by
8
reference, and shall be construed in the manner described, in
Annex A to the Lease.
ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes
The Equipment Notes shall be substantially in the form
set forth below:
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO
THE
SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT NOTE
MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH
APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS
AVAILABLE.
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
AS OWNER TRUSTEE UNDER TRUST AGREEMENT 114
DATED AS OF JULY 1, 1995.
SERIES [ ] LIMITED RECOURSE EQUIPMENT NOTE DUE [________] ISSUED
IN CONNECTION WITH THE BOEING MODEL 757-224 AIRCRAFT
BEARING UNITED STATES REGISTRATION NUMBER N12114.
No.________ Date:[_______, ____]
$_________________
INTEREST RATE MATURITY DATE
------------- -------------
[________] [_________]
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not
in its individual capacity but solely as Owner Trustee (herein in
such capacity called the "Owner Trustee") under that certain
Trust Agreement 114, dated as of July 1, 1995, between the Owner
Participant named therein and First Security Bank of Utah,
National Association (herein as such Trust Agreement may be
supplemented or amended from time to time called the "Trust
Agreement"), hereby promises to pay to __________, or the
registered assignee thereof, the principal sum of $__________
(the "Original Amount"), together with interest on the amount of
the Original Amount remaining unpaid from time to time
(calculated on the basis of a year of 360 days comprised of
twelve 30-day months) from the date hereof until paid in full at
9
a rate per annum equal to the Debt Rate. The Original Amount of
this Equipment Note shall be payable in installments on the dates
set forth in Schedule I hereto equal to the corresponding
percentage of the Original Amount of this Equipment Note set
forth in Schedule I hereto. Accrued but unpaid interest shall be
due and payable in quarterly installments commencing on July 2,
1996, and thereafter on October 2, January 2, April 2 and July 2
of each year, to and including ________ __. Notwithstanding the
foregoing, the final payment made on this Equipment Note shall be
in an amount sufficient to discharge in full the unpaid Original
Amount and all accrued and unpaid interest on, and any other
amounts due under, this Equipment Note. Notwithstanding anything
to the contrary contained herein, if any date on which a payment
under this Equipment Note becomes due and payable is not a
Business Day, then such payment shall not be made on such
scheduled date but shall be made on the next succeeding Business
Day and if such payment is made on such next succeeding Business
Day, no interest shall accrue on the amount of such payment
during such extension.
For purposes hereof, the term "Trust Indenture" means
the Amended and Restated Trust Indenture and Mortgage 114, dated
as of May 20, 1996, between the Owner Trustee and Wilmington
Trust Company (the "Loan Trustee"), as the same may be amended or
supplemented from time to time. All other capitalized terms used
in this Equipment Note and not defined herein shall have the
respective meanings assigned in the Trust Indenture.
This Equipment Note shall bear interest, payable on
demand, at the Payment Due Rate (calculated on the basis of a
year of 360 days comprised of twelve 30-day months) on any
overdue Original Amount, any overdue Make-Whole Amount, if any,
and (to the extent permitted by applicable Law) any overdue
interest and any other amounts payable hereunder which are
overdue, in each case for the period the same is overdue. Amounts
shall be overdue if not paid when due (whether at stated
maturity, by acceleration or otherwise).
The interest rate borne by this Equipment Note shall
be subject to adjustments to the extent, and under the
circumstances, specified by the Registration Rights Agreement.
All payments of Original Amount, interest, Make-Whole
Amount, if any, and other amounts, if any, to be made by the
Owner Trustee hereunder and under the Trust Indenture or the
Participation Agreement shall be payable only from the income and
proceeds from the Trust Estate to the extent included in the
Trust Indenture Estate and only to the extent that the Owner
Trustee shall have sufficient income or proceeds from the Trust
Estate to the extent included in the Trust Indenture Estate to
enable the Loan Trustee to make such payments in accordance with
the terms of Section 2.03 and Article III of the Trust Indenture,
10
and each holder hereof, by its acceptance of this Equipment Note,
agrees that it will look solely to the income and proceeds from
the Trust Indenture Estate to the extent available for
distribution to the holder hereof as above provided and that none
of the Owner Participant, the Owner Trustee and the Loan Trustee
is personally liable or liable in any manner extending to any
assets other than the Trust Indenture Estate to the holder hereof
for any amounts payable or any liability under this Equipment
Note or, except as provided in the Trust Indenture or in the
Participation Agreement, for any liability under the Trust
Indenture or the Participation Agreement; provided, however, that
nothing herein contained shall limit, restrict or impair the
right of the Loan Trustee, subject always to the terms and
provisions of the Trust Indenture, to accelerate the maturity of
this Equipment Note upon occurrence of an Event of Default under
the Trust Indenture in accordance with Section 4.04(b) of the
Trust Indenture, to bring suit and obtain a judgment against the
Owner Trustee on this Equipment Note for purposes of realizing
upon the Trust Indenture Estate and to exercise all rights and
remedies provided under the Trust Indenture or otherwise realize
upon the Trust Indenture Estate.
There shall be maintained Equipment Note Register for
the purpose of registering transfers and exchanges of Equipment
Notes at the Corporate Trust Office of the Loan Trustee or at the
office of any successor in the manner provided in Section 2.07 of
the Trust Indenture.
The Original Amount and interest and other amounts due
hereunder shall be payable in Dollars in immediately available
funds at the Corporate Trust Office of the Loan Trustee, or as
otherwise provided in the Trust Indenture. Each such payment
shall be made on the date such payment is due and without any
presentment or surrender of this Equipment Note, except that in
the case of any final payment with respect to this Equipment
Note, the Equipment Note shall be surrendered promptly thereafter
by the Loan Trustee to the Owner Trustee for cancellation.
The holder hereof, by its acceptance of this Equipment
Note, agrees that, except as provided in the Trust Indenture,
each payment received by it hereunder shall be applied, first, to
the payment of accrued interest on this Equipment Note (as well
as any interest on any overdue Original Amount, any overdue Make-
Whole Amount, if any, or, to the extent permitted by Law, any
overdue interest and other amounts hereunder) to the date of such
payment, second, to the payment of the Original Amount of this
Equipment Note then due, third, to the payment of Make-Whole
Amount, if any, and any other amount due hereunder or under the
Trust Indenture, and fourth, the balance, if any, remaining
thereafter, to the payment of Original Amount of this Equipment
Note remaining unpaid in the inverse order of their normal
maturity.
11
This Equipment Note is one of the Equipment Notes
referred to in the Trust Indenture which have been or are to be
issued by the Owner Trustee pursuant to the terms of the Trust
Indenture. The Trust Indenture Estate is held by the Loan Trustee
as security, in part, for the Equipment Notes. The provisions of
this Equipment Note are subject to the Trust Indenture. Reference
is hereby made to the Trust Indenture for a complete statement of
the rights and obligations of the holder of, and the nature and
extent of the security for, this Equipment Note and the rights
and obligations of the holders of, and the nature and extent of
the security for, any other Equipment Notes executed and
delivered under the Trust Indenture, as well as for a statement
of the terms and conditions of the Trust created by the Trust
Indenture, to all of which terms and conditions in the Trust
Indenture each holder hereof agrees by its acceptance of this
Equipment Note.
As provided in the Trust Indenture and subject to
certain limitations therein set forth, this Equipment Note is
exchangeable for a like aggregate Original Amount of Equipment
Notes of different authorized denominations, as requested by the
holder surrendering the same.
Prior to due presentment for registration of transfer
of this Equipment Note, the Owner Trustee and the Loan Trustee
shall treat the person in whose name this Equipment Note is
registered as the owner hereof for all purposes, whether or not
this Equipment Note be overdue, and neither of the Owner Trustee
nor the Loan Trustee shall be affected by notice to the contrary.
This Equipment Note is subject to redemption as
provided in Sections 2.10, 2.11 and 2.12 of the Trust Indenture
but not otherwise. This Equipment Note is also subject to
exchange and to purchase by the Owner Participant or the Owner
Trustee as provided in Section 2.14 of the Trust Indenture but
not otherwise.
[The indebtedness evidenced by this Equipment Note is,
to the extent and in the manner provided in the Trust Indenture,
subordinate and subject in right of payment to the prior payment
in full of the Secured Obligations (as defined in the Trust
Indenture) in respect of [Series A Equipment Notes]1 [Series A
and Series B Equipment Notes]2 [Series A, Series B and Series C
- --------
1 To be inserted in the case of a Series B Equipment
Note.
2 To be inserted in the case of a Series C Equipment
Note.
12
Equipment Notes]3, and this Equipment Note is issued subject to
such provisions. The Note Holder of this Equipment Note, by
accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Loan Trustee on his
behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in the Trust Indenture
and (c) appoints the Loan Trustee his attorney-in-fact for such
purpose.]*
Unless the certificate of authentication hereon has
been executed by or on behalf of the Loan Trustee by manual
signature, this Equipment Note shall not be entitled to any
benefit under the Trust Indenture or be valid or obligatory for
any purpose.
THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
IN WITNESS WHEREOF, the Owner Trustee has caused this
Equipment Note to be executed in its corporate name by its
officer thereunto duly authorized on the date hereof.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION, not
in its individual capacity
but solely as Owner Trustee
By___________________________
Name:
Title:
LOAN TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the
within-mentioned Trust Indenture.
- --------
3 To be inserted in the case of a Series D Equipment
Note.
* To be inserted for each Equipment Note other than any
Series A Equipment Note.
13
WILMINGTON TRUST COMPANY, as
Loan Trustee
By__________________________
Name:
Title:
SCHEDULE I
EQUIPMENT NOTE AMORTIZATION
Percentage of
Original Amount
Payment Date to Be Paid
------------ ----------
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. Issuance and Terms of Equipment Notes
The Equipment Notes shall be dated the date of
issuance thereof, shall be issued in four separate series
consisting of Series A, Series B, Series C and Series D and in
the maturities and principal amounts and shall bear interest as
specified in Schedule I hereto. On the date of the consummation
of the Refinancing Transaction, (i) each Refinancing Equipment
Note shall be issued to the Pass Through Trustees (or their
designee) under the Pass Through Trust Agreements as shall be set
forth in Schedule II to be attached hereto in connection
therewith and (ii) the Initial Equipment Notes shall be
concurrently redeemed. The Equipment Notes shall be issued in
registered form only. The Equipment Notes shall be
14
issued in denominations of $1,000 and integral multiples thereof,
except that one Equipment Note of each Series may be in an amount
that is not an integral multiple of $1,000.
Each Equipment Note shall bear interest at the Debt
Rate (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) on the unpaid Original Amount thereof from
time to time outstanding, payable in arrears on July 2, 1996, and
on each October 2, January 2, April 2 and July 2 thereafter until
maturity. The Original Amount of each Equipment Note shall be
payable on the dates and in the installments equal to the
corresponding percentage of the Original Amount as set forth in
Schedule I hereto which shall be attached as Schedule I to the
Equipment Notes. Notwithstanding the foregoing, the final payment
made under each Equipment Note shall be in an amount sufficient
to discharge in full the unpaid Original Amount and all accrued
and unpaid interest on, and any other amounts due under, such
Equipment Note. Each Equipment Note shall bear interest at the
Payment Due Rate (calculated on the basis of a year of 360 days
comprised of twelve 30-day months) on any part of the Original
Amount, Make-Whole Amount, if any, and, to the extent permitted
by applicable Law, interest and any other amounts payable
thereunder not paid when due for any period during which the same
shall be overdue, in each case for the period the same is
overdue. Amounts shall be overdue if not paid when due (whether
at stated maturity, by acceleration or otherwise).
Notwithstanding anything to the contrary contained herein, if any
date on which a payment under any Equipment Note becomes due and
payable is not a Business Day then such payment shall not be made
on such scheduled date but shall be made on the next succeeding
Business Day and if such payment is made on such next succeeding
Business Day, no interest shall accrue on the amount of such
payment during such extension.
The Owner Trustee agrees to pay to the Loan Trustee
for distribution in accordance with Section 3.04 hereof: (i) an
amount equal to the fees payable to the Liquidity Provider under
Section 2.03 of each Liquidity Facility and the related Fee
Letter (as defined in the Intercreditor Agreement) multiplied by
a fraction the numerator of which shall be the then outstanding
aggregate principal amount of the Series A Equipment Notes,
Series B Equipment Notes and Series C Equipment Notes and the
denominator of which shall be the then outstanding aggregate
principal amount of all "Series A Equipment Notes, Series B
Equitment Notes and Series C Equipment Notes" (as defined in each
of the Operative Leases and in the Indenture referred to in the
Note Purchase Agreement); (ii) (x) the amount equal to interest
on any Downgrade Advance (other than any Applied Downgrade
Advance) payable under Section 3.07(a)(i) of each Liquidity
Facility minus Investment Earnings from such Downgrade Advance
multiplied by (y) the fraction specified in the foregoing clause
(i); and (iii) if any payment default shall have occurred and be
15
continuing with respect to interest on any Series A Equipment
Note, Series B Equipment Note or Series C Equipment Note, (x) the
amount equal to interest on any Unpaid Advance or Applied
Downgrade Advance payable under Section 3.07(a)(i) of each
Liquidity Facility minus Investment Earnings from any Final
Advance multiplied by (y) a fraction the numerator of which shall
be the then aggregate overdue amounts of interest on the Series A
Equipment Notes, Series B Equipment Notes and Series C Equipment
Notes (other than interest becoming due and payable solely as a
result of acceleration of any such Equipment Notes) and the
denominator of which shall be the then aggregate overdue amounts
of interest on all "Series A Equipment Notes, Series B Equipment
Notes and Series C Equipment Notes" (as defined in each of the
Operative Leases and in the Indenture referred to in the Note
Purchase Agreement) (other than interest becoming due and payable
solely as a result of acceleration of any such "Equipment
Notes"); provided that any amounts payable at any time or from
time to time pursuant to clause (iii) above shall not in any
single instance or in the aggregate exceed $250,000. For purposes
of this paragraph, the terms "Applied Downgrade Advance", "Cash
Collateral Account", "Downgrade Advance", "Final Advance",
"Investment Earnings" and "Unpaid Advance" shall have the
meanings specified in each Liquidity Facility.
The Equipment Notes shall be executed on behalf of the
Owner Trustee by its President or one of its Vice Presidents,
Assistant Vice Presidents or Assistant Secretaries or other
authorized officer. Equipment Notes bearing the signatures of
individuals who were at any time the proper officers of the Owner
Trustee shall bind the Owner Trustee, notwithstanding that such
individuals or any of them have ceased to hold such offices prior
to the authentication and delivery of such Equipment Notes or did
not hold such offices at the respective dates of such Equipment
Notes. The Owner Trustee may from time to time execute and
deliver Equipment Notes with respect to the Aircraft to the Loan
Trustee for authentication upon original issue and such Equipment
Notes shall thereupon be authenticated and delivered by the Loan
Trustee upon the written request of the Owner Trustee signed by a
Vice President or Assistant Vice President or other authorized
officer of the Owner Trustee; provided, however, that each such
request shall specify the aggregate Original Amount of all
Equipment Notes to be authenticated hereunder on original issue
with respect to the Aircraft. No Equipment Note shall be secured
by or entitled to any benefit under this Trust Indenture or be
valid or obligatory for any purposes, unless there appears on
such Equipment Note a certificate of authentication in the form
provided for herein executed by the Loan Trustee by the manual
signature of one of its authorized officers and such certificate
upon any Equipment Notes be conclusive evidence, and the only
evidence, that such Equipment Note has been duly authenticated
and delivered hereunder.
The aggregate Original Amount of the Equipment Notes
issued hereunder shall not exceed 80% of Lessor's Cost.
16
SECTION 2.03. Payments from Trust Indenture Estate Only
(a) Without impairing any of the other rights, powers,
remedies, privileges, liens or security interests of the Note
Holders under this Trust Indenture, each Note Holder, by its
acceptance of an Equipment Note, agrees that as between it and
the Owner Trustee, except as expressly provided in this Trust
Indenture, the Participation Agreement or any other Operative
Agreement, (i) the obligation to make all payments of the
Original Amount of, interest on, Make-Whole Amount, if any, and
all other amounts due with respect to the Equipment Notes, and
the performance by the Owner Trustee of every obligation
17
or covenant contained in this Trust Indenture and in
the Participation Agreement or any of the other Operative
Agreements, shall be payable only from the income and proceeds
from the Trust Estate to the extent included in the Trust
Indenture Estate and only to the extent that the Owner Trustee
shall have sufficient income or proceeds from the Trust Estate to
the extent included in the Trust Indenture Estate to enable the
Loan Trustee to make such payments in accordance with the terms
of Article III hereof, and all of the statements,
representations, covenants and agreements made by the Owner
Trustee (when made in such capacity) contained in this Trust
Indenture and any agreement referred to herein other than the
Trust Agreement, unless expressly otherwise stated, are made and
intended only for the purpose of binding the Trust Estate and
establishing the existence of rights and remedies which can be
exercised and enforced against the Trust Estate; therefore,
anything contained in this Trust Indenture or such other
agreements to the contrary notwithstanding (except for any
express provisions or representations that the Owner Trustee is
responsible for, or is making, in its individual capacity, for
which there would be personal liability of the Owner Trustee), no
recourse shall be had with respect to this Trust Indenture or
such other agreements against the Owner Trustee in its individual
capacity or against any institution or person which becomes a
successor trustee or co-trustee or any officer, director,
trustee, servant or direct or indirect parent or controlling
Person or Persons of any of them, and (ii) none of the Owner
Trustee, in its individual capacity, the Owner Participant, the
Loan Trustee and any officer, director, trustee, servant,
employee, agent or direct or indirect parent or controlling
Person or Persons of any of them shall have any personal
liability for any amounts payable hereunder, under the
Participation Agreement or any of the other Operative Agreements
or under the Equipment Notes except as expressly provided herein
or in the Participation Agreement; provided, however, that
nothing contained in this Section 2.03(a) shall be construed to
limit the exercise and enforcement in accordance with the terms
of this Trust Indenture or such other agreements of rights and
remedies against the Trust Indenture Estate. These provisions are
not intended as any release or discharge of the indebtedness
represented by the Equipment Notes and the Trust Indenture, but
are intended only as a covenant not to sue the Owner Participant,
the Owner Trustee or the Loan Trustee in their individual
capacities, except as expressly provided herein or in the
Participation Agreement, for a deficiency with respect to such
indebtedness, the indebtedness represented by this Trust
Indenture and the Equipment Notes to remain in full force and
effect as fully as though these provisions were not contained in
this Trust Indenture. The Owner Trustee hereby acknowledges that
the Note Holders have expressly reserved all their rights and
remedies against the Trust Indenture Estate, including the right,
in the event of a default in the payment of all or part of the
18
Original Amount of, interest on, Make-Whole Amount, if any, or
any other amount due with respect to any Equipment Note within
the periods provided for in Section 4.02(b) hereof, or upon the
occurrence and continuation of any other Event of Default under
this Trust Indenture, to foreclose upon this Trust Indenture,
and/or to receive the proceeds from the Trust Indenture Estate
and otherwise to enforce any other right under this Trust
Indenture. Nothing in this Section 2.03(a) shall (x) release the
Owner Participant from personal liability, or constitute a
covenant not to sue the Owner Participant, for any breach by it
of any of its covenants, representations or warranties contained
in the Participation Agreement or for any of the payments it has
agreed to make pursuant to the Participation Agreement or (y)
release the Owner Trustee or constitute a covenant not to sue the
Owner Trustee for any breach by it of any representations,
warranties or covenants of the Owner Trustee contained in the
Operative Agreements or (z) release the Owner Trustee in its
individual capacity from personal liability, or constitute a
covenant not to sue the Owner Trustee in its individual capacity
for any breach by it of any representations, warranties or
covenants of the Owner Trustee made in its individual capacity in
the Operative Agreements.
(b) If (i) all or any part of the Trust Estate becomes
the property of, or the Owner Trustee or Owner Participant
becomes, a debtor subject to the reorganization provisions of the
Bankruptcy Code, (ii) pursuant to such reorganization provisions,
including Section 1111(b) of the Bankruptcy Code, the Owner
Trustee (in its individual capacity) or the Owner Participant is
required, by reason of the Owner Trustee (in its individual
capacity) or the Owner Participant being held to have recourse
liability to any Note Holder or the Loan Trustee, directly or
indirectly (other than the recourse liability of the Owner
Trustee (in its individual capacity) or the Owner Participant
under the Participation Agreement or this Trust Indenture or by
separate agreement), to make payment on account of any amount
payable as principal, Make-Whole Amount, if any, interest or
other amounts on the Equipment Notes and (iii) any Note Holder or
the Loan Trustee actually receives any Excess Amount (as
hereinafter defined) which reflects any payment by the Owner
Trustee (in its individual capacity) or the Owner Participant on
account of clause (ii) above, then such Note Holder or the Loan
Trustee, as the case may be, shall promptly refund to the Owner
Trustee (in its individual capacity) or the Owner Participant
(whichever shall have made such payment) such Excess Amount.
For purposes of this Section 2.03(b), "Excess Amount"
means the amount by which such payment exceeds the amount that
would have been received by a Note Holder or the Trustee if the
Owner Trustee (in its individual capacity) or the Owner
Participant had not become subject to the recourse liability
referred to in clause (ii) above. Nothing contained in this
Section 2.03(b) shall prevent a Note Holder or the Loan Trustee
19
from enforcing any personal recourse obligation (and retaining
the proceeds thereof) of the Owner Trustee (in its individual
capacity) or the Owner Participant under the Participation
Agreement or this Trust Indenture (and any exhibits or annexes
hereto or thereto) or by separate agreement or from retaining any
amount paid by Owner Participant under Section 2.14 or 4.03
hereof.
SECTION 2.04. Method of Payment
(a) The Original Amount of, interest on, Make-Whole
Amount, if any, and other amounts due under each Equipment Note
or hereunder will be payable in Dollars by wire transfer of
immediately available funds not later than 12:00 noon, New York
City time, on the due date of payment to the Loan Trustee at the
Corporate Trust Office for distribution among the Note Holders in
the manner provided herein. The Owner Trustee shall not have any
responsibility for the distribution of such payment to any Note
Holder. Notwithstanding the foregoing or any provision in any
Equipment Note to the contrary, the Loan Trustee will use
reasonable efforts to pay or cause to be paid, if so directed in
writing by any Note Holder (with a copy to the Owner Trustee),
all amounts paid by the Owner Trustee hereunder and under such
holder's Equipment Note or Equipment Notes to such holder or a
nominee therefor (including all amounts distributed pursuant to
Article III of this Trust Indenture) by transferring, or causing
to be transferred, by wire transfer of immediately available
funds in Dollars, prior to 2:00 p.m., New York City time, on the
due date of payment, to an account maintained by such holder with
a bank located in the continental United States the amount to be
distributed to such holder, for credit to the account of such
holder maintained at such bank. If the Loan Trustee shall fail to
make any such payment as provided in the immediately foregoing
sentence after its receipt of funds at the place and prior to the
time specified above, the Loan Trustee, in its individual
capacity and not as trustee, agrees to compensate such holders or
loss of use of funds at Debt Rate until such payment is made and
the Loan Trustee shall be entitled to any interest earned on such
funds until such payment is made. Any payment made hereunder
shall be made without any presentment or surrender of any
Equipment Note, except that, in the case of the final payment in
respect of any Equipment Note, such Equipment Note shall be
surrendered to the Trustee for cancellation promptly after such
payment. Notwithstanding any other provision of this Trust
Indenture to the contrary, the Loan Trustee shall not be required
to make, or cause to be made, wire transfers as aforesaid prior
to the first Business Day on which it is practicable for the Loan
Trustee to do so in view of the time of day when the funds to be
so transferred were received by it if such funds were received
after 12:00 noon, New York City time, at the place of payment.
Prior to the due presentment for registration of transfer of any
Equipment Note, the Owner Trustee and the Loan Trustee shall deem
20
and treat the Person in whose name any Equipment Note is
registered on the Equipment Note Register as the absolute owner
and holder of such Equipment Note for the purpose of receiving
payment of all amounts payable with respect to such Equipment
Note and for all other purposes, and none of the Owner Trustee or
the Loan Trustee shall be affected by any notice to the contrary.
So long as any signatory to the Participation Agreement or
nominee thereof shall be a registered Note Holder, all payments
to it shall be made to the account of such Note Holder specified
in Schedule I thereto and otherwise in the manner provided in or
pursuant to the Participation Agreement unless it shall have
specified some other account or manner of payment by notice to
the Loan Trust with this Section 2.04.
(b) The Loan Trustee, as agent for the Owner Trustee,
shall exclude and withhold at the appropriate rate from each
payment of Original Amount of, interest on, Make-Whole Amount, if
any, and other amounts due hereunder or under each Equipment Note
(and such exclusion and withholding shall constitute payment in
respect of such Equipment Note) any and all United States
withholding taxes applicable thereto as required by Law. The Loan
Trustee agrees to act as such withholding agent and, in
connection therewith, whenever any present or future United
States taxes or similar charges are required to be withheld with
respect to any amounts payable hereunder or in respect of the
Equipment Notes, to withhold such amounts and timely pay the same
to the appropriate authority in the name of and on behalf of the
Note Holders, that it will file any necessary United States
withholding tax returns or statements when due, and that as
promptly as possible after the payment thereof it will deliver to
each Note Holder (with a copy to the Owner Trustee and the
Lessee) appropriate receipts showing the payment thereof,
together with such additional documentary evidence as any such
Note Holder may reasonably request from time to time.
If a Note Holder which is a Non-U.S. Person has
furnished to the Loan Trustee a properly completed, accurate and
currently effective U.S. Internal Revenue Service Form 1001 or W-
8 (or such successor form or forms as may be required by the
United States Treasury Department) during the calendar year in
which the payment hereunder or under the Equipment Note(s) held
by such holder is made (but prior to the making of such payment),
or in either of the two preceding calendar years, and has not
notified the Loan Trustee of the withdrawal or inaccuracy of such
form prior to the date of such payment (and the Loan Trustee has
no reason to believe that any information set forth in such form
is inaccurate), the Loan Trustee shall withhold only the amount,
if any, required by Law (after taking into account any applicable
exemptions properly claimed by the Note Holder) to be withheld
from payments hereunder or under the Equipment Notes held by such
holder in respect of United States federal income tax. If a Note
Holder (x) which is a Non-U.S. Person has furnished to the Loan
21
Trustee a properly completed, accurate and currently effective
U.S. Internal Revenue Service Form 4224 in duplicate (or such
successor certificate, form or forms as may be required by the
United States Treasury Department as necessary in order to
properly avoid withholding of United States federal income tax),
for each calendar year in which a payment is made (but prior to
the making of any payment for such year), and has not notified
the Loan Trustee of the withdrawal or inaccuracy of such
certificate or form prior to the date of such payment (and the
Loan Trustee has no reason to believe that any information set
forth in such form is inaccurate) or (y) which is a U.S. Person
has furnished to the Loan Trustee a properly completed, accurate
and currently effective U.S. Internal Revenue Service Form W-9,
if applicable, prior to a payment hereunder or under the
Equipment Notes held by such holder, no amount shall be withheld
from payments in respect of United States federal income tax. If
any Note Holder has notified the Loan Trustee that any of the
foregoing forms or certificates is withdrawn or inaccurate, or if
such holder has not filed a form claiming an exemption from
United States withholding tax or if the Code or the regulations
thereunder or the administrative interpretation thereof are at
any time after the date hereof amended to require such
withholding of United States federal income taxes from payments
under the Equipment Notes held by such holder, the Loan Trustee
agrees to withhold from each payment due to the relevant Note
Holder withholding taxes at the appropriate rate under Law and
will, on a timely basis as more fully provided above, deposit
such amounts with an authorized depository and make such returns,
statements, receipts and other documentary evidence in connection
therewith as required by Law.
SECTION 2.05. Application of Payments
In the case of each Equipment Note, each payment of
Original Amount, Make-Whole Amount, if any, and interest or other
amounts due thereon shall be applied:
First: to the payment of accrued interest on such
Equipment Note (as well as any interest on any overdue
Original Amount, any overdue Make-Whole Amount, if any, and
to the extent permitted by Law, any overdue interest and
any other overdue amounts thereunder) to the date of such
payment;
Second: to the payment of the Original Amount of such
Equipment Note (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any,
and any other amount due hereunder or under such Equipment
Note; and
22
Fourth: the balance, if any, remaining thereafter, to
the payment of the Original Amount of such Equipment Note
remaining unpaid (provided that such Equipment Note shall
not be subject to redemption except as provided in Sections
2.10, 2.11 and 2.12 hereof).
The amounts paid pursuant to clause "Fourth" above shall be
applied to the installments of Original Amount of such Equipment
Note in the inverse order of their normal maturity.
SECTION 2.06. Termination of Interest in Trust
Indenture Estate
A Note Holder shall not, as such, have any further
interest in, or other right with respect to, the Trust Indenture
Estate when and if the Original Amount of, Make-Whole Amount, if
any, and interest on and other amounts due under all Equipment
Notes held by such Note Holder and all other sums then payable to
such Note Holder or the Loan Trustee hereunder (including,
without limitation, under the third paragraph of Section 2.02
hereof) and under the other Operative Agreements by the Owner
Trustee (collectively, the "Secured Obligations") shall have been
paid in full.
SECTION 2.07. Registration Transfer and Exchange of
Equipment Notes
The Loan Trustee shall keep a register (the "Equipment
Note Register") in which the Loan Trustee shall provide for the
registration of Equipment Notes and the registration of transfers
of Equipment Notes. No such transfer shall be given effect unless
and until registration hereunder shall have occurred. The
Equipment Note Register shall be kept at the Corporate Trust
Office of the Loan Trustee. The Loan Trustee is hereby appointed
"Equipment Note Registrar" for the purpose of registering
Equipment Notes and transfers of Equipment Notes as herein
provided. A holder of any Equipment Note intending to exchange
such Equipment Note shall surrender such Equipment Note to the
Loan Trustee at the Corporate Trust Office, together with a
written request from the registered holder thereof for the
issuance of a new Equipment Note, specify, in the case of a
surrender for transfer, the name and address of the new holder or
holders. Upon surrender for registration of transfer of any
Equipment Note, the Owner Trustee shall execute, and the Loan
Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Equipment
Notes of a like aggregate Original Amount and of the same series.
At the option of the Note Holder, Equipment Notes may be
exchanged for other Equipment Notes of any authorized
denominations of a like aggregate Original Amount, upon surrender
of the Equipment Notes to be exchanged to the Trustee at the
Corporate Trust Office. Whenever any Equipment Notes are so
23
surrendered for exchange, the Owner Trustee shall execute, and
the Loan Trustee shall authenticate and deliver, the Equipment
Notes which the Note Holder making the exchange is entitled to
receive. All Equipment Notes issued upon any registration of
transfer or exchange of Equipment Notes, whether under this
Section 2.07 or under Section 2.08 hereof or otherwise under this
Trust Indenture) shall be the valid obligations of the Owner
Trustee evidencing the same respective obligations, and entitled
to the same security and benefits under this Trust Indenture, as
the Equipment Notes surrendered upon such registration of
transfer or exchange. Every Equipment Note presented or
surrendered for registration of transfer, shall (if so required
by the Loan Trustee) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Loan
Trustee duly executed by the Note Holder or such holder's
attorney duly authorized in writing, and the Loan Trustee shall
require evidence satisfactory to it as to the compliance of any
such transfer with the Securities Act, and the securities Laws of
any applicable state. The Loan Trustee shall make a notation on
each new Equipment Note of the amount of all payments of Original
Amount previously made on the old Equipment Note or Equipment
Notes with respect to which such new Equipment Note is issued and
the date to which interest on such old Equipment Note or
Equipment Notes has been paid. Interest shall be deemed to have
been paid on such new Equipment Note to the date on which
interest shall have been paid on such old Equipment Note, and all
payments of the Original Amount marked on such new Equipment
Note, as provided above, shall be deemed to have been made
thereon. The Owner Trustee shall not be required to exchange any
surrendered Equipment Notes as provided above during the ten-day
period preceding the due date of any payment on such Equipment
Note. The Owner Trustee shall in all cases deem the Person in
whose name any Equipment Note shall have been issued and
registered as the absolute owner and holder of such Equipment
Note for the purpose of receiving payment of all amounts payable
by the Owner Trustee with respect to such Equipment Note and for
all purposes until a notice stating otherwise is received from
the Loan Trustee and such change is reflected on the Equipment
Note Register. The Loan Trustee will promptly notify the Owner
Trustee and the Lessee of each registration of a transfer of an
Equipment Note. Any such transferee of an Equipment Note, by its
acceptance of an Equipment Note, agrees to the provisions of the
Participation Agreement applicable to Note Holders, including
Sections 7.4 , 8.5, 8.7.5, 8.7.12, 8.7.14 and 12.1.3 thereof and
shall be deemed to have represented and warranted (except as
provided above), and covenanted, to the parties to the
Participation Agreement as to the matters represented, warranted
and covenanted by the original Loan Participant in the
Participation Agreement. Subject to compliance by the Note Holder
and its transferee (if any) of the requirements set forth in this
Section 2.07, Loan Trustee and Owner Trustee shall use all
reasonable efforts to issue new Equipment Notes upon transfer or
24
exchange within 10 Business Days of the date an Equipment Note is
surrendered for transfer or exchange.
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Equipment Notes
If any Equipment Note shall become mutilated,
destroyed, lost or stolen, the Owner Trustee shall, upon the
written request of the holder of such Equipment Note, execute and
the Loan Trustee shall authenticate and deliver in replacement
thereof a new Equipment Note, payable in the same Original Amount
dated the same date and captioned as issued in connection with
the Aircraft. If the Equipment Note being replaced has become
mutilated, such Equipment Note shall be surrendered to the Loan
Trustee and a photocopy thereof shall be furnished to the Owner
Trustee. If the Equipment Note being replaced has been destroyed,
lost or stolen, the holder of such Equipment Note shall furnish
to the Owner Trustee and the Loan Trustee such security or
indemnity as may be required by them to save the Owner Trustee
and the Loan Trustee harmless and evidence satisfactory to the
Owner Trustee and the Loan Trustee of the destruction, loss or
theft of such Equipment Note and of the ownership thereof. If a
'qualified institutional buyer" of the referred to in paragraph
(a)(1)(i)(A), (B), (D) or (E) of Rule 144A under the Securities
Act (a "QIB") is the holder of any such destroyed, lost or stolen
Equipment Note, then the written indemnity of such QIB, signed by
an authorized officer thereof, in favor of, delivered to and in
form reasonably satisfactory to Lessee, Owner Trustee and Loan
Trustee shall be accepted as satisfactory indemnity and security
and no further indemnity or security shall be required as a
condition to the execution and delivery of such new Equipment
Note. Subject to compliance by the Note Holder of the
requirements set forth in this Section 2.08, Loan Trustee and
Owner Trustee shall use all reasonable efforts to issue new
Equipment Notes within 10 Business Days of the date of the
written request therefor from the Note Holder.
SECTION 2.09. Payment of Expenses on Transfer;
Cancellation
(a) No service charge shall be made to a Note Holder
for any registration of transfer or exchange of Equipment Notes,
but the Loan Trustee, as Equipment Note Registrar, may require
payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any
registration of transfer or exchange of Equipment Notes;
provided, however, that neither the Owner Trustee nor the Owner
Participant shall bear costs of registration, transfer or
exchange in connection with the consummation of the Refinancing
Transaction.
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(b) The Loan Trustee shall cancel all Equipment Notes
surrendered for replacement, redemption, transfer, exchange,
payment or cancellation and shall destroy the canceled Equipment
Notes.
SECTION 2.10. Mandatory Redemptions of Equipment Notes
(a) On the date on which Lessee is required pursuant
to Section 10.1.2 of the Lease to make payment for an Event of
Loss with respect to the Aircraft, all of the Equipment Notes
shall be redeemed in whole at a redemption price equal to 100% of
the unpaid Original Amount thereof, together with all accrued
interest thereon to the date of redemption and all other Secured
Obligations owed to the Note Holders but without Make-Whole
Amount.
(b) If the Lease is terminated with respect to the
Aircraft by Lessee pursuant to Section 9 thereof, on the date the
Lease is so terminated, all the Equipment Notes shall be redeemed
in whole at a redemption price equal to 100% of the unpaid
Original Amount thereof, together with accrued interest thereon
to the date of redemption and all other amounts payable hereunder
or under the Participation Agreement to the Note Holders plus, if
such redemption is made prior to the Premium Termination Date,
Make-Whole Amount, if any.
SECTION 2.11. Voluntary Redemptions of Equipment Notes
All (but not less than all) of the Equipment Notes may
be redeemed by the Owner Trustee in connection with a transaction
described in, and subject to the terms and conditions of, Section
13 of the Participation Agreement upon at least 30 days'
revocable prior written notice to the Loan Trustee and the Note
Holders, and the Equipment Notes shall, as provided in Section 13
of the Participation Agreement, be redeemed in whole at a
redemption price equal to 100% of the unpaid Original Amount
thereof, together with accrued interest thereon to the date of
redemption and all other Secured Obligations owed to the Note
Holders plus (except as provided in Section 13 of the
Participation Agreement), if such redemption is made prior to the
Premium Termination Date, Make-Whole Amount, if any.
SECTION 2.12. Redemptions; Notice of Redemption
(a) Neither any redemption of any Equipment Note nor
any purchase by the Owner Trustee of any Equipment Note may be
made except to the extent and in the manner expressly permitted
by this Trust Indenture. No purchase of any Equipment Note may be
made by the Loan Trustee.
(b) Notice of redemption or purchase with respect to
the Equipment Notes shall be given by the Loan Trustee by first-
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class mail, postage prepaid, mailed not less than 25 nor more
than 60 days prior to the applicable redemption date, to each
Note Holder of such Equipment Notes to be redeemed or purchased,
at such Note Holder's address appearing in the Equipment Note
Register; provided that, in the case of a redemption to be made
pursuant to Section 2.10(b) or Section 2.11, such notices shall
be revocable and shall be deemed revoked in the event that the
Lease does not in fact terminate on the specified termination
date or if notice of such redemption shall have been given in
connection with a refinancing of Equipment Notes and the Loan
Trustee receives written notice of such revocation from the
Lessee or the Owner Trustee not later than three days prior to
the redemption date. All notices of redemption shall state: (1)
the redemption date, (2) the applicable basis for determining the
redemption price, (3) that on the redemption date, the redemption
price will become due and payable upon each such Equipment Note,
and that, if any such Equipment Notes are then outstanding,
interest on such Equipment Notes shall cease to accrue on and
after such redemption date, and (4) the place or places where
such Equipment Notes are to be surrendered for payment of the
redemption price.
(c) On or before the redemption date, the Owner
Trustee (or any person on behalf of the Owner Trustee) shall, to
the extent an amount equal to the redemption price for the
Equipment Notes to be redeemed or purchased on the redemption
date shall not then be held in the Trust Indenture Estate,
deposit or cause to be deposited with the Loan Trustee by 12:00
noon on the redemption date in immediately available funds the
redemption price of the Equipment Notes to be redeemed or
purchased.
(d) Notice of redemption or purchase having been given
as aforesaid (and not deemed revoked as contemplated in the
proviso to Section 2.12(b)), the Equipment Notes to be redeemed
or purchased shall, on the redemption date, become due and
payable at the Corporate Trust Office of the Loan Trustee or at
any office or agency maintained for such purposes pursuant to
Section 2.07, and from and after such redemption date (unless
there shall be a default in the payment of the redemption price)
any such Equipment Notes then outstanding shall cease to bear
interest. Upon surrender of any such Equipment Note for
redemption or purchase in accordance with said notice, such
Equipment Note shall be redeemed at the redemption price. If any
Equipment Note called for redemption or purchase shall not be so
paid upon surrender thereof for redemption, the principal amount
thereof shall, until paid, continue to bear interest from the
applicable redemption date at the interest rate in effect for
such Equipment Note as of such redemption date.
SECTION 2.13. [Intentionally Omitted.]
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SECTION 2.14. Option to Purchase Equipment Notes
The Owner Trustee and the Owner Participant may, upon
the events and subject to the terms and conditions and for the
price set forth in this Section 2.14, purchase all but not less
than all of the Equipment Notes outstanding hereunder, and each
Note Holder agrees that it will, upon such events and subject to
such terms and conditions and upon receipt of such price, sell,
assign, transfer and convey to such purchaser or its nominee
(without recourse or warranty of any kind except against Liens on
such Equipment Notes arising by, through or under such holder),
all of the right, title and interest of such Note Holder in and
to the Equipment Notes held by it, and such purchaser or its
nominee shall assume all of such holder's obligations under the
Participation Agreement and hereunder; provided, however, that,
prior to consummation of such purchase, the Note Holders and the
Loan Trustee shall be presented with an opinion of counsel, which
counsel shall be reasonably acceptable to the Loan Trustee, that
such sale and purchase does not violate the Securities Act or any
applicable state securities Laws.
Such option to purchase the Equipment Notes may be
exercised by the Owner Trustee or the Owner Participant upon any
of the following events, and in any such event the purchase price
thereof shall equal for each Equipment Note, the aggregate unpaid
Original Amount thereof, plus accrued and unpaid interest thereon
to the date of purchase and all other Secured Obligations owed to
the holder thereof. Such option to purchase the Equipment Notes
may be exercised (x) upon a Loan Trustee Event or (y) in the
event there shall have occurred and be continuing a Lease Event
of Default, provided that if such option is exercised pursuant to
this clause (y) at a time when there shall have occurred and be
continuing for less than 120 days a Lease Event of Default, the
purchase price thereof shall equal the price provided in the
preceding sentence plus (subject to Section 4.04(b) hereof) the
Make-Whole Amount, if any.
Such option to purchase the Equipment Notes may be
exercised by the Owner Trustee or the Owner Participant giving
written notice of its election of such option to the Loan
Trustee, which notice shall specify a date for such purchase
within 30 days of the date of such notice. The Loan Trustee shall
not exercise any of the remedies hereunder and, without the
consent of the Owner Trustee or the Owner Participant, under the
Lease, during the period from the time that an exercise by the
Owner Participant of such option to purchase becomes irrevocable
until the date on which such purchase is required to occur
pursuant to the terms of the preceding sentence. Such election to
purchase the Equipment Notes shall become irrevocable upon the
sixteenth day following the giving of written notice as provided
above.
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If the Owner Trustee or the Owner Participant on or
before the date of such purchase shall so request, the Note
Holders will comply with all the provisions of Section 2.07 to
enable new Equipment Notes to be issued to the Owner Trustee or
the Owner Participant or its nominee in such denominations as the
Owner Trustee or the Owner Participant shall request. All taxes,
charges and expenses required pursuant to Section 2.09 in
connection with the issuance of such new Equipment Note shall be
borne by the Owner Participant.
SECTION 2.15. Subordination
(a) The Owner Trustee and, by acceptance of its
Equipment Notes of any Series, each Note Holder of such Series,
hereby agree that no payment or distribution shall be made on or
in respect of the Secured Obligations owed to such Note Holder of
such Series, including any payment or distribution of cash,
property or securities after the commencement of a proceeding of
the type referred to in Section 4.02(g) hereof, except as
expressly provided in Article III hereof.
(b) By the acceptance of its Equipment Notes of any
Series (other than Series A), each Note Holder of such Series
agrees that in the event that such Note Holder, in its capacity
as a Note Holder, shall receive any payment or distribution on
any Secured Obligations in respect of such Series which it is not
entitled to receive under this Section 2.15 or Article III
hereof, it will hold any amount so received in trust for the
Senior Holder (as defined in Section 2.15(c) hereof) and will
forthwith turn over such payment to the Loan Trustee in the form
received to be applied as provided in Article III hereof.
(c) As used in this Section 2.15, the term "Senior
Holder" shall mean, (i) the Note Holders of Series A until the
Secured Obligations in respect of Series A Equipment Notes have
been paid in full, (ii) after the Secured Obligations in respect
of Series A Equipment Notes have been paid in full, the Note
Holders of Series B until the Secured Obligations in respect of
Series B Equipment Notes have been paid in full and (iii) after
the Secured Obligations in respect of Series B Equipment Notes
have been paid in full, the Note Holders of Series C until the
Secured Obligations in respect of Series C Equipment Notes have
been paid in full.
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ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Basic Rent Distribution
Except as otherwise provided in Section 3.03 hereof,
each installment of Basic Rent, any payment of interest on
overdue installments of Basic Rent and any payment received by
the Loan Trustee pursuant to Section 4.03 hereof shall be
promptly distributed in the following order of priority:
First, (i) so much of such installment or payment as shall be
required to pay in full the aggregate amount of
the payment or payments of Original Amount and
interest and other amounts (as well as any
interest on any overdue Original Amount and, to
the extent permitted by Law, on any overdue
interest and any other overdue amounts) then due
under all Series A Equipment Notes shall be
distributed to the Note Holders of Series A
ratably, without priority of one over the other,
in the proportion that the amount of such payment
or payments then due under each Series A Equipment
Note bears to the aggregate amount of the payments
then due under all Series A Equipment Notes;
(ii) after giving effect to paragraph (i) above, so
much of such installment or payment remaining as
shall be required to pay in full the aggregate
amount of the payment or payments of Original
Amount and interest and other amounts (as well as
any interest on any overdue Original Amount and,
to the extent permitted by Law, on interest and
any other overdue amounts) then due under all
Series B Equipment Notes shall be distributed to
the Note Holders of Series B ratably, without
priority of one over the other, in the proportion
that the amount of such payment or payments then
due under each Series B Equipment Note bears to
the aggregate amount of the payments then due
under all Series B Equipment Notes;
(iii) after giving effect to paragraph (ii) above, so
much of such installment or payment remaining as
shall be required to pay in full the aggregate
amount of the payment or payments of Original
Amount and interest and any other overdue amounts
(as well as any interest on any overdue Original
Amount and, to the extent permitted by Law, on any
overdue interest and any other overdue amounts)
30
then due under all Series C Equipment Notes shall
be distributed to the Note Holders of Series C
ratably, without priority of one over the other,
in the proportion that the amount of such payment
or payments then due under each Series C
Equipment Note bears to the aggregate amount of
the payments then due under all Series C
Equipment Notes; and
(iv) after giving effect to paragraph (iii) above, so
much of such installment or payment remaining as
shall be required to pay in full the aggregate
amount of the payment or payments of Original
Amount and interest and other amounts (as well as
any interest on any overdue original Amount and,
to the extent permitted by Law, on any overdue
interest and any other overdue amounts) then due
under all Series D Equipment Notes shall be
distributed to the Note Holders of Series D
ratably, without priority of one over the other,
in the proportion that the amount of such payment
or payments then due under each Series D
Equipment Note bears to the aggregate amount of
the payments then due under all Series D
Equipment Notes; and
Second, the balance, if any, of such installment remaining
thereafter shall be distributed to the Owner Trustee;
provided, however, that if an Event of Default shall
have occurred and be continuing, then such balance
shall not be distributed as provided in this clause
"Second" but shall be held by the Loan Trustee as part
of the Trust Indenture Estate and invested in
accordance with Section 5.09 hereof until whichever of
the following shall first occur: (i) all Events of
Default shall have been cured or waived, in which event
such balance shall be distributed as provided in this
clause "Second", (ii) Section 3.03 hereof shall be
applicable, in which event such balance shall be
distributed in accordance with the provisions of such
Section 3.03, or (iii) the 120th day after the receipt
of such payment in which case such payment shall be
distributed as provided in this clause "Second".
SECTION 3.02. Event of Loss; Replacement; Voluntary
Termination; Optional Redemption
Except as otherwise provided in Section 3.03 hereof,
any payments received by the Loan Trustee (i) with respect to the
Airframe or the Airframe and one or more Engines as the result of
an Event of Loss, (ii) pursuant to a voluntary termination of the
Lease pursuant to Section 9 thereof, or (iii) pursuant to an
optional redemption of the Equipment Notes pursuant to Section 13
of the Participation Agreement shall be applied to redemption of
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the Equipment Notes and to all other Secured Obligations by
applying such funds in the following order of priority:
First, (a) to reimburse the Loan Trustee and the Note
Holders for any reasonable costs or expenses
incurred in connection with such redemption for
which they are entitled to reimbursement, or
indemnity by Lessee, under the Operative
Agreements and then (b) to pay any other amounts
then due to the Loan Trustee and the Note Holders
under this Trust Indenture, the Participation
Agreement or the Equipment Notes;
Second, (i) to pay the amounts specified in paragraph (i)
of clause "Third" of Section 3.03 hereof plus
Make- Whole Amount, if any, then due and payable
in respect of the Series A Equipment Notes;
(ii) after giving effect to paragraph (i) above, to
pay the amounts specified in paragraph (ii) of
clause "Third" of Section 3.03 hereof plus
Make-Whole Amount, if any, then due and payable
in respect of
the Series B Equipment Notes;
(iii) after giving effect to paragraph (ii) above, to
pay the amounts specified in paragraph (iii) of
clause "Third" of Section 3.03 hereof plus
Make-Whole Amount, if any, then due and payable
in respect of the Series C Equipment Notes; and
(iv) after giving effect to paragraph (iii) above, to
pay the amounts specified in paragraph (iv) of
clause "Third" of Section 3.03 hereof plus
Make-Whole Amount, if any, then due and payable
in respect of the Series D Equipment Notes: and
Third, as provided in clause "Fourth" of Section 3.03 hereof;
provided, however, that if a Replacement Airframe or Replacement
Engine shall be substituted for the Airframe or Engine subject to
such Event of Loss as provided in Section 10 of the Lease and in
accordance with Section 5.06 hereof, any insurance, condemnation
or similar proceeds which result from such Event of Loss and are
paid over to the Loan Trustee shall be held by the Loan Trustee
as permitted by Section 6.04 hereof (provided that such moneys
shall be invested as provided in Section 5.09 hereof) as
additional security for the obligations of Lessee under the
Lessee Operative Agreements and, unless otherwise applied
pursuant to the Lease, such proceeds (and such investment
earnings) shall be released to the Lessee at the Lessee's written
request upon the release of such damaged Airframe or Engine and
the replacement thereof as provided in the Lease.
32
SECTION 3.03. Payments After Event of Default
Except as otherwise provided in Section 3.04 hereof,
all payments received and amounts held or realized by the Loan
Trustee (including any amounts realized by the Loan Trustee from
the exercise of any remedies pursuant to Section 15 of the Lease
or Article V hereof) after an Event of Default shall have
occurred and be continuing and after the declaration specified in
Section 4.04(b) hereof, as well as all payments or amounts then
held by the Loan Trustee as part of the Trust Indenture Estate,
shall be promptly distributed by the Loan Trustee in the
following order of priority:
First, so much of such payments or amounts as shall be
required to reimburse the Loan Trustee or WTC for any
tax (except to the extent resulting from a failure of
the Loan Trustee to withhold taxes pursuant to Section
2.04(b) hereof), expense or other loss (including,
without limitation, all amounts to be expended at the
expense of, or charged upon the rents, revenues,
issues, products and profits of, the property included
in the Trust Indenture Estate (all such property being
herein called the "Mortgaged Property") pursuant to
Section 4.05(b) hereof) incurred by the Loan Trustee or
WTC (to the extent not previously reimbursed), the
expenses of any sale, or other proceeding, reasonable
attorneys' fees and expenses, court costs, and any
other expenditures incurred or expenditures or advances
made by the Loan Trustee, WTC or the Note Holders in
the protection, exercise or enforcement of any right,
power or remedy or any damages sustained by the Loan
Trustee, WTC or any Note Holder, liquidated or
otherwise, upon such Event of Default shall be applied
by the Loan Trustee as between itself, WTC and the Note
Holders in reimbursement of such expenses and any other
expenses for which the Loan Trustee, WTC or the Note
Holders are entitled to reimbursement under any
Operative Agreement and in the case the aggregate
amount to be so distributed is insufficient to pay as
aforesaid, then ratably, without priority of one over
the other, in proportion to the amounts owed each
hereunder;
Second, so much of such payments or amounts remaining as shall
be required to reimburse the then existing or prior
Note Holders for payments made pursuant to Section 5.03
hereof (to the extent not previously reimbursed) shall
be distributed to such then existing or prior Note
Holders ratably, without priority of one over the
other, in accordance with the amount of the payment or
payments made by each such then existing or prior Note
Holder pursuant to said Section 5.03 hereof;
33
Third, (i) so much of such payments or amounts remaining as
shall be required to pay in full the aggregate
unpaid Original Amount of all Series A Equipment
Notes, and the accrued but unpaid interest and
other amounts due thereon (other than Make-Whole
Amount which shall not be due and payable) and all
other Secured Obligations in respect of the Series
A Equipment Notes (other than Make-Whole Amount)
to the date of distribution, shall be distributed
to the Note Holders of Series A, and in case the
aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other,
in the proportion that the aggregate unpaid
Original Amount of all Series A Equipment Notes
held by each holder plus the accrued but unpaid
interest and other amounts due hereunder or
thereunder (other than Make-Whole Amount, if any)
to the date of distribution, bears to the
aggregate unpaid Original Amount of all Series A
Equipment Notes held by all such holders plus the
accrued but unpaid interest and other amounts due
thereon (other than Make-Whole Amount) to the date
of distribution;
(ii) after giving effect to paragraph (i) above, so
much of such payments or amounts remaining as
shall be required to pay in full the aggregate
unpaid Original Amount of all Series B Equipment
Notes, and the accrued but unpaid interest and
other amounts due thereon (other than Make-Whole
Amount which not be due and payable) and all
other Secured Obligations in respect of the
Series B Equipment Notes (other than Make-Whole
Amount) to the date of distribution, shall be
distributed to the Note Holders of Series B, and
in case the aggregate amount so to be distributed
shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one
over the other, in the proportion that the
aggregate unpaid Original Amount of all Series B
Equipment Notes held by each holder plus the
accrued but unpaid interest and other amounts due
hereunder or thereunder (other than the
Make-Whole Amount, if any) to the date of
distribution, bears to the aggregate unpaid
Original Amount of all Series B Equipment Notes
held by all such holders plus the accrued but
unpaid interest and other amounts due thereon
(other than the Make-Whole Amount) to the date of
distribution;
34
(iii) after giving effect to paragraph (ii) above, so
much of such payments or amounts remaining as
shall be required to pay in full the aggregate
unpaid Original Amount of all Series C Equipment
Notes, and the accrued but unpaid interest and
other amounts due thereon (other than Make-Whole
Amount which shall not be due and payable) and
all other Secured Obligations in respect of the
Series C Equipment Notes (other than Make-Whole
Amount) to the date of distribution, shall be
distributed to the Note Holders of Series C, and
in case the aggregate amount so to be distributed
shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one
over the other, in the proportion that the
aggregate unpaid Original Amount of all Series C
Equipment Notes held by each holder plus the
accrued but unpaid interest and other amounts due
hereunder or thereunder (other than the
Make-Whole Amount, if any) to the date of
distribution, bears to the aggregate unpaid
Original Amount of all Series C Equipment Notes
held by all such holders plus the accrued but
unpaid interest and other amounts due thereon
(other than the Make-Whole Amount) to the date of
distribution; and
(iv) after giving effect to paragraph (iii) above, so
much of such payments or amounts remaining as
shall be required to pay in full the aggregate
unpaid Original Amount of all Series D Equipment
Notes, and the accrued but unpaid interest and
other amounts due thereon (other than Make-Whole
Amount which shall not be due and payable) and
all other Secured Obligations in respect of the
Series D Equipment Notes (other than Make-Whole
Amount) to the date of distribution, shall be
distributed to the Note Holders of Series D, and
in case the aggregate amount so to be distributed
shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one
over the other, in the proportion that the
aggregate unpaid Original Amount of all Series D
Equipment Notes held by each holder plus the
accrued but unpaid interest and other amounts due
hereunder or thereunder (other than the
Make-Whole Amount, if any) to the date of
distribution, bears to the aggregate unpaid
Original Amount of all Series D Equipment Notes
held by all such holders plus the accrued but
unpaid interest and other amounts due thereon
(other than the Make-Whole Amount) to the date of
distribution; and
35
Fourth, the balance, if any, of such payments or amounts
remaining thereafter shall be distributed to the Owner
Trustee.
No Make-Whole Amount shall be due and payable on the
Equipment Notes as a consequence of the acceleration of the
Equipment Notes as a result of an Event of Default.
SECTION 3.04. Certain Payments
(a) Any payments received by the Loan Trustee for
which no provision as to the application thereof is made in this
Trust Indenture and for which such provision is made in the
Lease, the Participation Agreement or any other Operative
Agreement shall be applied forthwith to the purpose for which
such payment was made in accordance with the terms of the Lease,
the Participation Agreement or such other Operative Agreement, as
the case may be.
(b) The Loan Trustee will distribute promptly upon
receipt any indemnity payment received by it from the Owner
Trustee or Lessee in respect of (i) the Loan Trustee in its
individual capacity, (ii) any Note Holder, (iii) the
Subordination Agent, (iv) the Liquidity Provider and (v) the Pass
Through Trustees, in each case whether pursuant to Section 10 of
the Participation Agreement or as Supplemental Rent, directly to
the Person entitled thereto. Any payment received by the Loan
Trustee under the third paragraph of Section 2.02 shall be
distributed to the Subordination Agent to be distributed in
accordance with the terms of the Intercreditor Agreement.
(c) [Intentionally Omitted]
(d) Notwithstanding anything to the contrary contained
in this Article III, any payments received by the Loan Trustee
which constitute Excluded Payments shall be distributed promptly
upon receipt by the Loan Trustee directly to the Person or
Persons entitled thereto.
(e) Notwithstanding any provision of this Trust
Indenture to the contrary, any amounts held by Loan Trustee
pursuant to the terms of the Lease shall be held by the Loan
Trustee as security for the obligations of Lessee under the
Lessee Operative Agreements and, if and when required by the
Lease, paid and/or applied in accordance with the applicable
provisions of the Lease.
36
SECTION 3.05. Other Payments
Any payments received by the Loan Trustee for which no
provision as to the application thereof is made in the Lease,
Participation Agreement, elsewhere in this Trust Indenture or in
any other Operative Agreement shall be distributed by the Loan
Trustee to the extent received or realized at any time (i) prior
to the payment in full of all Secured Obligations due the Note
Holders, in the order of priority specified in Section 3.01
hereof subject to the proviso thereto, and (ii) after payment in
full of all Secured Obligations due the Note Holders, in the
following order of priority:
First, to the extent payments or amounts described in clause
"First" of Section 3.03 hereof are otherwise
obligations of Lessee under the Operative Agreements
or for which the Lessee is obligated to indemnify
against thereunder, in the manner provided in clause
"First" of Section 3.03 hereof, and
Second, in the manner provided in clause "Fourth" of Section
3.03 hereof.
Further, and except as otherwise provided in Sections
3.02, 3.03 and 3.04 hereof, all payments received and amounts
realized by the Loan Trustee under the Lease or otherwise with
respect to the Aircraft (including, without limitation, all
amounts realized upon the sale or release of the Aircraft after
the termination of the Lease with respect thereto), to the extent
received or realized at any time after payment in full of all
Secured Obligations due the Note Holders, shall be distributed by
the Loan Trustee in the order of priority specified in clause
(ii) of the immediately preceding sentence of this Section 3.05.
SECTION 3.06. Payments to Owner Trustee
Any amounts distributed hereunder by the Loan Trustee
to the Owner Trustee shall be paid to the Owner Trustee (within
the time limits contemplated by Section 2.04(a)) by wire transfer
of funds of the type received by the Loan Trustee at such office
and to such account or accounts of such entity or entities as
shall be designated by notice from the Owner Trustee to the Loan
Trustee from time to time. The Owner Trustee hereby notifies the
Loan Trustee that unless and until the Loan Trustee receives
notice to the contrary from the Owner Trustee, all amounts to be
distributed to the Owner Trustee pursuant to clause "Second" of
Section 3.01 or clause "Fourth" of Section 3.03 hereof shall be
distributed by wire transfer of funds of the type received by the
Loan Trustee to the Owner Participant's account (within the time
limits contemplated by Section 2.04(a)) specified in Schedule 1
to the Participation Agreement.
37
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; EVENTS OF
DEFAULT; REMEDIES OF LOAN TRUSTEE
SECTION 4.01. Covenants of Owner Trustee
The Owner Trustee hereby covenants and agrees (the
covenants and agreements only in clause (b) below being made by
the Owner Trustee in its individual capacity) as follows:
(a) the Owner Trustee will duly and punctually pay the
Original Amount of, Make-Whole Amount, if any, and interest
on and other amounts due under the Equipment Notes and
hereunder in accordance with the terms of the Equipment
Notes and this Trust Indenture and all amounts, if any,
payable by it to the Note Holders under the Participation
Agreement;
(b) the Owner Trustee in its individual capacity
covenants and agrees that it shall not, directly or
indirectly, cause or permit to exist a Lessor Lien
attributable to it in its individual capacity with respect
to the Aircraft or any other portion of the Trust Estate;
that it will promptly, at its own expense, take such action
as may be necessary to duly discharge such Lessor Lien
attributable to it in its individual capacity; and that it
will make restitution to the Trust Estate for any actual
diminution of the assets of the Trust Estate resulting from
such Lessor Liens attributable to it in its individual
capacity;
(c) in the event the Owner Trustee shall have Actual
Knowledge of an Event of Default, a Default or an Event of
Loss, the Owner Trustee will give prompt written notice of
such Event of Default, Default or Event of Loss to the Loan
Trustee, each Note Holder, Lessee and the Owner
Participant;
(d) the Owner Trustee will furnish to the Note Holders
and the Loan Trustee, promptly upon receipt thereof,
duplicates or copies of all reports, notices, requests,
demands, certificates and other instruments furnished to
the Owner Trustee under the Lease, including, without
limitation, a copy of any Termination Notice and a copy of
each report or notice received pursuant to Section 9 or 8.2
or Annex D, Paragraph E of the Lease to the extent that the
same shall not have been furnished to the Note Holders or
the Loan Trustee pursuant to the Lease;
(e) except with the consent of the Loan Trustee
(acting pursuant to instructions given in accordance with
Section 9.01 hereof) or as provided in Sections 2, 13 and 15
38
of the Participation Agreement, the Owner Trustee will not
contract for, create, incur, assume or suffer to exist any
Debt, and will not guarantee (directly or indirectly or by
an instrument having the effect of assuring another's
payment or performance on any obligation or capability of
so doing, or otherwise), endorse or otherwise be or become
contingently liable, directly or indirectly, in connection
with the Debt of any other person; and
(f) the Owner Trustee will not enter into any business
or other activity other than the business of owning the
Aircraft, the leasing thereof to Lessee and the carrying
out of the transactions contemplated hereby and by the
Lease, the Participation Agreement and the Trust Agreement
and the other Operative Agreements.
SECTION 4.02. Event of Default
"Event of Default" means any of the following events
(whatever the reason for such Event of Default and whether such
event shall be voluntary or involuntary or come about or be
effected by operation of Law or pursuant to or in compliance with
any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) any Lease Event of Default (provided that any such
Lease Event of Default caused solely by a failure of Lessee
to pay to the Owner Trustee or the Owner Participant when
due any amount that is included in the definition of
Excluded Payments shall not constitute an Event of Default
unless notice is given by the Owner Trustee to the Loan
Trustee that such failure shall constitute an Event of
Default); or
(b) the failure of the Owner Trustee to pay when due
any payment of Original Amount of, interest on, Make-Whole
Amount, if any, or other amount due and payable under any
Equipment Note or hereunder (other than as a result of a
Lease Event of Default or a Lease Default) and such failure
shall have continued unremedied for ten Business Days in
the case of any payment of Original Amount or interest or
Make- Whole Amount, if any, thereon and, in the case of any
other amount, for ten Business Days after the Owner Trustee
or the Owner Participant receives written demand from the
Loan Trustee or any Note Holder; or
(c) any Lien required to be discharged by the Owner
Trustee, in its individual capacity pursuant to Section
4.01(b) hereof or in its individual or trust capacity
pursuant to Section 8.3.1 of the Participation Agreement,
or by the Owner Participant pursuant to Section 8.2.1 of
the Participation Agreement shall remain undischarged for a
39
period of 30 days after the Owner Trustee or the Owner
Participant, as the case may be, shall have received
written notice from the Loan Trustee or any Note Holder of
such Lien; or
(d) any representation or warranty made by the Owner
Participant or the Owner Trustee in the Participation
Agreement or the Refunding Agreement or in any certificate
furnished by the Owner Participant or the Owner Trustee to
the Loan Trustee or any Note Holder in connection with the
transactions contemplated by the Operative Agreements shall
prove to have been false or incorrect when made in any
material respect and continues to be material; and if such
misrepresentation is capable of being corrected and if such
correction is being sought diligently, such
misrepresentation shall not have been corrected within 60
days (or, without affecting Section 4.02(f) hereof, in the
case of the representation made in Section 7.3.6 or 7.2.6
of the Participation Agreement as to citizenship of the
Owner Trustee in its individual capacity or of the Owner
Participant, respectively, as soon as is reasonably
practicable but in any event within 60 days) following
notice thereof from the Loan Trustee or any Note Holder to
the Owner Trustee or the Owner Participant, as the case may
be; or
(e) other than as provided in (c) above or (f) below,
any failure by the Owner Trustee or Owner Participant to
observe or perform any other covenant or obligation of the
Owner Trustee or Owner Participant, as the case may be, for
the benefit of the Loan Trustee or the Note Holders
contained in the Participation Agreement, Section 4.01(a)
of the Trust Agreement, the Equipment Notes or this Trust
Indenture which is not remedied within a period of 60 days
after notice thereof has been given to the Owner Trustee
and the Owner Participant; or
(f) if at any time when the Aircraft is registered
under the Laws of the United States, the Owner Participant
shall not be a "citizen of the United States" within the
meaning of Section 40102(a)(15) of Part A of Subtitle VII
of Title 49, United States Code, and as the result thereof
the registration of the Aircraft under the Federal Aviation
Act, and regulations then applicable thereunder, shall
cease to be effective; provided that no Event of Default
shall be deemed to have occurred under this paragraph (f)
unless such circumstances continue unremedied for more than
60 days after the Owner Participant has Actual Knowledge of
the state of facts that resulted in such ineffectiveness
and of such loss of citizenship; or
40
(g) at any time either (i) the commencement of an
involuntary case or other proceeding in respect of the
Owner Participant, the Owner Trustee, the Trust or the
Trust Estate under the federal bankruptcy Laws, as now
constituted or hereafter amended, or any other applicable
federal or state bankruptcy, insolvency or other similar
Law in the United States or seeking the appointment of a
receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Owner
Participant, the Owner Trustee, the Trust or the Trust
Estate or for all or substantially all of its property, or
seeking the winding-up or liquidation of its affairs and
the continuation of any such case or other proceeding
undismissed and unstayed for a period of 60 consecutive
days; or (ii) the commencement by the Owner Participant,
the Owner Trustee, the Trust or the Trust Estate of a
voluntary case or proceeding under the federal bankruptcy
Laws, as now constituted or hereafter amended, or any other
applicable federal or state bankruptcy, insolvency or other
similar Law in the United States, or the consent by the
Owner Participant, the Owner Trustee, the Trust or the
Trust Estate to the appointment of or taking possession by
a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Owner
Participant, the Owner Trustee, the Trust or the Trust
Estate or for all or substantially all of its property, or
the making by the Owner Participant, the Owner Trustee, the
Trust or the Trust Estate of any assignment for the benefit
of creditors or the Owner Participant or the Owner Trustee
shall take any action to authorize any of the foregoing;
provided, however, that an event referred to in this
Section 4.02(g) with respect to the Owner Participant shall
not constitute an Event of Default if within 30 days of the
commencement of the case or proceeding a full
non-appealable order, judgment or decree shall be entered
in such case or proceeding by a court or a trustee,
custodian, receiver or liquidator, to the effect that, no
part of the Trust Estate (except for the Owner
Participant's beneficial interest therein) and no right,
title or interest under the Trust Indenture Estate shall be
included in, or be subject to, any declaration or
adjudication of, or proceedings with respect to, the
bankruptcy, insolvency or liquidation of the Owner
Participant referred to in this Section 4.02(g).
SECTION 4.03. Certain Rights
The Loan Trustee shall give the Note Holders, the
Owner Trustee and the Owner Participant prompt written notice of
any Event of Default of which the Loan Trustee has Actual
Knowledge and shall give the Note Holders, the Owner Trustee and
the Owner Participant not less than ten Business Days' prior
written notice of the date (the "Enforcement Date") on or after
which the Loan Trustee may, subject to the limitation set forth
41
in Section 4.04(a), commence and consummate the exercise of any remedy
OR remedies described in Section 4.04, 4.05 or 4.06 hereof, or the
exercise of any remedy or remedies pursuant to the provisions of
Section 15 of the Lease; provided, however, that in the event the
Loan Trustee shall have validly terminated the Lease, the Loan
Trustee shall not sell or lease, or otherwise afford the use of,
the Aircraft or any portion thereof to the Lessee or any
Affiliate thereof. Without limiting the generality of the
foregoing, the Loan Trustee shall give the Owner Trustee, the
Owner Participant and the Lessee at least ten Business Days'
prior written notice of any declaration of the Lease to be in
default pursuant to Sections 14 and 15 of the Lease or any
termination of the Lease or of the exercise of any remedy or
remedies pursuant to Section 15 of the Lease. If an Event of
Default shall have occurred and be continuing, the Owner Trustee
shall have the rights set forth below, any of which may be
exercised directly by the Owner Participant.
If as a result of the occurrence of an Event of
Default in respect of the nonpayment by Lessee of Basic Rent due
under the Lease, the Loan Trustee shall have insufficient funds
to make any payment of Original Amount and interest on any
Equipment Note on the day it becomes due and payable, the Owner
Trustee may, but shall not be obligated to, pay the Loan Trustee
prior to the Enforcement Date, in the manner provided in Section
2.04 hereof, for application in accordance with Section 3.01
hereof, an amount equal to the portion of the Original Amount and
interest (including interest, if any, on any overdue payments of
such portion of Original Amount and interest) then due and
payable on the Equipment Notes, and, unless the Owner Trustee has
cured Events of Default in respect of payments of Basic Rent on
each of the six immediately preceding Basic Rent payment dates
(or, for so long as Gaucho-2 Inc. or any other Affiliate of The
Boeing Company is the Owner Participant, the nine immediately
preceding Basic Rent payment dates), or the Owner Trustee has
cured twelve previous Events of Default (or, for so long as
Gaucho-2 Inc. or any other Affiliate of The Boeing Company is the
Owner Participant, sixteen previous Events of Default) in respect
of payments of Basic Rent, such payment by the Owner Trustee
shall, solely for purposes of this Trust Indenture be deemed to
cure any Event of Default which would otherwise have arisen on
account of the nonpayment by Lessee of such installment of Basic
Rent (but not any other Default or Event of Default which shall
have occurred and be continuing).
If any Event of Default (other than in respect of the
nonpayment of Basic Rent by the Lessee) which can be cured by the
payment of money has occurred, the Owner Trustee may, but shall
not be obligated to, cure such Event of Default by making such
payment prior to the Enforcement Date as is necessary to
accomplish the observance or performance of the defaulted
42
covenant, condition or agreement to the party entitled to the
same.
Except as hereinafter in this Section 4.03 provided,
the Owner Trustee shall not, as a result of exercising the right
to cure any such Event of Default, obtain any Lien on any of the
Mortgaged Property or any Rent payable under the Lease for or on
account of costs or expenses incurred in connection with the
exercise of such right, nor shall any claim of the Owner Trustee
against Lessee or any other party for the repayment of such costs
or expenses impair the prior right and security interest of the
Loan Trustee in and to the Mortgaged Property. Upon any payment
by the Owner Trustee pursuant to the first or second preceding
paragraphs of this Section 4.03, the Owner Trustee shall be
subrogated to the rights of the Loan Trustee and the Note Holders
in respect of the Basic Rent which was overdue at the time of
such payment and interest payable by the Lessee on account of its
being overdue and any Supplemental Rent in respect of the
reimbursement of amounts paid by Owner Trustee pursuant to the
immediately preceding paragraph (but in either case shall have no
rights as a secured party hereunder), and thereafter, the Owner
Trustee shall be entitled to receive such overdue Basic Rent or
Supplemental Rent, as the case may be, and interest thereon upon
receipt thereof by the Loan Trustee; provided, however, that (i)
if the Original Amount and interest on the Equipment Notes shall
have become due and payable pursuant to Section 4.04(b) hereof,
such subrogation shall, until the Secured Obligations shall have
been paid in full, be subordinate to the rights of the Loan
Trustee and the Note Holders in respect of such payment of
overdue Basic Rent, Supplemental Rent and such interest and (ii)
the Owner Trustee shall not be entitled to seek to recover any
such payment (or any payment in lieu thereof) except pursuant to
the foregoing right of subrogation.
Neither the Owner Trustee nor the Owner Participant
shall have the right to cure any Lease Event of Default or Lease
Default except as specified in this Section 4.03.
SECTION 4.04. Remedies
(a) If an Event of Default shall have occurred and be
continuing and so long as the same shall continue unremedied,
then and in every such case the Loan Trustee may, subject to the
second and third paragraphs of this Section 4.04(a), exercise any
or all of the rights and powers and pursue any and all of the
remedies pursuant to this Article IV and shall have and may
exercise all of the rights and remedies of a secured party under
the Uniform Commercial Code and, in the event such Event of
Default is also a Lease Event of Default, any and all of the
remedies pursuant to Section 15 of the Lease and may take
possession of all or any part of the properties covered or
intended to be covered by the Lien created hereby or pursuant
43
hereto and may exclude the Owner Participant, the Owner Trustee
and Lessee and all persons claiming under any of them wholly or
partly therefrom; provided, that the Loan Trustee shall give the
Owner Trustee and the Owner Participant twenty days' prior
written notice of its intention to sell the Aircraft; and
provided, further, that in the event the Loan Trustee shall have
validly terminated the Lease, the Loan Trustee shall not sell or
lease, or otherwise afford the use of, the Aircraft or any
portion thereof to the Lessee or any Affiliate thereof. Unless an
Event of Default not resulting from or relating to a Lease Event
of Default has occurred and is continuing, the Owner Participant
may bid at the sale and become the purchaser. Without limiting
any of the foregoing, it is understood and agreed that the Loan
Trustee may exercise any right of sale of the Aircraft available
to it, even though it shall not have taken possession of the
Aircraft and shall not have possession thereof at the time of
such sale.
Anything in this Trust Indenture to the contrary
notwithstanding, the Loan Trustee shall not be entitled to
exercise any remedy hereunder as a result of an Event of Default
which arises solely by reason of one or more events or
circumstances which constitute a Lease Event of Default unless
the Loan Trustee as security assignee of the Owner Trustee shall
have exercised or concurrently be exercising one or more of the
dispossessory remedies provided for in Section 15 of the Lease
with respect to the Aircraft; provided, however, that such
requirement to exercise one or more of such remedies under the
Lease shall not apply in circumstances where the Loan Trustee is,
and has been, for a continuous period in excess of 60 days or
such other period as may be specified in Section 1110(a)(1)(A) of
the Bankruptcy Code (such 60-day or other period being the "New
Section 1110 Period"), involuntarily stayed or prohibited by
applicable law or court order from exercising such remedies under
the Lease (a "Continuous Stay Period"); provided further,
however, that the requirement to exercise one or more of such
remedies under the Lease shall nonetheless be applied during a
Continuous Stay Period subsequent to the expiration of the New
Section 1110 Period to the extent that the continuation of such
Continuous Stay Period subsequent to the expiration of the New
Section 1110 Period (A) results from an agreement by the trustee
or the debtor-in-possession in such proceeding during the New
Section 1110 Period with the approval of the relevant court to
perform the Lease in accordance with Section 1110(a)(1)(A) of the
Bankruptcy Code and continues to perform as required by Section
1110(a)(1)(A-B) of the Bankruptcy Code or (B) is an "extension of
the New Section 1110 Period with the consent of the Loan Trustee
pursuant to Section 1110(b) of the Bankruptcy Code or (C) results
from the Lessee's assumption during the New Section 1110 Period
with the approval of the relevant court of the Lease pursuant to
Section 365 of the Bankruptcy Code or (D) is the consequence of
the Loan Trustee's own failure to give any requisite notice to
44
any person. In the event that the applicability of Section 1110
of Bankruptcy Code to the Aircraft is being contested by Lessee
in judicial proceedings, both of the Loan Trustee and the Owner
Trustee shall have the right to participate in such proceedings;
provided that any such participation by the Owner Trustee shall
not affect in any way any rights or remedy of the Loan Trustee
hereunder.
It is expressly understood and agreed that, subject
only to the two preceding paragraphs, the inability, described in
such paragraphs, of the Loan Trustee to exercise any right or
remedy under the Lease shall in no event and under no
circumstances prevent the Loan Trustee from exercising any or all
of its rights, powers and remedies under this Trust Indenture,
including, without limitation, this Article IV.
(b) If an Event of Default shall have occurred and be
continuing, then and in every such case the Loan Trustee may (and
shall, upon receipt of a written demand therefor from a Majority
in Interest of Note Holders), subject to Section 4.03 hereof, at
any time, by delivery of written notice or notices to the Owner
Trustee and the Owner Participant, declare all the Equipment
Notes to be due and payable, whereupon the unpaid Original Amount
of all Equipment Notes then outstanding, together with accrued
but unpaid interest thereon (without Make-Whole Amount) and other
amounts due thereunder, shall immediately become due and payable
without presentment, demand, protest or notice, all of which are
hereby waived; provided that, in the event of a reorganization
proceeding involving the Lessee instituted under Chapter 11 of
the Bankruptcy Code, if no Lease Event of Default (including any
Lease Event of Default set forth in Section 14.7 of the Lease)
and no other Event of Default (other than the failure to pay the
Original Amount of the Equipment Notes which by such declaration
shall have become payable) exists at any time after the
consummation of such proceeding, such declaration shall be
automatically rescinded without any further action on the part of
any Note Holder.
This Section 4.04(b), however, is subject to the
condition that, if at any time after the Original Amount of the
Equipment Notes shall have become so due and payable, and before
any judgment or decree for the payment of the money so due, or
any thereof, shall be entered, all overdue payments of interest
upon the Equipment Notes and all other amounts payable under the
Equipment Notes (except the Original Amount of the Equipment
Notes which by such declaration shall have become payable) shall
have been duly paid, and every other Default and Event of Default
with respect to any covenant or provision of this Trust Indenture
shall have been cured, then and in every such case a Majority in
Interest of Note Holders may (but shall not be obligated to), by
written instrument filed with the Loan Trustee, rescind and annul
the Loan Trustee's declaration (or such automatic acceleration)
45
and its consequences; but no such rescission or annulment extend
to or affect any subsequent Default or Event of Default or impair
any right consequent thereon.
(c) The Note Holders shall be entitled, at any sale
pursuant to Section 15 of the Lease or this Section 4.04, to
credit against any purchase price bid at such sale by such holder
all or any part of the unpaid obligations owing to such Note
Holder and secured by the Lien of this Trust Indenture (only to
the extent that such purchase price would have been paid to such
Note Holder pursuant to Article III hereof if such purchase price
were paid in cash and the foregoing provisions of this subsection
(c) were not given effect).
(d) In the event of any sale of the Trust Indenture
Estate, or any part thereof, pursuant to any judgment or decree
of any court or otherwise in connection with the enforcement of
any of the terms of this Trust Indenture, the unpaid Original
Amount of all Equipment Notes then outstanding, together with
accrued interest thereon (without Make-Whole Amount), and other
amounts due thereunder, shall immediately become due and payable
without presentment, demand, protest or notice, all of which are
hereby waived.
(e) Upon consummation of the Refinancing Transaction,
notwithstanding anything contained herein, so long as the Pass
Through Trustee under any Pass Through Trust Agreement (or its
designee) is a Note Holder, the Loan Trustee will not be
authorized or empowered to acquire title to any Mortgaged
Property or take any action with respect to any Mortgaged
Property so acquired by it if such acquisition or action would
cause any Trust to fail to qualify as a "grantor trust" for
federal income tax purposes.
SECTION 4.05. Return of Aircraft, Etc.
(a) If an Event of Default shall have occurred and be
continuing, subject to Section 4.03 hereof, at the request of the
Loan Trustee, the Owner Trustee shall promptly execute and
deliver to the Loan Trustee such instruments of title and other
documents as the Loan Trustee may deem necessary or advisable to
enable the Loan Trustee or an agent or representative designated
by the Loan Trustee, at such time or times and place or places as
the Loan Trustee may specify, to obtain possession of all or any
part of the Mortgaged Property included in the Trust Indenture
Estate to which the Loan Trustee shall at the time be entitled
hereunder. If the Owner Trustee shall for any reason fail to
execute and deliver such instruments and documents after such
request by the Loan Trustee, the Loan Trustee may (i) obtain a
judgment conferring on the Loan Trustee the right to immediate
possession and requiring the Owner Trustee to execute and deliver
such instruments and documents to the Loan Trustee, to the entry
46
of which judgment the Owner Trustee hereby specifically consents
to the fullest extent permitted by Law, and (ii) pursue all or
part of such Mortgaged Property wherever it may be found and, in
the event that a Lease Event of Default has occurred and is
continuing, may enter any of the premises of Lessee wherever such
Mortgaged Property may be or be supposed to be and search for
such Mortgaged Property and take possession of and remove such
Mortgaged Property. All expenses of obtaining such judgment or of
pursuing, searching for and taking such property shall, until
paid, be secured by the Lien of this Trust Indenture.
(b) Upon every such taking of possession, the Loan
Trustee may, from time to time, at the expense of the Mortgaged
Property, make all such expenditures for maintenance, use,
operation, storage, insurance, leasing, control, management,
disposition, modifications or alterations to and of the Mortgaged
Property, as it may deem proper. In each such case, the Loan
Trustee shall have the right to maintain, use, operate, store,
insure, lease, control, manage, dispose of, modify or alter the
Mortgaged Property and to carry on the business and to exercise
all rights and powers of the Owner Participant and the Owner
Trustee relating to the Mortgaged Property, as the Loan Trustee
shall deem best, including the right to enter into any and all
such agreements with respect to the maintenance, use, operation,
storage, insurance, leasing, control, management, disposition,
modification or alteration of the Mortgaged Property or any part
thereof as the Loan Trustee may determine, and the Loan Trustee
shall be entitled to collect and receive directly all tolls,
rents (including Rent), revenues, issues, income, products and
profits of the Mortgaged Property and every part thereof, except
Excluded Payments, without prejudice, however, to the right of
the Loan Trustee under any provision of this Trust Indenture to
collect and receive all cash held by, or required to be deposited
with, the Loan Trustee hereunder. Such tolls, rents (including
Rent), revenues, issues, income, products and profits shall be
applied to pay the expenses of the maintenance, use, operation,
storage, insurance, leasing, control, management, disposition,
improvement, modification or alteration of the Mortgaged Property
and of conducting the business thereof, and to make all payments
which the Loan Trustee may be required or may elect to make, if
any, for taxes, assessments, insurance or other proper charges
upon the Mortgaged Property or any part thereof (including the
employment of engineers and accountants to examine, inspect and
make reports upon the properties and books and records of the
Owner Trustee), and all other payments which the Loan Trustee may
be required or authorized to make under any provision of this
Trust Indenture, as well as just and reasonable compensation for
the services of the Loan Trustee, and of all persons properly
engaged and employed by the Loan Trustee with respect hereto.
47
SECTION 4.06. Remedies Cumulative
Each and every right, power and remedy given to the
Loan Trustee specifically or otherwise in this Trust Indenture
shall be cumulative and shall be in addition to every other
right, power and remedy herein specifically given or now or
hereafter existing at Law, in equity or by statute, and each and
every right, power and remedy whether specifically herein given
or otherwise existing may be exercised from time to time and as
often and in such order as may be deemed expedient by the Loan
Trustee, and the exercise or the beginning of the exercise of any
power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other right,
power or remedy. No delay or omission by the Loan Trustee in the
exercise of any right, remedy or power or in the pursuance of any
remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner
Trustee or Lessee or to be an acquiescence therein.
SECTION 4.07. Discontinuance of Proceedings
In case the Loan Trustee shall have instituted any
proceeding to enforce any right, power or remedy under this Trust
Indenture by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any
reason or shall have been determined adversely to the Loan
Trustee, then and in every such case the Owner Trustee, the Loan
Trustee and Lessee shall, subject to any determination in such
proceedings, be restored to their former positions and rights
hereunder with respect to the Mortgaged Property, and all rights,
remedies and powers of the Owner Trustee, the Loan Trustee or
Lessee shall continue as if no such proceedings had been
instituted.
SECTION 4.08. Waiver of Past Defaults
Upon written instruction from a Majority in Interest
of Note Holders, the Loan Trustee shall waive any past Default
hereunder and its consequences and upon any such waiver such
Default shall cease to exist and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of
this Trust Indenture, but no such waiver shall extend to any
subsequent or other Default or impair any right consequent
thereon; provided, that in the absence of written instructions
from all the Note Holders, the Loan Trustee shall not waive any
Default (i) in the payment of the Original Amount, Make-Whole
Amount, if any, and interest and other amounts due under any
Equipment Note then outstanding, or (ii) in respect of a covenant
or provision hereof which, under Article IX hereof, cannot be
modified or amended without the consent of each Note Holder.
48
SECTION 4.09. Appointment of Receiver
The Loan Trustee shall, as a matter of right, be
entitled to the appointment of a receiver (who may be the Loan
Trustee or any successor or nominee thereof) for all or any part
of the Mortgaged Property, whether such receivership be
incidental to a proposed sale of the Mortgaged Property or the
taking of possession thereof or otherwise, and the Owner Trustee
hereby consents to the appointment of such a receiver and will
not oppose any such appointment. Any receiver appointed for all
or any part of the Mortgaged Property shall be entitled to
exercise all the rights and powers of the Loan Trustee with
respect to the Mortgaged Property.
SECTION 4.10. Loan Trustee Authorized to Execute Bills
of Sale, Etc.
The Owner Trustee irrevocably appoints the Loan
Trustee the true and lawful attorney-in-fact of the Owner Trustee
in its name and stead and on its behalf, for the purpose of
effectuating any sale, assignment, transfer or delivery for the
enforcement of the Lien of this Trust Indenture, whether pursuant
to foreclosure or power of sale, assignments and other
instruments as may be necessary or appropriate, with full power
of substitution, the Owner Trustee hereby ratifying and
confirming all that such attorney or any substitute shall do by
virtue hereof in accordance with applicable law. Nevertheless, if
so requested by the Loan Trustee or any purchaser, the Owner
Trustee shall ratify and confirm any such sale, assignment,
transfer or delivery, by executing and delivering to the Loan
Trustee or such purchaser all bills of sale, assignments,
releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
SECTION 4.11. Rights of Note Holders to Receive
Payment
Notwithstanding any other provision of this Trust
Indenture, the right of any Note Holder to receive payment of
principal of, and premium, if any, and interest on an Equipment
Note on or after the respective due dates expressed in such
Equipment Note, or to bring suit for the enforcement of any such
payment on or after such respective dates in accordance with the
terms hereof, shall not be impaired or affected without the
consent of such Note Holder.
49
ARTICLE V
DUTIES OF THE LOAN TRUSTEE
SECTION 5.01. Notice of Event of Default
If the Loan Trustee shall have Actual Knowledge of an
Event of Default or of a Default arising from a failure to pay
Rent, the Loan Trustee shall give prompt written notice thereof
to the Owner Trustee, the Owner Participant, Lessee, and each
Note Holder. Subject to the terms of Sections 4.04, 4.08, 5.02
and 5.03 hereof, the Loan Trustee shall take such action, or
refrain from taking such action, with respect to such Event of
Default or Default (including with respect to the exercise of any
rights or remedies hereunder) as the Loan Trustee shall be
instructed in writing by a Majority in Interest of Note Holders.
Subject to the provisions of Section 5.03, if the Loan Trustee
shall not have received instructions as above provided within 20
days after mailing notice of such Event of Default to the Note
Holders, the Loan Trustee may, subject to instructions thereafter
received pursuant to the preceding provisions of this Section
5.01, take such action, or refrain from taking such action, but
shall be under no duty to take or refrain from taking any action,
with respect to such Event of Default or Default as it shall
determine advisable in the best interests of the Note Holders;
provided, however, that the Loan Trustee may not sell the
Aircraft or any Engine without the consent of a Majority in
Interest of Note Holders. For all purposes of this Trust
Indenture, in the absence of Actual Knowledge on the part of the
Loan Trustee, the Owner Trustee or the Owner Participant, the
Loan Trustee, the Owner Trustee or the Owner Participant, as the
case may be, shall not be deemed to have knowledge of a Default
or an Event of Default (except, in the case of the Loan Trustee,
the failure of Lessee to pay any installment of Basic Rent within
one Business Day after the same shall become due, if any portion
of such installment was then required to be paid to the Loan
Trustee, which failure shall constitute knowledge of a Default)
unless notified in writing by Lessee, the Owner Trustee, the
Owner Participant or one or more Note Holders.
SECTION 5.02. Action Upon Instructions; Certain Rights
and Limitations
(a) Subject to the terms of Sections 2.14, 4.03,
4.04(a) and (b), 4.08, 5.01 and 5.03 hereof, upon the written
instructions at any time and from time to time of a Majority in
Interest of Note Holders, the Loan Trustee shall, subject to the
terms of this Section 5.02, take such of the following actions as
may be specified in such instructions: (i) give such notice or
direction or exercise such right, remedy or power hereunder as
shall be specified in such instructions; (ii) give such notice or
direction or exercise such right, remedy or power under the
50
Lease, the Participation Agreement, the Purchase Agreement, the
Purchase Agreement Assignment, or any other part of the Trust
Indenture Estate as shall be specified in such instructions; and
(iii) approve as satisfactory to the Loan Trustee all matters
required by the terms of the Lease to be satisfactory to the
Owner Trustee, it being understood that without the written
instructions of a Majority in Interest of Note Holders, the Loan
Trustee shall not approve any such matter as satisfactory to the
Loan Trustee; provided, that anything contained in this Trust
Indenture, the Lease or the other Operative Agreements to the
contrary notwithstanding, but subject to the next paragraph
hereof:
(1) the Owner Trustee or the Owner Participant, may,
without the consent of the Loan Trustee, demand, collect,
sue for or otherwise obtain all amounts included in
Excluded Payments from Lessee and seek legal or equitable
remedies to require Lessee to maintain the insurance
coverage referred to in Section 11 of the Lease; provided,
that the rights referred to in this clause (1) shall not be
deemed to include the exercise of any remedies provided for
in Section 15 of the Lease other than the right to proceed
by appropriate court action, either at Law or in equity, to
enforce payment by Lessee of such amounts included in
Excluded Payments or performance by Lessee of such
insurance covenant or to recover damages for the breach
thereof;
(2) unless a Loan Trustee Event shall have occurred
and be continuing, the Loan Trustee shall not, without the
consent of the Owner Trustee, which consent shall not be
withheld if no right or interest of the Owner Trustee or
the Owner Participant shall be diminished or impaired
thereby, (i) enter into, execute and deliver amendments,
modifications, waivers or consents in respect of any of the
provisions of the Lease, or (ii) approve any accountants,
engineers, appraisers or counsel as satisfactory to render
services for or issue opinions to the Owner Trustee
pursuant to the Operative Agreements, provided that so long
as no Loan Trustee Event has occurred and is continuing,
the Owner Trustee's consent shall be required with respect
to the matters set forth in clauses (i) and (ii) above;
provided, however, that if the Loan Trustee is permitted to
take any action described in such clauses (i) or (ii)
without the consent of the Owner Trustee as a result of a
Loan Trustee Event arising out of a Lease Event of Default,
the Loan Trustee shall, prior to taking any such action,
endeavor to consult with the Owner Participant (as
practicable under the circumstances) in an effort to
minimize adverse consequences to the Owner Trustee and the
Owner Participant from such proposed action; and provided,
further, that under no circumstances shall any action taken
by Loan Trustee as to matters set forth in clauses (i) or
51
(ii) above (1) reduce the amount of, or postpone the due date of,
any payments required to be made by Lessee or any Permitted
Sublessee under or pursuant to the Lease or any Permitted Sublease,
or otherwise payable by Lessee as Basic Rent, Stipulated
Loss Value or Termination Value, (2) extend the Basic Term
or any Renewal Term of the Lease, (3) alter any terms or
conditions upon which the Lessee is permitted to exercise
any options to renew the Lease or purchase the Aircraft or
(4) permit the Lessee to alter, avoid or postpone any of
its obligations under the Lease or the other Operative
Agreements if any right or interest of the Owner Trustee or
the Owner Participant shall be diminished or impaired as a
result thereof;
(3) whether or not a Default or Event of Default under
the Trust Indenture has occurred and is continuing, the
Owner Trustee and the Owner Participant shall have the
right, together with the Loan Trustee, (i) to receive from
Lessee certificates and other documents and information
which Lessee is required to give or furnish to the Owner
Trustee or the Lessor pursuant to any Operative Agreement
and (ii) to inspect in accordance with the Lease the
Airframe and Engines and all Aircraft Documents;
(4) whether or not a Default or Event of Default under
the Trust Indenture has occurred and is continuing, the
Owner Trustee shall have the right to adjust upwards Rent,
Stipulated Loss Values and Termination Values as provided
in Section 3.2.1 of the Lease;
(5) so long as no Loan Trustee Event has occurred and
is continuing, the Owner Trustee shall have the right, to
the exclusion of the Loan Trustee, to adjust Basic Rent,
Stipulated Loss Values and Termination Values as provided
in Section 3.2 of the Lease or to adjust downward any
installment or amount of Basic Rent, Stipulated Loss Value
or Termination Value, as such installments and amounts are
set forth in Schedules 2, 3 and 4, respectively, to the
Lease, to the extent of the portion of such installment or
amount that would, under Section 3.01, 3.02 or 3.03 hereof,
as the case may be, be distributable to the Owner Trustee
or the Owner Participant;
(6) whether or not a Default or Event of Default under
the Trust Indenture has occurred and is continuing, the
Owner Trustee may, without the consent of the Loan Trustee,
(i) solicit and make bids with respect to the Aircraft
under Section 9 of the Lease in respect of a termination of
the Lease by Lessee pursuant to Section 9 thereof, (ii)
determine Fair Market Sales Value and Fair Market Rental
Value under Section 17 of the Lease for all purposes except
following a Loan Trustee Event pursuant to Section 15 of
52
the Lease, and (iii) make an election pursuant to and in
accordance with the provisions of Section 9.1(b), 9.2 and
9.3 of the Lease; and
(7) so long as no Loan Trustee Event shall have
occurred and be continuing, all other rights of the
"Lessor" under the Lease shall be exercised by the Owner
Trustee to the exclusion of the Loan Trustee including,
without limitation, the right to (i) exercise all rights
with respect to Lessee's use and operation, modification or
maintenance of the Aircraft and any Engine which the Lease
specifically confers on the Lessor, and (ii) consent to and
approve any assignment pursuant to Section 13 of the Lease;
provided that the foregoing shall not limit (A) any rights
separately granted to the Loan Trustee under the Operative
Agreements or (B) the right of the Loan Trustee to receive
any funds to be delivered to the "Lessor" under the Lease
(except with respect to Excluded Payments) and under the
Purchase Agreement.
Notwithstanding anything to the contrary contained
herein (including this Section 5.02), the Loan Trustee shall have
the right, to the exclusion of the Owner Trustee and the Owner
Participant, to (A) declare the Lease to be in default under
Section 15 thereof (other than with respect to a Lease Event of
Default described in clause (i) of the proviso to Section 14.1
thereof) and (B) subject only to the provisions of Sections 4.03,
4.04(a) and (b) and 2.14 hereof, exercise the remedies set forth
in such Section 15 (other than in connection with Excluded
Payment and provided that each of the Owner Trustee, Owner
Participant and Loan Trustee shall independently retain the
rights set forth in clause (ii) of Section 15.1.5 of the Lease)
at any time that a Lease Event of Default shall have occurred and
be continuing.
The Loan Trustee will execute and the Owner Trustee
will file or cause to be filed such continuation statements with
respect to financing statements relating to the security interest
created hereunder in the Trust Indenture Estate as may be
specified from time to time in written instructions of a Majority
in Interest of Note Holders (which instructions shall be
accompanied by the form of such continuation statement so to be
filed). The Loan Trustee will furnish to each Note Holder (and,
during the continuation of a Loan Trustee Event, to the Owner
Trustee and Owner Participant), promptly upon receipt thereof,
duplicates or copies of all reports, notices, requests, demands,
certificates and other instruments furnished to the Loan Trustee
under the Lease or hereunder, including, without limitation, a
copy of any Termination Notice (as defined in the Lease) and a
copy of each report or notice received pursuant to Section 9 and
Paragraph E of Annex D of the Lease, respectively to the extent
53
that the same shall not have been furnished to such holder
pursuant hereto or the Lease.
(b) If any Lease Event of Default shall have occurred
and be continuing and the Owner Trustee shall not have cured
fully such Lease Event of Default under and in accordance with
Section 4.03 hereof, on request of a Majority in Interest of Note
Holders, the Loan Trustee shall declare the Lease to be in
default pursuant to Section 15 thereof and exercise those
remedies specified by such Note Holders. The Loan Trustee agrees
to provide to the Note Holders, the Owner Trustee and the Owner
Participant concurrently with such declaration by the Loan
Trustee, notice of such declaration by the Loan Trustee.
SECTION 5.03. Indemnification
The Loan Trustee shall not be required to take any
action or refrain from taking any action under Section 5.01
(other than the first sentence thereof), 5.02 or Article IV
hereof unless the Loan Trustee shall have been indemnified to its
reasonable satisfaction against any liability, cost or expense
(including counsel fees) which may be incurred in connection
therewith pursuant to a written agreement with one or more Note
Holders. The Loan Trustee agrees that it shall look solely to the
Note Holders for the satisfaction of any indemnity (except
expenses for foreclosure of the type referred to in clause
"First" of Section 3.03 hereof) owed to it pursuant to this
Section 5.03. The Loan Trustee shall not be under any obligation
to take any action under this Trust Indenture or any other
Operative Agreement and nothing herein or therein shall require
the Loan Trustee to expend or risk its own funds or otherwise
incur the risk of any financial liability in the performance of
any of its rights or powers if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it
(the written indemnity of any Note Holder who is a QIB, signed by
an authorized officer thereof, in favor of, delivered to and in
form reasonably satisfactory to the Loan Trustee shall be
accepted as reasonable assurance of adequate indemnity). The Loan
Trustee shall not be required to take any action under Section
5.01 (other than the first sentence thereof) or 5.02 or Article
IV hereof, nor shall any other provision of this Trust Indenture
or any other Operative Agreement be deemed to impose a duty on
the Loan Trustee to take any action, if the Loan Trustee shall
have been advised by counsel that such action is contrary to the
terms hereof or of the Lease or is otherwise contrary to Law.
54
SECTION 5.04. No Duties Except as Specified in Trust
Indenture or Instructions
The Loan Trustee shall not have any duty or obligation
to use, operate, store, lease, control, manage, sell, dispose of
or otherwise deal with the Aircraft or any other part of the
Trust Indenture Estate, or to otherwise take or refrain from
taking any action under, or in connection with, this Trust
Indenture or any part of the Trust Indenture Estate, except as
expressly provided by the terms of this Trust Indenture or as
expressly provided in written instructions from Note Holders as
provided in this Trust Indenture; and no implied duties or
obligations shall be read into this Trust Indenture against the
Loan Trustee. The Loan Trustee agrees that it will in its
individual capacity and at its own cost and expense (but without
any right of indemnity in respect of any such cost or expense
under Section 7.01 hereof), promptly take such action as may be
necessary duly to discharge all liens and encumbrances on any
part of the Trust Indenture Estate which result from claims
against it in its individual capacity not related to the
ownership of the Aircraft or the administration of the Trust
Indenture Estate or any other transaction pursuant to this Trust
Indenture or any document included in the Trust Indenture Estate.
SECTION 5.05. No Action Except Under Lease, Trust
Indenture or Instructions
The Owner Trustee and the Loan Trustee agree that they
will not use, operate, store, lease, control, manage, sell,
dispose of or otherwise deal with the Aircraft or any other part
of the Trust Indenture Estate except (i) as required by the terms
of the Lease or (ii) in accordance with the powers granted to, or
the authority conferred upon, the Owner Trustee and the Loan
Trustee pursuant to this Trust Indenture and in accordance with
the express terms hereof.
SECTION 5.06. Replacement Airframes and Replacement
Engines
At any time an Airframe or Engine is to be replaced
under or pursuant to Section 10 of the Lease by a Replacement
Airframe or Replacement Engine, if no Lease Event of Default is
continuing, the Owner Trustee shall direct the Loan Trustee to
execute and deliver to the Owner Trustee an appropriate
instrument releasing such Airframe and/or Engine as appropriate
from the Lien of this Trust Indenture and the Loan Trustee shall
execute and deliver such instrument as aforesaid, but only upon
compliance by Lessee with the applicable provisions of Section 10
of the Lease.
SECTION 5.07. Indenture Supplements for Replacements
55
If a Replacement Airframe or Replacement Engine is
being substituted as contemplated by Section 10 of the Lease, the
Owner Trustee and the Loan Trustee agree for the benefit of the
Note Holders and Lessee, subject to fulfillment of the conditions
precedent and compliance by Lessee with its obligations set forth
in Section 10 of the Lease and the requirements of Section 5.06
hereof with respect to such Replacement Airframe or Replacement
Engine, to execute and deliver a Supplement and a Trust Indenture
Supplement, as applicable, as contemplated by Section 10 of the
Lease.
SECTION 5.08. Effect of Replacement
In the event of the substitution of an Airframe or of
a Replacement Engine pursuant to Section 10 of the Lease, all
provisions of this Trust Indenture relating to the Airframe or
Engine or Engines being replaced shall be applicable to such
Replacement Airframe or Replacement Engine or Engines with the
same force and effect as if such Replacement Airframe or
Replacement Engine or Engines were the same airframe or engine or
engines, as the case may be, as the Airframe or Engine or Engines
being replaced but for the Event of Loss with respect to the
Airframe or Engine or Engines being replaced.
SECTION 5.09. Investment of Amounts Held by Loan
Trustee
Any amounts held by the Loan Trustee as assignee of
the Owner Trustee's rights to hold monies for security pursuant
to Section 4.5.1 of the Lease shall be held in accordance with
the terms of such Section and the Loan Trustee agrees, for the
benefit of Lessee, to perform the duties of the Owner Trustee
under such Section. Any amounts held by the Loan Trustee pursuant
to the proviso to the first sentence of Section 3.01, pursuant to
Section 3.02, or pursuant to any provision of any other Operative
Agreement providing for amounts to be held by the Loan Trustee
which are not distributed pursuant to the other provisions of
Article III hereof shall be invested by the Loan Trustee from
time to time in Cash Equivalents as directed by the Owner Trustee
so long as the Loan Trustee may acquire the same using its best
efforts. Unless otherwise expressly provided in this Trust
Indenture, any income realized as a result of any such
investment, net of the Loan Trustee's reasonable fees and
expenses in making such investment, shall be held and applied by
the Loan Trustee in the same manner as the principal amount of
such investment is to be applied and any losses, net of earnings
and such reasonable fees and expenses, shall be charged against
the principal amount invested. The Loan Trustee shall not be
liable for any loss resulting from any investment required to be
made by it under this Trust Indenture other than by reason of its
willful misconduct or gross negligence, and any such investment
may be sold (without regard to its maturity) by the Loan Trustee
56
without instructions whenever such sale is necessary to make a
distribution required by this Trust Indenture.
ARTICLE VI
THE OWNER TRUSTEE AND THE LOAN TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties
The Loan Trustee accepts the duties hereby created and
applicable to it and agrees to perform the same but only upon the
terms of this Trust Indenture and agrees to receive and disburse
all monies constituting part of the Trust Indenture Estate in
accordance with the terms hereof. The Owner Trustee, in its
individual capacity, and the Loan Trustee, in its individual
capacity, shall not be answerable or accountable under any
circumstances, except (i) for their own willful misconduct or
gross negligence (other than for the handling of funds, for which
the standard of accountability shall be willful misconduct or
negligence), (ii) in the case of the Loan Trustee, as provided in
the fourth sentence of Section 2.04(a) hereof and the last
sentence of Section 5.04 hereof, and (iii) for liabilities that
may result, in the case of the Owner Trustee, from the inaccuracy
of any representation or warranty of the Owner Trustee expressly
made in its individual capacity in the Participation Agreement
(or, upon consummation of the Refinancing Transaction, the
Refunding Agreement) or in Section 4.01(b) or 6.03 hereof (or in
any certificate furnished to the Loan Trustee or any Note Holder
in connection with the transactions contemplated by the Operative
Agreements) or, in the case of the Loan Trustee (in its
individual capacity), from the inaccuracy of any representation
or warranty of the Loan Trustee (in its individual capacity) in
the Participation Agreement (or, upon consummation of the
Refinancing Transaction, the Refunding Agreement) or expressly
made hereunder. Neither the Owner Trustee nor the Loan Trustee
shall be liable for any action or inaction of the other or of the
Owner Participant.
SECTION 6.02. Absence of Duties
In the case of the Loan Trustee, except in accordance
with written instructions furnished pursuant to Section 5.01 or
5.02 hereof, and except as provided in, and without limiting the
generality of, Sections 5.03 and 5.04 hereof and, in the case of
the Owner Trustee, except as provided in Section 4.01(b) hereof,
the Owner Trustee and the Loan Trustee shall have no duty (i) to
see to any registration of the Aircraft or any recording or
filing of the Lease or of this Trust Indenture or any other
document, or to see to the maintenance of any such registration,
recording or filing, (ii) to see to any insurance on the Aircraft
or to effect or maintain any such insurance, whether or not
57
Lessee shall be in default with respect thereto, (iii) to see to
the payment or discharge of any lien or encumbrance of any kind
against any part of the Trust Estate or the Trust Indenture
Estate, (iv) to confirm, verify or inquire into the failure to
receive any financial statements from Lessee, or (v) to inspect
the Aircraft at any time or ascertain or inquire as to the
performance or observance of any of Lessee's covenants under the
Lease with respect to the Aircraft. The Owner Participant shall
not have any duty or responsibility hereunder, including, without
limitation, any of the duties mentioned in clauses (i) through
(v) above; provided, that nothing contained in this sentence
shall limit any obligations of the Owner Participant under the
Participation Agreement or relieve the Owner Participant from any
restriction under Section 4.03 hereof.
SECTION 6.03. No Representations or Warranties as to
Aircraft or Documents
NEITHER THE LOAN TRUSTEE IN ITS INDIVIDUAL OR TRUST
CAPACITY NOR THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS
OWNER TRUSTEE UNDER THE TRUST AGREEMENT, MAKES OR SHALL BE DEEMED
TO HAVE MADE AND EACH HEREBY EXPRESSLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION,
DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR
FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY
ENGINE, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR
NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY
PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS
BASED ON STRICT LIABILITY IN TORT OR ANY OTHER REPRESENTATION OR
WARRANTY WHATSOEVER, except the Owner Trustee in its individual
capacity warrants that (i) the Owner Trustee has received on the
Delivery Date whatever title was conveyed to it, and (ii) the
Aircraft is free and clear of Lessor Liens attributable to the
Owner Trustee in its individual capacity. Neither the Owner
Trustee, in its individual capacity or as Owner Trustee under the
Trust Agreement, nor the Loan Trustee, in its individual or trust
capacities, makes or shall be deemed to have made any
representation or warranty as to the validity, legality or
enforceability of this Trust Indenture, the Trust Agreement, the
Participation Agreement (or, upon consummation of the Refinancing
Transaction, the Refunding Agreement), the Equipment Notes, the
Lease, the Purchase Agreement or the Purchase Agreement
Assignment with the Consent and Agreement and the Engine Consent
and Agreement attached thereto, or as to the correctness of any
statement contained in any thereof, except for the
representations and warranties of the Owner Trustee made in its
individual capacity and the representations and warranties of the
Loan Trustee in its individual capacity, in each case expressly
made in this Trust Indenture or in the Participation Agreement
(or, upon consummation of the Refinancing Transaction, the
Refunding Agreement). The Loan Participants, the Note Holders
58
and the Owner Participant make no representation or warranty
hereunder whatsoever.
SECTION 6.04. No Segregation of Monies; No Interest
Any monies paid to or retained by the Loan Trustee
pursuant to any provision hereof and not then required to be
distributed to the Note Holders, Lessee or the Owner Trustee as
provided in Article III hereof need not be segregated in any
manner except to the extent required by Law or Section 4.5.1 of
the Lease and Section 5.09 hereof, and may be deposited under
such general conditions as may be prescribed by Law, and the Loan
Trustee shall not be liable for any interest thereon (except that
the Loan Trustee shall invest all monies held as directed by
Lessee so long as no Lease Event of Default or Lease Default has
occurred and is continuing (or in the absence of such direction,
by the Majority In Interest of Note Holders) in Cash Equivalents;
provided, however, that any payments received, or applied
hereunder, by the Loan Trustee shall be accounted for by the Loan
Trustee so that any portion thereof paid or applied pursuant
hereto shall be identifiable as to the source thereof.
SECTION 6.05. Reliance; Agreements; Advice of Counsel
Neither the Owner Trustee nor the Loan Trustee shall
incur any liability to anyone in acting upon any signature,
instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper
believed by it to be genuine and believed by it to be signed by
the proper party or parties. The Owner Trustee and the Loan
Trustee may accept a copy of a resolution of the Board of
Directors (or Executive Committee thereof) of any party to the
Participation Agreement, certified by the Secretary or an
Assistant Secretary thereof as duly adopted and in full force and
effect, as conclusive evidence that such resolution has been duly
adopted and that the same is in full force and effect. As to the
aggregate unpaid Original Amount of Equipment Notes outstanding
as of any date, the Owner Trustee may for all purposes hereof
rely on a certificate signed by any Vice President or other
authorized corporate trust officer of the Loan Trustee. As to any
fact or matter relating to Lessee the manner of which is not
specifically described herein, the Owner Trustee and the Loan
Trustee may for all purposes hereof rely on a certificate, signed
by a duly authorized officer of Lessee, as to such fact or
matter, and such certificate shall constitute full protection to
the Owner Trustee and the Loan Trustee for any action taken or
omitted to be taken by them in good faith in reliance thereon.
The Loan Trustee shall assume, and shall be fully protected in
assuming, that the Owner Trustee is authorized by the Trust
Agreement to enter into this Trust Indenture and to take all
action to be taken by it pursuant to the provisions hereof, and
shall not inquire into the authorization of the Owner Trustee
59
with respect thereto. In the administration of the trusts
hereunder, the Owner Trustee and the Loan Trustee each may
execute any of the trusts or powers hereof and perform its powers
and duties hereunder directly or through agents or attorneys and
may, at the expense of the Trust Indenture Estate, advise with
counsel, accountants and other skilled persons to be selected and
retained by it, and the Owner Trustee and the Loan Trustee shall
not be liable for anything done, suffered or omitted in good
faith by them in accordance with the written advice or written
opinion of any such counsel, accountants or other skilled
persons.
SECTION 6.06. Capacity in Which Acting
The Owner Trustee acts hereunder solely as trustee as
herein and in the Trust Agreement provided, and not in its
individual capacity, except as otherwise expressly provided
herein, in the Trust Agreement and in the Participation
Agreement.
SECTION 6.07. Compensation
The Trustee shall be entitled to reasonable
compensation, including expenses and disbursements (including the
reasonable fees and expenses of counsel), for all services
rendered hereunder and shall, on and subsequent to an Event of
Default hereunder, have a priority claim on the Trust Indenture
Estate for the payment of such compensation, to the extent that
such compensation shall not be paid by Lessee, and shall have the
right, on and subsequent to an Event of Default hereunder, to use
or apply any monies held by it hereunder in the Trust Indenture
Estate toward such payments. The Loan Trustee agrees that it
shall have no right against the Loan Participants, the Note
Holders, the Owner Trustee or the Owner Participant for any fee
as compensation for its services as trustee under this Trust
Indenture.
SECTION 6.08. Instructions from Note Holders
In the administration of the trusts created hereunder,
the Loan Trustee shall have the right to seek instructions from a
Majority in Interest of Note Holders should any provision of this
Trust Indenture appear to conflict with any other provision
herein or should the Loan Trustee's duties or obligations
hereunder be unclear, and the Loan Trustee shall incur no
liability in refraining from acting until it receives such
instructions. The Loan Trustee shall be fully protected for
acting in accordance with any instructions received under this
Section 6.08.
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ARTICLE VII
INDEMNIFICATION OF LOAN TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification
The Owner Trustee, not in its individual capacity, but
solely as Owner Trustee, hereby agrees, whether or not any of the
transactions contemplated hereby or the Refinancing Transaction
shall be consummated, except as to matters covered by any
indemnity furnished as contemplated by Section 5.03 hereof and
except as otherwise provided in Section 2.03 or 2.04(b) hereof,
to assume liability for, and does hereby indemnify, protect, save
and keep harmless the Loan Trustee (in its individual and trust
capacities), and its successors, assigns, agents and servants,
from and against any and all liabilities, obligations, losses,
damages, penalties, taxes (excluding any taxes payable by the
Loan Trustee on or measured by any compensation received by the
Loan Trustee for its services under this Trust Indenture),
claims, actions, suits, costs, expenses or disbursements
(including legal fees and expenses) of any kind and nature
whatsoever, which may be imposed on, incurred by or asserted
against the Loan Trustee (whether or not also indemnified against
by any other person under any other document) in any way relating
to or arising out of this Trust Indenture (or, upon consummation
of the Refinancing Transaction, the Refunding Agreement) or any
other Operative Agreement to which it is a party or the
enforcement of any of the terms of any thereof, or in any way
relating to or arising out of the manufacture, purchase,
acceptance, non-acceptance, rejection, ownership, delivery,
lease, possession, use, operation, condition, sale, return or
other disposition of the Aircraft or any Engine (including,
without limitation, latent or other defects, whether or not
discoverable, and any claim for patent, trademark or copyright
infringement), or in any way relating to or arising out of the
administration of the Trust Indenture Estate or the action or
inaction of the Loan Trustee hereunder except only in the case of
willful misconduct or gross negligence (or negligence in the case
of handling funds) of the Loan Trustee in the performance of its
duties hereunder or resulting from the inaccuracy of any
representation or warranty of the Loan Trustee (in its individual
capacity) referred to in Section 6.03 hereof, or as provided in
Section 6.01 hereof or in the last sentence of Section 5.04
hereof, or as otherwise excluded by the terms of Section 10.1 or
10.3 of the Participation Agreement from Lessee's indemnities
under such Sections. In addition, if necessary, the Loan Trustee
shall be entitled to indemnification from the Trust Indenture
Estate for any liability, obligation, loss, damage, penalty,
claim, action, suit, cost, expense or disbursement indemnified
against pursuant to this Section 7.01 to the extent not
reimbursed by Lessee or others, but without releasing any of them
from their respective agreements of reimbursement; and to secure
61
the same the Loan Trustee shall have a prior Lien on the Trust
Indenture Estate. Without limiting the foregoing, the Loan
Trustee agrees that, prior to seeking indemnification from the
Trust Indenture Estate, it will demand, and diligently pursue in
good faith (but with no duty to exhaust all legal remedies
therefor), indemnification available to the Loan Trustee from
Lessee under the Lease or the Participation Agreement.
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee
In the case of any appointment of a successor to the
Owner Trustee pursuant to the Trust Agreement including upon any
merger, conversion, consolidation or sale of substantially all of
the corporate trust business of the Owner Trustee pursuant to the
Trust Agreement, the successor Owner Trustee shall give prompt
written notice thereof to the Loan Trustee, Lessee and the Note
Holders.
SECTION 8.02. Resignation of Loan Trustee; Appointment
of Successor
(a) The Loan Trustee or any successor thereto may
resign at any time without cause by giving at least 30 days'
prior written notice to Lessee, the Owner Trustee, the Owner
Participant and each Note Holder, such resignation to be
effective upon the acceptance of the trusteeship by a successor
Loan Trustee. In addition, a Majority in Interest of Note Holders
may at any time (but only with the consent of Lessee, which
consent shall not be unreasonably withheld, except that such
consent shall not be necessary if a Lease Event of Default is
continuing) remove the Loan Trustee without cause by an
instrument in writing delivered to the Owner Trustee, Lessee, the
Owner Participant and the Loan Trustee, and the Loan Trustee
shall promptly notify each Note Holder thereof in writing, such
removal to be effective upon the acceptance of the trusteeship by
a successor Loan Trustee. In the case of the resignation or
removal of the Loan Trustee, a Majority in Interest of Note
Holders may appoint a successor Loan Trustee by an instrument
signed by such holders, which successor, so long as no Lease
Event of Default shall have occurred and be continuing, shall be
subject to Lessee's reasonable approval. If a successor Loan
Trustee shall not have been appointed within 30 days after such
notice of resignation or removal, the Loan Trustee, the Owner
Trustee, the Owner Participant or any Note Holder may apply to
any court of competent jurisdiction to appoint a successor Loan
Trustee to act until such time, if any, as a successor shall have
been appointed as above provided. The successor Loan Trustee so
appointed by such court shall immediately and without further act
62
be superseded by any successor Loan Trustee appointed as above
provided.
(b) Any successor Loan Trustee, however appointed,
shall execute and deliver to the Owner Trustee, the predecessor
Loan Trustee and Lessee an instrument accepting such appointment
and assuming the obligations of the Loan Trustee under the
Participation Agreement arising from and after the time of such
appointment, and thereupon such successor Loan Trustee, without
further act, shall become vested with all the estates,
properties, rights, powers and duties of the predecessor Loan
Trustee hereunder in the trust hereunder applicable to it with
like effect as if originally named the Loan Trustee herein; but
nevertheless upon the written request of such successor Loan
Trustee, such predecessor Loan Trustee shall execute and deliver
an instrument transferring to such successor Loan Trustee, upon
the trusts herein expressed applicable to it, all the estates,
properties, rights and powers of such predecessor Loan Trustee,
and such predecessor Loan Trustee shall duly assign, transfer,
deliver and pay over to such successor Loan Trustee all monies or
other property then held by such predecessor Loan Trustee
hereunder.
(c) Any successor Loan Trustee, however appointed,
shall be a bank or trust company having its principal place of
business in the Borough of Manhattan, City and State of New York;
Chicago, Illinois; Hartford, Connecticut; Wilmington, Delaware;
or Boston, Massachusetts and having (or whose obligations under
the Operative Agreements are guaranteed by an affiliated entity
having) a combined capital and surplus of at least $100,000,000,
if there be such an institution willing, able and legally
qualified to perform the duties of the Loan Trustee hereunder
upon reasonable or customary terms.
(d) Any corporation into which the Loan Trustee may be
merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or
consolidation to which the Loan Trustee shall be a party, or any
corporation to which substantially all the corporate trust
business of the Loan Trustee may be transferred, shall, subject
to the terms of paragraph (c) of this Section 8.02, be a
successor Loan Trustee and the Loan Trustee under this Trust
Indenture without further act.
SECTION 8.03. Appointment of Additional and Separate
Trustees
(a) Whenever (i) the Loan Trustee shall deem it
necessary or desirable in order to conform to any Law of any
jurisdiction in which all or any part of the Trust Indenture
Estate shall be situated or to make any claim or bring any suit
with respect to or in connection with the Trust Indenture Estate,
63
this Trust Indenture, any other Indenture Agreement, the
Equipment Notes or any of the transactions contemplated by the
Participation Agreement, (ii) the Loan Trustee shall be advised
by counsel satisfactory to it that it is so necessary or prudent
in the interests of the Note Holders (and the Loan Trustee shall
so advise the Owner Trustee and Lessee), or (iii) the Loan
Trustee shall have been requested to do so by a Majority in
Interest of Note Holders, then in any such case, the Loan Trustee
and, upon the written request of the Loan Trustee, the Owner
Trustee, shall execute and deliver an indenture supplemental
hereto and such other instruments as may from time to time be
necessary or advisable either (1) to constitute one or more bank
or trust companies or one or more persons approved by the Loan
Trustee, either to act jointly with the Loan Trustee as
additional trustee or trustees of all or any part of the Trust
Indenture Estate, or to act as separate trustee or trustees of
all or any part of the Trust Indenture Estate, in each case with
such rights, powers, duties and obligations consistent with this
Trust Indenture as may be provided in such supplemental indenture
or other instruments as the Loan Trustee or a Majority in
Interest of Note Holders may deem necessary or advisable, or (2)
to clarify, add to or subtract from the rights, powers, duties
and obligations theretofore granted any such additional or
separate trustee, subject in each case to the remaining
provisions of this Section 8.03. If the Owner Trustee shall not
have taken any action requested of it under this Section 8.03(a)
that is permitted or required by its terms within 15 days after
the receipt of a written request from the Loan Trustee so to do,
or if an Event of Default shall have occurred and be continuing,
the Loan Trustee may act under the foregoing provisions of this
Section 8.03(a) without the concurrence of the Owner Trustee; and
the Owner Trustee hereby irrevocably appoints (which appointment
is coupled with an interest) the Loan Trustee, its agent and
attorney-in-fact to act for it under the foregoing provisions of
this Section 8.03(a) in either of such contingencies. The Loan
Trustee may, in such capacity, execute, deliver and perform any
such supplemental indenture, or any such instrument, as may be
required for the appointment of any such additional or separate
trustee or for the clarification of, addition to or subtraction
from the rights, powers, duties or obligations theretofore
granted to any such additional or separate trustee. In case any
additional or separate trustee appointed under this Section
8.03(a) shall die, become incapable of acting, resign or be
moved, all the assets, property, rights, powers, trusts, duties
and obligations of such additional or separate trustee shall
revert to the Loan Trustee until a successor additional or
separate trustee is appointed as provided in this Section
8.03(a).
(b) No additional or separate trustee shall be
entitled to exercise any of the rights, powers, duties and
obligations conferred upon the Loan Trustee in respect of the
64
custody, investment and payment of monies and all monies received
by any such additional or separate trustee from or constituting
part of the Trust Indenture Estate or otherwise payable under any
Operative Agreement to the Loan Trustee shall be promptly paid
over by it to the Loan Trustee. All other rights, powers, duties
and obligations conferred or imposed upon any additional or
separate trustee shall be exercised or performed by the Loan
Trustee and such additional or separate trustee jointly except to
the extent that applicable Law of any jurisdiction in which any
particular act is to be performed renders the Loan Trustee
incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations (including the
holding of title to all or part of the Trust Indenture Estate in
any such jurisdiction) shall be exercised and performed by such
additional or separate trustee. No additional or separate trustee
shall take any discretionary action except on the instructions of
the Loan Trustee or a Majority in Interest of Note Holders. No
trustee hereunder shall be personally liable by reason of any act
or omission of any other trustee hereunder, except that the Loan
Trustee shall be liable for the consequences of its lack of
reasonable care in selecting, and the Loan Trustee's own actions
in acting with, any additional or separate trustee. Each
additional or separate trustee appointed pursuant to this Section
8.03 shall be subject to, and shall have the benefit of Articles
IV through VIII and Article X hereof insofar as they apply to the
Loan Trustee. The powers of any additional or separate trustee
appointed pursuant to this Section 8.03 shall not in any case
exceed those of the Loan Trustee hereunder.
(c) If at any time the Trustee shall deem it no longer
necessary or in order to conform to any such Lease or take any
such action or shall be advised by such counsel that it is no
longer so necessary or desirable in the interest of the Note
Holders, or in the event that the Loan Trustee shall have been
requested to do so in writing by a Majority in Interest of Note
Holders, the Loan Trustee and, upon the written request of the
Loan Trustee, the Owner Trustee, shall execute and deliver an
indenture supplemental hereto and all other instruments and
agreements necessary or proper to remove any additional or
separate trustee. The Loan Trustee may act on behalf of the Owner
Trustee under this Section 8.03(c) when and to the extent it
could so act under Section 8.03(a) hereof.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 9.01. Instructions of Majority; Limitations
65
(a) Except as provided in Section 5.02 hereof, the
Owner Trustee agrees it shall not enter into any amendment of or
supplement to the Lease, the Purchase Agreement, the Purchase
Agreement Assignment, the Consent and Agreement or the Engine
Consent and Agreement, or execute and deliver any written waiver
or modification of, or consent under, the terms of the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the
Consent and Agreement or the Engine Consent and Agreement, unless
such supplement, amendment, waiver, modification or consent is
consented to in writing by the Loan Trustee and a Majority in
Interest of Note Holders. Anything to the contrary contained
herein notwithstanding, without the necessity of the consent of
any of the Note Holders or the Loan Trustee, (i) any Excluded
Payments payable to the Owner Participant may be modified,
amended, changed or waived in such manner as shall be agreed to
by the Owner Participant and Lessee and (ii) the Owner Trustee
and Lessee may enter into amendments of or additions to the Lease
to modify Section 5 (except to the extent that such amendment
would affect the rights or exercise of remedies under Section 15
of the Lease) or Section 17 of the Lease so long as such
amendments, modifications and changes do not and would not affect
the time of, or reduce the amount of, Rent payments until after
the payment in full of all Secured Obligations or otherwise
adversely affect the Note Holders.
(b) Without limiting the provisions of Section 9.01
hereof, the Loan Trustee agrees with the Note Holders that it
shall not enter into any amendment, waiver or modification of,
supplement or consent to this Trust Indenture, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the
Consent and Agreement, the Engine Consent and Agreement or the
Participation Agreement, or any other agreement included in the
Trust Indenture Estate, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by a
Majority in Interest of Note Holders, but upon the written
request of a Majority in Interest of Note Holders, the Trustee
shall from time to time enter into any such supplement or
amendment, or execute and deliver any such waiver, modification
or consent, as may be specified in such request and as may be (in
the case of any such amendment, supplement or modification), to
the extent such agreement is required, agreed to by the Owner
Trustee and Lessee or, as may be appropriate, the Airframe
Manufacturer or the Engine Manufacturer; provided, however, that,
without the consent of each holder of an affected Equipment Note
then outstanding, no such amendment of or supplement to this
Trust Indenture, the Lease, the Purchase Agreement, the Purchase
Agreement Assignment, the Consent and Agreement, the Engine
Consent and Agreement or the Participation Agreement or waiver or
modification of the terms of, or consent under, any thereof,
shall (i) modify any of the provisions of this Section 9.01, or
of Article II or III or Section 4.02, 4.04(c), 4.04(d), 5.02 or
5.06 hereof, Section 13.3, 14 (except to add an Event of Default)
66
or 16 of the Lease, Section 19 of the Participation Agreement,
the definitions of "Event of Default," "Default," "Lease Event of
Default," "Lease Default," "Majority in Interest of Note
Holders," "Make-Whole Amount" or "Note Holder," or the percentage
of Note Holders required to take or approve any action hereunder,
(ii) reduce the amount, or change the time of payment or method
of calculation of any amount, of Original Amount, Make-Whole
Amount, if any, or interest with respect to any Equipment Note,
or alter or modify the provisions of Article III hereof with
respect to the order of priorities in which distribution
thereunder shall be made as among the Note Holders, the Owner
Trustee and Lessee, except as contemplated by Section 2.13
hereof, (iii) reduce, modify or amend any indemnities in favor of
the Owner Trustee, the Loan Trustee or the Note Holders (except
that the Owner Trustee (in its individual capacity) or the Loan
Trustee, as the case may be, may consent to any waiver or
reduction of an indemnity payable to it), (iv) consent to any
change in the Trust Indenture or the Lease which would permit
redemption of Equipment Notes earlier permitted under Section
2.10 or 2.11 hereof or the purchase or exchange of the Equipment
Notes other than as permitted by Section 2.14 hereof, (v) except
as contemplated by the Lease or the Participation Agreement,
reduce the amount or extend the time of payment of Basic Rent,
Stipulated Loss Value, or Termination Value for the Aircraft in
each case as set forth in the Lease, or modify, amend or
supplement the Lease or consent to any assignment of the Lease,
in either case releasing Lessee from its obligations in respect
of the payment of Basic Rent, Stipulated Loss Value or
Termination Value for the Aircraft or altering the absolute and
unconditional character of the obligations of Lessee to pay Rent
as set forth in Sections 3 and 16 of the Lease or (vi) permit the
creation of any Lien on the Trust Indenture Estate or any part
thereof other than Permitted Liens or deprive any Note Holder of
the benefit of the Lien of this Trust Indenture on the Trust
Indenture Estate, except as provided in connection with the
exercise of remedies under Article IV hereof.
(c) At any time after the date hereof, the Owner
Trustee and the Loan Trustee may enter into one or more
agreements supplemental hereto without the consent of any Note
Holder for any of the following purposes: (i) (a) to cure any
defect or inconsistency herein or in the Equipment Notes, or to
make any change not inconsistent with the provisions hereof
(provided that such change does not adversely affect the
interests of any Note Holder in its capacity solely as Note
Holder) or (b) to cure any ambiguity or correct any mistake; (ii)
to evidence the succession of another party as the Owner Trustee
in accordance with the terms of the Trust Agreement or to
evidence the succession of a new trustee hereunder pursuant
hereto, the removal of the trustee hereunder or the appointment
of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage
67
or pledge any property to or with the Loan Trustee or to make any
other provisions with respect to matters or questions arising
hereunder so long as such action shall not adversely affect the
interests of the Note Holders in its capacity solely as Note
Holder; (iv) to correct or amplify the description of any
property at any time subject to the Lien of this Trust Indenture
or better to assure, convey and confirm unto the Loan Trustee any
property subject or required to be subject to the Lien of this
Trust Indenture, the Airframe or Engines or any Replacement
Airframe or Replacement Engine; (v) to add to the covenants of
the Owner Trustee for the benefit of the Note Holders, or to
surrender any rights or power herein conferred upon the Owner
Trustee, the Owner Participant or Lessee; (vi) to add to the
rights of the Note Holders; and (vii) to include on the Equipment
Notes any legend as may be required by Law.
SECTION 9.02. Trustees Protected
If, in the opinion of the institution acting as Owner
Trustee under the Trust Agreement or the institution acting as
Loan Trustee hereunder, any document required to be executed by
it pursuant to the terms of Section 9.01 hereof affects any
right, duty, immunity or indemnity with respect to such
institution under this Trust Indenture or the Lease, such
institution may in its discretion decline to execute such
document.
SECTION 9.03. Documents Mailed to Note Holders
Promptly after the execution by the Owner Trustee or
the Loan Trustee of any document entered into pursuant to Section
9.01 hereof, the Loan Trustee shall mail, by first class mail,
postage prepaid, a copy thereof to Lessee and to each Note Holder
at its address last set forth in the Equipment Note Register, but
the failure of the Loan Trustee to mail such copies shall not
impair or affect the validity of such document.
68
SECTION 9.04. No Request Necessary for Lease
Supplement or Trust Indenture Supplement
No written request or consent of the Loan Trustee, the
Note Holders or the Owner Participant pursuant to Section 9.01
hereof shall be required to enable the Owner Trustee to enter
into any Lease Supplement specifically required by the terms of
the Lease or to execute and deliver a Trust Indenture Supplement
specifically required by the terms hereof.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Trust Indenture
Upon (or at any time after) payment in full of the
Original Amount of, Make-Whole Amount, if any, and interest on
and all other amounts due under all Equipment Notes and provided
that there shall then be no other Secured Obligations due to the
Loan Participants, the Note Holders and the Loan Trustee
hereunder or under the Participation Agreement, the Owner Trustee
shall direct the Loan Trustee to execute and deliver to or as
directed in writing by the Owner Trustee an appropriate
instrument releasing the Aircraft and the Engines from the Lien
of this Trust Indenture and releasing the Lease, the Purchase
Agreement, the Purchase Agreement Assignment with the Consent and
Agreement and the Engine Consent and Agreement attached thereto
from the assignment and pledge thereof hereunder and the Loan
Trustee shall execute and deliver such instrument as aforesaid
and give written notice thereof to Lessee; provided, however,
that this Trust Indenture and the trusts created hereby shall
earlier terminate and this Trust Indenture shall be of no further
force or effect upon any sale or other final disposition by the
Loan Trustee of all property constituting part of the Trust
Indenture Estate and the final distribution by the Loan Trustee
of all monies or other property or proceeds constituting part of
the Trust Indenture Estate in accordance with the terms hereof.
Except as aforesaid otherwise provided, this Trust Indenture and
the trusts created hereby shall continue in full force and effect
in accordance with the terms hereof.
SECTION 10.02. No Legal Title to Trust Indenture
Estate in Note Holders
No holder of an Equipment Note shall have legal title
to any part of the Trust Indenture Estate. No transfer, by
operation of law or otherwise, of any Equipment Note or other
right, title and interest of any Note Holder in and to the Trust
Indenture Estate or hereunder shall operate to terminate this
Trust Indenture or entitle such holder or any successor or
69
transferee of such holder to an accounting or to the transfer to
it of any legal title to any part of the Trust Indenture Estate.
SECTION 10.03. Sale of Aircraft by Loan Trustee Is
Binding
Any sale or other conveyance of the Trust Indenture
Estate, or any part thereof (including any part thereof or
interest therein), by the Loan Trustee made pursuant to the terms
of this Trust Indenture shall bind the Note Holders and shall be
effective to transfer or convey all right, title and interest of
the Trustee, the Owner Trustee, the Owner Participant and such
holders in and to such Trust Indenture Estate or part thereof. No
purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such sale
or conveyance or as to the application of any sale or other
proceeds with respect thereto by the Loan Trustee.
SECTION 10.04. Trust Indenture for Benefit of Owner
Trustee, Loan Trustee, Owner Participant and Note Holders
Except as provided in Section 8.7.8 of the
Participation Agreement, nothing in this Trust Indenture, whether
express or implied, shall be construed to give any person other
than the Owner Trustee, the Loan Trustee, the Owner Participant
and the Note Holders, any legal or equitable right, remedy or
claim under or in respect of this Trust Indenture.
SECTION 10.05. Notices
Unless otherwise expressly specified or permitted by
the terms hereof, all notices, requests, demands, authorizations,
directions, consents, waivers or documents provided or permitted
by this Trust Indenture to be made, given, furnished or filed
shall be in writing, personally delivered or mailed by certified
mail, postage prepaid, or by facsimile or confirmed telex, and
(i) if to the Owner Trustee, addressed to it at 79 South Main
Street, Salt Lake City, Utah 84111 with a copy to the Owner
Participant addressed as provided in clause (iii) below, (ii) if
to Loan Trustee, addressed to it at its office at Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890,
Attention: Corporate Trust Administration, facsimile number (302)
651-8882, (iii) if to any Participant, Lessee or any Note Holder,
addressed to such party at such address as such party shall have
furnished by notice to the Owner Trustee and the Loan Trustee,
or, until an address is so furnished, addressed to the address of
such party (if any) set forth on Schedule 1 to the Participation
Agreement or in the Equipment Note Register. Whenever any notice
in writing is required to be given by the Owner Trustee, any
Participant or the Loan Trustee or any Note Holder to any of the
other of them, such notice shall be deemed given and such
requirement satisfied when such notice is received, or if such notice
70
is mailed by certified mail, postage prepaid, three Business Days
after being mailed, addressed as provided above. Any party hereto
may change the address to which notices to such party will be
sent by giving notice of such change to the other parties to this
Trust Indenture.
SECTION 10.06. Severability
Any provision of this Trust Indenture which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof. Any such prohibition or unenforceability in any
particular jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10.07. No Oral Modification or Continuing
Waivers
No term or provision of this Trust Indenture or the
Equipment Notes may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the Owner
Trustee and the Loan Trustee, in compliance with Section 9.01
hereof. Any waiver of the terms hereof or of any Equipment Note
shall be effective only in the specific instance and for the
specific purpose given.
SECTION 10.08. Successors and Assigns
All covenants and agreements contained herein shall be
binding upon, and inure to the benefit of, each of the parties
hereto and the permitted successors and assigns of each, all as
herein provided. Any request, notice, direction, consent, waiver
or other instrument or action by any Note Holder shall bind the
successors and assigns of such holder. This Trust Indenture and
the Trust Indenture Estate shall not be affected by any amendment
or supplement to the Trust Agreement or by any other action taken
under or in respect of the Trust Agreement, except that each
reference in this Trust Indenture to the Trust Agreement shall
mean the Trust Agreement as amended and supplemented from time to
time to the extent permitted hereby, thereby and by the
Participation Agreement. Each Note Holder by its acceptance of an
Equipment Note agrees to be bound by this Trust Indenture and all
provisions of the Participation Agreement applicable to a Loan
Participant or a Note Holder.
SECTION 10.09. Headings
The headings of the various Articles and sections
herein and in the table of contents hereto are for convenience of
reference only and shall not define or limit any of the terms or
provisions hereof.
71
SECTION 10.10. Normal Commercial Relations
Anything contained in this Trust Indenture to the
contrary notwithstanding, Owner Trustee, Loan Trustee, any
Participant or any bank or other Affiliate of such Participant
may conduct any banking or other financial transactions, and have
banking or other commercial relationships, with Lessee, fully to
the same extent as if this Trust Indenture were not in effect,
including without limitation the making of loans or other
extensions of credit to Lessee for any purpose whatsoever,
whether related to any of the transactions contemplated hereby or
otherwise.
SECTION 10.11. Governing Law; Counterpart Form
THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE. THIS TRUST INDENTURE IS BEING DELIVERED
IN THE STATE OF NEW YORK. This Trust Indenture may be executed by
the parties hereto in separate counterparts (or upon separate
signature pages bound together into one or more counterparts),
each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but
one and the same instrument.
SECTION 10.12. Voting By Note Holders
All votes of the Note Holders shall be governed by a
vote of a Majority in Interest of Note Holders, except as
otherwise provided herein.
SECTION 10.13. Bankruptcy
It is the intention of the parties that the Owner
Trustee, as lessor under the Lease (and the Loan Trustee as
assignee of the Owner Trustee hereunder), shall be entitled to
the benefits of Section 1110 with respect to the right to take
possession of the Aircraft, Airframe, Engines and Parts as
provided in the Lease in the event of a case under Chapter 11 of
the Bankruptcy Code in which Lessee is a debtor, and in any
instance where more than one construction is possible of the
terms and conditions hereof or any other pertinent Operative
Agreement, each such party agrees that a construction which would
preserve such benefits shall control over any construction which
would not preserve such benefits.
* * *
72
IN WITNESS WHEREOF, the parties hereto have caused
this Trust Indenture and Mortgage 114 to be duly executed by
their respective officers thereof duly authorized as of the day
and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION, not in
its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee, as Owner Trustee
By:_________________________
Name:_______________________
Title:______________________
WILMINGTON TRUST COMPANY, as
Loan Trustee
By:_________________________
Name:_______________________
Title:______________________
73
--------------------------------
EXHIBIT A
TO
TRUST INDENTURE AND MORTGAGE
--------------------------------
TRUST INDENTURE AND MORTGAGE 114 SUPPLEMENT NO. 1
This TRUST INDENTURE AND MORTGAGE 114 SUPPLEMENT NO.
1, dated __________ ____, (herein called this "Trust Indenture Supplement")
of FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its
individual capacity, but solely as Owner Trustee (herein called
the "Owner Trustee") under that certain Trust Agreement 114 dated
as of , 1996 (the "Trust Agreement"), between the Owner Trustee
and the Owner Participant named therein.
W I T N E S S E T H:
WHEREAS, the Amended and Restated Trust Indenture and
Mortgage 114, dated as of , 1996 (as amended and supplemented to
the date hereof, the "Trust Indenture") between the Owner Trustee
and Wilmington Trust Company, as Loan Trustee (the "Loan
Trustee"), provides for the execution and delivery of a
supplement thereto substantially in the form hereof, which shall
particularly describe the Aircraft, and shall specifically
mortgage such Aircraft to the Loan Trustee; and
WHEREAS, each of the Trust Agreement and Trust
Indenture relates to the Airframe and Engines described below,
and a counterpart of the Trust Indenture is attached hereto and
made a part hereof and this Trust Indenture Supplement, together
with such counterpart of the Trust Indenture, is being filed for
recordation on the date hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement
witnesseth that the Owner Trustee hereby confirms that the Lien
of the Trust Indenture on the Trust Indenture Estate covers all
of Owner Trustee's right, title and interest in and to the
following described property:
2
AIRFRAME
One airframe identified as follows:
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
------------ ----- ------ -------------
The Boeing Company 757-224 N12114 27556
together with all of the Owner Trustee's right, title and
interest in and to all Parts of whatever nature, whether now
owned or hereinafter acquired and which are from time to time
incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or
more rated take-off horsepower or the equivalent thereof,
identified as follows:
Manufacturer Manufacturer's Model Serial Number
------------ -------------------- -------------
Rolls-Royce plc RB211-535E4-B-37 31319
Rolls Royce plc RB211-535E4-B-37 31278
together with all of Owner Trustee's right, title and interest in
and to all Parts of whatever nature, whether now owned or
hereafter acquired and which are from time to time incorporated
or installed in or attached to either of such engines.
Together with all of Owner Trustee's right, tide and
interest in and to (a) all Parts of whatever nature, which from
time to time are included within the definition of "Airframe" or
"Engine", whether now owned or hereafter acquired, including all
substitutions, renewals and replacements of and additions,
improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and
accumulations which constitute appliances, parts, instruments,
appurtenances, accessories, furnishings or other equipment
excluded from the definition of Parts) and (b) all Aircraft
Documents.
As further security for the obligations referred to
above and secured by the Trust Indenture and hereby, the Owner
Trustee has granted, bargained, sold, assigned, transferred,
conveyed, mortgaged, pledged and confirmed, and does hereby
grant, bargain, sell, assign, transfer, convey, mortgage, pledge
and confirm, unto the Loan Trustee, its successors and assigns,
for the security and benefit of the Loan Participants and of the
Note Holders, in the trust created by the Trust Indenture, all of
3
the right, title and interest of the Owner Trustee in, to and
under the Lease Supplement of even date herewith covering the
property described above.
Notwithstanding any provision hereof, no Excluded
Payment shall constitute security for any of the aforementioned
obligations.
TO HAVE AND TO HOLD all and singular the aforesaid
property unto the Loan Trustee, its successors and assigns, in
trust for the equal and proportionate benefit and security of the
Note Holders, except as provided in Section 2.15 and Article III
of the Trust Indenture without any preference, distinction or
priority of any one Equipment Note over any other by reason of
priority of time of issue, sale, negotiation, date of maturity
thereof or otherwise for any reason whatsoever, and for the uses
and purposes and subject to the terms and provisions set forth in
the Trust Indenture.
This Trust Indenture Supplement shall be construed as
supplemental to the Trust Indenture and shall form a part
thereof. The Trust Indenture is each hereby incorporated by
reference herein and is hereby ratified, approved and confirmed.
AND, FURTHER, the Owner Trustee hereby acknowledges
that the Aircraft referred to in this Trust Indenture Supplement
and the aforesaid Lease Supplement has been delivered to the
Owner Trustee and is included in the property of the Owner
Trustee covered by all the terms and conditions of the Trust
Agreement, subject to the pledge and mortgage thereof under the
Trust Indenture.
* * *
IN WITNESS WHEREOF, the Owner Trustee has caused this
Trust Indenture Supplement to be duly executed by one of its
officers, thereunto duly authorized, on the day and year first
above written.
FIRSTSECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, not in its individual
capacity, but solely as Owner
Trustee, Owner Trustee
By:____________________________________
Name:
Title:
--------------------------------
AMENDED AND RESTATED
TRUST INDENTURE AND
MORTGAGE 114
--------------------------------
SCHEDULE I
=========================================================
Original Amount Interest Rate
--------------- -------------
- ---------------------------------------------------------
Series A:
- ---------------------------------------------------------
Series B:
- ---------------------------------------------------------
Series C:
- ---------------------------------------------------------
Series D:
=========================================================
Equipment Note Amortization
Series A
--------
Percentage of Original
Payment Date Amount to be Paid
------------ -----------------
Equipment Note Amortization
Series B
--------
Percentage of Original
Payment Date Amount to be Paid
------------ -----------------
Equipment Note Amortization
Series C
--------
Percentage of Original
Payment Date Amount to be Paid
------------ -----------------
Equipment Note Amortization
Series D
--------
Percentage of Original
Payment Date Amount to be Paid
------------ -----------------
SCHEDULE I
Original Amount Interest Rate
--------------- -------------
Series A.........
Series B.........
Series C.........
Series D.........
[Intentionally omitted from the version of
this document filed with the FAA as
containing confidential financial information.]
2
Equipment Note Amortization
SERIES A
--------
Percentage of Original
Payment Date Amount to be Paid
------------ -----------------
[Intentionally omitted from the version of
this document filed with the FAA as
containing confidential financial information.]
3
SERIES B
--------
Percentage of Original
Payment Date Amount to be Paid
------------ -----------------
[Intentionally omitted from the version of
this document filed with the FAA as
containing confidential financial information.]
4
SERIES C
--------
Percentage of Original
Payment Date Amount to be Paid
------------ -----------------
[Intentionally omitted from the version of
this document filed with the FAA as
containing confidential financial information.]
5
SERIES D
--------
Percentage of Original
Payment Date Amount to be Paid
------------ -----------------
[Intentionally omitted from the version of
this document filed with the FAA as
containing confidential financial information.]
TRUST AGREEMENT 114 AMENDMENT NO. 1
THIS TRUST AGREEMENT 114 AMENDMENT NO. 1
("Amendment"), dated as of May __, 1996, is between GAUCHO-2
INC., a Delaware corporation, in its capacity as owner
participant ("Owner Participant") and FIRST SECURITY BANK OF
UTAH, NATIONAL ASSOCIATION, a national banking association, not
in its individual capacity, except as expressly provided herein,
but solely as Owner Trustee (in its capacity as Owner Trustee,
"Owner Trustee" and in its individual capacity, "First
Security").
RECITALS
(A) Owner Participant and Owner Trustee are parties to
that certain Trust Agreement 114, dated as of July 1, 1995, as
more specifically defined on Appendix A attached hereto relating
to that certain Boeing 757-224 aircraft (the "Trust Agreement").
(B) The parties wish to amend the Trust Agreement as
set forth below in connection with the Refinancing Transaction
(as defined in Annex A attached to the Lease).
NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
AGREEMENT
A. DEFINITIONS. Capitalized terms used but not
defined herein shall have the respective meanings set forth or
incorporated by reference, and shall be construed and interpreted
in the manner described, in Annex A to the Lease.
B. TRUST AGREEMENT AMENDMENTS. The parties agree that,
effective as of the date hereof, the Trust Agreement is hereby
amended as follows:
1. Section 5.1 of the Trust Agreement is hereby amended
by deleting the word ", Guarantor" after the word "Mortgagee" and
before the words "and Lessee" as it appears in line 4 thereof.
2. Section 9.1.1 of the Trust Agreement is hereby
amended by deleting the word ", Guarantor" after the word
"Mortgagee" and before the words "and Lessee" as it appears in
lines 7 and 12 thereof.
3. Section 9.2(b)(vi) of the Trust Agreement is hereby
amended by deleting the word ", Guarantor" after the word
"Mortgagee" and before the words "or the Certificate Holders" as
it appears in line 5 thereof.
C. ENTIRE AGREEMENT. This Amendment is intended to be
a complete and exclusive statement of the terms of the agreement
of the parties hereto and supersedes any prior or contemporaneous
agreements, whether oral or in writing with respect to the
subject matter hereof.
D. STATUS OF TRUST AGREEMENT. This Amendment shall be
construed in connection with, and as a part of, the Trust
Agreement. The terms, conditions, covenants, representations,
agreements, rights, remedies, powers and privileges set forth in
the Trust Agreement, as modified hereby, are hereby confirmed in
all respects by the parties hereto and shall continue in full
force and effect.
E. COUNTERPARTS. This Amendment may be executed in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument
[This space intentionally left blank.]
2
IN WITNESS WHEREOF, this Amendment has been executed
on behalf of each of the parties as of the date first written
above.
GAUCHO-2 INC.
By:_______________________________
Name:
Title:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION
By:_______________________________
Name:
Title:
3
APPENDIX A
Trust Agreement 114, dated as of July 1, 1996, between Gaucho-2,
Inc., as owner participant and First Security Bank of Utah,
National Association.
- -----------------------------------------------------------------
REFUNDING AGREEMENT 116
Dated as of May 20, 1996
Among
CONTINENTAL AIRLINES, INC.,
as Lessee
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
as Owner Trustee
WILMINGTON TRUST COMPANY,
as Pass Through Trustee under each of the
Continental Airlines 1996-2 Pass Through Trust Agreements
THE BOEING COMPANY,
as Loan Participant
GAUCHO-2 INC.,
as Owner Participant
WILMINGTON TRUST COMPANY,
as Subordination Agent
and
WILMINGTON TRUST COMPANY,
as Loan Trustee
-------------
One Boeing 757-224 Aircraft
MSN 27558
Leased to Continental Airlines, Inc.
- -----------------------------------------------------------------
INDEX TO REFUNDING AGREEMENT 116
Page
SECTION 1. Purchase of Refunding Notes; Refunding.................3
SECTION 2. Refunding Notes........................................5
SECTION 3. Conditions Precedent...................................5
SECTION 4. Certain Conditions Precedent to the
Obligations of the Lessee; Conditions
Precedent with Respect to the Pass
Through Trustee......................................10
SECTION 5. Amendment of the Original Indenture...................10
SECTION 6. Amendment of the Original Lease.......................11
SECTION 7. Amendment of the Participation Agreement..............11
SECTION 8. Lessee's Representations and Warranties...............11
SECTION 9. Representations, Warranties and Covenants.............14
SECTION 10. Notices..............................................27
SECTION 11. Expenses.............................................27
SECTION 12. Miscellaneous........................................27
SECTION 13. Governing Law........................................28
Schedules
Schedule I Pass Through Trust Agreements
Schedule II Refunding Notes, Purchasers and Purchase Price
ii
REFUNDING AGREEMENT 116
This REFUNDING AGREEMENT, dated as of May 20, 1996,
among (i) CONTINENTAL AIRLINES, INC., a Delaware corporation (the
"Lessee"), (ii) GAUCHO-2 INC., a Delaware corporation (the "Owner
Participant"), (iii) FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, a national banking association, not in its
individual capacity except as otherwise expressly provided
herein, but solely as trustee (the "Owner Trustee") under the
Trust Agreement (as defined below), (iv) WILMINGTON TRUST
COMPANY, a Delaware banking corporation, not in its individual
capacity except as otherwise expressly provided herein, but
solely as trustee (in such capacity, the "Pass Through Trustee")
under each of the four separate Pass Through Trust Agreements (as
defined below), (v) THE BOEING COMPANY, a Delaware corporation
(the "Loan Participant"), (vi) WILMINGTON TRUST COMPANY, a
Delaware banking corporation, not in its individual capacity, but
solely as subordination agent and trustee (in such capacity, the
"Subordination Agent") under the Intercreditor Agreement (as
defined below), and (vii) WILMINGTON TRUST COMPANY, a Delaware
banking corporation, not in its individual capacity, but solely
as Loan Trustee (the "Loan Trustee") under the Indenture (as
defined below).
W I T N E S S E T H:
WHEREAS, the Lessee, the Owner Participant, the Owner
Trustee, the Loan Participant and the Loan Trustee entered into
Participation Agreement 116, dated as of March 15, 1996 (the
"Original Participation Agreement"), providing for the sale and
lease of one Boeing 757-224 aircraft (the "Aircraft");
WHEREAS, concurrently with the execution and delivery
of the Original Participation Agreement, the Owner Trustee and
Wilmington Trust Company, as mortgagee, entered into the Trust
Indenture and Mortgage 116, dated as of March 15, 1996 (as
supplemented by the Trust Indenture and Mortgage 116 Supplement
No. 1, dated March 27, 1996 (the "Delivery Date"), the "Original
Indenture"), pursuant to which the Owner Trustee issued to the
Loan Participant loan certificates (the "Loan Certificates") as
evidence of the loan then being made by the Loan Participant in
participating in the payment of the Lessor's Cost (as such term
and other capitalized terms used herein without definition are
defined in the Participation Agreement (as defined below) or, if
not defined therein, as defined in the Lease (as defined below))
for the Aircraft;
WHEREAS, concurrently with the execution and
delivery of the Original Participation Agreement, the Owner
Trustee and the Lessee entered into the Lease Agreement 116
relating to the Aircraft, dated as of even date with the Original
Indenture (such Lease Agreement, as supplemented by Lease
Supplement No. 1, dated as of the Delivery Date, the "Original
Lease"), whereby, the Owner Trustee agreed to lease to the
Lessee, and the Lessee agreed to lease from such Owner Trustee,
the Aircraft on its Delivery Date;
WHEREAS, concurrently with the execution and delivery
of the Original Participation Agreement, the Owner Participant
and the Owner Trustee entered into the Trust Agreement 116, dated
as of even date with the Original Indenture (the "Original Trust
Agreement"), pursuant to which the Owner Trustee agreed, among
other things, to hold the Trust Estate defined in Section 1
thereof for the benefit of the Owner Participant thereunder;
WHEREAS, concurrently with the execution and delivery
of this Agreement, the Owner Trustee and the Loan Trustee have
entered into the Amended and Restated Trust Indenture and
Mortgage 116, dated as of the date hereof (the "Indenture
Amendment"; the Original Indenture, as amended by the Indenture
Amendment, the "Indenture"), pursuant to which the Refunding
Notes (as defined below) shall be issued;
WHEREAS, concurrently with the execution and delivery
of this Agreement, the Owner Trustee and the Lessee have entered
into the Lease Agreement 116 Amendment No. 1, dated as of the
date hereof (the "Lease Amendment"; the Original Lease, as
amended by the Lease Amendment, the "Lease"), containing
amendments, modifications and additions necessary to give effect
to the transactions described herein;
WHEREAS, concurrently with the execution and delivery
of this Agreement, the Lessee, the Owner Trustee, the Owner
Participant, the Loan Trustee and the Subordination Agent have
entered into the Participation Agreement 116 Amendment No. 1,
dated as of the date hereof (the "PA Amendment"; the Original
Participation Agreement, as amended by the PA Amendment, the
"Participation Agreement");
WHEREAS, pursuant to each of the Pass Through Trust
Agreements set forth in Schedule 1 hereto (the "Pass Through
Trust Agreements"), on the Refunding Date (as defined in Section
1 below), a separate grantor trust (collectively, the "Pass
Through Trusts" and, individually, a "Pass Through Trust") will
be created to facilitate certain of the transactions contemplated
hereby, including, without limitation, the issuance and sale of
pass through certificates pursuant thereto (collectively, the
2
"Certificates");
WHEREAS, the proceeds from the issuance and sale of
the Certificates will be applied by the Pass Through Trustee to
purchase from the Owner Trustee, on behalf of each Pass Through
Trust, all of the Refunding Notes bearing the same interest rate
as the Certificates issued by such Pass Through Trust; and
WHEREAS, concurrently with the execution and delivery
of this Agreement, (i) De Nationale Investeringsbank N.V., a bank
organized under the laws of The Netherlands (the "Liquidity
Provider"), entered into three revolving credit agreements (each,
a "Liquidity Facility") for the benefit of the Certificateholders
of each Pass Through Trust (other than the Continental Airlines
1996-2D Pass Through Trust (the "Class D Trust")), with the
Subordination Agent, as agent for the Pass Through Trustee on
behalf of each such Pass Through Trust; and (ii) the Pass Through
Trustee, the Liquidity Provider and the Subordination Agent
entered into the Intercreditor Agreement, dated as of the date
hereof (the "Intercreditor Agreement");
NOW, THEREFORE, in consideration of the foregoing
premises and the mutual agreements herein contained and other
good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Purchase of Refunding Notes; Refunding. (a)
Subject to the satisfaction or waiver of the conditions set forth
herein, on the date hereof or on such other date agreed to by the
parties hereto (the "Refunding Date"):
(i) immediately prior to the Closing (as hereinafter
defined), the Lessee shall pay to the Owner Trustee, as a
special payment of Basic Rent under the Lease, an amount
equal to the unpaid interest on the Loan Certificates
accrued up to but not including the Refunding Date;
(ii) the Pass Through Trustee for each Pass Through
Trust shall pay to the Owner Trustee the aggregate purchase
price of the Refunding Notes being issued to such Pass
Through Trustee as set forth in clause (vi) below;
(iii) the Owner Trustee shall pay to the Loan Trustee
for the benefit of the Loan Participant an amount equal to
the aggregate principal amount of Loan Certificates
outstanding on the Refunding Date, together with accrued and
3
unpaid interest on the Loan Certificates up to but not
including the Refunding Date, and all other amounts payable
to the Loan Participant under the Original Indenture and the
Original Participation Agreement (but excluding any Make-Whole
Amount);
(iv) the Loan Trustee shall disburse to the Loan
Participant the amounts of principal and interest, and
other amounts, if any, described in clause (iii) above,
owing to it on the Refunding Date with respect to the Loan
Certificates as a prepayment of the Loan Certificates;
(v) the Loan Participant shall, against receipt of
payment for the Loan Certificates, deliver to the Loan
Trustee the Loan Certificates for cancellation;
(vi) the Owner Trustee shall issue, pursuant to
Article II of the Indenture, to the Subordination Agent on
behalf of the Pass Through Trustee for each of the Pass
Through Trusts, equipment notes of the maturity and
aggregate principal amount and bearing the interest rate
set forth on Schedule II hereto (each a "Refunding Note"
and collectively, the "Refunding Notes") opposite the name
of such Pass Through Trust.
(b) The Owner Participant, by its execution and
delivery hereof, requests and directs the Owner Trustee to
execute and deliver this Agreement and, subject to the terms
hereof, to take the actions contemplated herein.
(c) The closing (the "Closing") of the transactions
described in this Agreement shall take place at the offices of
Cleary, Gottlieb, Steen & Hamilton, One Liberty Plaza, New York,
New York 10006, on the Refunding Date, or at such other place as
the parties hereto may agree.
(d) In case any Pass Through Trustee shall for any
reason fail to purchase the Refunding Notes pursuant to Section
1(a) above on or prior to August 2, 1996, neither the Owner
Trustee nor the Lessee shall have any obligation to pay to the
Loan Participant any amount in respect of the prepayment of the
Loan Certificates and the Loan Certificates shall remain
outstanding and in full force and effect, and the actions
contemplated by Sections 5, 6 and 7 hereof shall not take place.
(e) All payments pursuant to this Section 1 shall be
made in immediately available funds to such accounts and at such
banks as the parties hereto shall designate in writing not less
than one Business Day prior to the Refunding Date.
4
(f) In order to facilitate the transactions
contemplated hereby, the Lessee has entered into the Purchase
Agreement, dated as of May 9, 1996, among the Lessee and the
several purchasers (the "Initial Purchasers") named therein (the
"Purchase Agreement"), and, subject to the terms and conditions
hereof, the Lessee will enter into each of the Pass Through Trust
Agreements and will undertake to perform certain administrative
and ministerial duties under such Pass Through Trust Agreements.
SECTION 2. Refunding Notes. The Refunding Notes shall
be payable as to principal in accordance with the terms of the
Indenture, and the Refunding Notes shall provide for a fixed rate
of interest per annum (subject to certain adjustments
contemplated thereby) and shall contain the terms and provisions
provided for the Refunding Notes in the Indenture. The Owner
Trustee shall execute, and the Loan Trustee shall authenticate
and deliver to the Pass Through Trustee for each Pass Through
Trust, a principal amount of Refunding Notes bearing the interest
rate set forth opposite the name of such Pass Through Trust on
Schedule II hereto, which Refunding Notes in the aggregate shall
be in the principal amounts set forth on Schedule II hereto.
Subject to the terms hereof, of the Pass Through Agreements and
of the other Operative Agreements, all such Refunding Notes shall
be dated and authenticated as of the Refunding Date and shall
bear interest therefrom, shall be registered in such names as
shall be specified by the Subordination Agent and shall be paid
in the manner and at such places as are set forth in the
Indenture.
SECTION 3. Conditions Precedent. The obligation of the
Pass Through Trustee to make the payment described in Section
1(a)(v) and the obligations of the Owner Trustee and the Owner
Participant to participate in the transactions contemplated by
this Agreement on the Refunding Date are subject to the
fulfillment, prior to or on the Refunding Date, of the following
conditions precedent (except that paragraphs (a), (f) and (j)
shall not be conditions precedent to the obligations of the Owner
Trustee hereunder and paragraphs (g) and (l) shall not be
conditions precedent to the obligations of the Owner Participant
hereunder):
(a) The Owner Trustee shall have tendered the
Refunding Notes to the Loan Trustee for authentication, and the
Loan Trustee shall have authenticated such Refunding Notes and
shall have tendered the Refunding Notes to the Subordination
Agent on behalf of the Pass Through Trustee in accordance with
Section 1.
(b) The Pass Through Trustee, the Owner Trustee
5
and the Owner Participant each shall have received executed
counterparts or conformed copies of the following documents:
(1) this Agreement;
(2) the Lease Amendment;
(3) the Indenture Amendment;
(4) the PA Amendment;
(5) each of the Pass Through Trust
Agreements;
(6) the Intercreditor Agreement;
(7) the Liquidity Facility for each of the
Class A, Class B and Class C Trusts; and
(8) the Registration Rights Agreement, dated the
date hereof, among the Lessee, the Pass
Through Trustee and each of the Initial
Purchasers, with respect to the Certificates
(the "Registration Rights Agreement") (for
the Owner Participant only).
(c) The Pass Through Trustee, the Owner Trustee and
the Owner Participant each shall have received the following:
(1) an incumbency certificate of the Lessee as to
the person or persons authorized to execute and
deliver this Agreement, the Lease Amendment, the PA
Amendment, the Pass Through Trust Agreements, the
Registration Rights Agreement and any other documents
to be executed on behalf of the Lessee in connection
with the transactions contemplated hereby and the
signatures of such person or persons;
(2) a copy of the resolutions of the board of
directors of the Lessee or the executive committee
thereof, certified by the Secretary or an Assistant
Secretary of the Lessee, duly authorizing the
transactions contemplated hereby and the execution and
delivery of each of the documents required to be
executed and delivered on behalf of the Lessee in
connection with the transactions contemplated hereby;
and
(3) a copy of the certificate of
incorporation of the Lessee, certified by the
6
Secretary of State of the State of Delaware, a copy of
the by-laws of the Lessee, certified by the Secretary
or Assistant Secretary of the Lessee, and a
certificate or other evidence from the Secretary of
State of the State of Delaware, dated as of a date
reasonably near the date of this Agreement, as to the
due incorporation and good standing of the Lessee in
such state.
(d) If the Refunding Date occurs on a date subsequent
to the date hereof, the Pass Through Trustee, the Owner Trustee
and the Owner Participant each shall have received a certificate
signed by an authorized officer of the Lessee, dated the
Refunding Date, certifying that, to the best knowledge of such
officer, after due inquiry, the representations and warranties
contained herein of the Lessee are correct as though made on and
as of the Refunding Date, except to the extent that such
representations and warranties relate solely to an earlier date
(in which case such representations and warranties are correct on
and as of such earlier date).
(e) The Pass Through Trustee, the Owner Trustee and
the Owner Participant each shall have received a certificate
signed by an authorized officer of the Loan Trustee, dated the
Refunding Date, certifying that the representations and
warranties contained herein of the Loan Trustee are correct as
though made on and as of the Refunding Date, except to the extent
that such representations and warranties relate solely to an
earlier date (in which case such representations and warranties
are correct on and as of such earlier date).
(f) The Pass Through Trustee and the Owner Participant
each shall have received a certificate signed by an authorized
officer of the Owner Trustee, dated the Refunding Date,
certifying that the representations and warranties contained
herein of the Owner Trustee are correct as though made on and as
of the Refunding Date, except to the extent that such
representations and warranties relate solely to an earlier date
(in which case such representations and warranties are correct on
and as of such earlier date).
(g) The Pass Through Trustee and the Owner Trustee
each shall have received a certificate signed by an authorized
officer of the Owner Participant, dated the Refunding Date,
certifying that the representations and warranties contained
herein of the Owner Participant are correct as though made on and
as of the Refunding Date, except to the extent that such
representations and warranties relate solely to an earlier date
(in which case such representations and warranties are correct on
and as of such earlier date).
7
(h) The Pass Through Trustee, the Owner Trustee and
the Owner Participant each shall have received an independent
insurance broker's report, together with certificates of
insurance from such broker, as to the due compliance with the
terms of Section 11 of the Lease relating to insurance with
respect to the Aircraft.
(i) The Pass Through Trustee, the Loan Participant,
the Owner Trustee and the Owner Participant each shall have
received an opinion addressed to it from Cleary, Gottlieb, Steen
& Hamilton, counsel for the Lessee, an opinion addressed to it
from Hughes Hubbard & Reed LLP, counsel for the Lessee, and an
opinion addressed to it from the Lessee's legal department, in
each case in form and substance reasonably satisfactory to each
of them.
(j) The Pass Through Trustee, the Loan Participant and
the Owner Participant each shall have received an opinion
addressed to it from Ray, Quinney & Nebeker, special counsel for
the Owner Trustee, in form and substance reasonably satisfactory
to each of them.
(k) The Pass Through Trustee, the Owner Trustee, the
Loan Participant and the Owner Participant each shall have
received an opinion addressed to it from Richards, Layton &
Finger, special counsel for the Loan Trustee, in form and
substance satisfactory to each of them.
(l) The Pass Through Trustee and the Owner Trustee
each shall have received an opinion addressed to it from Perkins
Coie, counsel for the Owner Participant, and an opinion addressed
to it from corporate counsel to the Owner Participant, in each
case in form and substance reasonably satisfactory to each of
them.
(m) The Pass Through Trustee shall have received an
opinion of Whitman, Breed, Abbott & Morgan, United States counsel
to the Liquidity Provider, and internal counsel to the Liquidity
Provider, in each case in form and substance reasonably
satisfactory to the Pass Through Trustee.
(n) The Pass Through Trustee, the Owner Trustee and
the Owner Participant each shall have received an opinion
addressed to it from Lytle, Soule & Curlee, special counsel in
Oklahoma City, Oklahoma, in form and substance reasonably
satisfactory to each of them.
(o) The Lessee shall have entered into the Purchase
Agreement and each of the Pass Through Trust Agreements, the
Certificates shall have been issued and sold pursuant to the
Purchase Agreement and the Pass Through Trust Agreements, and the
8
Initial Purchasers shall have transferred to the Pass
Through Trustees in immediately available funds an amount equal
to the aggregate purchase price of the Refunding Notes to be
purchased from the Owner Trustee.
(p) No change shall have occurred after the date of
this Agreement in applicable law or regulations thereunder or
interpretations thereof by appropriate regulatory authorities or
any court that would make it illegal for the Pass Through
Trustees to make the payments described in Section 1(a)(v) or for
the Owner Trustee or the Owner Participant to participate in the
transactions contemplated by this Agreement on the Refunding
Date.
(q) All approvals and consents of any trustee or
holder of any indebtedness or obligations of the Lessee which are
required in connection with the Pass Through Trustee's making of
the payments described in Section 1(a)(ii) or the Owner Trustee's
or the Owner Participant's participation in the transactions
contemplated by this Agreement on the Refunding Date shall have
been duly obtained.
Promptly following the recording of the Lease
Amendment and the Indenture Amendment pursuant to 49 U.S.C.
Sections 40101-46507 (the "Aviation Act") and the filing of the
Trust Amendment No. 1 pursuant to such Act, the Lessee will cause
Lytle, Soule & Curlee, special counsel in Oklahoma City,
Oklahoma, to deliver to the Pass Through Trustee, the Lessee, the
Loan Trustee, the Owner Participant and the Owner Trustee an
opinion as to the due recording of the Lease Amendment and the
Indenture Amendment.
SECTION 4. Certain Conditions Precedent to the
Obligations of the Lessee; Conditions Precedent with Respect to
the Pass Through Trustee. (a) The Lessee's obligation to
participate in the transactions contemplated by this Agreement
and to execute and deliver the Lease Amendment and the PA
Amendment are subject to the receipt by the Lessee of (i) each
opinion referred to in subsections (j) through (n) of Section 3,
addressed to the Lessee or accompanied by a letter from counsel
rendering such opinion authorizing the Lessee to rely on such
opinion as if it were addressed to the Lessee, and (ii) such
other documents and evidence with respect to each other party
hereto as it may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement,
the taking of all necessary corporate action in connection
therewith and compliance with the conditions herein set forth.
(b) The respective obligations of each of the
Lessee, the Owner Participant, the Owner Trustee, the Loan
9
Participant, and the Loan Trustee to participate in the
transactions contemplated hereby is subject to the receipt by
each of them of (i) a certificate signed by an authorized officer
of the Pass Through Trustee, dated the Refunding Date, certifying
that the representations and warranties contained herein of the
Pass Through Trustee are correct as though made on and as of the
Refunding Date, except to the extent that such representations
and warranties relate solely to an earlier date (in which case
such representations and warranties are correct on and as of such
earlier date), (ii) an opinion addressed to each of them of
Richards, Layton & Finger, special counsel for the Pass Through
Trustee, in form and substance reasonably satisfactory to each of
them, and (iii) such other documents and evidence with respect to
the Pass Through Trustee as it may reasonably request in order to
establish the due consummation of the transactions contemplated
by this Agreement, the taking of all necessary corporate action
in connection therewith and compliance with the conditions herein
set forth.
SECTION 5. Amendment of the Original Indenture. The
Loan Participant and Owner Participant, respectively, by
execution and delivery hereof, requests, authorizes and directs
the Owner Trustee and the Loan Trustee to execute and deliver the
Indenture Amendment, and the Owner Trustee and the Loan Trustee,
by execution and delivery hereof, agree to execute and deliver
the Indenture Amendment. The Lessee, by execution and delivery
hereof, consents to such execution and delivery of the Indenture
Amendment. The Indenture Amendment shall be effective as of the
Refunding Date.
SECTION 6. Amendment of the Original Lease. The Loan
Trustee and the Owner Participant, by execution and delivery
hereof, request and instruct the Owner Trustee to execute and
deliver the Lease Amendment, and the Owner Trustee and the Lessee
agree, by execution and delivery hereof, to execute and deliver
the Lease Amendment. The Lease Amendment shall be effective as of
the Refunding Date.
SECTION 7. Amendment of the Participation Agreement.
The Loan Participant and Owner Participant, respectively, by
execution and delivery hereof, request, authorize and direct the
Owner Trustee and the Loan Trustee to execute and deliver the PA
Amendment, and the Owner Trustee and the Loan Trustee, by
execution and delivery hereof, agree to execute and deliver the
PA Amendment. The PA Amendment shall be effective as of the
Refunding Date.
SECTION 8. Lessee's Representations and Warranties.
The Lessee represents and warrants to the Pass Through Trustee,
the Owner Participant, the Owner Trustee, the Loan Participant and
10
the Loan Trustee that:
(a) the Lessee is duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, is
an "air carrier" within the meaning of 49 U.S.C. Section
40102(a), holds a certificate of public convenience and necessity
in accordance with 49 U.S.C. Section 41102, and an air carrier
operating certificate issued by the Secretary of Transportation
pursuant to Chapter 447 of Title 49 of United States Code for
aircraft capable of carrying 10 or more individuals or 6,000
pounds or more of cargo, is a "citizen of the United States" as
defined in 49 U.S.C. Section 40102, has the corporate power and
authority to own or hold under lease its properties, has, or had
on the respective dates of execution thereof, the corporate power
and authority to enter into and perform its obligations under
this Agreement, the Lease Amendment, the PA Amendment, the Pass
Through Trust Agreements, the Registration Rights Agreement, the
Purchase Agreement and the other Operative Agreements to which it
is a party, and is duly qualified to do business as a foreign
corporation in good standing in each state in which it has a
principal office or a major overhaul facility and in which such
qualification is required, except where the failure to so qualify
would not be reasonably likely to have a material adverse effect
on the financial condition, properties or results of operations
of the Lessee, and its chief executive office (as such term is
used in Article 9 of the Uniform Commercial Code in effect in the
State of Texas) is located at 2929 Allen Parkway, Houston, Texas
77019;
(b) the execution and delivery by the Lessee of this
Agreement, the Lease Amendment, the PA Amendment, the Pass
Through Trust Agreements, the Registration Rights Agreement, the
Purchase Agreement and each other Operative Agreement to which it
is a party, and the performance of its obligations under this
Agreement, the Participation Agreement, the Lease, the Pass
Through Trust Agreements, the Registration Rights Agreement, the
Purchase Agreement and each other Operative Agreement to which it
is a party, have been duly authorized by all necessary corporate
action on the part of the Lessee, do not require any stockholder
approval, or approval or consent of any trustee or holder of any
material indebtedness or material obligations of the Lessee,
except such as have been duly obtained and are in full force and
effect, and do not contravene any law, governmental rule,
regulation or order binding on the Lessee or the certificate of
incorporation or by-laws of the Lessee, or contravene the
provisions of, or constitute a default under, or result in the
creation of any Lien (other than Permitted Liens) upon the
property of the Lessee under, any indenture, mortgage, contract
or other agreement to which the Lessee is a party or by which it
may be bound or affected which contravention, default or Lien,
11
individually or in the aggregate, would be reasonably likely
to have a material adverse effect on the financial condition,
properties or results of operations of the Lessee;
(c) neither the execution and delivery by the Lessee
of this Agreement, the Lease Amendment, the PA Amendment, the
Pass Through Trust Agreements, the Registration Rights Agreement,
the Purchase Agreement or any other Operative Agreement to which
it is a party, nor the performance of its obligations hereunder
or under the Participation Agreement, the Tax Indemnity
Agreement, the Lease, the Pass Through Trust Agreements, the
Registration Rights Agreement, the Purchase Agreement or the
other Operative Agreements to which it is a party, nor the
consummation by the Lessee of any of the transactions
contemplated hereby or thereby, requires the consent or approval
of, the giving of notice to, the registration with, or the taking
of any other action in respect of, the Department of
Transportation, the FAA, or any other federal, state or foreign
governmental authority having jurisdiction, other than (i) the
registration of the Exchange Certificates (as defined in each
Pass Through Trust Agreement), if any, pursuant to the provisions
of the Pass Through Trust Agreements, under the Securities Act of
1933, as amended, and under the securities laws of any state in
which the Certificates may be offered for sale if the laws of
such state require such action, (ii) the qualification of the
Pass Through Trust Agreements under the Trust Indenture Act of
1939, as amended, which qualification will be duly obtained upon
the effectiveness of any Registration Statement (as defined in
the Registration Rights Agreement) pursuant to an order of the
Securities and Exchange Commission, (iii) the registrations and
filings referred to in Section 8(e) and (iv) authorizations,
consents, approvals, actions, notices and filings required to be
obtained, taken, given or made the failure of which to obtain,
take, give or make would not be reasonably likely to have a
material adverse effect on the financial condition, properties or
results of operations of the Lessee;
(d) each of this Agreement, the Pass Through Trust
Agreements, the Registration Rights Agreement and each other
Operative Agreement to which the Lessee is a party constitutes,
and each of the Participation Agreement and the Lease, when the
PA Amendment and the Lease Amendment shall have been executed and
delivered by each of the parties thereto, will constitute, the
legal, valid and binding obligations of the Lessee enforceable
against the Lessee in accordance with their respective terms,
except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
the rights of creditors generally and by general principles of
12
equity, whether considered in a proceeding at law or in equity,
and except, in the case of the Lease, as limited by applicable
laws which may affect the remedies provided in the Lease, which
laws, however, do not make the remedies provided in the Lease
inadequate for practical realization of the rights and benefits
intended to be afforded thereby;
(e) except for the filing for recording pursuant to
the Aviation Act of the Indenture Amendment and the Lease
Amendment, no further filing or recording of any document
(including any financing statement in respect thereof under
Article 9 of the Uniform Commercial Code of any applicable
jurisdiction) is necessary under the laws of the United States of
America or any State thereof in order to perfect the Owner
Trustee's interest in the Aircraft as against the Lessee and any
third parties, or to perfect the security interest in favor of
the Loan Trustee in the Owner Trustee's interest in the Aircraft
or the Lease (with respect to such portion of the Aircraft as is
covered by the recording system established by the FAA pursuant
to 49 U.S.C. Section 44107) in any applicable jurisdiction in the
United States and in the Lease in any applicable jurisdiction in
the United States other than the Loan Trustee taking possession
of the original counterparts of the Lease and the Lease Amendment
(to the extent the Lease and the Lease Amendment constitute
chattel paper) and the filing of continuation statements with
respect to the Uniform Commercial Code financing statements in
effect on the date hereof covering the security interests created
by the Original Indenture or describing the Original Lease as a
lease;
(f) neither the Lessee nor any of its affiliates has
directly or indirectly offered the Equipment Notes or the Pass
Through Certificates for sale to any Person other than in a
manner permitted by the Securities Act of 1933, as amended, and
by the rules and regulations thereunder;
(g) the Lessee is not an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended;
(h) no event has occurred and is continuing which
constitutes an Indenture Event of Default or would constitute an
Indenture Event of Default but for the requirement that notice be
given or time lapse or both;
(i) no event has occurred and is continuing which
constitutes an Event of Loss or would constitute an Event of Loss
with the lapse of time;
(j) the Aircraft has been duly certified by the FAA as
to type and airworthiness in accordance with the terms of the
Original Lease and has a current, valid certificate of airworthiness;
13
(k) the FAA Bill of Sale, the Original Lease, the
Lease Amendment No. 1 and the Original Indenture have been
duly recorded, and the Trust Agreement has been duly filed,
with the FAA pursuant to the Aviation Act;
(l) the Aircraft has been registered with the FAA
in the name of the Owner Trustee and the Lessee has
authority to operate the Aircraft; and
(m) there has been no material adverse change in the
financial condition of the Lessee since March 31, 1996.
SECTION 9. Representations, Warranties and Covenants.
Each of the parties below represents, warrants and covenants to
each of the other parties to this Agreement as follows:
(a) The Loan Trustee represents, warrants and
covenants that:
(1) the Loan Trustee is duly incorporated, validly
existing and in good standing under the laws of the State
of Delaware, is a "citizen of the United States" as defined
in 49 U.S.C. Section 40102 and will resign as Loan Trustee
promptly after it obtains actual knowledge that it has
ceased to be such a citizen, and has the full corporate
power, authority and legal right under the laws of the
State of Delaware and the United States pertaining to its
banking, trust and fiduciary powers to execute and deliver
each of this Agreement, the PA Amendment, the Indenture
Amendment and each other Operative Agreement to which it is
a party and to carry out its obligations under this
Agreement, the Participation Agreement, the Indenture and
each other Operative Agreement to which it is a party;
(2) the execution and delivery by the Loan Trustee of
this Agreement, the Indenture Amendment, the PA Amendment
and each other Operative Agreement to which it is a party
and the performance by the Loan Trustee of its obligations
under this Agreement, the Participation Agreement, the
Indenture and each other Operative Agreement to which it is
a party have been duly authorized by the Loan Trustee and
will not violate its articles of association or by-laws or
the provisions of any indenture, mortgage, contract or
other agreement to which it is a party or by which it is
bound; and
(3) this Agreement constitutes, and the
Participation Agreement, when the PA Amendment has been
14
executed and delivered by the Loan Trustee, and the
Indenture, when the Indenture Amendment has been executed
and delivered by the Loan Trustee, will constitute, the
legal, valid and binding obligations of the Loan Trustee
enforceable against it in accordance with their respective
terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in
a proceeding at law or in equity.
(b) The Owner Trustee, in its individual capacity
(except as provided in clauses (3), (4), (8) and (9) below) and
(but only as provided in clauses (3), (4) and, to the extent that
it relates to the Owner Trustee, clauses (8), (10) and (12)
below) as Owner Trustee, represents and warrants that:
(1) the Owner Trustee, in its individual capacity, is
a national banking association duly organized and validly
existing in good standing under the laws of the United
States holding a valid certificate to do business as a
national banking association, has full corporate power and
authority to carry on its business as now conducted, has,
or had on the respective dates of execution thereof, the
corporate power and authority to execute and deliver the
Trust Agreement, has the corporate power and authority to
carry out the terms of the Trust Agreement, and has, or had
on the respective dates of execution thereof (assuming the
authorization, execution and delivery of the Trust
Agreement by the Owner Participant), as Owner Trustee, and
to the extent expressly provided herein or therein, in its
individual capacity, the corporate power and authority to
execute and deliver and to carry out the terms of this
Agreement, the Original Indenture, the Indenture Amendment,
the Refunding Notes, the Lease Amendment, the PA Amendment
and each other Operative Agreement (other than the Trust
Agreement) to which it is a party;
(2) the Owner Trustee in its trust capacity and, to
the extent expressly provided therein, in its individual
capacity, has duly authorized, executed and delivered the
Trust Agreement and (assuming the due authorization,
execution and delivery of the Trust Agreement by the Owner
Participant) each of this Agreement, the Original
Participation Agreement, the Trust Agreement, the Original
Indenture, the Original Lease, the Trust Agreement and each
other Operative Agreement to which it is a party,
constitutes a legal, valid and binding obligation of the
15
Owner Trustee, in its individual capacity, enforceable against
it in its individual capacity or as Owner Trustee, as the case may
be, in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in
equity;
(3) assuming the due authorization, execution and
delivery of the Trust Agreement by the Owner Participant,
each of this Agreement, the Original Participation
Agreement, the Original Indenture, the Original Lease and
each other Operative Agreement to which it is party
constitutes, and each of the Participation Agreement, when
the PA Amendment shall have been entered into, the
Indenture, when the Indenture Amendment shall have been
entered into, and the Lease, when the Lease Amendment shall
have been entered into, will constitute, the legal, valid
and binding obligation of the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may
be, enforceable against it in its individual capacity or as
Owner Trustee, as the case may be, in accordance with its
terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in
a proceeding at law or in equity;
(4) assuming the due authorization, execution and
delivery of the Trust Agreement by the Owner Participant,
the Owner Trustee has duly authorized, and on the Refunding
Date shall have duly issued, executed and delivered to the
Loan Trustee for authentication, the Refunding Notes
pursuant to the terms and provisions hereof and of the
Indenture, and each Refunding Note on the Refunding Date
will constitute the valid and binding obligation of the
Owner Trustee and will be entitled to the benefits and
security afforded by the Indenture in accordance with the
terms of such Refunding Note and the Indenture;
(5) neither the execution and delivery by the Owner
Trustee, in its individual capacity or as Owner Trustee, as
the case may be, of this Agreement, the Original
Participation Agreement, the PA Amendment, the Trust
Agreement, the Original Indenture, the Indenture Amendment,
the Original Lease, the Lease Amendment or the Refunding
Notes, nor the consummation by the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may be,
16
of any of the transactions contemplated hereby or thereby, nor
the compliance by the Owner Trustee, in its individual capacity
or as Owner Trustee, as the case may be, with any of the terms
and provisions hereof and thereof, (A) requires or will require
any approval of its stockholders, or approval or consent of
any trustees or holders of any indebtedness or obligations
of it, or (B) violates or will violate its articles of
association or by-laws, or contravenes or will contravene
any provision of, or constitutes or will constitute a
default under, or results or will result in any breach of,
or results or will result in the creation of any Lien
(other than as permitted under the Lease) upon its property
under, any indenture, mortgage, chattel mortgage, deed of
trust, conditional sale contract, bank loan or credit
agreement, license or other agreement or instrument to
which it is a party or by which it is bound, or contravenes
or will contravene any law, governmental rule or regulation
of the United States of America or the State of Utah
governing the trust powers of the Owner Trustee, or any
judgment or order applicable to or binding on it;
(6) no consent, approval, order or authorization of,
giving of notice to, or registration with, or taking of any
other action in respect of, any Utah state or local
governmental authority or agency or any United States
federal governmental authority or agency regulating the
trust powers of the Owner Trustee in its individual
capacity is required for the execution and delivery of, or
the carrying out by, the Owner Trustee, in its individual
capacity or as Owner Trustee, as the case may be, of any of
the transactions contemplated hereby or by the Trust
Agreement, the Participation Agreement, the Indenture, the
Lease or the Refunding Notes, other than any such consent,
approval, order, authorization, registration, notice or
action as has been duly obtained, given or taken or which
is described in Section 8(h);
(7) there exists no Lessor Lien attributable to the
Owner Trustee, in its individual capacity, other than any
Lessor Liens (A) the existence of which poses no material
risk of the sale, forfeiture or loss of the Aircraft,
Airframe or any Engine or any interest therein, (B) the
existence of which does not interfere in any way with the
use or operation of the Aircraft by the Lessee (or any
Permitted Sublessee), (C) the existence of which does not
affect the priority or perfection of, or otherwise
jeopardize, the Lien of the Indenture, (D) which the Owner
Trustee is diligently contesting by appropriate
proceedings, (E) the existence of which does not
17
result in actual interruption in the receipt and distribution by
the Loan Trustee in accordance with the Indenture of Rent assigned
to the Loan Trustee for the benefit of the Note Holders, and
(F) any property subject to which is not then required to be
conveyed to any other Person pursuant to Section 4.6 of the
Lease;
(8) there exists no Lessor Lien attributable to the
Owner Trustee, as lessor under the Lease, other than any
Lessor Liens (A) the existence of which poses no material
risk of the sale, forfeiture or loss of the Aircraft,
Airframe or any Engine or any interest therein, (B) the
existence of which does not interfere in any way with the
use or operation of the Aircraft by the Lessee (or any
Permitted Sublessee), (C) the existence of which does not
affect the priority or perfection of, or otherwise
jeopardize, the Lien of the Indenture, (D) which the Owner
Trustee is diligently contesting by appropriate
proceedings, (E) the existence of which does not result in
actual interruption in the receipt and distribution by the
Loan Trustee in accordance with the Indenture of Rent
assigned to the Loan Trustee for the benefit of the Note
Holders, and (F) any property subject to which is not then
required to be conveyed to any other Person pursuant to
Section 4.6 of the Lease;
(9) there are no Taxes payable by the Owner Trustee,
either in its individual capacity or as Owner Trustee,
imposed by the State of Utah or any political subdivision
thereof in connection with the redemption of the Initial
Notes or the issuance of the Refunding Notes, and in its
individual capacity or as Owner Trustee, as the case may
be, of any of the instruments referred to in clauses (1),
(2), (4) and (5) above, that, in each case, would not have
been imposed if the Trust Estate had not been created
pursuant to the laws of the State of Utah and First
Security Bank of Utah, National Association, had not (a)
had its principal place of business in, (b) performed (in
its individual capacity or as Owner Trustee) any or all of
its duties under the Operative Agreements in, and (c)
engaged in any activities unrelated to the transactions
contemplated by the Operative Agreements in, the State of
Utah;
(10) there are no pending or, to its knowledge,
threatened actions or proceedings against the Owner
Trustee, either in its individual capacity or as Owner
Trustee, before any court or administrative agency which,
if determined adversely to it, would materially adversely
affect the ability of the Owner Trustee, in
18
its individual capacity or as Owner Trustee, as the case
may be, to perform its obligations under any of the
instruments referred to in clauses (1), (2), (4) and (5)
above;
(11) both its chief executive office, and the place
where its records concerning the Aircraft and all its
interests in, to and under all documents relating to the
Trust Estate, are located in Salt Lake City, Utah, and the
Owner Trustee, in its individual capacity, agrees to give
the Lessee, the Owner Participant, the Loan Trustee and the
Pass Through Trustee at least 30 days' prior written notice
of any relocation of said chief executive office or said
place from its present location;
(12) the Owner Trustee has not, in its individual
capacity or as Owner Trustee, directly or indirectly
offered any Refunding Note or Certificate or any interest
in or to the Trust Estate, the Trust Agreement or any
similar interest for sale to, or solicited any offer to
acquire any of the same from, anyone other than the Pass
Through Trustee, the Loan Participant and the Owner
Participant; and the Owner Trustee has not authorized
anyone to act on its behalf (it being understood that in
arranging and proposing the refinancing contemplated hereby
and agreed to herein by the Owner Trustee, the Lessee has
not acted as agent of the Owner Trustee) to offer directly
or indirectly any Refunding Note, any Certificate or any
interest in and to the Trust Estate, the Trust Agreement or
any similar interest for sale to, or to solicit any offer
to acquire any of the same from, any person; and
(13) it is a "citizen of the United States" as defined
in 49 U.S.C. Section 40102 (without making use of a voting
trust agreement or voting powers agreement).
(c) The Owner Participant represents and warrants
that:
(1) it is duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and
has the corporate power and authority to carry on its
present business and operations and to own or lease its
properties, has, or had on the respective dates of
execution thereof or assumption of rights and obligations
thereunder, as the case may be, the corporate power and
authority to enter into and to perform its obligations
under this Agreement, the Original Participation Agreement,
the Trust Agreement and the PA Amendment; and this
Agreement has been duly authorized, executed and delivered by
19
it and the execution and delivery of the PA Amendment has
been duly authorized by it; and each of this Agreement, the
Original Participation Agreement and the Trust Agreement
constitutes, and the Participation Agreement when the PA
Amendment shall have been entered into, will constitute,
the legal, valid and binding obligations of the Owner
Participant enforceable against it in accordance with their
respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of
creditors generally and by general principles of equity,
whether considered in a proceeding at law or in equity;
(2) neither (A) the execution and delivery by the
Owner Participant of this Agreement, the PA Amendment or
any other Operative Agreement to which it is a party nor
(B) compliance by it with all of the provisions thereof,
(x) will contravene any law or order of any court or
governmental authority or agency applicable to or binding
on the Owner Participant (it being understood that no
representation or warranty is made with respect to laws,
rules or regulations relating to aviation or to the nature
of the equipment owned by the Owner Trustee other than such
laws, rules or regulations relating to the citizenship
requirements of the Owner Participant under applicable
law), or (y) will contravene the provisions of, or
constitutes or has constituted or will constitute a default
under, its certificate of incorporation or by-laws or any
indenture, mortgage, contract or other agreement or
instrument to which the Owner Participant is a party or by
which it or any of its property may be bound or affected;
(3) no authorization or approval or other action by,
and no notice to or filing with, any governmental authority
or regulatory body (other than as required by the Aviation
Act or the regulations promulgated thereunder and except
for routine filings which have been or will be made) is or
was required, as the case may be, for the due execution,
delivery or performance by it of this Agreement and the PA
Amendment;
(4) there are no pending or, to its knowledge,
threatened actions or proceedings before any court or
administrative agency or arbitrator which would materially
adversely affect the Owner Participant's ability to perform
its obligations under this Agreement, the Participation
Agreement and the Trust Agreement;
20
(5) neither the Owner Participant nor anyone
authorized by it to act on its behalf (it being understood
that in proposing, facilitating and otherwise taking any
action in connection with the refinancing contemplated
hereby and agreed to herein by the Owner Participant,
neither the Lessee nor any other party hereto has acted as
agent of the Owner Participant) has directly or indirectly
offered any Refunding Note or Pass Through Certificate or
any interest in and to the Trust Estate, the Trust
Agreement or any similar interest for sale to, or solicited
any offer to acquire any of the same from, any Person,
except in compliance with the Securities Act of 1933, as
amended; the Owner Participant's interest in the Trust
Estate and the Trust Agreement was acquired for its own
account and was purchased for investment and not with a
view to any resale or distribution thereof;
(6) on the Refunding Date, the Trust Estate shall be
free of Lessor Liens attributable to the Owner Participant
other than any Lessor Liens (A) the existence of which
poses no material risk of the sale, forfeiture or loss of
the Aircraft, Airframe or any Engine or any interest
therein, (B) the existence of which does not interfere in
any way with the use or operation of the Aircraft by the
Lessee (or any Permitted Sublessee), (C) the existence of
which does not affect the priority or perfection of, or
otherwise jeopardize, the Lien of the Indenture, (D) which
the Owner Participant is diligently contesting by
appropriate proceedings, (E) the existence of which does
not result in actual interruption in the receipt and
distribution by the Loan Trustee in accordance with the
Indenture of Rent assigned to the Loan Trustee for the
benefit of the Note Holders, and (F) any property subject
to which is not then required to be conveyed to any other
Person pursuant to Section 4.6 of the Lease; and
(7) it is a "citizen of the United States" as defined
in 49 U.S.C. Section 40102 (without making use of a voting
trust agreement or a voting powers agreement).
(d) The Pass Through Trustee represents, warrants and
covenants that:
(1) the Pass Through Trustee is duly incorporated,
validly existing and in good standing under the laws of the
State of Delaware, and has the full corporate power,
authority and legal right under the laws of the State of
Delaware and the United States pertaining to its banking, trust
21
and fiduciary powers to execute and deliver each of the Pass
Through Trust Agreements, the Registration Rights Agreement, the
Intercreditor Agreement, the PA Amendment and this
Agreement and to perform its obligations under this
Agreement, the Pass Through Trust Agreements, the
Registration Rights Agreement, the Intercreditor Agreement
and the PA Amendment;
(2) each of the Pass Through Trust Agreements, the
Registration Rights Agreement, the Intercreditor Agreement,
the PA Amendment and this Agreement has been duly
authorized, executed and delivered by the Pass Through
Trustee; this Agreement and each of the Pass Through Trust
Agreements, the Registration Rights Agreement, the
Intercreditor Agreement and the PA Amendment constitute the
legal, valid and binding obligations of the Pass Through
Trustee enforceable against it in accordance with their
respective terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity,
whether considered in a proceeding at law or in equity;
(3) none of the execution, delivery and performance by
the Pass Through Trustee of any of the Pass Through Trust
Agreements, the Registration Rights Agreement, the
Intercreditor Agreement, this Agreement or the PA
Amendment, the purchase by the Pass Through Trustee of the
Refunding Notes pursuant to this Agreement, or the issuance
of the Certificates pursuant to the Pass Through Trust
Agreements, contravenes any law, rule or regulation of the
State of Delaware or any United States governmental
authority or agency regulating the Pass Through Trustee's
banking, trust or fiduciary powers or any judgment or order
applicable to or binding on the Pass Through Trustee and
does not contravene or result in any breach of, or
constitute a default under, the Pass Through Trustee's
articles of association or by-laws or any agreement or
instrument to which the Pass Through Trustee is a party or
by which it or any of its properties may be bound;
(4) neither the execution and delivery by the Pass
Through Trustee of any of the Pass Through Trust
Agreements, the Registration Rights Agreement, the
Intercreditor Agreement, the PA Amendment or this
Agreement, nor the consummation by the Pass Through Trustee
of any of the transactions contemplated hereby or thereby,
requires the consent or approval of, the giving of notice
to, the registration with, or the taking of any other
action with respect to, any Delaware governmental authority
22
or agency or any federal governmental authority or agency
regulating the Pass Through Trustee's banking, trust or fiduciary
powers;
(5) there are no Taxes payable by the Pass Through
Trustee imposed by the State of Delaware or any political
subdivision or taxing authority thereof in connection with
the execution, delivery and performance by the Pass Through
Trustee of this Agreement, any of the Pass Through Trust
Agreements, the Registration Rights Agreement, the
Intercreditor Agreement or the PA Amendment (other than
franchise or other taxes based on or measured by any fees
or compensation received by the Pass Through Trustee for
services rendered in connection with the transactions
contemplated by any of the Pass Through Trust Agreements),
and there are no Taxes payable by the Pass Through Trustee
imposed by the State of Delaware or any political
subdivision thereof in connection with the acquisition,
possession or ownership by the Pass Through Trustee of any
of the Refunding Notes (other than franchise or other taxes
based on or measured by any fees or compensation received
by the Pass Through Trustee for services rendered in
connection with the transactions contemplated by any of the
Pass Through Trust Agreements), and, assuming that the
trusts created by the Pass Through Trust Agreements will
not be taxable as corporations, but, rather, each will be
characterized as a grantor trust under subpart E, Part I of
Subchapter J of the Code, such trusts will not be subject
to any Taxes imposed by the State of Delaware or any
political subdivision thereof;
(6) there are no pending or threatened actions or
proceedings against the Pass Through Trustee before any
court or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Pass Through Trustee to
perform its obligations under this Agreement, the PA
Amendment, the Registration Rights Agreement, the
Intercreditor Agreement or any Pass Through Trust
Agreement;
(7) except for the issue and sale of the Certificates
contemplated hereby, the Pass Through Trustee has not
directly or indirectly offered any Refunding Note for sale
to any Person or solicited any offer to acquire any
Refunding Notes from any Person, nor has the Pass Through
Trustee authorized anyone to act on its behalf to offer
directly or indirectly any Refunding Note for sale to any
Person, or to solicit any offer to acquire any Refunding
Note from any Person; and the Pass Through Trustee
23
is not in default under any Pass Through Trust Agreement; and
(8) the Pass Through Trustee is not directly or
indirectly controlling, controlled by or under common
control with the Owner Participant, the Owner Trustee, any
Initial Purchaser or the Lessee.
(e) The Subordination Agent represents, warrants
and covenants that:
(1) the Subordination Agent is duly incorporated,
validly existing and in good standing under the laws of the
State of Delaware, and has the full corporate power,
authority and legal right under the laws of the State of
Delaware and the United States pertaining to its banking,
trust and fiduciary powers to execute and deliver each of
the Liquidity Facilities, the Intercreditor Agreement, the
PA Amendment and this Agreement and to perform its
obligations under this Agreement, the Liquidity Facilities,
the Intercreditor Agreement and the PA Amendment;
(2) each of the Liquidity Facilities, the
Intercreditor Agreement, the PA Amendment and this
Agreement has been duly authorized, executed and delivered
by the Subordination Agent; each of the Liquidity
Facilities, the Intercreditor Agreement, the PA Amendment
and this Agreement constitute the legal, valid and binding
obligations of the Subordination Agent enforceable against
it in accordance with their respective terms, except as the
same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in
equity;
(3) none of the execution, delivery and performance by
the Subordination Agent of each of the Liquidity
Facilities, the Intercreditor Agreement, this Agreement or
the PA Amendment contravenes any law, rule or regulation of
the State of Delaware or any United States governmental
authority or agency regulating the Subordination Agent's
banking, trust or fiduciary powers or any judgment or order
applicable to or binding on the Subordination Agent and do
not contravene or result in any breach of, or constitute a
default under, the Subordination Agent's articles of
association or by-laws or any agreement or instrument to
which the Subordination Agent is a party or by which it or
any of its properties may be bound;
24
(4) neither the execution and delivery by the
Subordination Agent of any of the Liquidity Facilities, the
Intercreditor Agreement, the PA Amendment or this Agreement
nor the consummation by the Subordination Agent of any of
the transactions contemplated hereby or thereby requires
the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with
respect to, any Delaware governmental authority or agency
or any federal governmental authority or agency regulating
the Subordination Agent's banking, trust or fiduciary
powers;
(5) there are no Taxes payable by the Subordination
Agent imposed by the State of Delaware or any political
subdivision or taxing authority thereof in connection with
the execution, delivery and performance by the
Subordination Agent of this Agreement, any of the Liquidity
Facilities, the Intercreditor Agreement or the PA Amendment
(other than franchise or other taxes based on or measured
by any fees or compensation received by the Subordination
Agent for services rendered in connection with the
transactions contemplated by the Intercreditor Agreement or
any of the Liquidity Facilities), and there are no Taxes
payable by the Subordination Agent imposed by the State of
Delaware or any political subdivision thereof in connection
with the acquisition, possession or ownership by the
Subordination Agent of any of the Refunding Notes (other
than franchise or other taxes based on or measured by any
fees or compensation received by the Subordination Agent
for services rendered in connection with the transactions
contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities);
(6) there are no pending or threatened actions or
proceedings against the Subordination Agent before any
court or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Subordination Agent to
perform its obligations under this Agreement, the PA
Amendment, the Intercreditor Agreement or any Liquidity
Facility;
(7) the Subordination Agent has not directly or
indirectly offered any Refunding Note for sale to any
Person or solicited any offer to acquire any Refunding
Notes from any Person, nor has the Subordination Agent
authorized anyone to act on its behalf to offer directly or
indirectly any Refunding Note for sale to any Person, or to
solicit any offer to acquire any Refunding Note from any
Person; and the Subordination Agent is not in default under any
25
Liquidity Facility; and
(8) the Subordination Agent is not directly or
indirectly controlling, controlled by or under common
control with the Owner Participant, the Owner Trustee, any
Initial Purchaser or the Lessee.
(f) The Loan Participant represents and warrants
that:
(1) as of the Refunding Date, it is the owner of the
Loan Certificates in the aggregate principal amount of
$37,386,771.20 free and clear of Liens attributable to it;
and
(2) this Agreement has been duly authorized, executed
and delivered by the Loan Participant and constitutes the
legal, valid and binding obligation of the Loan
Participant, enforceable against the Loan Participant in
accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, moratorium or
similar laws affecting the rights of creditors generally
and by general principles of equity, whether considered in
a proceeding at law or in equity.
SECTION 10. Notices. Unless otherwise specifically
provided herein, all notices required or permitted by the terms
of this Agreement shall be in English and in writing, and any
such notice shall become effective upon being deposited in the
United States mail, with proper postage for first-class
registered or certified mail prepaid, or when delivered
personally or, if promptly confirmed by mail as provided above,
when dispatched by telegram, telex, facsimile or other written
telecommunication, addressed, if to the Lessee, the Owner
Participant, the Owner Trustee, the Pass Through Trustee, the
Subordination Agent, the Loan Participant or the Loan Trustee, at
their respective addresses or facsimile numbers set forth below
the signatures of such parties at the foot of this Agreement.
SECTION 11. Expenses. All of the reasonable
out-of-pocket costs, fees and expenses incurred by the Owner
Trustee, the Owner Participant, the Pass Through Trustee, the
Subordination Agent, the Loan Trustee and the Loan Participant in
connection with the transactions contemplated by this Agreement,
the other Operative Agreements, the Pass Through Trust
Agreements, the Registration Rights Agreement, the Intercreditor
Agreement, the Liquidity Facilities and the Purchase Agreement
(except, in each case, as otherwise provided therein) shall be
paid promptly by the Lessee, including, without limitation, the
26
reasonable fees, expenses and disbursements allocable to the
Refunding Notes issued under the Indenture of (A) Richards,
Layton & Finger, special counsel for the Pass Through Trustee and
the Loan Trustee, (B) Ray, Quinney & Nebeker, special counsel for
the Owner Trustee, (C) Lytle, Soule & Curlee, special counsel in
Oklahoma City, Oklahoma, (D) Shearman & Sterling, special counsel
for the Initial Purchasers, in an amount separately agreed, and
(E) Perkins Coie, special counsel to the Loan Participant and
Owner Participant.
Notwithstanding the foregoing, the Lessee shall pay,
in amounts separately agreed, the fees, expenses and
disbursements of Cleary, Gottlieb, Steen & Hamilton and Hughes
Hubbard & Reed LLP, special counsel for the Lessee.
SECTION 12. Miscellaneous. (a) Provided that the
transactions contemplated hereby have been consummated, and
except as otherwise provided for herein, the representations,
warranties and agreements herein of the Lessee, the Owner
Trustee, the Loan Trustee, the Owner Participant, the Loan
Participant, the Subordination Agent and the Pass Through
Trustee, and the Lessee's, the Owner Trustee's, the Loan
Trustee's, the Owner Participant's, the Subordination Agent's and
the Pass Through Trustee's obligations under any and all thereof,
shall survive the expiration or other termination of this
Agreement and the other agreements referred to herein.
(b) This Agreement may be executed in any number of
counterparts (and each of the parties hereto shall not be
required to execute the same counterpart). Each counterpart of
this Agreement, including a signature page executed by each of
the parties hereto, shall be an original counterpart of this
Agreement, but all of such counterparts together shall constitute
one instrument. Neither this Agreement nor any of the terms
hereof may be terminated, amended, supplemented, waived or
modified orally, but only by an instrument in writing signed by
the party against which the enforcement of the termination,
amendment, supplement, waiver or modification is sought; and no
such termination, amendment, supplement, waiver or modification
shall be effective unless a signed copy thereof shall have been
delivered to the Loan Trustee. The index preceding this Agreement
and the headings of the various Sections of this Agreement are
for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions hereof. The terms
of this Agreement shall be binding upon, and shall inure to the
benefit of, the Lessee and, subject to the terms of the
Participation Agreement, its successors and permitted assigns,
the Loan Participant, the Pass Through Trustee and its successors
as Pass Through Trustee (and any additional trustee appointed)
under any of the Pass Through Trust Agreements, the Loan Trustee
27
and its successors as Loan Trustee (and any additional Loan
Trustee appointed) under the Indenture, the Subordination Agent
and its successors as Subordination Agent under the Intercreditor
Agreement, the Owner Trustee and its successors as Owner Trustee
under the Trust Agreement, and the Owner Participant, and,
subject to the provisions of the Participation Agreement, its
successors and permitted assigns. No purchaser or holder of any
Refunding Notes shall be deemed to be a successor or assign of
the Loan Participant.
SECTION 13. Governing Law. THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE
STATE OF NEW YORK.
28
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective officers
thereunto duly authorized as of the day and year first above
written.
CONTINENTAL AIRLINES, INC.,
as Lessee
By_________________________________
Name:
Title:
Address: 2929 Allen Parkway
Suite 2010
Houston, TX 77019
Attention: Senior Vice
President and Chief Financial
Officer
Facsimile: (713) 520-6329
29
GAUCHO-2 INC.,
as Owner Participant
By__________________________________
Name:
Title:
Address: P.O. Box 3707
Seattle, WA 98124-3707
Attention: Treasurer
Facsimile: (206) 237-8746
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as
otherwise provided herein, but solely
as Loan Trustee, Pass Through Trustee
and Subordination Agent
By___________________________________
Name:
Title:
Address: One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust
Administration
Facsimile: (302) 651-8882
30
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION,
not in its individual capacity,
except as otherwise provided
herein, but solely as Owner Trustee
By___________________________________
Name:
Title:
Address: 79 South Main Street
Salt Lake City, UT 84111
Attention: Corporate Trust
Department
Facsimile: (801) 246-5053
THE BOEING COMPANY,
as Loan Participant
By___________________________________
Name:
Title:
Address: P.O. Box 3707
Seattle, WA 98124-3707
Attention: Treasurer
Facsimile: (206) 237-8746
31
SCHEDULE I to
Refunding Agreement
PASS THROUGH TRUST AGREEMENTS
1. Continental Airlines 1996-2A Pass Through Trust Agreement.
2. Continental Airlines 1996-2B Pass Through Trust Agreement.
3. Continental Airlines 1996-2C Pass Through Trust Agreement.
4. Continental Airlines 1996-2D Pass Through Trust Agreement.
SCHEDULE II to
Refunding Agreement 116
REFUNDING NOTES, PURCHASERS AND PURCHASE PRICE
Purchaser Interest Rate and Maturity Principal
Amount
Continental
Airlines Pass
Through Trust
1996-2A 7.75% Refunding Notes due 7/2/2014 $18,407,667
1996-2B 8.56% Refunding Notes due 7/2/2014 $7,889,000
1996-2C 10.22% Refunding Notes due 7/2/2014 $7,889,000
1996-2D 11.50% Refunding Notes due 4/2/2008 $3,201,104
2
PARTICIPATION AGREEMENT 116 AMENDMENT NO. 1
THIS PARTICIPATION AGREEMENT 116 AMENDMENT NO. 1
("Amendment"), dated as of May 20, 1996, is among (a) CONTINENTAL
AIRLINES, INC., a Delaware corporation ("Lessee"), (b) GAUCHO-2
INC., a Delaware corporation, in its capacity as owner
participant ("Owner Participant"), (c) WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as Subordination Agent
under the Intercreditor Agreement, in its capacity as loan
participant (the "Loan Participant"), (d) FIRST SECURITY BANK OF
UTAH, NATIONAL ASSOCIATION, a national banking association, not
in its individual capacity, except as expressly provided herein,
but solely as Owner Trustee (in its capacity as Owner Trustee,
"Owner Trustee" or "Lessor," and in its individual capacity,
"First Security") and (e) WILMINGTON TRUST COMPANY, a Delaware
banking corporation, not in its individual capacity, except as
expressly provided herein, but solely as Loan Trustee (in its
capacity as Loan Trustee, "Loan Trustee" and in its individual
capacity, "WTC") (Lessee, Owner Participant, Loan Participant,
Owner Trustee and Loan Trustee collectively referred to herein as
the "Transaction Participants").
RECITALS
(A) Certain of the Transaction Participants are
parties to that certain Participation Agreement 116, dated as of
March 15, 1996, relating to that certain Boeing 757-224 aircraft
(the "Participation Agreement").
(B) The parties wish to amend the Participation
Agreement as set forth below in connection with the Refinancing
Transaction (as defined in Annex A attached hereto) .
NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
AGREEMENT
A. DEFINITIONS. Capitalized terms used but not
defined herein shall have the respective meanings set forth or
incorporated by reference, and shall be construed and interpreted
in the manner described, in Annex A to the Participation
Agreement, as amended hereby.
B. PARTICIPATION AGREEMENT AMENDMENTS. The parties
agree that, effective as of the date hereof, the Participation
Agreement is hereby amended as follows:
1. Amendment to Annex A (Definitions).
Annex A to the Participation Agreement is hereby
replaced in its entirety by the revised Annex A attached to
this Amendment as Annex A.
2. Amendments to Representations, Warranties and
Covenants.
(a) Section 7.1.3 of the Participation Agreement
(Lessee's Representations and Warranties -- No Violation)
is hereby amended by deleting it in its entirety and
substituting the following new Section 7.1.3 in lieu
thereof:
The execution and delivery by Lessee of the
Lessee Operative Agreements, the performance by
Lessee of its obligations thereunder and the
consummation by Lessee on the Delivery Date of
the transactions contemplated thereby, do not and
will not (a) violate or contravene any provision
of the Certificate of Incorporation or By-Laws of
Lessee, (b) violate or contravene any Law
applicable to or binding on Lessee (it being
understood that this representation is not made
with respect to any Law to the extent that such
Law relates to any Plan), or (c) violate,
contravene or constitute any default under, or
result in the creation of any Lien (other than as
permitted under the Lease) upon any property of
Lessee or any of its subsidiaries under, any
material indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, lease,
loan or other material agreement, instrument or
document to which Lessee is a party or by which
Lessee or any of its properties is or may be
bound or affected.
(b) Section 7.1.13 of the Participation Agreement
(Lessee's Representations and Warranties -- Compliance with
Laws) is hereby amended by deleting it in its entirety and
substituting the following new Section 7.1.13 in lieu
thereof:
(a) Lessee is not in default under, or in
violation of, any Law applicable to Lessee or to
which Lessee is subject, the violation of which
would give rise to a Material Adverse Change to
Lessee.
(b) Without limiting the generality of
Section 7.1.13(a):
(i) Lessee is a Citizen of the United
States and a U.S. Air Carrier,
(ii) Lessee holds all licenses, permits
and franchises from the appropriate
Government Entities necessary to authorize
Lessee to lawfully engage in air
2
transportation and to carry on scheduled
commercial passenger service as currently
conducted, except where the failure to so
hold any such license, permit or franchise
would not give rise to a Material Adverse
Change to Lessee; and
(iii) Lessee is not an "investment
company" or a company controlled by an
"investment company" within the meaning of
the Investment Company Act of 1940, as
amended.
(c) Section 7.1.14 of the Participation Agreement
(Lessee's Representations and Warranties --Securities Laws)
is hereby amended by inserting the characters "(a)" before
the words "Neither Lessee nor any person authorized to act
on its behalf" at the beginning of such Section and by
adding at the end of such Section the following new
paragraph:
(b) As of May 20, 1996, neither Lessee nor
any person authorized to act on its behalf (it
being deemed for purposes of this representation
that the initial purchasers under that certain
purchase agreement dated as of May 9, 1996 among
Continental, Morgan Stanley & Co. Incorporated,
CS First Boston Corporation and Fieldstone FPCG
Services, L.P. are not acting on Lessee's behalf)
has directly or indirectly offered any beneficial
interest or Security relating to any of the
Equipment Notes or Pass Through Certificates for
sale to, or solicited any offer to acquire any
such interest or Security from, or has sold any
such interest or Security to, any person in
violation of the Securities Act or applicable
state securities Laws.
(d) Section 7.2.3 of the Participation Agreement
(Owner Participant's Representations and Warranties -- No
Violation) is hereby amended by deleting it in its entirety
and substituting the following new Section 7.2.3 in lieu
thereof:
The execution and delivery by Owner
Participant of the Owner Participant Agreements,
the performance by Owner Participant of its
obligations thereunder and the consummation by
Owner Participant on the Delivery Date of the
transactions contemplated thereby, do not and
will not (a) violate or contravene any provision
of the Certificate of Incorporation or By-Laws of
Owner Participant, (b) violate or contravene any
Law applicable to or binding on Owner Participant (it
being understood that this representation is not
3
made with respect to any Law to the extent that
such Law relates to any Plan), or (c) violate,
contravene or constitute any default under, or
result in the creation of any Lien (other than as
provided for or otherwise permitted in the
Operative Agreements) upon the Trust Estate
under, any material indenture, mortgage, chattel
mortgage, deed of trust, conditional sales
contract, lease, loan or other material
agreement, instrument or document to which Owner
Participant is a party or by which Owner
Participant or any of its properties is or may be
bound or affected.
(e) Section 7.4.2 of the Participation Agreement
(Loan Participant's Representations and Warranties
--Investment by Loan Participant) is hereby amended by
deleting it in its entirety and substituting the following
new Section 7.4.2 in lieu thereof:
The Equipment Notes to be acquired by it are
being acquired by it for its own account, for
investment and not with a view to any resale or
distribution thereof, except for the offer and
sale of the Pass Through Certificates and except
that, subject to the restrictions on transfer set
forth in Sections 8.5.3 and 12.1.3 (which are
subject to Section 21), the disposition by it of
its Equipment Notes shall at all times be within
its control. Neither it nor any person it has
authorized to act on its behalf has directly or
indirectly offered any interest in and to the
Equipment Notes for sale to, or solicited any
offer to acquire any of the same from, any person
in violation of applicable Laws.
(f) Sections 7.4.3 and 7.4.4 of the Participation
Agreement (Loan Participant's Representations and
Warranties -- ERISA and --Broker's Fees) are hereby amended
by deleting such Sections in their entirety and shall be
deemed "Intentionally Omitted."
(g) Section 8.5.2 of the Participation Agreement
(Covenants of Note Holders -- Withholding Taxes) is hereby
amended by deleting it in its entirety and substituting the
following new Section 8.5.2 therefor:
Such Note Holder (if it is a Non-U.S.
Person) agrees to indemnify (on an after-Tax
basis) and hold harmless Lessee, Owner
Participant and Loan Trustee against any United
States withholding taxes (and related interest,
penalties and additions to tax) as a result of
the inaccuracy or invalidity of any certificate
or form provided by such Note Holder to Loan
Trustee in connection with such withholding
taxes. Any amount payable hereunder shall be
4
paid within 30 days after receipt by a Note
Holder of a written demand therefor.
(h) Section 8.5.3 of the Participation Agreement
(Covenants of Note Holders -- Transfer; Compliance) is
hereby amended by deleting Section 8.5.3(b) and the first
three paragraphs of Section 8.5.3(c) in their entirety and
substituting the following new Section 8.5.3(b) and the
following new first three paragraphs of Section 8.5.3(c),
respectively, in lieu thereof:
(b) Subject to Section 21, each Loan
Participant and each Note Holder (including the
Pass Through Trustee, as beneficial owner of the
Equipment Notes, and the Subordination Agent, as
record owner of the Equipment Notes) covenants
and agrees that it shall not sell, assign,
convey, exchange or otherwise transfer any
Equipment Note or any interest in, or represented
by, any Equipment Note unless the proposed
transferee thereof first provides Lessee and
Owner Participant with both of the following:
(i) a written representation that
either (a) no portion of the funds it uses
to purchase, acquire and hold such Equipment
Note or interest directly or indirectly
constitutes, or may be deemed under the Code
or ERISA or any rulings, regulations or
court decisions thereunder to constitute,
the assets of any Plan, or (b) the transfer,
and subsequent holding, of such Equipment
Note or interest shall not involve or give
rise to a transaction that constitutes a
prohibited transaction within the meaning of
Section 406 of ERISA or Section 4975(c)(1)
of the Code involving Lessee, Owner
Participant, Pass Through Trustee, the
Subordination Agent or the proposed
transferee (other than a transaction that is
exempted from the prohibitions of such
sections by applicable provisions of ERISA
or the Code or administrative exemptions or
regulations issued thereunder) and so long
as Gaucho-2 Inc. or any Affiliate thereof is
Owner Participant, a written representation
that such proposed transferee is not an
Affiliate of Aetna Life Insurance Company;
and
(ii) a written covenant that it will
not transfer any Equipment Note or any
interest in, or represented by, any
Equipment Note unless the subsequent
transferee also makes the representation
described in clause (i) above and agrees
5
to comply with this clause (ii).
(c) Subject to Section 21, promptly after
discovery by any Note Holder that its source of
funding for its Equipment Note has resulted in,
or will result in, a prohibited transaction
within the meaning of Section 406 of ERISA or
Section 4975(c)(1) of the Code, (i) such Note
Holder shall promptly and diligently use all good
faith reasonable efforts to fund such Equipment
Note in a manner that would correct such
prohibited transaction and (ii) during the Term,
so long as such prohibited transaction has not
been corrected pursuant to clause (i) above or
otherwise, upon notice (which notice shall
specifically refer to this Section 8.5.3(c)(ii))
from either Lessee or Owner Participant to such
Note Holder, the following actions will be taken:
(A) a Person (which may be Lessee),
designated by Lessee with the consent of
Owner Participant (which consent shall not
be unreasonably withheld or delayed) in such
notice of Lessee, or within ten days of any
such notice of Owner Participant (which
Person confirms in writing to such Note
Holder and Owner Participant that it will
comply with the obligations of the
remarketing agent under this Section
8.5.3(c)(ii)) (such Person being referred to
herein as the "remarketing agent"), will use
reasonable efforts promptly, and in any
event within 65 days following such notice
from Lessee or Owner Participant to the
remarketing agent, to identify to Lessee
potential purchasers that are not Affiliates
of Lessee for such Equipment Note that are
willing to purchase such Equipment Note
pursuant to this Section 8.5.3(c)(ii) and
would be willing to pay a commercially
reasonable cash purchase price therefor,
taking into account, among other things,
prevailing interest rates, the security for
the Equipment Notes under the Trust
Indenture and the market prices of
comparable securities;
(B) within 70 days following such
notice from Lessee or Owner Participant to
the remarketing agent, Lessee shall
designate a purchaser (which shall not be an
Affiliate of Lessee) to the Note Holder and
the remarketing agent that is willing to pay a
commercially reasonable cash purchase price
6
for such Equipment Note, failing which the
remarketing agent shall within two Business
Days identify to Lessee and such Note Holder
the potential purchaser willing to pay the
highest cash purchase price and such
potential purchaser shall be deemed to be
the designated purchaser;
(i) Section 8.5.3(c) of the Participation
Agreement (Covenants of Note Holders -- Transfer;
Compliance) is hereby further amended by deleting the first
two paragraphs following paragraph (E) thereof in their
entirety.
(j) Section 8.5.4 of the Participation Agreement
(Covenants of Note Holders --Update of Listings) is hereby
amended by deleting it in its entirety and shall be deemed
"Intentionally Omitted."
3. Amendment to Provisions Regarding Revocation of
Trust Agreement.
The first sentence of Section 8.2.2(b) of the
Participation Agreement is hereby amended by deleting it in
its entirety and substituting the following new sentence in
lieu thereof:
Notwithstanding Section 8.2.2(a), Owner
Participant may at any time remove Owner Trustee
pursuant to Section 9.1 of the Trust Agreement;
provided, however, that so long as any Pass
Through Certificates are outstanding, the Owner
Participant shall (i) give prior written notice
of any such proposed removal to the nationally
recognized rating agencies which have been
requested by Lessee to rate, and are then rating,
the Pass Through Certificates, and (ii) obtain
written confirmation from such rating agencies
prior to effecting any such proposed removal to
the effect that such removal will not result in a
withdrawal or downgrading of the ratings of the
Pass Through Certificates.
4. Amendment to Agreements Provisions.
Section 8.7 of the Participation Agreement is
hereby amended by adding the following new Section 8.7.17
immediately after Section 8.7.16 of the Participation
Agreement:
With respect to any amounts paid by Lessee
as Supplemental Rent in excess of amounts owed by
Lessee as Supplemental Rent, the Owner Trustee
agrees to forward promptly to Lessee such excess
7
(if and to the extent such excess has been
distributed to and received by the Owner Trustee)
after Final Distributions (as such term is
defined in the Intercreditor Agreement) have been
made on all classes of the Pass Through
Certificates and all other amounts due under the
Intercreditor Agreement have been paid and all
amounts due and payable by Lessee to the Owner
Trustee or to the Owner Participant or both under
the Operative Agreements have been paid in full.
5. Deletion of Optimization of Amortization Schedule
Provision.
Section 9 of the Participation Agreement is hereby
deleted in its entirety and shall be deemed "Intentionally
Omitted."
6. Amendments to General Indemnity Provisions.
(a) Section 10.1.1(a) of the Participation
Agreement is hereby amended by deleting it in its entirety
and substituting the following new Section 10.1.1(a) in
lieu thereof:
The Operative Agreements, any Permitted
Sublease, the Refinancing Agreement, the
Refunding Agreements, the Note Purchase
Agreement, the Pass Through Trust Agreements, the
Intercreditor Agreement, the Liquidity Facilities
and (with respect to Owner Participant only) the
Fee Letter (as defined in the Intercreditor
Agreement) or the enforcement of any of the terms
of any of the Operative Agreements, any Permitted
Sublease, the Refinancing Agreement, the
Refunding Agreements, the Note Purchase
Agreement, the Pass Through Trust Agreements, the
Intercreditor Agreement, the Liquidity Facilities
and (with respect to Owner Participant only) the
Fee Letter (as defined in the Intercreditor
Agreement).
(b) Section 10.1.1(c) of the Participation
Agreement is hereby amended by deleting it in its entirety
and substituting the following new Section 10.1.1(c) in
lieu thereof:
The offer, sale, resale, purchase, delivery
or holding of any Loan Certificate or Equipment
Note (whether issued pursuant to the Original
Indenture or the Trust Indenture and whether
issued on the Delivery Date or in connection with
the Refinancing Transaction or otherwise) or Pass
Through Certificate or any interest in or
represented by any Loan Certificate or Equipment
Note (whether issued pursuant to the Original
8
Indenture or the Trust Indenture and whether
issued on the Delivery Date or in connection with
the Refinancing Transaction or otherwise) or Pass
Through Certificate or any refunding of any Loan
Certificate or Equipment Note pursuant to Section
13, whether before, on or after the Delivery
Date;
(c) Section 10.1.1(d) of the Participation
Agreement is hereby amended by deleting it in its entirety
and substituting the following new Section 10.1.1(d) in
lieu thereof:
The offer or sale of any interest in the
Aircraft, the Equipment Notes (whether issued on
the Delivery Date or in connection with the
Refinancing Transaction or otherwise), the Pass
Through Certificates, the Trust Estate or the
Trust Agreement or any similar interest or in any
way resulting from or arising out of the Trust
Agreement and the Trust Estate and the Trust
Indenture Estate (including for claims resulting
from or arising under the Securities Act or other
applicable federal, state or foreign securities
Laws or at common law) in each case (other than
the Equipment Notes issued in connection with the
Refinancing Transaction and the Pass Through
Certificates) on or prior to the Delivery Date
and, in the case of the Equipment Notes issued in
connection with the Refinancing Transaction, and
the Pass Through Certificates, on or prior to the
date on which the Refinancing Transaction is
consummated or on or prior to the date on which
registered Pass Through Certificates are issued,
as contemplated by the Registration Rights
Agreement, in exchange for the initial Pass
Through Certificates;
(d) Section 10.1.1(e) of the Participation
Agreement is hereby amended by deleting it in its entirety
and substituting the following new Section 10.1.1(e) in
lieu thereof:
Any breach of or failure to perform or
observe, or any other noncompliance with, any
covenant or agreement or other obligation to be
performed by Lessee under any Lessee Operative
Agreement, the Refinancing Agreement, any
Refunding Agreement, the Note Purchase Agreement
or any Pass Through Trust Agreement or the
falsity of any representation or warranty of
Lessee in any such agreement other than in the
Tax Indemnity Agreement or the occurrence of any
Lease Default or Lease Event of Default;
9
(e) Section 10.1.1(f) of the Participation
Agreement is hereby amended by deleting it in its entirety
and substituting the following new Section 10.1.1(f) in
lieu thereof:
Any "prohibited transaction," within the
meaning of Section 406 of ERISA or Section
4975(c)(1) of the Code, in any way relating to,
resulting from, or arising out of or in
connection with, directly or indirectly, the
Refinancing Transaction, the offer, sale, resale,
purchase, delivery or holding of any Loan
Certificate or Equipment Note (whether issued
pursuant to the Original Indenture or the Trust
Indenture and whether issued on the Delivery Date
or in connection with the Refinancing Transaction
or otherwise) or Pass Through Certificate or any
interest therein or represented thereby or any
refunding thereof pursuant to Section 13, or any
other transaction contemplated under any
Operative Agreement, the Refinancing Agreement,
any Refunding Agreement, the Note Purchase
Agreement, any Pass Through Trust Agreement, the
Intercreditor Agreement, the Liquidity Facilities
or the Fee Letter (as defined in the
Intercreditor Agreement) whether such prohibited
transaction occurs before, on or after the
Delivery Date.
(f) Section 10.1.2(g) of the Participation
Agreement is hereby amended by deleting it in its entirety
and substituting the following new Section 10.1.2(g) in
lieu thereof:
Any Expense to the extent attributable to
the incorrectness or breach of any representation
or warranty of such Indemnitee or related
Indemnitee contained in or made pursuant to any
Operative Agreement, the Refinancing Agreement,
any Refunding Agreement, the Note Purchase
Agreement, any Pass Through Trust Agreement, the
Intercreditor Agreement or any Liquidity
Facility.
(g) Section 10.1.2(h) of the Participation
Agreement is hereby amended by deleting it in its entirety
and substituting the following new Section 10.1.2(h) in
lieu thereof:
Any Expense to the extent attributable to
the failure by such Indemnitee or any related
Indemnitee to perform or observe any agreement,
covenant or condition on its part to be performed
or observed in any Operative Agreement, the
Refinancing Agreement (except with respect to the
Owner Participant), any Refunding Agreement
(except with respect to the Owner Participant),
10
the Note Purchase Agreement, any Pass Through
Trust Agreement, the Intercreditor Agreement, any
Liquidity Facility or the Fee Letter (as defined
in the Intercreditor Agreement).
(h) Section 10.1.2(j) of the Participation
Agreement is hereby amended by deleting it in its entirety
and substituting the following new Section 10.1.2(j) in
lieu thereof:
(i) With respect to any Indemnitee (other
than Loan Trustee), any Expense to the extent
attributable to the failure of (X) the Loan
Trustee to distribute funds received and
distributable by it in accordance with the Trust
Indenture or (Y) the Owner Trustee to distribute
funds received and distributable by it in
accordance with the Trust Agreement, (ii) with
respect to any Indemnitee (other than the
Subordination Agent), any Expense to the extent
attributable to the failure of the Subordination
Agent to distribute funds received and
distributable by it in accordance with the
Intercreditor Agreement, (iii) with respect to
any Indemnitee (other than the Pass Through
Trustees), any Expense to the extent attributable
to the failure of a Pass Through Trustee to
distribute funds received and distributable by it
in accordance with the Pass Through Trust
Agreements, (iv) with respect to Loan Trustee,
any Expense to the extent attributable to the
negligence or willful misconduct of Loan Trustee
in the distribution of funds received and
distributable by it in accordance with the Trust
Indenture, (v) with respect to the Subordination
Agent, any Expense to the extent attributable to
the negligence or willful misconduct of the
Subordination Agent in the distribution of funds
received and distributable by it in accordance
with the Intercreditor Agreement, and (vi) with
respect to the Pass Through Trustees, any Expense
to the extent attributable to the negligence or
willful misconduct of a Pass Through Trustee in
the distribution of funds received and
distributable by it in accordance with the Pass
Through Trust Agreements.
(i) Section 10.1.2(q) of the Participation
Agreement is hereby amended by deleting such Section in its
entirety and by substituting the following new Section
10.1.2(q) in lieu thereof:
If such Indemnitee shall be a Loan Participant or
a Note Holder, or any related Indemnitee of either,
for any Expense incurred by or asserted against such
11
Indemnitee as a result of any "prohibited
transaction", within the meaning of Section 406 of
ERISA or Section 4975(c)(1) of the Code, including a
prohibited transaction described in Section 10.1.1(f);
provided, that this clause (q) shall not negate
Lessee's obligation under Section 10.1.1, or any other
provision of any Lessee Operative Agreement, to
indemnify an Indemnitee, other than a Loan Participant
or a Note Holder, or any related Indemnitee of either,
for any Expense incurred by or asserted against such
Indemnitee as a result of a "prohibited transaction",
within the meaning of Section 406 of ERISA or Section
4975(c)(1) of the Code, in any way relating to,
resulting from, or arising out of or in connection
with, directly or indirectly, the Refinancing
Transaction, the offer, sale, resale, purchase,
delivery or holding of any Pass Through Certificate,
any Loan Certificate or Equipment Note (whether issued
pursuant to the Original Indenture or the Trust
Indenture and whether issued on the Delivery Date or
in connection with the Refinancing Transaction or
otherwise) or any interest therein or represented
thereby or any refunding thereof pursuant to Section
13, or any other transaction contemplated under any
Operative Agreement, the Refinancing Agreement, any
Refunding Agreement, the Note Purchase Agreement, any
Pass Through Trust Agreement, the Intercreditor
Agreement, any Liquidity Facility or the Fee Letter
(as defined in the Intercreditor Agreement), whether
such prohibited transaction occurs before, on or after
the Delivery Date; provided further, that if The
Boeing Company or any related Indemnitee thereof is
the Indemnitee, this clause (q) shall not apply (or
negate Lessee's obligation under Section 10.1.1, or
any other provision of any Lessee Operative Agreement
to indemnify such Indemnitee) with respect to any
Expense of any kind or nature whatsoever in any way
relating to, resulting from or arising out of or in
connection with, directly or indirectly, any
"prohibited transaction" within the meaning of Section
406 of ERISA or Section 4975(c)(1) of the Code, in any
way relating to, resulting from, or arising out of or
in connection with, directly or indirectly, the
Refinancing Transaction, the offer, sale, resale,
purchase, delivery or holding of any Pass Through
Certificate, any Equipment Note issued in connection
with the Refinancing Transaction or any interest
therein or represented thereby or any refunding
thereof pursuant to Section 13, or any other
transaction contemplated under the Refinancing
Agreement, any Refunding Agreement, the Note Purchase
Agreement, any Pass Through Trust Agreement, the
Intercreditor Agreement, any Liquidity Facility or the
Fee Letter (as defined in the Intercreditor
Agreement).
(j) Section 10.1.5(h) of the Participation
12
Agreement is hereby amended by deleting the words
"Indemnified Party" from the second line of such Section
and substituting the word "Indemnitee" in lieu thereof.
(k) Section 10.3.2(b) of the Participation
Agreement is hereby amended by deleting clause (B) thereof
in its entirety and by replacing such clause with the
following new clause (B):
(B) any withholding Taxes (other than withholding
taxes, imposed by any state or local Taxing Authority
within the United States, on, based on or measured by
gross or net income)
(l) Section 10.3 of the Participation Agreement
is hereby amended by adding the following new Section
10.3.11 immediately after Section 10.3.10:
10.3.11 Withholding Tax on Payments to Pass
Through Certificate Holders or Liquidity Provider
Notwithstanding anything to the contrary
contained herein, (a) if Owner Participant is required
to pay or reimburse any Person for any Non-Excluded
Taxes (as defined in the Liquidity Facilities) imposed
by withholding or otherwise on any payment required to
be made to the Liquidity Provider under any Liquidity
Facility, any agreement contemplated by the
Refinancing Transaction or any Operative Agreement by
the Subordination Agent, Owner Trustee, Owner
Participant or Lessee or (b) if at any time while the
holder of an Equipment Note is a Pass Through Trustee,
Owner Participant is required to pay or reimburse any
Person for any U.S. withholding Taxes with respect to
an Equipment Note or Pass Through Certificate and
fails to withhold or cause to be withheld such Taxes
(other than to the extent caused by the willful
misconduct of the Owner Participant), Lessee shall pay
to the Owner Participant an amount sufficient to cover
any liability for such Non-Excluded Taxes and
withholding Taxes. The provisions of Section 10.3.3
through 10.3.5 and Section 10.3.9 shall apply mutatis
mutandis, except that Owner Participant shall be
subject to the rule contained in the proviso to
Section 10.3.3(a) and the last proviso to Section
13.3.3(f).
7. Amendment to Provisions Regarding Assignment or
Transfer of Interests by Loan Participant and Note Holders.
Section 12.1.3 of the Participation Agreement is
hereby amended by deleting it in its entirety and substituting
the following new Section 12.1.3 in lieu thereof:
Subject to Section 8.5.3 hereof (which is subject
to Section 21 hereof) and Section 2.07 of the Trust
13
Indenture, Loan Participant and any other Note Holder
may, at any time and from time to time, Transfer or
grant participations in all or any portion of the
Equipment Notes and/or all or any portion of its
beneficial interest in its Equipment Note and the
Trust Indenture Estate to any person (it being
understood that the sale or issuance of Pass Through
Certificates by a Pass Through Trustee shall not be
considered a Transfer or participation); provided,
that any participant in any such participations shall
not have any direct rights under the Operative
Agreements or any Lien on all or any part of the
Aircraft or Trust Indenture Estate and Lessee shall
not have any increased liability or obligations as a
result of any such participation. Subject to Section
21, in the case of any such Transfer, the Transferee,
by acceptance of Equipment Notes in connection with
such Transfer, shall make each of the representations
applicable to it contained in Sections 7.4 and
8.5.3(b)(i) and each of the covenants set forth in
Section 8.5.
8. Deletion of Provisions Applicable Only if Boeing
is Holder of Loan Certificate.
Section 13.9 of the Participation Agreement is
hereby amended by deleting it in its entirety.
9. Amendments Regarding Owner Participant's Right to
Restructure.
Section 15.2.2 of the Participation Agreement is
hereby amended by deleting it in its entirety and
substituting the following new Section 15.2.2 in lieu
thereof:
Notwithstanding Section 15.1, any such
Special Structure shall not, and prior to the
exercise of its rights thereunder, the Owner
Participant shall deliver an officer's
certificate to the Loan Trustee and, after the
Refinancing Transaction is consummated, to the
Pass Through Trustee that provides that any such
Special Structure shall not, (a) change the terms
and conditions of Loan Participant's or any Note
Holder's rights and obligations under the
Operative Agreements or rights and obligations of
holders of Pass Through Certificates issued in
connection with the Refinancing Transaction, from
those which Loan Participant, Note Holders and
such Pass Through Certificate holders would
otherwise possess or be subject to in the absence
of such Special Structure (including, without limi-
tation, the amount and timing of any payment of
principal, interest and Make-Whole Amount under
14
the Equipment Notes, the relative rights of the
Note Holders with respect to such payments and
such holder of Pass Through Certificates and the
priority of Loan Trustee's Lien on the Trust
Indenture Estate under the Trust Indenture) or
(b) expose Loan Participant, any such Note Holder
or any such holder of Pass Through Certificates
to any additional risks beyond those to which
Loan Participant, such Note Holder or such holder
of Pass Through Certificates would be exposed in
the absence of such Special Structure. In
addition, in no event shall any Special Structure
be permitted unless a written confirmation from
the Rating Agencies is obtained prior to the
implementation of such Special Structure to the
effect that such Special Structure will not
adversely affect the ratings of the Pass Through
Certificates.
10. Amendment to Third-Party Beneficiary Provision.
Section 19.9 is hereby amended by deleting it in its
entirety and substituting the following new Section 19.9 in
lieu thereof:
This Agreement is not intended to, and shall not,
provide any person not a party hereto (other than the
Liquidity Provider, the Subordination Agent and the
Pass Through Trustees, which are intended third-party
beneficiaries with respect to the provisions of
Section 10.1) with any rights of any nature whatsoever
against any of the parties hereto, and no person not a
party hereto (other than the Liquidity Provider, the
Subordination Agent and the Pass Through Trustees,
with respect to the provisions of Section 10.1) shall
have any right, power or privilege in respect of, or
have any benefit or interest arising out of, this
Agreement.
11. Amendment to ERISA provisions.
(a) Section 20.1 of the Participation Agreement
(ERISA -- Generally) is hereby amended by deleting it in
its entirety and by substituting the following new Section
20.1 in lieu thereof:
Without prejudice to the representations,
warranties or covenants regarding the Law
relating to any Plan, including Sections 7.2.9,
7.3.3, 7.6.3 and 8.5.3(b)(i), but subject to
Section 21, each of Lessee, Owner Participant,
each Note Holder, First Security, Owner Trustee,
the Pass Through Trustee, the Subordination
Agent, WTC and Loan Trustee agrees that it will,
immediately upon obtaining Actual Knowledge (with
15
respect to Lessee, Owner Participant, First
Security, Owner Trustee, WTC and Loan Trustee) or
actual knowledge of a Vice President or more
senior officer, or any other officer having
responsibility for the Transactions (with respect
to any Note Holder (or any beneficial owner of a
Equipment Note) that, with respect to a Note
Holder, its source of funding with respect to the
Equipment Notes it then holds or, with respect to
Lessee, Owner Participant, First Security, Owner
Trustee, the Pass Through Trustee, the
Subordination Agent, WTC or Loan Trustee, its
continued participation in the Transaction has
resulted in a "prohibited transaction" within the
meaning of Section 406 of ERISA or Section
4975(c)(1) of the Code, promptly notify in
writing all other parties hereto. In addition, if
any such party obtains any such Knowledge or
knowledge with respect to another party, such
party shall promptly notify in writing all such
other parties hereto.
(b) Section 20.3 of the Participation Agreement
(ERISA -- Note Holders) is hereby amended by deleting it in
its entirety and by substituting the following new Section
20.3 in lieu thereof:
Subject to Section 21, upon any Note Holder
(including Loan Participant, whether or not it
has elected or elects to have its Equipment
Note(s) registered in the name of a nominee, the
Pass Through Trustee and the Subordination Agent)
giving any notice in accordance with the first
sentence of Section 20.1, such Note Holder shall
comply with Section 8.5.3(c).
(c) Section 20.7 of the Participation Agreement
(ERISA -- Pass Through Trustee) is hereby amended by
deleting it in its entirety and by substituting the
following new Section 20.7 in lieu thereof:
Subject to Section 21, upon WTC giving any
notice in accordance with the first sentence of
Section 20.1, the Pass Through Trustee shall
resign; provided, however, that if it is the Pass
Through Trustee's source of funding with respect
to a Equipment Note, rather than the Pass Through
Trustee's continued participation in the
Transaction, that has caused the prohibited
transaction, then the Pass Through Trustee shall
not resign, but shall comply with Section
8.5.3(c).
(d) Section 20.8 of the Participation Agreement
(ERISA -- Certain Agreements) is hereby amended by deleting
it in its entirety and by substituting the following new
16
Section 20.8 in lieu thereof:
Subject to Section 21, Owner Participant
shall not be entitled to give the notice
described in Section 8.5.3(c)(ii) unless, as a
result of the occurrence of a prohibited
transaction as described in Section 8.5.3(c),
Owner Participant would be exposed to any
material risk of liability, cost or other Expense
(after taking into account the indemnity of
Lessee under Section 10.1.1(f) and the
creditworthiness of Lessee at such time). If the
procedures specified in Section 8.5.3(c)(ii) are
invoked, Owner Participant shall, upon request of
Lessee, use reasonable efforts to confirm to
Lessee whether or not it believes a transfer to a
proposed transferee would correct such prohibited
transaction and whether or not such transfer,
immediately upon its consummation, would result
in another prohibited transaction. A copy of any
notice given by either Lessee or Owner
Participant under Section 8.5.3(c)(ii) shall,
within one Business Day, be delivered by such
party to the other. If, after Owner Participant
provides a Note Holder that is the Pass Through
Trustee with notice that it is invoking the
procedures specified in Section 8.5.3(c)(ii), the
Note Holder is able to establish to the
reasonable satisfaction of Owner Participant that
the transfer of the Note Holder's Equipment Note
would not correct the prohibited transaction,
then Owner Participant shall rescind its notice
to the Note Holder. Such rescission shall not
preclude delivery of another such notice by Owner
Participant (or Lessee) pursuant to Section
8.5.3(c)(ii).
12. Addition of New Provision Regarding Refinancing
Transaction.
The Participation Agreement is hereby amended by
adding the following new Section 21:
SECTION 21. REFINANCING TRANSACTION
In connection with the Refinancing Transaction,
notwithstanding anything to the contrary contained
herein, it is expressly agreed and understood that the
provisions of Sections 7.4.2 (to the extent such
Section refers to Section 8.5.3(a)(ii), (b) and (c)),
8.5.3(a)(ii), (b) and (c), 12.1.3, 13.7 and 20 of the
Participation Agreement shall not apply to (i) the
issuance of Equipment Notes by the Owner Trustee to the
Pass Through Trustees (as beneficial owners) and the
Subordination Agent (as record owner) in connection
17
with the Refinancing Transaction, (ii) the acquisition
and holding of Equipment Notes by the Pass Through
Trustees (as beneficial owners) and the Subordination
Agent (as record owner) in connection with the
Refinancing Transaction, (iii) the issuance by each
Pass Through Trust of the Pass Through Certificates,
(iv) the acquisition, holding or transfer of Pass
Through Certificate(s) by a holder thereof or a
prospective transferee thereof or (v) any sale,
assignment, conveyance, exchange or other transfer of
any Equipment Note or any interest in, or represented
by, any Equipment Note from the Pass Through Trustee
to a subsequent Pass Through Trustee. The parties
further agree that so long as any Pass Through
Certificate shall remain outstanding, the provisions
of 7.1.18, 7.2.13 and 8.5.4 shall be of no force or
effect.
The parties agree that the Refinancing
Transaction shall not constitute a refunding
transaction under Section 13.1 of the Participation
Agreement.
In addition, the disclosure of certain
confidential documents specified in Section 18 of the
Participation Agreement shall be permitted to the
extent necessary or advisable to consummate the
Refinancing Transaction.
13. Amendment to Schedules.
(a) Schedule 4 to the Participation Agreement is
hereby amended by deleting the definition of "Debt
Rate" therefrom and substituting the following new
definition therefor:
7.75% with respect to the Equipment Notes
designated as "Series A"; 8.56% with respect
to the Equipment Notes designated as "Series
B"; 10.22% with respect to the Equipment
Notes designated as "Series C"; and 11.50%
with respect to the Equipment Notes
designated as "Series D".
(b) Schedule 5 to the Participation Agreement is
hereby deleted in its entirety.
C. ENTIRE AGREEMENT. This Amendment is intended to be
a complete and exclusive statement of the terms of the agreement
of the parties hereto and supersedes any prior or contemporaneous
agreements, whether oral or in writing with respect to the
subject matter hereof.
D. STATUS OF PARTICIPATION AGREEMENT. This Amendment
shall be construed in connection with, and as a part of, the
Participation Agreement. The terms, conditions, covenants,
18
representations, agreements, rights, remedies, powers and
privileges set forth in the Participation Agreement, as modified
hereby, are hereby confirmed in all respects by the parties
hereto and shall continue in full force and effect.
E. COUNTERPARTS. This Amendment may be executed in
two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
19
IN WITNESS WHEREOF, this Amendment has been executed
on behalf of each of the parties as of the date first written
above.
CONTINENTAL AIRLINES, INC.,
Lessee
By:_____________________________
Name: Gerald Laderman
Title: Vice President
GAUCHO-2 INC.
Owner Participant
By:_____________________________
Name:
Title:
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
not in its individual
capacity, except as expressly
provided herein, but solely as
Owner Trustee, Owner Trustee
By:_____________________________
Name:
Title:
20
WILMINGTON TRUST COMPANY, not in
its individual capacity,
except as expressly provided
herein, but solely as Loan
Trustee, Loan Trustee
By:_____________________________
Name:
Title:
WILMINGTON TRUST COMPANY, not in
its individual capacity, but
solely as Subordination Agent
under the Intercreditor
Agreement, Loan Participant
By:_____________________________
Name:
Title:
21
LEASE AGREEMENT 116 AMENDMENT NO. 1
THIS LEASE AGREEMENT 116 AMENDMENT NO. 1
("Amendment"), dated as of May 20, 1996, is by and between FIRST
SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity, except as expressly
provided herein, but solely as Owner Trustee ("Lessor") and
CONTINENTAL AIRLINES, INC., a Delaware corporation ("Lessee").
RECITALS
(A) Pursuant to that certain Lease Agreement 116,
dated as of March 15, 1996, as more specifically defined on
Appendix A attached hereto (the "Lease"), Lessor agreed to lease
and Lessee agreed to take on lease one Boeing 757-224 aircraft
(the "Aircraft") upon the terms and conditions contained in the
Lease.
(B) Lessor and Lessee wish to amend the Lease as set
forth below in connection with the Refinancing Transaction (as
defined in Annex A attached hereto).
NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged,
Lessor and Lessee hereby agree as follows:
AGREEMENT
A. DEFINITIONS. Capitalized terms used but not
defined herein shall have the respective meanings set forth or
incorporated by reference, and shall be construed and interpreted
in the manner described, in Annex A to the Lease, as amended
hereby.
B. LEASE AMENDMENTS. Lessor and Lessee agree that,
effective as of the date hereof, the Lease is hereby amended as
follows:
1. Amendment to Annex A (Definitions).
Annex A to the Lease is hereby replaced in its
entirety by the revised Annex A attached to this
Amendment as Annex A.
2. Amendments to Basic Rent Provisions. Sections
3.2.1(a), (b) and (c) of the Lease are hereby amended and
restated in their entirety to read as follows:
(a) During the Base Lease Term, Lessee shall pay
to Lessor, on each Payment Date, in the manner and in
funds of the type specified in Section 3.3, Basic Rent
in advance and in the amount equal to the percentage
of
Lessor's Cost specified in Schedule 2 for such Payment
Date, as such amount may be (i) adjusted pursuant to
Section 3.2.1(b) or (ii) increased in an amount equal
to any increase in the amount of interest due on the
Equipment Notes on the relevant Payment Date pursuant
to Section 2(e) of the Registration Rights Agreement.
Each installment of Basic Rent shall, for all purposes
hereof, be accrued on a daily basis over the
three-month period beginning on the Payment Date on
which such installment is scheduled to be paid; and as
security for the obligations of Lessee under this
Lease and the other Lessee Operative Documents, Lessee
hereby grants to Lessor a security interest in all
amounts of Basic Rent which may be paid but unaccrued
hereunder from time to time.
(b) The percentages of (i) Basic Rent, Stipulated
Loss Value and Termination Value set forth in
Schedules 2, 3 and 4, respectively, shall be
appropriately adjusted (upward or downward) in the
manner set forth in Section 3.2.1(c), (x) to reflect
any Post-Delivery Change in Tax Law (but without any
optimization of the Amortization Schedule)or (y) as
contemplated by Section 13 of the Participation
Agreement, to reflect a transaction described in such
Section and subject to the terms therein and (ii)
Stipulated Loss Value and Termination Value shall be
adjusted and recomputed in accordance with, and to the
extent required by, the Tax Indemnity Agreement. Any
adjustment described in this Section 3.2.1(b) shall be
set forth in an amendment to this Lease to be prepared
by Lessor, executed and delivered by Lessor and
Lessee, and filed with the FAA, all at the sole cost
and expense of Lessee, and a copy of such amendment
shall be provided to Mortgagee; provided, however,
that the execution, delivery and filing of such
amendment shall not be a condition to the
effectiveness of any adjustment required by the terms
hereof.
(c) All adjustments pursuant to Section 3.2.1(b)
shall be made as promptly as practicable after either
Owner Participant or Lessee gives notice to the other
that an event has occurred that requires an
adjustment. Owner Participant and Lessee shall give
prompt notice to each other of any event requiring an
adjustment, but in any event, in the case of a
Post-Delivery Change in Tax Law, not later than the
end of the fourteenth month following the month in
which the Delivery Date occurs. All such adjustments
shall be made in a manner that (i) maintains the Net
Economic Return to Owner Participant and (ii) to the
extent possible consistent with clause (i), minimizes
the Net Present Value of Rents to
2
Lessee; provided, however, that payments of Basic Rent
hereunder shall, notwithstanding any such adjustment,
be payable in consecutive quarterly installments,
subject always to the provisions of Section 3.2.1(e).
Any recalculation of the percentages of Basic Rent,
Stipulated Loss Value and Termination Value shall be
prepared by Owner Participant, subject to verification
at the request of Lessee in accordance with Section
3.2.1(d), on the basis of the same methodology and
assumptions used by Owner Participant in determining
the percentages of Basic Rent, Stipulated Loss Value
and Termination Value as of the Delivery Date
(including compliance with Revenue Procedures 75-21
and 75-28 and Section 467 of the Code), except as such
assumptions have been modified to reflect the events
giving rise to adjustments hereunder. Promptly after
an adjustment is made hereunder, Owner Participant
shall deliver to Lessee a description of such
adjustment, setting forth in reasonable detail the
calculation thereof. All adjustments shall (y) be made
so as to avoid characterization of the Lease as a
"disqualified leaseback or long-term agreement" within
the meaning of Section 467 of the Code and to avoid
any additional risk of such characterization and (z)
be in compliance with the requirements of Revenue
Procedure 75-21 and Sections 4.02(5), 4.07(1) and, on
a prospective basis, 4.08(1) or (2) of Revenue
Procedure 75-28. Notwithstanding the foregoing,
adjustments to Basic Rent shall not be required to
comply with Section 467 and shall be permitted to
result in recharacterization of the Lease as a
"disqualified leaseback or long-term agreement" if (i)
application of Section 467 does not result in
acceleration of recognition of rental income, or (ii)
Section 467 does require acceleration of recognition
of rental income, but the adjustments to Basic Rent
maintain Owner Participant's Net Economic Return
(taking into account the after-Tax effect of Section
467) notwithstanding such acceleration.
3. Amendment to Payments Provision. Section 3.3(a)
of the Lease is hereby amended by deleting it in its
entirety and substituting the following new Section 3.3(a)
in lieu thereof:
Payments of Rent and any and all other amounts
payable by Lessee hereunder and under any other
Operative Agreement shall be paid from an account
maintained by Lessee at a bank or other financial
institution in the United States by wire transfer of
immediately available Dollars, not later than 12:00
noon, New York City time, on the date when due, to the
3
account of Lessor specified in Schedule 1 to the
Participation Agreement or to such other account in
the United States as directed by Lessor to Lessee in
writing or, in the case of any payment of Supplemental
Rent expressly payable to a person other than Lessor,
to the person that shall be entitled thereto to such
account in the United States as such person may
specify from time to time to Lessee.
4
4. Amendment to Title Transfers by Lessor Provisions.
Section 4.6 of the Lease is hereby amended by deleting
from the third line thereof the words "Section 5.3, 9, 10
or 17.2" and replacing such words with the following words
in lieu thereof: "Section 5.3, 9, 10 or 17.3".
5. Amendments to Event of Loss Provisions.
(a) Section 10.1.1(a) of the Lease is hereby amended
by deleting the second sentence thereof in its entirety and
substituting the following new sentence in lieu thereof:
Within 20 days after such occurrence, Lessee
shall give Lessor, Mortgagee and Owner Participant
written notice of Lessee's election to make payment in
respect of such Event of Loss, as provided in Section
10.1.2 (which notice or any subsequent notice shall
specify the date, which shall be at least 25 days
after the date of such notice, on which such payment
shall be made), or to replace the Airframe, and any
such Engines, as provided in Section 10.1.3.
(b) Section 10.1.2(a)(i) of the Lease is hereby
amended by deleting the first clause thereof up to but not
including clause (1) thereof and substituting the following
new clause in lieu thereof:
On or before the Business Day next following the
earlier of (x) the sixty-first day following the date
of the occurrence of such Event of Loss, and (y) the
second Business Day following the receipt of insurance
proceeds with respect to such occurrence (but in any
event not earlier than the date specified in Lessee's
notice under Section 10.1.1(a) on which payment in
respect of such Event of Loss shall be made), Lessee
shall pay to Lessor:
6. Amendment to Lease Events of Default Provisions.
Section 14.1 of the Lease is hereby amended by
(i) deleting the words "due hereunder or under any
other Lessee Operative Agreement" from the third and
fourth lines of such Section and inserting in their
place the words "of Supplemental Rent" and (ii) by
inserting the words "or any Additional Excluded
Amounts" in the second line of the proviso to such
Section immediately after the words "any Excluded
Payment".
5
7. Amendments to Remedies Provisions.
(a) Section 15.1.3 of the Lease is hereby amended by
adding the following new paragraph to the end of such
Section:
Lessee and Lessor hereby acknowledge and agree
that the amounts provided for in this Section 15.1.3
are reasonable and are calculated on the basis of, and
are intended only to compensate for, the anticipated
harm likely to be suffered as a result of a Lease
Event of Default.
(b) Section 15.1.4 of the Lease is hereby amended by
adding the following new paragraph to the end of such
Section:
Lessee and Lessor hereby acknowledge and agree
that the amounts provided for in this Section 15.1.4
are reasonable and are calculated on the basis of, and
are intended only to compensate for, the anticipated
harm likely to be suffered as a result of a Lease
Event of Default.
8. Amendments to Schedules.
(a) Schedule 1 to the Lease is hereby amended as
and to the extent provided in Amended Schedule 1 as
attached to this Amendment.
(b) Schedule 2 to the Lease is hereby replaced in
its entirety by the revised Schedule 2 attached to
this Amendment as Amended Schedule 2.
(c) Schedule 3 to the Lease is hereby replaced in
its entirety by the revised Schedule 3 attached to
this Amendment as Amended Schedule 3.
(d) Schedule 4 to the Lease is hereby replaced in
its entirety by the revised Schedule 4 attached to
this Amendment as Amended Schedule 4.
(e) Schedule 5 to the Lease is hereby amended by
deleting from the list of Permitted Air Carriers the
words "Air Inter" and "Union de Transports Aeriens".
D. ENTIRE AGREEMENT. This Amendment is intended to be
a complete and exclusive statement of the terms of the agreement
of the parties hereto and supersedes any prior or contemporaneous
agreements, whether oral or in writing with respect to the
subject matter hereof.
6
E. STATUS OF LEASE. This Amendment shall be construed
in connection with, and as a part of, the Lease. The terms,
conditions, covenants, representations, agreements, rights,
remedies, powers and privileges set forth in the Lease, as
modified hereby, are hereby confirmed in all respects by the
parties hereto and shall continue in full force and effect.
F. COUNTERPARTS. This Amendment may be executed in two
or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument. To the extent, if any, that this Amendment
constitutes chattel paper (as such term is defined in the Uniform
Commercial Code in effect in the applicable jurisdiction) no
security interest in Lessor's right, title and interest in and to
this Amendment may be perfected through the delivery or
possession of any counterpart of this Amendment other than the
counterpart which has been marked "Original" on the signature
page thereof.
7
IN WITNESS WHEREOF, this Amendment has been executed
on behalf of each of the parties as of the date first written
above.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION, not in its
individual capacity, except as
expressly provided herein, but
solely as Owner Trustee under the
Trust Agreement, as Lessor
By:_________________________________
Name:
Title:
CONTINENTAL AIRLINES, INC.,
as Lessee
By:_________________________________
Name: Gerald Laderman
Title: Vice President
8
[N12116 757]
ANNEX A
DEFINITIONS
GENERAL PROVISIONS
(a) In each Operative Agreement, unless otherwise expressly
provided, a reference to:
(i) each of "Lessee," "Lessor," "Owner Trustee,"
"Owner Participant," "Loan Participant," "Loan Trustee,"
"Note Holder" or any other person includes, without
prejudice to the provisions of any Operative Agreement, any
successor in interest to it and any permitted transferee,
permitted purchaser or permitted assignee of it;
(ii) words importing the plural include the singular
and words importing the singular include the plural;
(iii) any agreement, instrument or document, or any
annex, schedule or exhibit thereto, or any other part
thereof, includes, without prejudice to the provisions of
any Operative Agreement, that agreement, instrument or
document, or annex, schedule or exhibit, or part,
respectively, as amended, modified or supplemented from
time to time in accordance with its terms and in accordance
with the Operative Agreements, and any agreement,
instrument or document entered into in substitution or
replacement therefor;
(iv) any provision of any Law includes any such
provision as amended, modified, supplemented, substituted,
reissued or reenacted prior to the Delivery Date, and
thereafter from time to time;
(v) the words "Agreement," "this Agreement," "hereby,"
"herein," "hereto," "hereof" and "hereunder" and words of
similar import when used in any Operative Agreement refer
to such Operative Agreement as a whole and not to any
particular provision of such Operative Agreement;
(vi) the words "including," "including, without
limitation," "including, but not limited to," and terms or
phrases of similar import when used in any Operative
Agreement, with respect to any matter or thing, mean
including, without limitation, such matter or thing; and
(vii) a "Section," an "Exhibit," an "Annex" or a
"Schedule" in any Operative Agreement, or in any annex
thereto, is a reference to a section of, or an exhibit, an
annex or a schedule to, such Operative Agreement or such
annex, respectively.
(b) Each exhibit, annex and schedule to each Operative
Agreement is incorporated in, and shall be deemed to be a part
of, such Operative Agreement.
(c) Unless otherwise defined or specified in any Operative
Agreement, all accounting terms therein shall be construed and
all accounting determinations thereunder shall be made in
accordance with GAAP.
(d) Headings used in any Operative Agreement are for
convenience only and shall not in any way affect the construction
of, or be taken into consideration in interpreting, such
Operative Agreement.
DEFINED TERMS
"Act" means 49 U.S.C. ss.ss. 40101-46507.
"Actual Knowledge" means (a) as it applies to Owner Trustee
or Loan Trustee, as the case may be, actual knowledge of a
responsible officer in the Corporate Trust Department or the
Corporate Trust Office, respectively, and (b) as it applies to
Lessee or Owner Participant, actual knowledge of a Vice President
or more senior officer of Owner Participant or Lessee,
respectively, or any other officer of Owner Participant or
Lessee, respectively, in each case having responsibility for the
transactions contemplated by the Operative Agreements; provided
that each of Lessee, Owner Participant, Owner Trustee and Loan
Trustee shall be deemed to have "Actual Knowledge" of any matter
as to which it has received notice from Lessee, Owner
Participant, any Note Holder, Owner Trustee or Loan Trustee, such
notice having been given pursuant to Section 19.7 of the
Participation Agreement.
"Additional Excluded Amounts" means (1) all amounts of
Supplemental Rent payable, under clause (a) of the definition of
such term set forth in this Annex A, to any Indemnitees described
in clauses (vii), (viii), (ix), (xi), (xiii) and (xv) of the
definition of "Indemnitee" set forth in this Annex A, (2) all
amounts of Supplemental Rent payable, under clause (b)(iii) of
the definintion of such term set forth in this Annex A, to the
extent that such amounts in any single instance or in the
aggregate exceed $250,000, and (3) all amounts of Supplemental
Rent payable under clauses (b)(iv), (c) and (d) of the definition
of such term set forth in this Annex A.
"Additional Insured" is defined by reference to Section 11
of the Lease.
2
"Adverse Change in Tax Law" means (a) for Lessee, a Change
in Tax Law that Lessee regards as one that could adversely affect
the economic consequences of the transactions contemplated by the
Participation Agreement and the other Operative Agreements
anticipated by Lessee or (b) for Owner Participant, any Change in
Tax Law that would adversely affect any of the following tax
assumptions:
(i) For federal income tax purposes, the Lease will be
a "true" lease for purposes of the Code and Owner
Participant will be treated as the owner of the Aircraft
and Lessee will be treated as the lessee thereof;
(ii) For federal income tax purposes, Owner
Participant will be entitled to depreciation or cost
recovery deductions with respect to Lessor's Cost of the
Aircraft; and
(iii) For federal income tax purposes, Owner
Participant will be entitled to deductions for interest
payments on the Equipment Notes.
"Affiliate" means, with respect to any person, any other
person directly or indirectly controlling, controlled by or under
common control with such person. For purposes of this definition,
"control" means the power, directly or indirectly, to direct or
cause the direction of the management and policies of such
person, whether through the ownership of voting securities or by
contract or otherwise and "controlling," "controlled by" and
"under common control with" have correlative meanings.
"Aircraft" means, collectively, the Airframe and Engines.
"Aircraft Bill of Sale" means the full warranty bill of
sale covering the Aircraft delivered by Airframe Manufacturer to
Owner Trustee on the Delivery Date.
"Aircraft Documents" means all technical data, manuals and
log books, and all inspection, modification and overhaul records
and other service, repair, maintenance and technical records that
are required by the FAA (or the relevant Aviation Authority), the
Lease or the Maintenance Program to be maintained with respect to
the Aircraft, Airframe, Engines or Parts, or that are of a type
required to be delivered by Lessee upon return of the Aircraft,
Airframe or Engines under Section 5 of the Lease; and such term
shall include all additions, renewals, revisions and replacements
of any such materials from time to time made, or required to be
made, in accordance with the Lease, the Maintenance Program or
such FAA (or other Aviation Authority) regulations, and in each
case in whatever form and by whatever means or medium (including,
without limitation, microfiche, microfilm, paper or computer
disk) such materials may be maintained or retained by or on
3
behalf of Lessee (provided that all such materials shall be
maintained in the English language); and such term shall include,
without limitation, the documents described in Section N of Annex
B to the Lease.
"Airframe" means (a) the aircraft (excluding Engines or
engines from time to time installed thereon) manufactured by
Airframe Manufacturer and identified by Airframe Manufacturer's
model number, United States registration number and Airframe
Manufacturer's serial number set forth in Lease Supplement No. 1
and any Replacement Airframe and (b) any and all Parts
incorporated or installed in or attached or appurtenant to such
airframe, and any and all Parts removed from such airframe,
unless title to such Parts shall not be vested in Lessor in
accordance with Section 8.1 and Annex C of the Lease. Upon
substitution of a Replacement Airframe under and in accordance
with the Lease, such Replacement Airframe shall become subject to
the Lease and shall be the "Airframe" for all purposes of the
Lease and the other Operative Agreements and thereupon the
Airframe for which the substitution is made shall no longer be
subject to the Lease, and such replaced Airframe shall cease to
be the "Airframe."
"Airframe Manufacturer" means The Boeing Company, a
Delaware corporation, solely in its capacity as manufacturer or
seller of the Aircraft, Airframe, Engines or Parts (other than
BFE and other than any Parts incorporated or installed in or
attached or appurtenant to the Aircraft, Airframe or any Engine
after delivery of the Aircraft, Airframe and Engines to Tramco,
Inc. prior to the Delivery Date) under the Purchase Agreement or
any other contract or other services provided for thereunder or
related thereto.
"Amortization Amount" means, with respect to any Equipment
Note, as of any Payment Date, the amount determined by
multiplying the percentage set forth opposite such Date on the
Amortization Schedule by the Original Amount of such Equipment
Note.
"Amortization Schedule" means, with respect to each
Equipment Note, the amortization schedule for the Equipment Notes
delivered pursuant to Section 2.02 of the Trust Indenture or, if
a revised amortization schedule shall be established pursuant to
Section 13 of the Participation Agreement, the amortization
schedule so established.
"Appraiser" means a firm of internationally recognized,
independent aircraft appraisers.
"APU" means the auxiliary power unit installed on the
Aircraft on the Delivery Date, whether or not installed on the
4
Aircraft from time to time thereafter, unless title to such APU
shall not be vested in Lessor in accordance with Section 8.1 of
the Lease, and any replacement or substituted auxiliary power
unit installed on the Aircraft in accordance with the Lease.
"Average Life Date" for any Equipment Note shall be the
date which follows the time of determination by a period equal to
the Remaining Weighted Average Life of such Equipment Note.
"Remaining Weighted Average Life" on a given date with respect to
any Equipment Note shall be the number of days equal to the
quotient obtained by dividing (a) the sum of each of the products
obtained by multiplying (i) the amount of each then remaining
scheduled payment of principal of such Equipment Note by (ii) the
number of days from and including such determination date to but
excluding the date on which such payment of principal is
scheduled to be made, by (b) the then outstanding principal
amount of such Equipment Note.
"Aviation Authority" means the FAA or, if the Aircraft is
permitted to be, and is, registered with any other Government
Entity under and in accordance with Section 7.1.2 of the Lease,
such other Government Entity.
"Bankruptcy Code" means the United States Bankruptcy Code,
11 U.S.C. Sections 102 et seq.
"Base Lease Term" means the period beginning on and
including the Commencement Date and ending on the Scheduled
Expiration Date, or such earlier date on which the Term
terminates in accordance with the provisions of the Lease.
"Basic Rent" means the rent payable for the Aircraft
pursuant to Section 3.2.1(a) of the Lease.
"Beneficial Owner" when used in relation to an Equipment
Note means a Person that, by reason of direct ownership,
contract, share ownership or otherwise, has the right to receive
or participate in receiving, directly or indirectly, payments of
principal, interest or Make-Whole Amount in respect of such
Equipment Note; provided that a Person shall not be deemed to be
a Beneficial Owner of an Equipment Note solely because another
Person in which such a Person owns common stock or other equity
securities is a registered holder or Beneficial Owner of such
Equipment Note unless such Person is an Affiliate of such other
Person.
"BFE" means all appliances, parts, instruments,
appurtenances, accessories, furnishings or other equipment of
whatever nature sold by Lessee to Owner Trustee pursuant to the
BFE Bill of Sale.
5
"BFE Amount" means the amount paid by Owner Trustee to
Lessee to purchase the BFE, and is designated by Dollar amount in
Schedule 4 to the Participation Agreement.
"BFE Bill of Sale" means the full warranty bill of sale
executed by Lessee in favor of Owner Trustee, dated the Delivery
Date, identifying and covering the BFE.
"Bills of Sale" means the FAA Bill of Sale, the Aircraft
Bill of Sale and the BFE Bill of Sale.
"Business Day" means any day other than a Saturday, Sunday
or other day on which commercial banks are authorized or required
by law to close in New York, New York, Houston, Texas or Salt
Lake City, Utah.
"Cash Equivalents" means the following securities (which
shall mature within 90 days of the date of purchase thereof): (a)
direct obligations of the U.S. Government; (b) obligations fully
guaranteed by the U.S. Government; (c) certificates of deposit
issued by, or bankers' acceptances of, or time deposits or a
deposit account with, Owner Trustee, Loan Trustee or any bank,
trust company or national banking association incorporated or
doing business under the laws of the United States or any state
thereof having a combined capital and surplus and retained
earnings of at least $500,000,000 and having a rate of "C" or
better from the Thomson BankWatch Service; or (d) commercial
paper of any issuer doing business under the laws of the United
States or one of the states thereof and in each case having a
rating assigned to such commercial paper by Standard & Poor's
Corporation or Moody's Investors Service, Inc. equal to A1 or
higher.
"Certificate Holder" means Note Holder.
"Change in Tax Law" means any amendment, modification,
addition or change in or to the provisions of the Code, any other
federal tax statutes, the Treasury Regulations promulgated
thereunder, the Internal Revenue Service Revenue Rulings, Revenue
Procedures or other administrative or judicial interpretations of
the Code or the federal tax statutes that affects the tax
assumptions set forth in the Tax Indemnity Agreement or otherwise
affects Owner Participant's anticipated Net Economic Return
(other than a change in the alternative minimum tax or other
change that results in Owner Participant being subject to
alternative minimum tax or unable to fully utilize tax benefits
because of its particular tax situation).
"Citizen of the United States," unless otherwise defined, is
as defined in 49 U.S.C. ss.40102(a)(15) and in the FAA Regulations.
6
"Closing" means the closing of the transactions contemplated
by the Participation Agreement on the Delivery Date.
"Code" means the Internal Revenue Code of 1986, as amended;
provided that, when used in relation to a Plan, "Code" shall mean
the Internal Revenue Code of 1986 and any regulations and rulings
issued thereunder, all as amended and in effect from time to
time.
"Commencement Date" is defined in Schedule 1 to the Lease.
"Commitment" means, for any Participant, the amount of its
participation in the payment of Lessor's Cost.
"Commitment Termination Date" is defined in Schedule 4 to
the Participation Agreement.
"Consent and Agreement" means the Manufacturer Consent and
Agreement 116, dated as of even date with the Participation
Agreement, of Airframe Manufacturer.
"Continuous Stay Period" is defined in Section 4.04(a) of
the Trust Indenture.
"Corporate Trust Department" or "Trust Office" means the
principal corporate trust office of Owner Trustee located from
time to time at Owner Trustee's address for notices under the
Participation Agreement or such other office at which Owner
Trustee's corporate trust business shall be administered which
Owner Trustee shall have specified by notice in writing to
Lessee, Loan Trustee and each Note Holder.
"Corporate Trust Office" means the principal office of Loan
Trustee located at Loan Trustee's address for notices under the
Participation Agreement or such other office at which Loan
Trustee's corporate trust business shall be administered which
Loan Trustee shall have specified by notice in writing to Lessee,
Owner Trustee and each Note Holder.
"CRAF" means the Civil Reserve Air Fleet Program
established pursuant to 10 U.S.C. Section 9511-13 or any similar
substitute program.
"Damage Payment Threshold" is defined in Schedule 1 to the
Lease.
"Debt" means any liability for borrowed money, or any
liability for the payment of money in connection with any letter
of credit transaction or any other liabilities evidenced or to be
evidenced by bonds, debentures, notes or other similar
instruments.
7
"Debt Rate" means, with respect to any Series, the rate per
annum specified for such Series under the heading "Interest Rate"
in Schedule I to the Trust Indenture.
"Default" means any event or condition that with the giving
of notice or the lapse of time or both would become an Event of
Default.
"Definitive Purchase Notice" is defined in Section 17.1 of
the Lease.
"Delayed Delivery Date" means a delayed Delivery Date
notified to each Participant, Owner Trustee and Loan Trustee by
Lessee pursuant to Section 5.3.1 of the Participation Agreement,
which delayed Delivery Date shall be a Business Day not later
than the Commitment Termination Date.
"Delivery Date" means the Business Day specified in Lease
Supplement No. 1 as the date on which, among other things, the
Aircraft is delivered to and accepted by Lessee under the Lease
and the Closing occurs.
"Dollars," "United States Dollars" or "$" means the lawful
currency of the United States.
"DOT" means the Department of Transportation of the United
States or any Government Entity succeeding to the functions of
such Department of Transportation.
"Enforcement Date" is defined in Section 4.03 of the Trust
Indenture.
"Engine" means (a) each of the engines manufactured by
Engine Manufacturer and identified by Engine Manufacturer's model
number and Engine Manufacturer's serial number set forth in Lease
Supplement No. 1 and originally installed on the Airframe on
delivery thereof pursuant to the Lease, and any Replacement
Engine, in any case whether or not from time to time installed on
such Airframe or installed on any other airframe or aircraft, and
(b) any and all Parts incorporated or installed in or attached or
appurtenant to such engine, and any and all Parts removed from
such engine, unless title to such Parts shall not be vested in
Lessor in accordance with Section 8.1 and Annex C of the Lease.
Upon substitution of a Replacement Engine under and in accordance
with the Lease, such Replacement Engine shall become subject to
the Lease and shall be an "Engine" for all purposes of the Lease
and the other Operative Agreements and thereupon the Engine for
which the substitution is made shall no longer be subject to the
Lease, and such replaced Engine shall cease to be an "Engine."
"Engine Consent and Agreement" means the Engine Manufacturer
8
Consent and Agreement 116 dated as of even date with the
Participation Agreement, of Engine Manufacturer.
"Engine Manufacturer" means Rolls-Royce plc, a corporation
organized under the laws of England.
"Equipment Note Register" is defined in Section 2.07 of the
Trust Indenture.
"Equipment Notes" means and includes any equipment notes
issued under the Trust Indenture in the form specified in Section
2.01 thereof (as such form may be varied pursuant to the terms of
the Trust Indenture) and any Equipment Note issued under the
Trust Indenture in exchange for or replacement of any other
Equipment Note.
"ERISA" means the Employee Retirement Income Security Act
of 1974 and any regulations and rulings issued thereunder all as
amended and in effect from time to time.
"Event of Default" is defined in Section 4.02 of the Trust
Indenture.
"Event of Loss" means, with respect to the Aircraft,
Airframe or any Engine, any of the following circumstances,
conditions or events with respect to such property, for any
reason whatsoever:
(a) the destruction of such property, damage to such
property beyond practical or economic repair or
rendition of such property permanently unfit for
normal use;
(b) the actual or constructive total loss of such property
or any damage to such property, or requisition of
title or use of such property, which results in an
insurance settlement with respect to such property on
the basis of a total loss or constructive or
compromised total loss;
(c) any loss of such property or loss of use of such
property for a period of 90 days or more as a
consequence of any theft, hijacking or disappearance
of such property;
(d) any seizure, condemnation, confiscation, taking or
requisition of title to such property by any Government
Entity or purported non-U.S. Government Entity;
(e) any seizure, condemnation, confiscation, taking or
requisition of use of such property that continues
9
until the earliest of (i) the last day of the Term,
(ii) the date upon which the Aircraft is modified,
altered or adapted in such a manner as would render
conversion of such property for use in normal
commercial passenger service impractical or
uneconomical, (iii) the date on which such property is
operated or located in any area excluded from coverage
by any insurance policy required to be maintained in
respect of such property pursuant to the Lease (unless
an indemnity in lieu of insurance is provided to
Lessor and Loan Trustee in accordance with Section
11.4 of the Lease) or (iv) the date that is 90 days
following the commencement of such loss of use (unless
such loss of use results from action by the U.S.
Government, in which case this clause (iv) shall not
apply to such loss of use); and
(f) as a result of any law, rule, regulation, order or
other action by the Aviation Authority or by any
Government Entity of the government of registry of the
Aircraft or by any Government Entity otherwise having
jurisdiction over the operation or use of the Aircraft,
the use of such property in the normal course of
Lessee's business of passenger air transportation is
prohibited for a period expiring on the earlier to
occur of (i) the last day of the Term or (ii) the date
that is 180 days following commencement of such
prohibition, provided that if Lessee, prior to the
--------
expiration of such 180-day period, shall have
undertaken and shall be diligently carrying forward all
steps which are necessary or desirable to permit the
normal use of such property by Lessee, then the date
that is 360 days following commencement of such
prohibition.
The date of such Event of Loss shall be the date of such loss,
damage, insurance settlement, seizure, condemnation,
confiscation, taking or requisition of title or use or
prohibition, except that, for purposes of clauses (c), (e) and
(f) above, no Event of Loss shall be deemed to have occurred
until the date of expiration of the applicable period referred to
therein.
"Excluded Payments" means (i) indemnity payments paid or
payable by Lessee to or in respect of Owner Participant, or Owner
Trustee in its individual capacity, their respective Affiliates,
successors and permitted assigns and their directors, officers,
employees, servants and agents pursuant to Section 10 of the
Participation Agreement or any corresponding payments under the
Trust Indenture, (ii) proceeds of public liability insurance paid
or payable as a result of insurance claims made, or losses
10
suffered, by Owner Trustee in its individual capacity or by Owner
Participant, that are payable directly to Owner Trustee in its
individual capacity, or Owner Participant, respectively, for
their own account, (iii) proceeds of insurance maintained with
respect to the Aircraft by Owner Participant or any Affiliate
thereof for its or their own account or benefit (whether directly
or through Owner Trustee) and permitted under Section 11.3 of the
Lease, (iv) all payments required to be made under the Tax
Indemnity Agreement by Lessee whether or not denominated as
Supplemental Rent, (v) any interest that pursuant to the
Operative Agreements may from time to time accrue in respect of
any of the amounts described in clauses (i) through (iv) above,
(vi) any right to enforce the payment of any amount described in
clauses (i) through (v) above (provided, that the rights referred
to in this clause (vi) shall not be deemed to include the
exercise of any remedies provided for in the Lease other than the
right to sue for specific performance of any covenant to make
such payment or to sue for damages in respect of the breach of
any such covenant) and (vii) any right to exercise any election
or option or make any decision or determination, or to give or
receive any notice, consent, waiver or approval, or to take any
other action in respect of, but in each case, only to the extent
relating to, any Excluded Payments.
"Expenses" means any and all liabilities, obligations,
losses, damages, settlements, penalties, claims (including,
without limitation, claims or liabilities based or asserted upon
(a) negligence, (b) strict or absolute liability, (c) liability
in tort, (d) infringement of patent, trademark or other property
or other right and (e) liabilities arising out of violation of
any Law), actions, suits, costs, expenses and disbursements
(including, without limitation, reasonable fees and disbursements
of legal counsel, accountants, appraisers, inspectors or other
professionals, and costs of investigation), including, without
limitation, all such costs, expenses and disbursements incurred
by any person in asserting or establishing, or in defending any
claims arising out of its assertion of, any rights it may have
under, or its cooperation in connection with any Expenses
indemnified pursuant to, Section 10 of the Participation
Agreement.
"FAA" means the Federal Aviation Administration of the
United States or any Government Entity succeeding to the
functions of such Federal Aviation Administration.
"FAA Bill of Sale" means a bill of sale for the Aircraft on
AC Form 8050-2 (or such other form as may be approved by the FAA)
delivered to Owner Trustee on the Delivery Date by Airframe
Manufacturer.
"FAA Filed Documents" means the Lease, Lease Supplement No.
11
1, the Trust Indenture, the Trust Agreement, the Trust Indenture
Supplement, the FAA Bill of Sale and an application for
registration of the Aircraft with the FAA in the name of Owner
Trustee.
"FAA Regulations" means the Federal Aviation Regulations
issued or promulgated pursuant to the Act from time to time.
"Fair Market Rental Value" means the fair market rental
value in Dollars for the Aircraft that would apply in an
arm's-length transaction between an informed and willing lessee
under no compulsion to lease, and an informed and willing lessor
under no compulsion to lease, the Aircraft, for the First Renewal
Lease Term or Second Renewal Lease Term, as the case may be,
assuming that (a) the Aircraft has been maintained in accordance
with, and is in the condition required by, the Lease, (b)
payments of rent would be made quarterly, and (c) the Aircraft
would be leased during any such Renewal Term on the same terms
and conditions as are set forth in the Lease with respect to the
Base Lease Term.
"Fair Market Sales Value" means the fair market sales value
in Dollars for the Aircraft that would apply in an arm's-length
transaction between an informed and willing buyer under no
compulsion to buy, and an informed and willing seller under no
compulsion to sell, the Aircraft, in a transaction that would
close on or about the relevant time of determination, assuming
that (a) the Aircraft has been maintained in accordance with, and
is in the condition required by, the Lease and (b) the Aircraft
would be delivered to such informed and willing buyer in the
return condition required by the Lease.
"Financing Statements" means, collectively, UCC-1 (and,
where appropriate, UCC-3) financing statements (a) covering the
Trust Indenture Estate, by Owner Trustee, as debtor, showing Loan
Trustee as secured party, for filing in Utah and each other
jurisdiction that, in the opinion of Loan Trustee, is necessary
to perfect its Lien on the Trust Indenture Estate, (b) covering
the Lease and the Aircraft, as a precautionary matter, by Lessee,
as lessee, showing Owner Trustee as lessor and Loan Trustee as
assignee of Owner Trustee, for filing in Texas and each other
jurisdiction that, in the opinion of Owner Trustee and Loan
Trustee, is reasonably desirable and (c) for purposes of Section
6.1.2 of the Participation Agreement only, terminating the lien
of (i) the Purchase Contract Security Agreement dated December 7,
1993, between Lessee and Engine Manufacturer and (ii) the 757
Purchase Agreement Assignment dated February 7, 1994 between
Lessee and Airframe Manufacturer.
"First Renewal Lease Term" means, if Lessee exercises its
option to renew the Lease at the end of the Base Lease Term
12
pursuant to and in accordance with Section 17.2 of the Lease, the
period commencing on the first day following the Scheduled
Expiration Date, and ending on the First Renewal Term Expiration
Date or such earlier date on which the Term terminates in
accordance with the provisions of the Lease.
"First Renewal Term Expiration Date" means the first
anniversary of the Scheduled Expiration Date.
"First Security" means First Security Bank of Utah,
National Association, a national banking association, not in its
capacity as Owner Trustee under the Trust Agreement, but in its
individual capacity.
"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 SEC 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.
"Government Entity" means (a) any federal, state,
provincial or similar government, and any body, board,
department, commission, court, tribunal, authority, agency or
other instrumentality of any such government or otherwise
exercising any executive, legislative, judicial, administrative
or regulatory functions of such government or (b) any other
government entity having jurisdiction over any matter
contemplated by the Operative Agreements or relating to the
observance or performance of the obligations of any of the
parties to the Operative Agreements.
"GTA" means the Purchase Contract reference RR/CAL/DEG 2124
dated December 7, 1993, by and between Engine Manufacturer and
Lessee (including all exhibits thereto, together with all letter
agreements that by their terms constitute part of such Purchase
Contract), to the extent assigned pursuant to the Purchase
Agreement Assignment.
"Inclusion Event" is defined in the Tax Indemnity Agreement.
"Indemnitee" means (i) First Security and Owner Trustee,
(ii) WTC and Loan Trustee, (iii) each separate or additional
trustee appointed pursuant to the Trust Agreement or the Trust
Indenture, (iv) each Participant, (v) Owner Participant Parent
(but only in its capacity as issuer of the Owner Participant
Guaranty), (vi) the Trust Estate and the Trust Indenture Estate,
(vii) the Subordination Agent, (viii) the Liquidity Provider,
13
(ix) the Pass Through Trustees, (x) each Affiliate of the persons
described in clauses (i) through (v), inclusive, (xi) each
Affiliate of the persons described in clauses (vii), (viii) and
(ix), (xii) the respective directors, officers, employees, agents
and servants of each of the persons described in clauses (i)
through (v) inclusive and in clause (x), (xiii) the respective
directors, officers, employees, agents and servants of each of
the persons described in clauses (vii), (viii), (ix) and (xi),
(xiv) the successors and permitted assigns of the persons
described in clauses (i) through (v), inclusive, and in clauses
(x) and (xii), and (xv) the successors and permitted assigns of
the persons described in clauses (vii), (viii), (ix), (xi) and
(xiii); provided that the persons described in clauses (vii),
(viii), (ix), (xi), (xiii) and (xv) are Indemnitees only for
purposes of Section 10.1 of the Participation Agreement. If any
Indemnitee is Airframe Manufacturer or Engine Manufacturer or any
subcontractor or supplier of either thereof, such Person shall be
an Indemnitee only in its capacity as Owner Participant, Owner
Participant Parent, Loan Participant or Note Holder.
"Indenture Default" means any condition, circumstance, act
or event that, with the giving of notice, the lapse of time or
both, would constitute an Indenture Event of Default.
"Indenture Agreements" means the Participation Agreement,
the Lease, the Purchase Agreement, the Purchase Agreement
Assignment, the Consent and Agreement, the Engine Consent and
Agreement, the Bills of Sale and any other contract, agreement or
instrument from time to time assigned or pledged under the Trust
Indenture.
"Indenture Event of Default" means any one or more of the
conditions, circumstances, acts or events set forth in Section
4.02 of the Trust Indenture.
"Independent Tax Counsel" means independent tax counsel of
recognized reputation selected by Owner Participant and
reasonably acceptable to Lessee.
"Intercreditor Agreement" means that certain Intercreditor
Agreement among the Pass Through Trustees, the Liquidity Provider
and the Subordination Agent.
"Interim Lease Term" means the period commencing on and
including the Delivery Date, and ending on and including the day
immediately preceding the Commencement Date or such earlier date
on which the Term terminates in accordance with the provisions of
the Lease.
"Interim Term Value Date" is defined in Schedule 1 to the
Lease.
14
"IRS" means the Internal Revenue Service of the United
States or any Government Entity succeeding to the functions of
such Internal Revenue Service.
"Law" means (a) any constitution, treaty, statute, law,
decree, regulation, order, rule or directive of any Government
Entity, and (b) any judicial or administrative interpretation or
application of, or decision under, any of the foregoing.
"Lease" or "Lease Agreement" means the Lease Agreement 116,
dated as of even date with the Participation Agreement, between
Owner Trustee and Lessee.
"Lease Default" means any condition, circumstance, act or
event that, with the giving of notice, the lapse of time or both,
would constitute a Lease Event of Default.
"Lease Event of Default" means any one or more of the
conditions, circumstances, acts or events set forth in Section 14
of the Lease.
"Lease Supplement" means a supplement to the Lease, in the
form of Exhibit A to the Lease.
"Lease Supplement No. 1" means the initial Lease Supplement,
dated the Delivery Date.
"Lessee" means Continental Airlines, Inc., a Delaware
corporation.
"Lessee Operative Agreements" means the Participation
Agreement, the Lease, Lease Supplement No. 1, the Tax Indemnity
Agreement, the BFE Bill of Sale, the Purchase Agreement
Assignment and each other agreement between Lessee and any other
party to the Participation Agreement, relating to the
Transactions, delivered on the Delivery Date.
"Lessee Person" means Lessee, any sublessee, assignee,
successor or other user or person in possession of the Aircraft,
Airframe or an Engine with or without color of right, or any
Affiliate of any of the foregoing (other than any Indemnitee or
any related Indemnitee with respect thereto, or any person using
or claiming any rights with respect to the Aircraft, Airframe or
an Engine directly by or through any of the persons in this
parenthetical).
"Lessor" means Owner Trustee in its capacity as lessor under
the Lease.
"Lessor Lien" means, with respect to any person and in
respect of any property (including, without limitation, the
15
Aircraft, Airframe, Engines, Parts or Aircraft Documents), any
Lien on such property which (a) arises from claims against such
person (if such person is a trustee, whether in its individual
capacity or in its capacity as a trustee) not related to or
arising out of, directly or indirectly (i) its ownership of, Lien
on or other interest in the Aircraft, Airframe, Engines, Parts or
Aircraft Documents or all or any other part of the Trust Estate
or Indenture Estate or (ii) any of the transactions contemplated
by the Operative Agreements, (b) results from actions taken by
such person (if such person is a trustee, whether in its
individual capacity or in its capacity as a trustee) (i) in
violation of such person's obligations under any of the terms of
the Operative Agreements, (ii) not participated in or consented
to by Lessee and (iii) not taken in connection with or by reason
of the occurrence of a Lease Default or a Lease Event of Default,
or (c) is imposed as a result of Taxes against such person (if
such person is a trustee, whether in its individual capacity or
in its capacity as a trustee) or any of its Affiliates not
required to be indemnified by Lessee under the Participation
Agreement, the Tax Indemnity Agreement or any other Operative
Agreement; provided that for purposes of Sections 8.2.1 and 8.3.1
of the Participation Agreement, any Lien that is attributable
solely to Owner Participant, First Security or Lessor and would
otherwise constitute a Lessor Lien thereunder shall not
constitute a Lessor Lien thereunder, so long as (A) the existence
of such Lien poses no material risk of the sale, forfeiture or
loss of the Aircraft, Airframe or any Engine or any interest
therein, (B) the existence of such Lien does not interfere in any
way with the use or operation of the Aircraft by Lessee (or any
Permitted Sublessee), (C) the existence of such Lien does not
affect the priority or perfection of, or otherwise jeopardize,
the Lien of the Trust Indenture, (D) First Security, Lessor or
Owner Participant, as the case may be, is diligently contesting
such Lien by appropriate proceedings, (E) the existence of such
Lien does not result in actual interruption in the receipt and
distribution by Loan Trustee in accordance with the Trust
Indenture of Rent assigned to Loan Trustee for the benefit of the
Note Holders, and (F) any property subject to such Lien is not
then required to be conveyed to any other Person pursuant to
Section 4.6 of the Lease.
"Lessor's Cost" means the aggregate of the amounts paid by
Owner Trustee to Airframe Manufacturer, and, with respect to BFE,
Lessee, to purchase the Aircraft pursuant to the Purchase
Agreement and the Purchase Agreement Assignment, and is
designated by Dollar amount in Schedule 4 to the Participation
Agreement.
"Liability Deductible" is defined in Schedule 1 to the
Lease.
16
"Lien" means any mortgage, pledge, lien, charge, claim,
encumbrance, lease or security interest affecting the title to or
any interest in property.
"Liquidity Facilities" means the three Revolving Credit
Agreements between the Subordination Agent, as borrower, and the
Liquidity Provider, and any replacement thereof, in each case as
the same may be amended, modified or supplemented.
"Liquidity Provider" means De Nationale Investeringsbank
N.V., as Class A Liquidity Provider, Class B Liquidity Provider
and Class C Liquidity Provider (as such terms are defined in the
Intercreditor Agreement) under the Liquidity Facilities, or any
successor thereto.
"Loan Certificate Register" means the Equipment Note
Register.
"Loan Certificates" means the Equipment Notes.
"Loan Participant" means, on or prior to the Delivery Date,
the Person executing the Participation Agreement as Loan
Participant and thereafter, each Note Holder.
"Loan Participant Agreements" means the Participation
Agreement and each other agreement or document delivered by Loan
Participant under the Participation Agreement or any other
Operative Agreement.
"Loan Participant's Percentage" with respect to the Loan
Participant, means the Percentage of Lessor's Cost allocated to
such Loan Participant in Schedule 3 to the Participation
Agreement.
"Loan Trustee" means Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as
loan trustee under the Trust Indenture.
"Loan Trustee Event" means in the event of a reorganization
proceeding involving the Lessee under Chapter 11 of the
Bankruptcy Code, (i) the trustee in such proceeding or the Lessee
not agreeing to perform its obligations under the Lease, as
contemplated under Section 1110, during the 60-day period under
Section 1110(a)(1)(A) of the Bankruptcy Code (or such longer
period as may apply under Section 1110(b) of the Bankruptcy
Code), (ii) at any time after so agreeing to perform such
obligations, such trustee or the Lessee ceasing to perform such
obligations with the result that the Continuous Stay Period comes
to an end or (iii) Loan Trustee taking action or notifying Owner
Trustee that it intends to take action to foreclose the Lien of
the Trust Indenture in accordance with Section 4.04(a) of the
17
Trust Indenture.
"MACRS Deductions" is defined in the Tax Indemnity
Agreement.
"Maintenance Program" is defined in Annex C to the Lease.
"Majority in Interest of Note Holders" means as of a
particular date of determination, the holders of a majority in
aggregate unpaid Original Amount of all Equipment Notes
outstanding as of such date (excluding any Equipment Notes held
by Owner Trustee, Lessee, Loan Trustee or Owner Participant or
any Affiliate of any such party or any interests of Owner Trustee
or Owner Participant therein by reason of subrogation pursuant to
Section 4.03 of the Trust Indenture (unless all Equipment Notes
then outstanding shall be held by Owner Trustee, Owner
Participant or any Affiliate of any thereof)); provided that for
the purposes of directing any action or casting any vote or
giving any consent, waiver or instruction hereunder, any Note
Holder of an Equipment Note or Equipment Notes may allocate, in
such Note Holder's sole discretion, any fractional portion of the
principal amount of such Equipment Note or Equipment Notes in
favor of or in opposition to any such action, vote, consent,
waiver or instruction.
"Make-Whole Amount" means, with respect to any Equipment
Note, an amount (as determined by an independent investment
banker of national standing) equal to the excess, if any, of (a)
the present value of the remaining scheduled payments of
principal and interest to maturity of such Equipment Note
computed by discounting such payments on a quarterly basis on
each Payment Date (assuming a 360-day year of twelve 30-day
months) using a discount rate equal to the Treasury Yield over
(b) the outstanding principal amount of such Equipment Note plus
accrued interest to the date of determination. For purposes of
determining the Make-Whole Amount, "Treasury Yield" means, at the
date of determination with respect to any Equipment Note, the
interest rate (expressed as a quarterly equivalent and as a
decimal and, in the case of United States Treasury bills,
converted to a bond equivalent yield) determined to be the per
annum rate equal to the semi-annual yield to maturity for United
States Treasury securities maturing on the Average Life Date of
such Equipment Note and trading in the public securities markets
either as determined by interpolation between the most recent
weekly average yield to maturity for two series of United States
Treasury securities, trading in the public securities markets,
(A) one maturing as close as possible to, but earlier than, the
Average Life Date of such Equipment Note and (B) the other
maturing as close as possible to, but later than, the Average
Life Date of such Equipment Note, in each case as published in
the most recent H.15(519) or, if a weekly average yield to
18
maturity for United States Treasury securities maturing on the
Average Life Date of such Equipment Note is reported on the most
recent H.15(519), such weekly average yield to maturity as
published in such H.15(519). "H.15(519) " means the weekly
statistical release designated as such, or any successor
publication, published by the Board of Governors of the Federal
Reserve System. The date of determination of a Make-Whole Amount
shall be the third Business Day prior to the applicable payment
or redemption date and the "most recent H.15(519)" means the
H.15(519) published prior to the close of business on the third
Business Day prior to the applicable payment or redemption date.
"Material Adverse Change" means, with respect to any
person, any event, condition or circumstance that materially and
adversely affects such person's business or consolidated
financial condition, or its ability to observe or perform its
obligations, liabilities and agreements under the Operative
Agreements.
"Minimum Liability Insurance Amount" is defined in Schedule
1 to the Lease.
"Minimum Residual Percentage" is defined in Schedule 1 to
the Lease.
"Minimum Value Percentage" is defined in Schedule 1 to the
Lease.
"Mortgaged Property" is defined in Section 3.03 of the Trust
Indenture.
"Mortgagee" means Loan Trustee.
"Mortgagee Agreements" means, collectively, the
Participation Agreement, the Trust Indenture and each other
agreement between Loan Trustee and any other party to the
Participation Agreement, relating to the Transactions, delivered
on the Delivery Date.
"Mortgagee Event" means Loan Trustee Event.
"Net Economic Return" means Owner Participant's net
after-tax yield and aggregate after-tax cash flow computed on the
basis of the same methodology and assumptions as were used by the
initial Owner Participant in determining Basic Rent, Stipulated
Loss Value percentages and Termination Value percentages as of
the Delivery Date, as such assumptions may be adjusted for events
that have been the basis for adjustments to Basic Rent pursuant
to Section 3.2.1(b) of the Lease or events giving rise to
indemnity payments pursuant to Section 5.1 of the Tax Indemnity
Agreement; provided that if the initial Owner Participant shall
19
have transferred its interest as Owner Participant, Net Economic
Return shall be calculated as if the initial Owner Participant
had retained its interests; provided further, that,
notwithstanding the preceding proviso, solely for purposes of
Section 13 of the Participation Agreement and calculating any
adjustments to Basic Rent, Stipulated Loss Values and Termination
Values in connection with a refunding pursuant to such Section 13
at a time when Owner Participant is a transferee (other than an
Affiliate of the initial Owner Participant), the after-tax yield
(but not the after-tax cash flow) component of Net Economic
Return shall be calculated on the basis of the methodology and
assumptions utilized by the transferee Owner Participant as of
the date on which it acquired its interest.
"Net Present Value of Rents" means the present value, as of
the date of determination, discounted at ten percent per annum,
compounded quarterly to the date of determination, of all unpaid
Basic Rent payments during the then-remaining portion of the Base
Lease Term, expressed as a percentage of Lessor's Cost.
"Net Worth" means, for any person, the excess of its total
assets over its total liabilities.
"New Debt" means debt securities in an aggregate principal
amount specified in the Refunding Information, which amount shall
be no greater than the aggregate principal amount of all
Equipment Notes outstanding on the Refunding Date.
"Non-U.S. Person" means any Person other than a United
States person, as defined in Section 7701(a)(30) of the Code.
"Note Holder" means at any time each registered holder of
one or more Equipment Notes.
"Note Purchase Agreement" means the Note Purchase
Agreement, dated as of May 20, 1996, among Continental Airlines,
Inc., the Pass Through Trustee under each Pass Through Trust
Agreement and the Loan Trustee, providing for, among other
things, the issuance and sale of certain equipment notes.
"Officer's Certificate" means, in respect of any party to
the Participation Agreement, a certificate signed by the
Chairman, the President, any Vice President or Assistant Vice
President, the Treasurer or the Secretary of such party.
"Operative Agreements" means, collectively, the
Participation Agreement, the Trust Agreement, the Purchase
Agreement Assignment, the Consent and Agreement, the Engine
Consent and Agreement, the Lease, Lease Supplement No. 1, the
Trust Indenture, the initial Trust Indenture Supplement, the
Bills of Sale, the Tax Indemnity Agreement, the Owner Participant
20
Guaranty, the Equipment Notes and each other Lessee Operative
Agreement.
"Operative Leases" means each of the lease agreements
between Lessor and Lessee identified on Schedule 1 to this Annex
A.
"Original Amount," with respect to an Equipment Note, means
the stated original principal amount of such Equipment Note and,
with respect to all Equipment Notes, means the aggregate stated
original principal amounts of all Equipment Notes.
"Original Indenture" means the Trust Indenture and Mortgage
116, dated as of even date with the Participation Agreement,
between the Owner Trustee and the Loan Trustee.
"Owner Participant" means the person executing the
Participation Agreement as "Owner Participant" or, if a second
person becomes an "Owner Participant" pursuant to Section 12.1.1
of the Participation Agreement, both of such persons; provided
that if an Owner Participant Transfers 100% of its interest to a
successor Owner Participant, such transferring Owner Participant
shall thereafter no longer be considered an "Owner Participant."
"Owner Participant Agreements" means, collectively, the
Participation Agreement, the Tax Indemnity Agreement, the Trust
Agreement and each other agreement between Owner Participant and
any other party to the Participation Agreement relating to the
Transactions, delivered on the Delivery Date.
"Owner Participant Guaranty" means the Guaranty by
Corporate Affiliate of Owner Participant 116 dated the Delivery
Date from Owner Participant Parent to the beneficiaries named
therein.
"Owner Participant Parent" means the person executing the
Owner Participant Guaranty.
"Owner Participant's Percentage" means the percentage of
Lessor's Cost allocated to the Owner Participant in Schedule 3 to
the Participation Agreement.
"Owner Trustee" means First Security Bank of Utah, National
Association, a national banking association, not in its
individual capacity, except as expressly provided in any
Operative Agreement, but solely as Owner Trustee under the Trust
Agreement.
"Owner Trustee Agreements" means, collectively, the
Participation Agreement, the Lease, Lease Supplement No. 1, the
Trust Agreement, the Trust Indenture, the initial Trust Indenture
Supplement, the Equipment Notes, the Purchase Agreement
21
Assignment, and each other agreement between Owner Trustee and
any other party to the Participation Agreement, relating to the
Transactions, delivered on the Delivery Date.
"Participants" means, collectively, Owner Participant and
Loan Participant and "Participant" means Owner Participant or
Loan Participant, individually.
"Participation Agreement" means the Participation Agreement
116 dated as of March 15, 1996 among Lessee, Owner Participant,
Loan Participant, Owner Trustee and Loan Trustee.
"Parts" means all appliances, parts, components,
instruments, appurtenances, accessories, furnishings, seats and
other equipment of whatever nature (including, without
limitation, all BFE, avionics, the APU and Passenger Convenience
Equipment, but excluding Engines or engines), that may from time
to time be installed or incorporated in or attached or
appurtenant to the Airframe or any Engine; provided that the term
"Parts" shall not be deemed to include any Passenger Convenience
Equipment if and for so long as such Equipment shall be owned by,
or shall be subject to a security interest, license or other
interest of, another Person (other than any Affiliate of Lessee)
as provided under Section D.3 of Annex C to the Lease.
"Pass Through Certificates" means the pass through
certificates to be issued by the Pass Through Trusts (and any
other pass through certificates for which such pass through
certificates may be exchanged) in connection with the Refinancing
Transaction.
"Pass Through Trust Agreement" means each of the four
separate pass through trust agreements to be entered into by and
between the Lessee and the Pass Through Trustee in connection
with the Refinancing Transaction.
"Pass Through Trustee" means Wilmington Trust Company, a
Delaware banking corporation, in its capacity as trustee under
each Pass Through Trust Agreement, and each other person which
may from time to time be acting as successor trustee under any
such Pass Through Trust Agreement.
"Passenger Convenience Equipment" means components or
systems installed on or affixed to the Airframe that are used to
provide individual telecommunications or electronic entertainment
to passengers aboard the Aircraft.
"Payment Date" is defined in Schedule 1 to the Lease.
"Payment Due Rate" is defined in Schedule 1 to the Lease.
22
"Permitted Air Carrier" means any U.S. Air Carrier or any
air carrier listed on Schedule 5 to the Lease.
"Permitted Institution" means (a) any bank, trust company,
insurance company, pension trust, finance or leasing corporation,
financial institution or other person (other than, without
Lessee's consent, a commercial air carrier or Affiliate thereof
that is in direct competition with Lessee), in each case with a
combined capital and surplus or net worth of at least
$50,000,000, or (b) any Affiliate of any person described in
clause (a) in respect of which such person has provided a written
guarantee of the obligations assumed by such Affiliate under the
Owner Participant Agreements in form and substance reasonably
satisfactory to Lessee, Owner Trustee and Loan Trustee.
"Permitted Lien" means any Lien described in clauses (a)
through (f), inclusive, of Section 6 of the Lease.
"Permitted Sublease" means a sublease permitted under
Section 7.2.7 of the Lease.
"Permitted Sublessee" means the sublessee under a Permitted
Sublease.
"Persons" or "persons" means individuals, firms,
partnerships, joint ventures, trusts, trustees, Government
Entities, organizations, associations, corporations, government
agencies, committees, departments, authorities and other bodies,
corporate or incorporate, whether having distinct legal status or
not, or any member of any of the same.
"Plan" means any employee benefit plan within the meaning
of Section 3(3) of ERISA, and any plan within the meaning of
Section 4975(e)(1) of the Code.
"Post-Delivery Change in Tax Law" means a Change in Tax Law
that is enacted, promulgated or issued after the Delivery Date
and on or prior to the first anniversary of the Delivery Date
that is based on or similar in substance or effect to one or more
elements of the provisions of a proposal made after April 27,
1993 and on or before the Delivery Date by the President, the
Department of the Treasury, the Majority Leader or Minority
Leader of the House of Representatives or the staff or any member
of the House Ways and Means Committee, the Senate Finance
Committee or the Joint Committee on Taxation; provided, that such
proposal was active or pending on the Delivery Date.
"Preliminary Notice" is defined in Section 17.1 of the
Lease.
"Premium Termination Date" means (i) with respect to Series
23
A Equipment Notes, Series B Equipment Notes and Series C
Equipment Notes, September 22, 2006 and (ii) with respect to
Series D Equipment Notes, June 26, 2003.
"Purchase Agreement" means the Purchase Agreement No. 1783,
dated March 18, 1993, between Airframe Manufacturer and Lessee
(including all exhibits thereto, together with all letter
agreements entered into that by their terms constitute part of
such Purchase Agreement), to the extent assigned pursuant to the
Purchase Agreement Assignment.
"Purchase Agreement Assignment" means the Purchase
Agreement and Engine Warranties Assignment 116 dated as of even
date with the Participation Agreement, between Lessee and Owner
Trustee.
"Purchase Date" means the last Business Day of any of the
Base Lease Term, First Renewal Lease Term or Second Renewal Lease
Term, as specified in any Purchase Notice.
"Purchase Notice" is defined in Section 17.3.1 of the Lease.
"QIB" is defined in Section 2.08 of the Trust Indenture.
"Refinancing Transaction" means the refinancing transaction
effected in accordance with the Refunding Agreement.
"Refunding Agreement" means Refunding Agreement 116, dated
as of May 20, 1996, entered into by and among the Lessee, the
Owner Participant, the Owner Trustee, the Pass Through Trustee
under each Pass Through Trust Agreement and the Loan Trustee,
providing for, among other things, the issuance and sale of the
Equipment Notes.
"Refunding Certificate" means a certificate of an
authorized representative of Owner Participant delivered pursuant
to Section 13.1.1 of the Participation Agreement, setting forth
(a) the Refunding Date and (b) the following information, subject
to the limitations set forth in Section 13 of the Participation
Agreement: (i) the principal amount of debt to be issued by Owner
Trustee on the Refunding Date and (ii) the proposed revised
schedules of Basic Rent, Stipulated Loss Value percentages and
Termination Value percentages and the proposed Amortization
Schedules.
"Refunding Date" means the proposed date on which the
outstanding Equipment Notes will be redeemed and refinanced
pursuant to Section 13 of the Participation Agreement.
"Refunding Information" means the information set forth in
the Refunding Certificate (other than the Refunding Date) as such
information may have been revised by any verification procedures
24
demanded by Lessee pursuant to Section 3.2.1(d) of the Lease.
"Registration Rights Agreement" means the registration
rights agreement to be entered into by and among the Lessee and
certain initial purchasers of the Pass Through Certificates to be
issued pursuant to the Refunding Agreement, providing for, among
other things, the exchange offer with respect to such Pass
Through Certificates to be registered under the Securities Act or
the shelf registration of such Pass Through Certificates for a
period to be specified therein.
"Renewal Lease Term" means, collectively, the First Renewal
Lease Term and the Second Renewal Lease Term, in each case, if
any.
"Renewal Notice" is defined in Section 17.2.1 of the Lease.
"Renewal Rent" for the Aircraft means the rent payable
therefor in respect of a Renewal Lease Term determined pursuant
to Section 17.2.2 of the Lease.
"Rent" means, collectively, Basic Rent, Renewal Rent and
Supplemental Rent.
"Replacement Airframe" means any airframe substituted for
the Airframe pursuant to Section 10 of the Lease.
"Replacement Engine" means an engine substituted for an
Engine pursuant to Section 5.3, 7.2, 9 or 10 of the Lease.
"Return Acceptance Supplement" means a Return Acceptance
Supplement, dated as of the date the Aircraft is returned to
Lessor pursuant to Section 5 of the Lease, by Lessor and Lessee
substantially in the form of Exhibit B to the Lease.
"Scheduled Delivery Date" means the expected Delivery Date
notified to each Participant, Owner Trustee and Loan Trustee by
Lessee pursuant to Section 5.1(a) of the Participation Agreement,
which expected Delivery Date shall be a Business Day not later
than the Commitment Termination Date.
"Scheduled Expiration Date" means the Business Day next
preceding the twentieth anniversary of the Delivery Date.
"SEC" means the Securities and Exchange Commission of the
United States, or any Government Entity succeeding to the
functions of such Securities and Exchange Commission.
"Second Renewal Lease Term" means, if Lessee exercises its
option to renew the Lease at the end of the First Renewal Lease
Term pursuant to and in accordance with Section 17.2 of the
25
Lease, the period commencing on the first day following the First
Renewal Term Expiration Date, and ending on the second
anniversary of the Scheduled Expiration Date or such earlier date
on which the Term terminates in accordance with the provisions of
the Lease.
"Section 1110" means 11 U.S.C. Section 1110 of the
Bankruptcy Code or any successor or analogous section of the
federal bankruptcy Law in effect from time to time.
"Secured Obligations" is defined in Section 2.06 of the
Trust Indenture.
"Securities Act" means the Securities Act of 1933, as
amended.
"Security" means a "security" as defined in Section 2(1) of
the Securities Act.
"Senior Holder" is defined in Section 2.15(c) of the Trust
Indenture.
"Series" means any of Series A, Series B, Series C or
Series D.
"Series A" or "Series A Equipment Notes" means Equipment
Notes issued under the Trust Indenture and designated as "Series
A" thereunder, in the Original Amount and maturities and bearing
interest as specified in Schedule I to the Trust Indenture under
the heading "Series A."
"Series B" or "Series B Equipment Notes" means Equipment
Notes issued under the Trust Indenture and designated as "Series
B" thereunder, in the Original Amount and maturities and bearing
interest as specified in Schedule I to the Trust Indenture under
the heading "Series B."
"Series C" or "Series C Equipment Notes" means Equipment
Notes issued under the Trust Indenture and designated as "Series
C" thereunder, in the Original Amount and maturities and bearing
interest as specified in Schedule I to the Trust Indenture under
the heading "Series C."
"Series D" or "Series D Equipment Notes" means Equipment
Notes issued under the Trust Indenture and designated as "Series
D" thereunder, in the Original Amount and maturities and bearing
interest as specified in Schedule I to the Trust Indenture under
the heading "Series D."
"Similar Aircraft" means a Boeing Model 757-200 aircraft
(other than the Aircraft) having a passenger compartment
26
configuration (of the type used in Block Nos. ND301-325 as
specified in Boeing Detail Specification D924N104-3 dated as of
March 18, 1993, as amended or supplemented) most similar to the
Aircraft.
"SLV Rate" is defined in Schedule 1 to the Lease.
"Stipulated Loss Value" means, with respect to the
Aircraft, (a) during the Base Lease Term, the amount determined
by multiplying (i) the percentage set forth in Schedule 3 to the
Lease (as adjusted from time to time in accordance with Section
3.2.1 of the Lease) opposite the Stipulated Loss Value Date by
(ii) Lessor's Cost and (b) during any Renewal Term, the amount
determined pursuant to Section 17.2.3 of the Lease.
Notwithstanding anything to the contrary in any Operative
Agreement, Stipulated Loss Value shall always be sufficient to
pay in full, as of the date of payment thereof (assuming timely
payment of the Equipment Notes prior to such date), the aggregate
unpaid principal amount of all Equipment Notes outstanding as of
such date, together with accrued and unpaid interest on all such
Equipment Notes as of such date.
"Stipulated Loss Value Date" means for any month, the day
in such month specified in Schedule 3 to the Lease or, if such
day is not a Business Day, the immediately succeeding Business
Day.
"Subordination Agent" means Wilmington Trust Company, as
subordination agent under the Intercreditor Agreement, or any
successor thereto.
"Supplemental Rent" means, without duplication (a) all
Expenses, Transaction Expenses and all other amounts,
liabilities, indemnities and obligations (other than Basic Rent
or Renewal Rent but including Make-Whole Amount, if any) that
Lessee assumes or becomes obligated to or agrees to pay under any
Lessee Operative Agreement to or on behalf of Lessor or any other
person, including, without limitation, payments of Stipulated
Loss Value, Termination Value and payments of indemnities under
Section 10 of the Participation Agreement, (b) (i) an amount
equal to the fees payable to the Liquidity Provider under Section
2.03 of each Liquidity Facility and the related Fee Letter (as
defined in the Intercreditor Agreement) multiplied by a fraction
the numerator of which shall be the then outstanding aggregate
principal amount of the Series A Equipment Notes, Series B
Equipment Notes and Series C Equipment Notes and the denominator
of which shall be the then outstanding aggregate principal amount
of all "Series A Equipment Notes", "Series B Equipment Notes" and
"Series C Equipment Notes" (as defined in each of the Operative
Leases and in the Indenture referred to in the Note Purchase
Agreement); (ii) (x) the amount equal to interest on any
Downgrade Advance (other than any Applied Downgrade Advance)
27
payable under Section 3.07(a)(i) of each Liquidity Facility minus
Investment Earnings from such Downgrade Advance multiplied by (y)
the fraction specified in the foregoing clause (i); (iii) if any
payment default shall have occurred and be continuing with
respect to interest on any Series A Equipment Note, Series B
Equipment Note or Series C Equipment Note, (x) the amount equal
to interest on any Unpaid Advance or Applied Downgrade Advance
payable under Section 3.07(a)(i) of each Liquidity Facility minus
Investment Earnings from any Final Advance multiplied by (y) a
fraction the numerator of which shall be the then aggregate
overdue amounts of interest on the Series A Equipment Notes,
Series B Equipment Notes and Series C Equipment Notes (other than
interest becoming due and payable solely as a result of
acceleration of any such Equipment Notes) and the denominator of
which shall be the aggregate overdue amounts of interest on all
"Series A Equipment Notes", "Series B Equipment Notes" and
"Series C Equipment Notes" (as defined in each of the Operative
Leases and in the Indenture referred to in the Note Purchase
Agreement) (other than interest becoming due and payable solely
as a result of acceleration of any such "Equipment Notes");
provided that any amounts payable at any time or from time to
time pursuant to clause (iii) in any single instance or in the
aggregate in excess of $250,000 shall be paid by Lessee directly
to the Subordination Agent; and (iv) Lessee's pro rata share of
any other amounts owed to the Liquidity Provider by the
Subordination Agent as borrower under each Liquidity Facility
(other than amounts due as repayment of advances thereunder or as
interest on such advances, except to the extent payable pursuant
to clause (ii) or (iii) above) and any other amounts owed to the
Liquidity Provider under Section 11 of each Refunding Agreement
and Section 9 of the Note Purchase Agreement, (c) Lessee's pro
rata share of all compensation and reimbursement of expenses,
disbursements and advances payable by Lessee under the Pass
Through Trust Agreements and (d) Lessee's pro rata share of all
compensation and reimbursement of expenses and disbursements
payable to the Subordination Agent under the Intercreditor
Agreement except with respect to any income or franchise taxes
incurred by the Subordination Agent in connection with the
transactions contemplated by the Intercreditor Agreement. As used
herein, "Lessee's pro rata share" means as of any time a
fraction, the numerator of which is the principal balance then
outstanding of Equipment Notes and the denominator of which is
the aggregate principal balance then outstanding of (x) all
"Equipment Notes" (as such term is defined in each of the
Operative Leases) and (y) all "Equipment Notes" issued under (and
as defined in) the Note Purchase Agreement. For purposes of this
definition, the terms "Applied Downgrade Advance", "Cash
Collateral Account", "Downgrade Advance", "Final Advance",
"Investment Earnings" and "Unpaid Advance" shall have the
meanings specified in each Liquidity Facility.
28
"Tax Attribute Period" is defined in Section 3.4 of the Tax
Indemnity Agreement.
"Tax Indemnitee" means (a) First Security and Owner
Trustee, (b) WTC and Loan Trustee, (c), each separate or
additional trustee appointed pursuant to the Trust Agreement or
the Trust Indenture, (d) each Participant, (e) the Trust Estate
and the Trust Indenture Estate and (f) the respective successors,
assigns, agents and servants of the foregoing. For purposes of
this definition, the term "Owner Participant" shall include any
member of an affiliated group (within the meaning of Section 1504
of the Code) of which Owner Participant is, or may become, a
member if consolidated, joint or combined returns are filed for
such affiliated group for federal, state or local income tax
purposes. If the Tax Indemnitee is the Airframe Manufacturer or
Engine Manufacturer, such Person shall be a Tax Indemnitee only
in its capacity as Owner Participant, Owner Participant Parent,
Loan Participant or Certificate Holder.
"Tax Indemnity Agreement" means the Tax Indemnity Agreement
116, dated as of even date with the Participation Agreement,
between Lessee and Owner Participant.
"Taxes" means all license, recording, documentary,
registration and other similar fees and all taxes, levies,
imposts, duties, charges, assessments or withholdings of any
nature whatsoever imposed by any Taxing Authority, together with
any penalties, additions to tax, fines or interest thereon or
additions thereto.
"Taxing Authority" means any federal, state or local
government or other taxing authority in the United States, any
foreign government or any political subdivision or taxing
authority thereof, any international taxing authority or any
territory or possession of the United States or any taxing
authority thereof.
"Term" means the term, commencing on the Delivery Date, for
which the Aircraft is leased pursuant to Section 3 of the Lease,
and shall include the Interim Lease Term, the Base Lease Term
and, if applicable, any Renewal Lease Term.
"Termination Date" means any Payment Date occurring after
the tenth anniversary of the Delivery Date and on or before the
date one year prior to the Scheduled Expiration Date on which the
Lease shall terminate in accordance with Section 9 of the Lease.
"Termination Value" means, with respect to the Aircraft,
the amount determined by multiplying (a) the percentage set forth
in Schedule 4 to the Lease (as adjusted from time to time in
accordance with Section 3.2.1 of the Lease) opposite the
29
Termination Value Date by (b) Lessor's Cost. Notwithstanding
anything to the contrary in any Operative Agreement, Termination
Value shall always be sufficient to pay in full, as of the date
of payment thereof (assuming timely payment of the Equipment
Notes prior to such date), the aggregate unpaid principal amount
of all Equipment Notes outstanding as of such date, together with
accrued and unpaid interest on all such Equipment Notes as of
such date.
"Termination Value Date" means for any month, the day in
such month specified in Schedule 4 to the Lease or, if such day
is not a Business Day, the immediately succeeding Business Day.
"Transaction Expenses" means all costs and expenses
incurred by Owner Participant, Loan Participant, Owner Trustee
and Loan Trustee in connection with (a) the preparation,
execution and delivery of the Operative Agreements and all
agreements and documents entered into in connection with the
Refinancing Transaction and the recording or filing of any
documents, certificates or instruments in accordance with any
Operative Agreement, including, without limitation, the FAA Filed
Documents and the Financing Statements, (b) any sublease or
transfer of possession of the Aircraft or Airframe or any Engine,
any Event of Loss with respect to the Aircraft, any Engine or any
Part, any payment of Stipulated Loss Value or Termination Value
and any replacement of any Engine or Part pursuant to the Lease,
(c) any refunding of the Equipment Notes pursuant to Section 13
of the Participation Agreement or, pursuant to Section 15.3 of
the Participation Agreement, any restructuring of the
transactions in accordance with Section 15 of the Participation
Agreement, (d) any transfer of title to the Aircraft or any
Engine contemplated by Section 4.6 of the Lease, (e) all waivers,
amendments or other agreements in connection with the Operative
Agreements and all agreements and documents entered into in
connection with the Refinancing Transaction or the transactions
contemplated thereby, in each case, except during the
continuation of a Lease Event of Default, only to the extent
requested by Lessee or required by or made pursuant to the terms
of the Operative Agreements or such agreements and documents
entered into in connection with the Refinancing Transaction
(unless such requirement results from the actions of the party
incurring such costs or expenses not required by or made pursuant
to the Operative Agreements or such agreements and documents
entered into in connection with the Refinancing Transaction),
whether or not any of the same are also indemnified against by
any other person, and (f) with respect to Owner Trustee and Loan
Trustee, otherwise in connection with the administration of the
transactions contemplated by the Participation Agreement,
including, without limitation, in each such case (a) through (f),
(i) the reasonable fees and disbursements of counsel for each
Participant, counsel for Owner Trustee, counsel for Loan Trustee
and special counsel in Oklahoma City, Oklahoma, in each case,
30
in connection with the Closing, (ii) all initial and ongoing
fees, disbursements and expenses of Owner Trustee and Loan Trustee,
and (iii) except as may be expressly provided in the Lease the
fees, expenses and disbursements of any Appraiser retained under
or as contemplated by the Participation Agreement or the Lease.
"Transactions" means the transactions contemplated by the
Participation Agreement and the other Operative Agreements.
"Transfer" means the transfer, sale, assignment or other
conveyance of all or any interest in any property, right or
interest.
"Transferee" means a person to which any Owner Participant,
Owner Trustee or any Loan Participant or Note Holder purports or
intends to Transfer any or all of its right, title or interest in
the Trust Estate or in its Equipment Note and the Trust Indenture
Estate, respectively, as described in Section 12.1.1(a), 12.1.2
or 12.1.3 (but excluding participants in any participation
referred to in Section 12.1.3), respectively, of the
Participation Agreement.
"Trust" means the trust created by the Trust Agreement.
"Trust Agreement" means the Trust Agreement 116, dated as
of even date with the Participation Agreement, between Owner
Participant and Owner Trustee.
"Trust Estate" means all estate, right, title and interest
of Owner Trustee in and to the Aircraft, the Lease, any Lease
Supplement, the Purchase Agreement and the GTA including, without
limitation, all amounts of Basic Rent and Supplemental Rent
including, without limitation, insurance proceeds (other than
insurance proceeds payable to or for the benefit of Owner
Participant, Loan Participant, Note Holders or WTC) and
requisition, indemnity or other payments of any kind for or with
respect to the Aircraft (except amounts owing to Owner
Participant, Loan Participant, Note Holders or WTC, or to any of
their respective directors, officers, employees, servants and
agents, pursuant to Section 10 of the Participation Agreement).
Notwithstanding the foregoing, "Trust Estate" shall not include
any Excluded Payment.
"Trust Indenture" means the Amended and Restated Trust
Indenture and Mortgage 116, dated as of May 20, 1996, between
Owner Trustee and Loan Trustee, which amends and restates the
Original Indenture.
"Trust Indenture Estate" is defined in the "Granting Clause"
of the Trust Indenture.
31
"Trust Indenture Supplement" means a Trust Indenture and
Mortgage 116 Supplement, substantially in the form of Exhibit A
to the Trust Indenture, with appropriate modifications to reflect
the purpose for which it is being used.
"UCC" means the Uniform Commercial Code as in effect in any
applicable jurisdiction.
"United States" or "U.S." means the United States of
America; provided that for geographic purposes, "United States"
means, in aggregate, the 50 states and the District of Columbia
of the United States of America.
"U.S. Air Carrier" means any United States air carrier that
is a Citizen of the United States holding an air carrier
operating certificate issued by the Secretary of Transportation
pursuant to chapter 447 of title 49 of the United States Code for
aircraft capable of carrying 10 or more individuals or 6000
pounds or more of cargo, and as to which there is in force an air
carrier operating certificate issued pursuant to Part 121 of the
FAA Regulations, or which may operate as an air carrier by
certification or otherwise under any successor or substitute
provisions therefor or in the absence thereof.
"U.S. Government" means the federal government of the United
States, or any instrumentality or agency thereof the obligations
of which are guaranteed by the full faith and credit of the
federal government of the United States.
"U.S. Person" means any Person described in Section
7701(a)(30) of the Code.
"Wet Lease" means any arrangement whereby Lessee agrees to
furnish the Airframe and Engines or engines installed thereon to
a third party pursuant to which the Airframe and such Engines or
engines (i) shall at all times be in the sole possession and
control of Lessee, (ii) shall be operated in all respects solely
by regular employees of Lessee possessing all current
certificates and licenses that are required under the Act or any
FAA Regulations for the possession, use and operation of the
Airframe and such Engines or engines (or, if the Airframe is then
under foreign registration, in accordance with Section 7.1.2 of
the Lease, the foregoing requirement shall apply in respect of
all certificates and licenses required by such government of
registration and the applicable Aviation Authority for the
possession, use and operation of the Airframe and such Engines or
engines), and (iii) shall in all events be maintained, insured
and otherwise used and operated in compliance with the terms and
provisions of the Lease.
"WTC" means Wilmington Trust Company, a Delaware banking
32
corporation, not in its capacity as Loan Trustee under the Trust
Indenture, but in its individual capacity.
33
SCHEDULE 1
OPERATIVE LEASES
1. Lease Agreement 114, dated as of July 1, 1995 between
First Security Bank of Utah, National Association and Continental
Airlines, Inc.
2. Lease Agreement 115, dated as of July 1, 1995 between
First Security Bank of Utah, National Association and Continental
Airlines, Inc.
3. Lease Agreement 116, dated as of March 15, 1996, between
First Security Bank of Utah, National Association and Continental
Airlines, Inc.
4. Lease Agreement 117, dated as of April 15, 1996,
between First Security Bank of Utah, National Association and
Continental Airlines, Inc.
APPENDIX A
Lease Agreement 116, dated as of March 15, 1996, between First
Security Bank of Utah, National Association, as lessor, and
Continental Airlines, Inc., as lessee, which was recorded by the
Federal Aviation Administration on April 2, 1996, and assigned
Conveyance No. GG007288, as supplemented by the following
described instruments:
Date of FAA FAA
Instrument Instrument Recording Date Conveyance No.
Lease Supple-
ment No. 1 3/27/96 4/2/96 GG007288
AMENDED SCHEDULE 1
SCHEDULE 1 -
LEASE AGREEMENT 116
[Intentionally omitted from the version of
this document filed with the FAA as
containing confidential financial information.]
AMENDED SCHEDULE 2
SCHEDULE 2 - BASIC
RENT
LEASE AGREEMENT 116
BASIC RENT
Payment Date Percentage of Lessor's Cost
[Intentionally omitted from the version of
this document filed with the FAA as
containing confidential financial information.]
AMENDED SCHEDULE 3
SCHEDULE 3 - STIPULATED LOSS VALUE
LEASE AGREEMENT 116
STIPULATED LOSS VALUE
Percentage of Percentage of
Month Lessor's Cost Month Lessor's Cost
[Intentionally omitted from the version of
this document filed with the FAA as
containing confidential financial information.]
AMENDED SCHEDULE 4
SCHEDULE 4 - TERMINATION VALUE
LEASE AGREEMENT 116
TERMINATION VALUE
Percentage of Percentage of
Month Lessor's Cost Month Lessor's Cost
[Intentionally omitted from the version of
this document filed with the FAA as
containing confidential financial information.]
- -------------------------------------------------------------------
AMENDED AND RESTATED TRUST INDENTURE AND MORTGAGE 116
Dated as of May 20, 1996
Between
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly stated herein,
but solely as Owner Trustee,
Owner Trustee
and
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly stated herein,
but solely as Loan Trustee,
Loan Trustee
- -------------------------------------------------------------------
EQUIPMENT NOTES COVERING
ONE BOEING 757-224 AIRCRAFT
BEARING U.S. REGISTRATION MARK N12116
LEASED BY CONTINENTAL AIRLINES, INC.
- -------------------------------------------------------------------
TABLE OF CONTENTS
Page
GRANTING CLAUSE.................................................... 2
ARTICLE I
DEFINITIONS........................................................ 8
ARTICLE II
THE EQUIPMENT NOTES...................... 8
SECTION 2.01. Form of Equipment Notes.................. 8
SECTION 2.02. Issuance and Terms of Equipment Notes.... 14
SECTION 2.03. Payments from Trust Indenture Estate
Only..................................... 16
SECTION 2.04. Method of Payment........................ 18
SECTION 2.05. Application of Payments.................. 20
SECTION 2.06. Termination of Interest in Trust
Indenture Estate......................... 21
SECTION 2.07. Registration Transfer and Exchange of
Equipment Notes.......................... 21
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Equipment Notes.......................... 22
SECTION 2.09. Payment of Expenses on Transfer;
Cancellation............................. 23
SECTION 2.10. Mandatory Redemptions of Equipment
Notes.................................... 23
SECTION 2.11. Voluntary Redemptions of Equipment
Notes.................................... 24
SECTION 2.12. Redemptions; Notice of Redemption........ 24
SECTION 2.13. [Intentionally Omitted.] ............... 25
SECTION 2.14. Option to Purchase Equipment Notes....... 25
SECTION 2.15. Subordination............................ 26
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE............. 27
SECTION 3.01. Basic Rent Distribution.................. 27
SECTION 3.02. Event of Loss; Replacement; Voluntary
Termination; Optional Redemption......... 29
SECTION 3.03. Payments After Event of Default.......... 30
SECTION 3.04. Certain Payments......................... 33
SECTION 3.05. Other Payments........................... 34
SECTION 3.06. Payments to Owner Trustee................ 34
ARTICLE IV
ii
COVENANTS OF OWNER TRUSTEE; EVENTS OF
DEFAULT; REMEDIES OF LOAN TRUSTEE............... 35
SECTION 4.01. Covenants of Owner Trustee............... 35
SECTION 4.02. Event of Default......................... 36
SECTION 4.03. Certain Rights........................... 38
SECTION 4.04. Remedies................................. 40
SECTION 4.05. Return of Aircraft, Etc.................. 42
SECTION 4.06. Remedies Cumulative...................... 44
SECTION 4.07. Discontinuance of Proceedings............ 44
SECTION 4.08. Waiver of Past Defaults.................. 44
SECTION 4.09. Appointment of Receiver.................. 45
SECTION 4.10. Loan Trustee Authorized to Execute
Bills of Sale, Etc....................... 45
SECTION 4.11. Rights of Note Holders to Receive
Payment.................................. 45
ARTICLE V
DUTIES OF THE LOAN TRUSTEE................... 45
SECTION 5.01. Notice of Event of Default............... 45
SECTION 5.02. Action Upon Instructions; Certain
Rights and Limitations................... 46
SECTION 5.03. Indemnification.......................... 49
SECTION 5.04. No Duties Except as Specified in
Trust Indenture or Instructions.......... 50
SECTION 5.05. No Action Except Under Lease, Trust
Indenture or Instructions................ 50
SECTION 5.06. Replacement Airframes and Replacement
Engines.................................. 50
SECTION 5.07. Indenture Supplements for
Replacements............................. 51
SECTION 5.08. Effect of Replacement.................... 51
SECTION 5.09. Investment of Amounts Held by Loan
Trustee.................................. 51
ARTICLE VI
THE OWNER TRUSTEE AND THE LOAN TRUSTEE............. 52
SECTION 6.01. Acceptance of Trusts and Duties.......... 52
SECTION 6.02. Absence of Duties........................ 52
SECTION 6.03. No Representations or Warranties as
to Aircraft or Documents................. 53
SECTION 6.04. No Segregation of Monies; No Interest.... 54
SECTION 6.05. Reliance; Agreements; Advice of
Counsel.................................. 54
SECTION 6.06. Capacity in Which Acting................. 55
SECTION 6.07. Compensation............................. 55
SECTION 6.08. Instructions from Note Holders........... 55
iii
ARTICLE VII
INDEMNIFICATION OF LOAN TRUSTEE BY OWNER TRUSTEE........ 55
SECTION 7.01. Scope of Indemnification................. 55
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES................ 57
SECTION 8.01. Notice of Successor Owner Trustee........ 57
SECTION 8.02. Resignation of Loan Trustee;
Appointment of Successor................. 57
SECTION 8.03. Appointment of Additional and
Separate Trustees........................ 58
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS...................... 60
SECTION 9.01. Instructions of Majority; Limitations.... 60
SECTION 9.02. Trustees Protected....................... 62
SECTION 9.03. Documents Mailed to Note Holders......... 62
SECTION 9.04. No Request Necessary for Lease
Supplement or Trust Indenture
Supplement............................... 63
ARTICLE X
MISCELLANEOUS......................... 63
SECTION 10.01. Termination of Trust Indenture.......... 63
SECTION 10.02. No Legal Title to Trust Indenture
Estate in Note Holders.................. 63
SECTION 10.03. Sale of Aircraft by Loan Trustee Is
Binding................................. 64
SECTION 10.04. Trust Indenture for Benefit of Owner
Trustee, Loan Trustee, Owner
Participant and Note Holders............ 64
SECTION 10.05. Notices................................. 64
SECTION 10.06. Severability............................ 65
SECTION 10.07. No Oral Modification or Continuing
Waivers................................. 65
SECTION 10.08. Successors and Assigns.................. 65
SECTION 10.09. Headings................................ 65
SECTION 10.10. Normal Commercial Relations............. 66
SECTION 10.11. Governing Law; Counterpart Form......... 66
SECTION 10.12. Voting By Note Holders.................. 66
SECTION 10.13. Bankruptcy.............................. 66
iv
EXHIBIT A Form of Trust Indenture and Mortgage Supplement
SCHEDULE I Equipment Notes Amortization
AMENDED AND RESTATED TRUST INDENTURE AND MORTGAGE 116
AMENDED AND RESTATED TRUST INDENTURE AND MORTGAGE 116,
dated as of May 20, 1996 ("Trust Indenture"), between FIRST
SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity, except as expressly
stated herein, but solely as Owner Trustee under the Trust
Agreement referred to below (together with its successors under
the Trust Agreement, the "Owner Trustee"), and WILMINGTON TRUST
COMPANY, a Delaware banking corporation, not in its individual
capacity, except as expressly stated herein, but solely as Loan
Trustee hereunder (together with its successors hereunder, the
"Loan Trustee").
W I T N E S S E T H
WHEREAS, all capitalized terms used herein shall have
the respective meanings set forth or referred to in Article I
hereof;
WHEREAS, the Owner Participant and the Owner Trustee
in its individual capacity have entered into the Trust Agreement
whereby, among other things, (i) the Owner Trustee has
established a certain trust for the use and benefit of the Owner
Participant subject, however, to the Trust Indenture Estate
created pursuant hereto for the use and benefit of, and with the
priority of payment to, the holders of Equipment Notes issued
hereunder, and (ii) the Owner Trustee has been authorized and
directed to execute and deliver this Agreement;
WHEREAS, (i) the Owner Trustee and Wilmington Trust
Company, as Mortgagee, entered into the Trust Indenture and
Mortgage 116 dated as of March 15, 1996 between the Owner Trustee
and the Mortgagee (the "Original Indenture"), (ii) the Owner
Trustee and the Mortgagee entered into the Trust Indenture and
Mortgage 116 Supplement No. 1 (the "Supplement") dated March 27,
1996 to the Original Indenture, (iii) the Original Indenture and
the Supplement were recorded by the Federal Aviation
Administration on March 27, 1996 and were assigned Conveyance No.
GG007287 and (iv) the Lease Agreement 116 dated as of even date
with the Original Indenture between the Owner Trustee and Lessee
(the "Lease") and the Lease Supplement No. 1 were recorded by the
Federal Aviation Administration on March 27, 1996 and were
assigned Conveyance No. GG007288 and (v) pursuant to the Original
Indenture, the Owner Trustee issued and sold to The Boeing
Company ("Boeing"), Loan Certificates (as defined in the Original
Indenture);
WHEREAS, the parties have agreed that subject to
certain conditions, Lessee shall have the right to cause the
1
implementation of the Refinancing Transaction pursuant to which,
among other things, the Equipment Notes issued to Boeing on the
date of the Original Indenture (the "Initial Equipment Notes")
shall be redeemed and new Equipment Notes (the "Refinancing
Equipment Notes") shall be issued to the Pass Through Trustees
(or their designee);
WHEREAS, in light of the foregoing, the parties desire
by this Trust Indenture, among other things, (i) to amend and
restate in its entirety the Original Indenture, (ii) to provide
for the issuance by the Owner Trustee of the Refinancing
Equipment Notes and (iii) to provide for the assignment, mortgage
and pledge by the Owner Trustee to the Loan Trustee, as part of
the Trust Indenture Estate hereunder, among other things, of all
of the Owner Trustee's right, title and interest in and to the
Aircraft and, except as hereinafter expressly provided, all of
the Owner Trustee's right, title and interest in, to and under
the Lease and all payments and other amounts received hereunder
or thereunder in accordance with the terms hereof or thereof, as
security for, among other things, the Owner Trustee's obligations
to the Loan Trustee, for the ratable benefit and security of the
Note Holders;
WHEREAS, all things have been done to make the
Equipment Notes, when executed by the Owner Trustee and
authenticated and delivered by the Loan Trustee hereunder, the
valid, binding and enforceable obligations of the Owner Trustee;
and
WHEREAS, all things necessary to make this Trust
Indenture the valid, binding and legal obligation of the Owner
Trustee for the uses and purposes herein set forth, in accordance
with its terms, have been done and performed and have happened;
GRANTING CLAUSE
NOW, THEREFORE, THIS TRUST INDENTURE AND MORTGAGE
WITNESSETH, that, to secure the prompt payment of the Original
Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to, all Equipment Notes from time to
time outstanding hereunder according to their tenor and effect
and to secure the performance and observance by the Owner Trustee
of all the agreements, covenants and provisions contained herein
and in the Participation Agreement and the Equipment Notes, for
the benefit of the Note Holders and the Loan Participants and the
prompt payment of all amounts from time to time owing under the
Participation Agreement to the Loan Participants and/or the Note
Holders by the Owner Trustee and for the uses and purposes and
subject to the terms and provisions hereof, and in consideration
of the premises and of the covenants herein contained, and of the
acceptance of the Equipment Notes by the holders thereof, and for
2
other good and valuable consideration the receipt and adequacy
whereof are hereby acknowledged, the Owner Trustee has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged,
pledged and confirmed, and does hereby grant, bargain, sell,
assign, transfer, convey, mortgage, pledge and confirm, unto the
Loan Trustee, its successors in trust and assigns, for the
security and benefit of the Loan Participants and the Note
Holders, a first priority security interest in and mortgage lien
on all right, title and interest of the Owner Trustee in, to and
under the following described property, rights and privileges,
whether now or hereafter acquired, other than Excluded Payments
(which, collectively, excluding Excluded Payments but including
all property hereafter specifically subject to the Lien of this
Trust Indenture by the terms hereof or any supplement hereto, are
included within, and are referred to as, the "Trust Indenture
Estate"), to wit:
(1) The Airframe which is one Boeing 757-224 aircraft
with the FAA Registration number of N12116 and the manufacturer's
serial number of 27558 and Engines, each of which Engines is a
Rolls-Royce RB211-535E4-B-37 engine with the manufacturer's
serial numbers of 31402 and 31403, is of 750 or more rated
takeoff horsepower or the equivalent of such horsepower (such
Airframe and Engines more particularly described in the Indenture
Supplement executed and delivered as provided in the Original
Indenture) as the same is now and will hereafter be constituted,
whether now owned by the Owner Trustee or hereafter acquired,
leased or intended to be leased under the Lease, and in the case
of such Engines, whether or not any such Engine shall be
installed in or attached to the Airframe or any other airframe,
together with (a) all Parts of whatever nature, which are from
time to time included within the definitions of "Airframe" or
"Engines", whether now owned or hereafter acquired, including all
substitutions, renewals and replacements of and additions,
improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and
accumulations which constitute appliances, parts, instruments,
appurtenances, accessories, furnishings or other equipment
excluded from the definition of Parts) and (b) all Aircraft
Documents;
(2) All right, title, interest, claims and demands of
the Owner Trustee, as lessor, in, to and under the Lease,
including the Interim Lease Term, the Base Lease Term and any
Renewal Lease Term, together with all rights, powers, privileges,
options and other benefits of the Owner Trustee as lessor under
the Lease, including the immediate and continuing right to
receive and collect all Rent, income, revenues, issues, profits,
insurance proceeds, condemnation awards and other payments,
tenders and security now or hereafter payable to or receivable by
the lessor under the Lease pursuant thereto, and, subject to
3
Section 5.02 hereof, the right to make all waivers and
agreements, to give and receive copies of all notices and other
instruments or communications, to accept surrender or redelivery
of the Aircraft or any part thereof, as well as all the rights,
powers and remedies on the part of the Owner Trustee as lessor
under the Lease, to take such action upon the occurrence of a
Lease Event of Default thereunder, including the commencement,
conduct and consummation of legal, administrative or other
proceedings, as shall be permitted by the Lease or by Law, and to
do any and all other things whatsoever which the Owner Trustee or
any lessor is or may be entitled to do under or in respect of the
Lease and any right to restitution from the Lessee or any other
Person in respect of any determination of invalidity of the
Lease;
(3) All right, title, interest, claims and demands of
the Owner Trustee in, to and under:
(a) the Purchase Agreement and the GTA;
(b) the Purchase Agreement Assignment with the Consent
and Agreement and the Engine Consent and Agreement
attached thereto;
(c) the Bills of Sale; and
(d) any and all other contracts, agreements and
instruments relating to the Airframe and Engines
or any rights or interests therein to which the
Owner Trustee is now or may hereafter be a party;
together with all rights, powers, privileges, licenses,
easements, options and other benefits of the Owner Trustee under
each contract, agreement and instrument referred to in this
clause (3), including the right to receive and collect all
payments to the Owner Trustee thereunder now or hereafter payable
to or receivable by the Owner Trustee pursuant thereto and,
subject to Section 5.02 hereof, the right to make all waivers and
agreements, to give and receive notices and other instruments or
communications, or to take any other action under or in respect
of any thereof or to take such action upon the occurrence of a
default thereunder, including the commencement. conduct and
consummation of legal, administrative or other proceedings, as
shall be permitted thereby or by Law, and to do any and all other
things which the Owner Trustee is or may be entitled to do
thereunder and any right to restitution from the Lessee, the
Owner Participant or any other Person in respect of any
determination of invalidity of any thereof;
(4) All rents, issues, profits, revenues and other
income of the property subjected or required to be subjected to
4
the Lien of this Trust Indenture, including all payments or
proceeds payable to the Owner Trustee after termination of the
Lease with respect to the Aircraft as the result of the sale,
lease or other disposition thereof, and all estate, right, title
and interest of every nature whatsoever of the Owner Trustee in
and to the same;
(5) Without limiting the generality of the foregoing,
all insurance and requisition proceeds with respect to the
Aircraft or any part thereof, including the insurance required
under Section 11 of the Lease;
(6) Without limiting the generality of the foregoing,
all rights of the Owner Trustee to amounts paid or payable by
Lessee to the Owner Trustee under the Participation Agreement and
all rights of the Owner Trustee to enforce payments of any such
amounts thereunder;
(7) Without limiting the generality of the foregoing,
all monies and securities from time to time deposited or required
to be deposited with the Loan Trustee pursuant to any terms of
this Trust Indenture or the Lease or required hereby or by the
Lease to be held by the Loan Trustee hereunder as security for
the obligations of the Lessee under the Lease or of the Owner
Trustee hereunder; and
(8) All proceeds of the foregoing.
Excluding, however, in all events from each of
foregoing clauses (1) through (8) inclusive all Excluded Payments
and the right to specifically enforce the same or to sue for
damages for the breach thereof as provided in Section 5.02
hereof.
Concurrently with the delivery of the Original
Indenture, the Owner Trustee has delivered to the Loan Trustee
the original executed counterpart of the Lease and the Lease
Supplement No. 1 (to each of which a chattel paper receipt is
attached), and executed copies of the Participation Agreement,
the Purchase Agreement and the GTA (to the extent assigned by the
Purchase Agreement Assignment) the Purchase Agreement Assignment
with the Consent and Agreement and the Engine Consent and
Agreement attached thereto.
TO HAVE AND TO HOLD all and singular the aforesaid
property unto the Loan Trustee, and its successors and assigns,
in trust for the equal and proportionate benefit and security of
the Note Holders, except as provided in Section 2.15 and Article
III hereof without any preference, distinction or priority of any
one Equipment Note over any other by reason of priority of time
of issue, sale, negotiation, date of maturity thereof or
5
otherwise for any reason whatsoever, and for the uses and
purposes and in all cases and as to all property specified in
paragraphs (1) through (8) inclusive above, subject to the terms
and provisions set forth in this Trust Indenture.
It is expressly agreed that anything herein contained
to the contrary notwithstanding, the Owner Trustee shall remain
liable under the Indenture Agreements, to perform all of the
obligations assumed by it thereunder, except to the extent
prohibited or excluded from doing so pursuant to the terms and
provisions thereof, and the Loan Trustee, the Loan Participants
and the Note Holders shall have no obligation or liability under
the Indenture Agreements, by reason of or arising out of the
assignment hereunder, nor shall the Loan Trustee, the Loan
Participants or the Note Holders be required or obligated in any
manner to perform or fulfill any obligations of the Owner Trustee
under or pursuant to the Indenture Agreements, or, except as
herein expressly provided, to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received
by it, or present or file any claim, or take any action to
collect or enforce the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or
times.
The Owner Trustee does hereby constitute the Loan
Trustee the true and lawful attorney of the Owner Trustee,
irrevocably, granted for good and valuable consideration and
coupled with an interest and with full power of substitution, and
with full power (in the name of the Owner Trustee or otherwise)
to ask for, require, demand, receive, compound and give
acquittance for any and all monies and claims for monies (in each
case including insurance and requisition proceeds but in all
cases excluding Excluded Payments) due and to become due under or
arising out of the Indenture Agreements, and all other property
which now or hereafter constitutes part of the Trust Indenture
Estate, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or to take any action
or to institute any proceedings which the Loan Trustee may deem
to be necessary or advisable in the premises. Without limiting
the generality of the foregoing, but subject to the rights of the
Owner Trustee and the Owner Participant under Sections 2.14, 4.03
and 4.04(a) hereof, during the continuance of any Event of
Default under this Trust Indenture, the Loan Trustee shall have
the right under such power of attorney to accept any offer in
connection with the exercise of remedies as set forth herein of
any purchaser to purchase the Airframe and Engines and upon such
purchase to execute and deliver in the name of and on behalf of
the Owner Trustee an appropriate bill of sale and other
instruments of transfer relating to the Airframe and Engines,
when purchased by such purchaser, and to perform all other
necessary or appropriate acts with respect to any such purchase,
6
and in its discretion to file any claim or take any other action
or proceedings, either in its own name or in the name of the
Owner Trustee or otherwise, which the Loan Trustee may deem
necessary or appropriate to protect and preserve the right, title
and interest of the Loan Trustee in and to such Rents and other
sums and the security intended to be afforded hereby; provided,
however, that no action of the Loan Trustee pursuant to this
paragraph shall increase the obligations or liabilities of the
Owner Trustee to any Person beyond those obligations and
liabilities specifically set forth in this Trust Indenture and in
the other Operative Agreements. Under the Lease, Lessee is
directed, so long as this Trust Indenture shall not have been
fully discharged, to make all payments of Rent (other than
Excluded Payments) and all other amounts which are required to be
paid to or deposited with the Owner Trustee pursuant to the Lease
(other than Excluded Payments) directly to, or as directed by,
the Loan Trustee at such address or addresses as the Loan Trustee
shall specify, for application as provided in this Trust
Indenture. The Owner Trustee agrees that promptly upon receipt
thereof, it will transfer to the Loan Trustee any and all monies
from time to time received by it constituting part of the Trust
Indenture Estate, for distribution by the Loan Trustee pursuant
to this Trust Indenture, except that the Owner Trustee shall
accept for distribution pursuant to the Trust Agreement any
amounts distributed to it by the Loan Trustee under this Trust
Indenture.
The Owner Trustee agrees that at any time and from
time to time, upon the written request of the Loan Trustee, the
Owner Trustee will promptly and duly execute and deliver or cause
to be duly executed and delivered any and all such further
instruments and documents as the Loan Trustee may reasonably deem
necessary or desirable to perfect, preserve or protect the
mortgage, security interests and assignments created or intended
to be created hereby or to obtain for the Loan Trustee the full
benefits of the assignment hereunder and of the rights and powers
herein granted.
The Owner Trustee does hereby warrant and represent
that it has not assigned or pledged, and hereby covenants and
agrees that it will not assign or pledge, so long as the
assignment hereunder shall remain in effect, and the Lien hereof
shall not have been released pursuant to Section 10.01 hereof,
any of its right, title or interest hereby assigned, to anyone
other than the Loan Trustee, and that it will not, except as
otherwise provided in this Trust Indenture and except with
respect to Excluded Payments to which it is entitled, (i) accept
any payment from Lessee under any Indenture Agreement, (ii) enter
into any agreement amending or supplementing any Indenture
Agreement, (iii) execute any waiver or modification of, or
consent under, the terms of, or exercise any rights, powers or
7
privileges under, any Indenture Agreement, (iv) settle or
compromise any claim arising under any Indenture Agreement or (v)
submit or consent to the submission of any dispute, difference or
other matter arising under or in respect of any Indenture
Agreement to arbitration thereunder.
The Owner Trustee does hereby agree that it will not
without the written consent of the Loan Trustee:
(a) receive or collect or agree to the receipt or
collection of any payment of Rent, including Basic
Rent, Stipulated Loss Value, Termination Value or
any other payment to be made pursuant to Section 9
or 10 of the Lease prior to the date for the
payment thereof provided for by the Lease or
assign, transfer or hypothecate (other than to the
Loan Trustee hereunder) any payment of Rent,
including Basic Rent, Stipulated Loss Value,
Termination Value or any other payment to be made
pursuant to Section 9 or 10 of the Lease, then due
or to accrue in the future under the Lease in
respect of the Airframe and Engines; or
(b) except as contemplated by the Trust Agreement in
connection with the appointment of a successor
owner trustee, sell, mortgage, transfer. assign or
hypothecate (other than to the Loan Trustee
hereunder) its interest in the Airframe and
Engines or any part thereof or in any amount to be
received by it from the use or disposition of the
Airframe and Engines, other than amounts
distributed to it pursuant to Article III hereof.
It is hereby further agreed that any and all property
described or referred to in the granting clauses hereof which is
hereafter acquired by the Owner Trustee shall ipso facto, and
without any other conveyance, assignment or act on the part of
the Owner Trustee or the Loan Trustee, become and be subject to
the Lien herein granted as fully and completely as though
specifically described herein, but nothing contained in this
paragraph shall be deemed to modify or change the obligations of
the Owner Trustee contained in the foregoing paragraphs.
The Owner Trustee does hereby ratify and confirm the
Lease and does hereby agree that it will not violate any covenant
or agreement made by it therein, herein or in any other Owner
Trustee Agreement.
IT IS HEREBY COVENANTED AND AGREED by and between the
parties hereto as follows:
8
ARTICLE I
DEFINITIONS
Capitalized terms used but not defined herein shall
have the respective meanings set forth or incorporated by
reference, and shall be construed in the manner described, in
Annex A to the Lease.
ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes
The Equipment Notes shall be substantially in the form
set forth below:
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO
THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT NOTE
MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH
APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH REGISTRATIONS IS
AVAILABLE.
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
AS OWNER TRUSTEE UNDER TRUST AGREEMENT 116
DATED AS OF MARCH 15, 1996.
SERIES [____] LIMITED RECOURSE EQUIPMENT NOTE DUE [________] ISSUED
IN CONNECTION WITH THE BOEING MODEL 757-224 AIRCRAFT
BEARING UNITED STATES REGISTRATION NUMBER N12116.
No.________ Date:[_________, ____]
$_______________
INTEREST RATE MATURITY DATE
[______] [________]
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not
in its individual capacity but solely as Owner Trustee (herein in
such capacity called the "Owner Trustee") under that certain
Trust Agreement 116, dated as of March 15, 1996, between the
Owner Participant named therein and First Security Bank of Utah,
National Association (herein as such Trust Agreement may be
9
supplemented or amended from time to time called the "Trust
Agreement"), hereby promises to pay to __________, or the
registered assignee thereof, the principal sum of $__________
(the "Original Amount"), together with interest on the amount of
the Original Amount remaining unpaid from time to time
(calculated on the basis of a year of 360 days comprised of
twelve 30-day months) from the date hereof until paid in full at
a rate per annum equal to the Debt Rate. The Original Amount of
this Equipment Note shall be payable in installments on the dates
set forth in Schedule I hereto equal to the corresponding
percentage of the Original Amount of this Equipment Note set
forth in Schedule I hereto. Accrued but unpaid interest shall be
due and payable in quarterly installments commencing on July 2,
1996, and thereafter on October 2, January 2, April 2 and July 2
of each year, to and including ________ __. Notwithstanding the
foregoing, the final payment made on this Equipment Note shall be
in an amount sufficient to discharge in full the unpaid Original
Amount and all accrued and unpaid interest on, and any other
amounts due under, this Equipment Note. Notwithstanding anything
to the contrary contained herein, if any date on which a payment
under this Equipment Note becomes due and payable is not a
Business Day, then such payment shall not be made on such
scheduled date but shall be made on the next succeeding Business
Day and if such payment is made on such next succeeding Business
Day, no interest shall accrue on the amount of such payment
during such extension.
For purposes hereof, the term "Trust Indenture" means
the Amended and Restated Trust Indenture and Mortgage 116, dated
as of May 20, 1996, between the Owner Trustee and Wilmington
Trust Company (the "Loan Trustee"), as the same may be amended or
supplemented from time to time. All other capitalized terms used
in this Equipment Note and not defined herein shall have the
respective meanings assigned in the Trust Indenture.
This Equipment Note shall bear interest, payable on
demand, at the Payment Due Rate (calculated on the basis of a
year of 360 days comprised of twelve 30-day months) on any
overdue Original Amount, any overdue Make-Whole Amount, if any,
and (to the extent permitted by applicable Law) any overdue
interest and any other amounts payable hereunder which are
overdue, in each case for the period the same is overdue. Amounts
shall be overdue if not paid when due (whether at stated
maturity, by acceleration or otherwise).
The interest rate borne by this Equipment Note shall
be subject to adjustments to the extent, and under the
circumstances, specified by the Registration Rights Agreement.
All payments of Original Amount, interest, Make-Whole
Amount, if any, and other amounts, if any, to be made by the
10
Owner Trustee hereunder and under the Trust Indenture or the
Participation Agreement shall be payable only from the income and
proceeds from the Trust Estate to the extent included in the
Trust Indenture Estate and only to the extent that the Owner
Trustee shall have sufficient income or proceeds from the Trust
Estate to the extent included in the Trust Indenture Estate to
enable the Loan Trustee to make such payments in accordance with
the terms of Section 2.03 and Article III of the Trust Indenture,
and each holder hereof, by its acceptance of this Equipment Note,
agrees that it will look solely to the income and proceeds from
the Trust Indenture Estate to the extent available for
distribution to the holder hereof as above provided and that none
of the Owner Participant, the Owner Trustee and the Loan Trustee
is personally liable or liable in any manner extending to any
assets other than the Trust Indenture Estate to the holder hereof
for any amounts payable or any liability under this Equipment
Note or, except as provided in the Trust Indenture or in the
Participation Agreement, for any liability under the Trust
Indenture or the Participation Agreement; provided, however, that
nothing herein contained shall limit, restrict or impair the
right of the Loan Trustee, subject always to the terms and
provisions of the Trust Indenture, to accelerate the maturity of
this Equipment Note upon occurrence of an Event of Default under
the Trust Indenture in accordance with Section 4.04(b) of the
Trust Indenture, to bring suit and obtain a judgment against the
Owner Trustee on this Equipment Note for purposes of realizing
upon the Trust Indenture Estate and to exercise all rights and
remedies provided under the Trust Indenture or otherwise realize
upon the Trust Indenture Estate.
There shall be maintained Equipment Note Register for
the purpose of registering transfers and exchanges of Equipment
Notes at the Corporate Trust Office of the Loan Trustee or at the
office of any successor in the manner provided in Section 2.07 of
the Trust Indenture.
The Original Amount and interest and other amounts due
hereunder shall be payable in Dollars in immediately available
funds at the Corporate Trust Office of the Loan Trustee, or as
otherwise provided in the Trust Indenture. Each such payment
shall be made on the date such payment is due and without any
presentment or surrender of this Equipment Note, except that in
the case of any final payment with respect to this Equipment
Note, the Equipment Note shall be surrendered promptly thereafter
by the Loan Trustee to the Owner Trustee for cancellation.
The holder hereof, by its acceptance of this Equipment
Note, agrees that, except as provided in the Trust Indenture,
each payment received by it hereunder shall be applied, first, to
the payment of accrued interest on this Equipment Note (as well
as any interest on any overdue Original Amount, any overdue Make-
11
Whole Amount, if any, or, to the extent permitted by Law, any
overdue interest and other amounts hereunder) to the date of such
payment, second, to the payment of the Original Amount of this
Equipment Note then due, third, to the payment of Make-Whole
Amount, if any, and any other amount due hereunder or under the
Trust Indenture, and fourth, the balance, if any, remaining
thereafter, to the payment of Original Amount of this Equipment
Note remaining unpaid in the inverse order of their normal
maturity.
This Equipment Note is one of the Equipment Notes
referred to in the Trust Indenture which have been or are to be
issued by the Owner Trustee pursuant to the terms of the Trust
Indenture. The Trust Indenture Estate is held by the Loan Trustee
as security, in part, for the Equipment Notes. The provisions of
this Equipment Note are subject to the Trust Indenture. Reference
is hereby made to the Trust Indenture for a complete statement of
the rights and obligations of the holder of, and the nature and
extent of the security for, this Equipment Note and the rights
and obligations of the holders of, and the nature and extent of
the security for, any other Equipment Notes executed and
delivered under the Trust Indenture, as well as for a statement
of the terms and conditions of the Trust created by the Trust
Indenture, to all of which terms and conditions in the Trust
Indenture each holder hereof agrees by its acceptance of this
Equipment Note.
As provided in the Trust Indenture and subject to
certain limitations therein set forth, this Equipment Note is
exchangeable for a like aggregate Original Amount of Equipment
Notes of different authorized denominations, as requested by the
holder surrendering the same.
Prior to due presentment for registration of transfer
of this Equipment Note, the Owner Trustee and the Loan Trustee
shall treat the person in whose name this Equipment Note is
registered as the owner hereof for all purposes, whether or not
this Equipment Note be overdue, and neither of the Owner Trustee
nor the Loan Trustee shall be affected by notice to the contrary.
This Equipment Note is subject to redemption as
provided in Sections 2.10, 2.11 and 2.12 of the Trust Indenture
but not otherwise. This Equipment Note is also subject to
exchange and to purchase by the Owner Participant or the Owner
Trustee as provided in Section 2.14 of the Trust Indenture but
not otherwise.
[The indebtedness evidenced by this Equipment Note is,
to the extent and in the manner provided in the Trust Indenture,
subordinate and subject in right of payment to the prior payment
in full of the Secured Obligations (as defined in the Trust
12
Indenture) in respect of [Series A Equipment Notes]1 [Series A
and Series B Equipment Notes]2 [Series A, Series B and Series C
Equipment Notes]3, and this Equipment Note is issued subject to
such provisions. The Note Holder of this Equipment Note, by
accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Loan Trustee on his
behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in the Trust Indenture
and (c) appoints the Loan Trustee his attorney-in-fact for such
purpose.]*
Unless the certificate of authentication hereon has
been executed by or on behalf of the Loan Trustee by manual
signature, this Equipment Note shall not be entitled to any
benefit under the Trust Indenture or be valid or obligatory for
any purpose.
THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
IN WITNESS WHEREOF, the Owner Trustee has caused this
Equipment Note to be executed in its corporate name by its
officer thereunto duly authorized on the date hereof.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as Owner
Trustee
By_______________________________________
Name:
Title:
______________________
1 To be inserted in the case of a Series B Equipment
Note.
2 To be inserted in the case of a Series C Equipment
Note.
3 To be inserted in the case of a Series D Equipment
Note.
* To be inserted for each Equipment Note other than any
Series A Equipment Note.
13
LOAN TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the
within-mentioned Trust Indenture.
WILMINGTON TRUST COMPANY, as
Loan Trustee
By__________________________
Name:
Title:
SCHEDULE I
EQUIPMENT NOTE AMORTIZATION
Percentage of
Original Amount
Payment Date to Be Paid
------------ ----------
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. Issuance and Terms of Equipment Notes
The Equipment Notes shall be dated the date of issuance
thereof, shall be issued in four separate series consisting of
Series A, Series B, Series C and Series D and in the maturities
and principal amounts and shall bear interest as specified in
Schedule I hereto. On the date of the consummation of the
Refinancing Transaction, (i) each Refinancing Equipment Note
shall be issued to the Pass Through Trustees (or their designee)
under the Pass Through Trust Agreements as shall be set forth in
Schedule II to be attached hereto in connection therewith and
(ii) the Initial Equipment Notes shall be concurrently redeemed.
The Equipment Notes shall be issued in registered form only. The
Equipment Notes shall be issued in denominations of $1,000 and
integral multiples thereof, except that one Equipment Note of
14
each Series may be in an amount that is not an integral multiple
of $1,000.
Each Equipment Note shall bear interest at the Debt
Rate (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) on the unpaid Original Amount thereof from
time to time outstanding, payable in arrears on July 2, 1996, and
on each October 2, January 2, April 2 and July 2 thereafter until
maturity. The Original Amount of each Equipment Note shall be
payable on the dates and in the installments equal to the
corresponding percentage of the Original Amount as set forth in
Schedule I hereto which shall be attached as Schedule I to the
Equipment Notes. Notwithstanding the foregoing, the final payment
made under each Equipment Note shall be in an amount sufficient
to discharge in full the unpaid Original Amount and all accrued
and unpaid interest on, and any other amounts due under, such
Equipment Note. Each Equipment Note shall bear interest at the
Payment Due Rate (calculated on the basis of a year of 360 days
comprised of twelve 30-day months) on any part of the Original
Amount, Make-Whole Amount, if any, and, to the extent permitted
by applicable Law, interest and any other amounts payable
thereunder not paid when due for any period during which the same
shall be overdue, in each case for the period the same is
overdue. Amounts shall be overdue if not paid when due (whether
at stated maturity, by acceleration or otherwise).
Notwithstanding anything to the contrary contained herein, if any
date on which a payment under any Equipment Note becomes due and
payable is not a Business Day then such payment shall not be made
on such scheduled date but shall be made on the next succeeding
Business Day and if such payment is made on such next succeeding
Business Day, no interest shall accrue on the amount of such
payment during such extension.
The Owner Trustee agrees to pay to the Loan Trustee
for distribution in accordance with Section 3.04 hereof: (i) an
amount equal to the fees payable to the Liquidity Provider under
Section 2.03 of each Liquidity Facility and the related Fee
Letter (as defined in the Intercreditor Agreement) multiplied by
a fraction the numerator of which shall be the then outstanding
aggregate principal amount of the Series A Equipment Notes,
Series B Equipment Notes and Series C Equipment Notes and the
denominator of which shall be the then outstanding aggregate
principal amount of all "Series A Equipment Notes, Series B
Equitment Notes and Series C Equipment Notes" (as defined in each
of the Operative Leases and in the Indenture referred to in the
Note Purchase Agreement); (ii) (x) the amount equal to interest
on any Downgrade Advance (other than any Applied Downgrade
Advance) payable under Section 3.07(a)(i) of each Liquidity
Facility minus Investment Earnings from such Downgrade Advance
multiplied by (y) the fraction specified in the foregoing clause
15
(i); and (iii) if any payment default shall have occurred and be
continuing with respect to interest on any Series A Equipment
Note, Series B Equipment Note or Series C Equipment Note, (x) the
amount equal to interest on any Unpaid Advance or Applied
Downgrade Advance payable under Section 3.07(a)(i) of each
Liquidity Facility minus Investment Earnings from any Final
Advance multiplied by (y) a fraction the numerator of which shall
be the then aggregate overdue amounts of interest on the Series A
Equipment Notes, Series B Equipment Notes and Series C Equipment
Notes (other than interest becoming due and payable solely as a
result of acceleration of any such Equipment Notes) and the
denominator of which shall be the then aggregate overdue amounts
of interest on all "Series A Equipment Notes, Series B Equipment
Notes and Series C Equipment Notes" (as defined in each of the
Operative Leases and in the Indenture referred to in the Note
Purchase Agreement) (other than interest becoming due and payable
solely as a result of acceleration of any such "Equipment
Notes"); provided that any amounts payable at any time or from
time to time pursuant to clause (iii) above shall not in any
single instance or in the aggregate exceed $250,000. For purposes
of this paragraph, the terms "Applied Downgrade Advance", "Cash
Collateral Account", "Downgrade Advance", "Final Advance",
"Investment Earnings" and "Unpaid Advance" shall have the
meanings specified in each Liquidity Facility.
The Equipment Notes shall be executed on behalf of the
Owner Trustee by its President or one of its Vice Presidents,
Assistant Vice Presidents or Assistant Secretaries or other
authorized officer. Equipment Notes bearing the signatures of
individuals who were at any time the proper officers of the Owner
Trustee shall bind the Owner Trustee, notwithstanding that such
individuals or any of them have ceased to hold such offices prior
to the authentication and delivery of such Equipment Notes or did
not hold such offices at the respective dates of such Equipment
Notes. The Owner Trustee may from time to time execute and
deliver Equipment Notes with respect to the Aircraft to the Loan
Trustee for authentication upon original issue and such Equipment
Notes shall thereupon be authenticated and delivered by the Loan
Trustee upon the written request of the Owner Trustee signed by a
Vice President or Assistant Vice President or other authorized
officer of the Owner Trustee; provided, however, that each such
request shall specify the aggregate Original Amount of all
Equipment Notes to be authenticated hereunder on original issue
with respect to the Aircraft. No Equipment Note shall be secured
by or entitled to any benefit under this Trust Indenture or be
valid or obligatory for any purposes, unless there appears on
such Equipment Note a certificate of authentication in the form
provided for herein executed by the Loan Trustee by the manual
signature of one of its authorized officers and such certificate
upon any Equipment Notes be conclusive evidence, and the only
evidence, that such Equipment Note has been duly authenticated
and delivered hereunder.
The aggregate Original Amount of the Equipment Notes
issued hereunder shall not exceed 80% of Lessor's Cost.
16
SECTION 2.03. Payments from Trust Indenture Estate Only
(a) Without impairing any of the other rights, powers,
remedies, privileges, liens or security interests of the Note
Holders under this Trust Indenture, each Note Holder, by its
acceptance of an Equipment Note, agrees that as between it and
the Owner Trustee, except as expressly provided in this Trust
Indenture, the Participation Agreement or any other Operative
Agreement, (i) the obligation to make all payments of the
Original Amount of, interest on, Make-Whole Amount, if any, and
all other amounts due with respect to the Equipment Notes, and
the performance by the Owner Trustee of every obligation or covenant
17
contained in this Trust Indenture and in the Participation
Agreement or any of the other Operative Agreements, shall be
payable only from the income and proceeds from the Trust Estate
to the extent included in the Trust Indenture Estate and only to
the extent that the Owner Trustee shall have sufficient income or
proceeds from the Trust Estate to the extent included in the
Trust Indenture Estate to enable the Loan Trustee to make such
payments in accordance with the terms of Article III hereof, and
all of the statements, representations, covenants and agreements
made by the Owner Trustee (when made in such capacity) contained
in this Trust Indenture and any agreement referred to herein
other than the Trust Agreement, unless expressly otherwise
stated, are made and intended only for the purpose of binding the
Trust Estate and establishing the existence of rights and
remedies which can be exercised and enforced against the Trust
Estate; therefore, anything contained in this Trust Indenture or
such other agreements to the contrary notwithstanding (except for
any express provisions or representations that the Owner Trustee
is responsible for, or is making, in its individual capacity, for
which there would be personal liability of the Owner Trustee), no
recourse shall be had with respect to this Trust Indenture or
such other agreements against the Owner Trustee in its individual
capacity or against any institution or person which becomes a
successor trustee or co-trustee or any officer, director,
trustee, servant or direct or indirect parent or controlling
Person or Persons of any of them, and (ii) none of the Owner
Trustee, in its individual capacity, the Owner Participant, the
Loan Trustee and any officer, director, trustee, servant,
employee, agent or direct or indirect parent or controlling
Person or Persons of any of them shall have any personal
liability for any amounts payable hereunder, under the
Participation Agreement or any of the other Operative Agreements
or under the Equipment Notes except as expressly provided herein
or in the Participation Agreement; provided, however, that
nothing contained in this Section 2.03(a) shall be construed to
limit the exercise and enforcement in accordance with the terms
of this Trust Indenture or such other agreements of rights and
remedies against the Trust Indenture Estate. These provisions are
not intended as any release or discharge of the indebtedness
represented by the Equipment Notes and the Trust Indenture, but
are intended only as a covenant not to sue the Owner Participant,
the Owner Trustee or the Loan Trustee in their individual
capacities, except as expressly provided herein or in the
Participation Agreement, for a deficiency with respect to such
indebtedness, the indebtedness represented by this Trust
Indenture and the Equipment Notes to remain in full force and
effect as fully as though these provisions were not contained in
this Trust Indenture. The Owner Trustee hereby acknowledges that
the Note Holders have expressly reserved all their rights and
remedies against the Trust Indenture Estate, including the right,
in the event of a default in the payment of all or part of the
18
Original Amount of, interest on, Make-Whole Amount, if any, or
any other amount due with respect to any Equipment Note within
the periods provided for in Section 4.02(b) hereof, or upon the
occurrence and continuation of any other Event of Default under
this Trust Indenture, to foreclose upon this Trust Indenture,
and/or to receive the proceeds from the Trust Indenture Estate
and otherwise to enforce any other right under this Trust
Indenture. Nothing in this Section 2.03(a) shall (x) release the
Owner Participant from personal liability, or constitute a
covenant not to sue the Owner Participant, for any breach by it
of any of its covenants, representations or warranties contained
in the Participation Agreement or for any of the payments it has
agreed to make pursuant to the Participation Agreement or (y)
release the Owner Trustee or constitute a covenant not to sue the
Owner Trustee for any breach by it of any representations,
warranties or covenants of the Owner Trustee contained in the
Operative Agreements or (z) release the Owner Trustee in its
individual capacity from personal liability, or constitute a
covenant not to sue the Owner Trustee in its individual capacity
for any breach by it of any representations, warranties or
covenants of the Owner Trustee made in its individual capacity in
the Operative Agreements.
(b) If (i) all or any part of the Trust Estate becomes
the property of, or the Owner Trustee or Owner Participant
becomes, a debtor subject to the reorganization provisions of the
Bankruptcy Code, (ii) pursuant to such reorganization provisions,
including Section 1111(b) of the Bankruptcy Code, the Owner
Trustee (in its individual capacity) or the Owner Participant is
required, by reason of the Owner Trustee (in its individual
capacity) or the Owner Participant being held to have recourse
liability to any Note Holder or the Loan Trustee, directly or
indirectly (other than the recourse liability of the Owner
Trustee (in its individual capacity) or the Owner Participant
under the Participation Agreement or this Trust Indenture or by
separate agreement), to make payment on account of any amount
payable as principal, Make-Whole Amount, if any, interest or
other amounts on the Equipment Notes and (iii) any Note Holder or
the Loan Trustee actually receives any Excess Amount (as
hereinafter defined) which reflects any payment by the Owner
Trustee (in its individual capacity) or the Owner Participant on
account of clause (ii) above, then such Note Holder or the Loan
Trustee, as the case may be, shall promptly refund to the Owner
Trustee (in its individual capacity) or the Owner Participant
(whichever shall have made such payment) such Excess Amount.
For purposes of this Section 2.03(b), "Excess Amount"
means the amount by which such payment exceeds the amount that
would have been received by a Note Holder or the Trustee if the
Owner Trustee (in its individual capacity) or the Owner
Participant had not become subject to the recourse liability
referred to in clause (ii) above. Nothing contained in this
Section 2.03(b) shall prevent a Note Holder or the Loan Trustee
19
from enforcing any personal recourse obligation (and retaining
the proceeds thereof) of the Owner Trustee (in its individual
capacity) or the Owner Participant under the Participation
Agreement or this Trust Indenture (and any exhibits or annexes
hereto or thereto) or by separate agreement or from retaining any
amount paid by Owner Participant under Section 2.14 or 4.03
hereof.
SECTION 2.04. Method of Payment
(a) The Original Amount of, interest on, Make-Whole
Amount, if any, and other amounts due under each Equipment Note
or hereunder will be payable in Dollars by wire transfer of
immediately available funds not later than 12:00 noon, New York
City time, on the due date of payment to the Loan Trustee at the
Corporate Trust Office for distribution among the Note Holders in
the manner provided herein. The Owner Trustee shall not have any
responsibility for the distribution of such payment to any Note
Holder. Notwithstanding the foregoing or any provision in any
Equipment Note to the contrary, the Loan Trustee will use
reasonable efforts to pay or cause to be paid, if so directed in
writing by any Note Holder (with a copy to the Owner Trustee),
all amounts paid by the Owner Trustee hereunder and under such
holder's Equipment Note or Equipment Notes to such holder or a
nominee therefor (including all amounts distributed pursuant to
Article III of this Trust Indenture) by transferring, or causing
to be transferred, by wire transfer of immediately available
funds in Dollars, prior to 2:00 p.m., New York City time, on the
due date of payment, to an account maintained by such holder with
a bank located in the continental United States the amount to be
distributed to such holder, for credit to the account of such
holder maintained at such bank. If the Loan Trustee shall fail to
make any such payment as provided in the immediately foregoing
sentence after its receipt of funds at the place and prior to the
time specified above, the Loan Trustee, in its individual
capacity and not as trustee, agrees to compensate such holders or
loss of use of funds at Debt Rate until such payment is made and
the Loan Trustee shall be entitled to any interest earned on such
funds until such payment is made. Any payment made hereunder
shall be made without any presentment or surrender of any
Equipment Note, except that, in the case of the final payment in
respect of any Equipment Note, such Equipment Note shall be
surrendered to the Trustee for cancellation promptly after such
payment. Notwithstanding any other provision of this Trust
Indenture to the contrary, the Loan Trustee shall not be required
to make, or cause to be made, wire transfers as aforesaid prior
to the first Business Day on which it is practicable for the Loan
Trustee to do so in view of the time of day when the funds to be
so transferred were received by it if such funds were received
after 12:00 noon, New York City time, at the place of payment.
Prior to the due presentment for registration of transfer of any
Equipment Note, the Owner Trustee and the Loan Trustee shall deem
20
and treat the Person in whose name any Equipment Note is
registered on the Equipment Note Register as the absolute owner
and holder of such Equipment Note for the purpose of receiving
payment of all amounts payable with respect to such Equipment
Note and for all other purposes, and none of the Owner Trustee or
the Loan Trustee shall be affected by any notice to the contrary.
So long as any signatory to the Participation Agreement or
nominee thereof shall be a registered Note Holder, all payments
to it shall be made to the account of such Note Holder specified
in Schedule I thereto and otherwise in the manner provided in or
pursuant to the Participation Agreement unless it shall have
specified some other account or manner of payment by notice to
the Loan Trust with this Section 2.04.
(b) The Loan Trustee, as agent for the Owner Trustee,
shall exclude and withhold at the appropriate rate from each
payment of Original Amount of, interest on, Make-Whole Amount, if
any, and other amounts due hereunder or under each Equipment Note
(and such exclusion and withholding shall constitute payment in
respect of such Equipment Note) any and all United States
withholding taxes applicable thereto as required by Law. The Loan
Trustee agrees to act as such withholding agent and, in
connection therewith, whenever any present or future United
States taxes or similar charges are required to be withheld with
respect to any amounts payable hereunder or in respect of the
Equipment Notes, to withhold such amounts and timely pay the same
to the appropriate authority in the name of and on behalf of the
Note Holders, that it will file any necessary United States
withholding tax returns or statements when due, and that as
promptly as possible after the payment thereof it will deliver to
each Note Holder (with a copy to the Owner Trustee and the
Lessee) appropriate receipts showing the payment thereof,
together with such additional documentary evidence as any such
Note Holder may reasonably request from time to time.
If a Note Holder which is a Non-U.S. Person has
furnished to the Loan Trustee a properly completed, accurate and
currently effective U.S. Internal Revenue Service Form 1001 or W-
8 (or such successor form or forms as may be required by the
United States Treasury Department) during the calendar year in
which the payment hereunder or under the Equipment Note(s) held
by such holder is made (but prior to the making of such payment),
or in either of the two preceding calendar years, and has not
notified the Loan Trustee of the withdrawal or inaccuracy of such
form prior to the date of such payment (and the Loan Trustee has
no reason to believe that any information set forth in such form
is inaccurate), the Loan Trustee shall withhold only the amount,
if any, required by Law (after taking into account any applicable
exemptions properly claimed by the Note Holder) to be withheld
from payments hereunder or under the Equipment Notes held by such
holder in respect of United States federal income tax. If a Note
Holder (x) which is a Non-U.S. Person has furnished to the Loan
21
Trustee a properly completed, accurate and currently effective
U.S. Internal Revenue Service Form 4224 in duplicate (or such
successor certificate, form or forms as may be required by the
United States Treasury Department as necessary in order to
properly avoid withholding of United States federal income tax),
for each calendar year in which a payment is made (but prior to
the making of any payment for such year), and has not notified
the Loan Trustee of the withdrawal or inaccuracy of such
certificate or form prior to the date of such payment (and the
Loan Trustee has no reason to believe that any information set
forth in such form is inaccurate) or (y) which is a U.S. Person
has furnished to the Loan Trustee a properly completed, accurate
and currently effective U.S. Internal Revenue Service Form W-9,
if applicable, prior to a payment hereunder or under the
Equipment Notes held by such holder, no amount shall be withheld
from payments in respect of United States federal income tax. If
any Note Holder has notified the Loan Trustee that any of the
foregoing forms or certificates is withdrawn or inaccurate, or if
such holder has not filed a form claiming an exemption from
United States withholding tax or if the Code or the regulations
thereunder or the administrative interpretation thereof are at
any time after the date hereof amended to require such
withholding of United States federal income taxes from payments
under the Equipment Notes held by such holder, the Loan Trustee
agrees to withhold from each payment due to the relevant Note
Holder withholding taxes at the appropriate rate under Law and
will, on a timely basis as more fully provided above, deposit
such amounts with an authorized depository and make such returns,
statements, receipts and other documentary evidence in connection
therewith as required by Law.
SECTION 2.05. Application of Payments
In the case of each Equipment Note, each payment of
Original Amount, Make-Whole Amount, if any, and interest or other
amounts due thereon shall be applied:
First: to the payment of accrued interest on such
Equipment Note (as well as any interest on any overdue
Original Amount, any overdue Make-Whole Amount, if any, and
to the extent permitted by Law, any overdue interest and
any other overdue amounts thereunder) to the date of such
payment;
Second: to the payment of the Original Amount of such
Equipment Note (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any,
and any other amount due hereunder or under such Equipment
Note; and
22
Fourth: the balance, if any, remaining thereafter, to
the payment of the Original Amount of such Equipment Note
remaining unpaid (provided that such Equipment Note shall
not be subject to redemption except as provided in Sections
2.10, 2.11 and 2.12 hereof).
The amounts paid pursuant to clause "Fourth" above shall be
applied to the installments of Original Amount of such Equipment
Note in the inverse order of their normal maturity.
SECTION 2.06. Termination of Interest in Trust
Indenture Estate
A Note Holder shall not, as such, have any further
interest in, or other right with respect to, the Trust Indenture
Estate when and if the Original Amount of, Make-Whole Amount, if
any, and interest on and other amounts due under all Equipment
Notes held by such Note Holder and all other sums then payable to
such Note Holder or the Loan Trustee hereunder (including,
without limitation, under the third paragraph of Section 2.02
hereof) and under the other Operative Agreements by the Owner
Trustee (collectively, the "Secured Obligations") shall have been
paid in full.
SECTION 2.07. Registration Transfer and Exchange of
Equipment Notes
The Loan Trustee shall keep a register (the "Equipment
Note Register") in which the Loan Trustee shall provide for the
registration of Equipment Notes and the registration of transfers
of Equipment Notes. No such transfer shall be given effect unless
and until registration hereunder shall have occurred. The
Equipment Note Register shall be kept at the Corporate Trust
Office of the Loan Trustee. The Loan Trustee is hereby appointed
"Equipment Note Registrar" for the purpose of registering
Equipment Notes and transfers of Equipment Notes as herein
provided. A holder of any Equipment Note intending to exchange
such Equipment Note shall surrender such Equipment Note to the
Loan Trustee at the Corporate Trust Office, together with a
written request from the registered holder thereof for the
issuance of a new Equipment Note, specify, in the case of a
surrender for transfer, the name and address of the new holder or
holders. Upon surrender for registration of transfer of any
Equipment Note, the Owner Trustee shall execute, and the Loan
Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Equipment
Notes of a like aggregate Original Amount and of the same series.
At the option of the Note Holder, Equipment Notes may be
exchanged for other Equipment Notes of any authorized
denominations of a like aggregate Original Amount, upon surrender
of the Equipment Notes to be exchanged to the Trustee at the
Corporate Trust Office. Whenever any Equipment Notes are so
23
surrendered for exchange, the Owner Trustee shall execute, and
the Loan Trustee shall authenticate and deliver, the Equipment
Notes which the Note Holder making the exchange is entitled to
receive. All Equipment Notes issued upon any registration of
transfer or exchange of Equipment Notes, whether under this
Section 2.07 or under Section 2.08 hereof or otherwise under this
Trust Indenture) shall be the valid obligations of the Owner
Trustee evidencing the same respective obligations, and entitled
to the same security and benefits under this Trust Indenture, as
the Equipment Notes surrendered upon such registration of
transfer or exchange. Every Equipment Note presented or
surrendered for registration of transfer, shall (if so required
by the Loan Trustee) be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the Loan
Trustee duly executed by the Note Holder or such holder's
attorney duly authorized in writing, and the Loan Trustee shall
require evidence satisfactory to it as to the compliance of any
such transfer with the Securities Act, and the securities Laws of
any applicable state. The Loan Trustee shall make a notation on
each new Equipment Note of the amount of all payments of Original
Amount previously made on the old Equipment Note or Equipment
Notes with respect to which such new Equipment Note is issued and
the date to which interest on such old Equipment Note or
Equipment Notes has been paid. Interest shall be deemed to have
been paid on such new Equipment Note to the date on which
interest shall have been paid on such old Equipment Note, and all
payments of the Original Amount marked on such new Equipment
Note, as provided above, shall be deemed to have been made
thereon. The Owner Trustee shall not be required to exchange any
surrendered Equipment Notes as provided above during the ten-day
period preceding the due date of any payment on such Equipment
Note. The Owner Trustee shall in all cases deem the Person in
whose name any Equipment Note shall have been issued and
registered as the absolute owner and holder of such Equipment
Note for the purpose of receiving payment of all amounts payable
by the Owner Trustee with respect to such Equipment Note and for
all purposes until a notice stating otherwise is received from
the Loan Trustee and such change is reflected on the Equipment
Note Register. The Loan Trustee will promptly notify the Owner
Trustee and the Lessee of each registration of a transfer of an
Equipment Note. Any such transferee of an Equipment Note, by its
acceptance of an Equipment Note, agrees to the provisions of the
Participation Agreement applicable to Note Holders, including
Sections 7.4 , 8.5, 8.7.5, 8.7.12, 8.7.14 and 12.1.3 thereof and
shall be deemed to have represented and warranted (except as
provided above), and covenanted, to the parties to the
Participation Agreement as to the matters represented, warranted
and covenanted by the original Loan Participant in the
Participation Agreement. Subject to compliance by the Note Holder
and its transferee (if any) of the requirements set forth in this
Section 2.07, Loan Trustee and Owner Trustee shall use all
reasonable efforts to issue new Equipment Notes upon transfer or
24
exchange within 10 Business Days of the date an Equipment Note is
surrendered for transfer or exchange.
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Equipment Notes
If any Equipment Note shall become mutilated,
destroyed, lost or stolen, the Owner Trustee shall, upon the
written request of the holder of such Equipment Note, execute and
the Loan Trustee shall authenticate and deliver in replacement
thereof a new Equipment Note, payable in the same Original Amount
dated the same date and captioned as issued in connection with
the Aircraft. If the Equipment Note being replaced has become
mutilated, such Equipment Note shall be surrendered to the Loan
Trustee and a photocopy thereof shall be furnished to the Owner
Trustee. If the Equipment Note being replaced has been destroyed,
lost or stolen, the holder of such Equipment Note shall furnish
to the Owner Trustee and the Loan Trustee such security or
indemnity as may be required by them to save the Owner Trustee
and the Loan Trustee harmless and evidence satisfactory to the
Owner Trustee and the Loan Trustee of the destruction, loss or
theft of such Equipment Note and of the ownership thereof. If a
'qualified institutional buyer" of the referred to in paragraph
(a)(1)(i)(A), (B), (D) or (E) of Rule 144A under the Securities
Act (a "QIB") is the holder of any such destroyed, lost or stolen
Equipment Note, then the written indemnity of such QIB, signed by
an authorized officer thereof, in favor of, delivered to and in
form reasonably satisfactory to Lessee, Owner Trustee and Loan
Trustee shall be accepted as satisfactory indemnity and security
and no further indemnity or security shall be required as a
condition to the execution and delivery of such new Equipment
Note. Subject to compliance by the Note Holder of the
requirements set forth in this Section 2.08, Loan Trustee and
Owner Trustee shall use all reasonable efforts to issue new
Equipment Notes within 10 Business Days of the date of the
written request therefor from the Note Holder.
SECTION 2.09. Payment of Expenses on Transfer;
Cancellation
(a) No service charge shall be made to a Note Holder
for any registration of transfer or exchange of Equipment Notes,
but the Loan Trustee, as Equipment Note Registrar, may require
payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any
registration of transfer or exchange of Equipment Notes;
provided, however, that neither the Owner Trustee nor the Owner
Participant shall bear costs of registration, transfer or
exchange in connection with the consummation of the Refinancing
Transaction.
25
(b) The Loan Trustee shall cancel all Equipment Notes
surrendered for replacement, redemption, transfer, exchange,
payment or cancellation and shall destroy the canceled Equipment
Notes.
SECTION 2.10. Mandatory Redemptions of Equipment Notes
(a) On the date on which Lessee is required pursuant
to Section 10.1.2 of the Lease to make payment for an Event of
Loss with respect to the Aircraft, all of the Equipment Notes
shall be redeemed in whole at a redemption price equal to 100% of
the unpaid Original Amount thereof, together with all accrued
interest thereon to the date of redemption and all other Secured
Obligations owed to the Note Holders but without Make-Whole
Amount.
(b) If the Lease is terminated with respect to the
Aircraft by Lessee pursuant to Section 9 thereof, on the date the
Lease is so terminated, all the Equipment Notes shall be redeemed
in whole at a redemption price equal to 100% of the unpaid
Original Amount thereof, together with accrued interest thereon
to the date of redemption and all other amounts payable hereunder
or under the Participation Agreement to the Note Holders plus, if
such redemption is made prior to the Premium Termination Date,
Make-Whole Amount, if any.
SECTION 2.11. Voluntary Redemptions of Equipment Notes
All (but not less than all) of the Equipment Notes may
be redeemed by the Owner Trustee in connection with a transaction
described in, and subject to the terms and conditions of, Section
13 of the Participation Agreement upon at least 30 days'
revocable prior written notice to the Loan Trustee and the Note
Holders, and the Equipment Notes shall, as provided in Section 13
of the Participation Agreement, be redeemed in whole at a
redemption price equal to 100% of the unpaid Original Amount
thereof, together with accrued interest thereon to the date of
redemption and all other Secured Obligations owed to the Note
Holders plus (except as provided in Section 13 of the
Participation Agreement), if such redemption is made prior to the
Premium Termination Date, Make-Whole Amount, if any.
SECTION 2.12. Redemptions; Notice of Redemption
(a) Neither any redemption of any Equipment Note nor
any purchase by the Owner Trustee of any Equipment Note may be
made except to the extent and in the manner expressly permitted
by this Trust Indenture. No purchase of any Equipment Note may be
made by the Loan Trustee.
(b) Notice of redemption or purchase with respect to
the Equipment Notes shall be given by the Loan Trustee by first-
26
class mail, postage prepaid, mailed not less than 25 nor more
than 60 days prior to the applicable redemption date, to each
Note Holder of such Equipment Notes to be redeemed or purchased,
at such Note Holder's address appearing in the Equipment Note
Register; provided that, in the case of a redemption to be made
pursuant to Section 2.10(b) or Section 2.11, such notices shall
be revocable and shall be deemed revoked in the event that the
Lease does not in fact terminate on the specified termination
date or if notice of such redemption shall have been given in
connection with a refinancing of Equipment Notes and the Loan
Trustee receives written notice of such revocation from the
Lessee or the Owner Trustee not later than three days prior to
the redemption date. All notices of redemption shall state: (1)
the redemption date, (2) the applicable basis for determining the
redemption price, (3) that on the redemption date, the redemption
price will become due and payable upon each such Equipment Note,
and that, if any such Equipment Notes are then outstanding,
interest on such Equipment Notes shall cease to accrue on and
after such redemption date, and (4) the place or places where
such Equipment Notes are to be surrendered for payment of the
redemption price.
(c) On or before the redemption date, the Owner
Trustee (or any person on behalf of the Owner Trustee) shall, to
the extent an amount equal to the redemption price for the
Equipment Notes to be redeemed or purchased on the redemption
date shall not then be held in the Trust Indenture Estate,
deposit or cause to be deposited with the Loan Trustee by 12:00
noon on the redemption date in immediately available funds the
redemption price of the Equipment Notes to be redeemed or
purchased.
(d) Notice of redemption or purchase having been given
as aforesaid (and not deemed revoked as contemplated in the
proviso to Section 2.12(b)), the Equipment Notes to be redeemed
or purchased shall, on the redemption date, become due and
payable at the Corporate Trust Office of the Loan Trustee or at
any office or agency maintained for such purposes pursuant to
Section 2.07, and from and after such redemption date (unless
there shall be a default in the payment of the redemption price)
any such Equipment Notes then outstanding shall cease to bear
interest. Upon surrender of any such Equipment Note for
redemption or purchase in accordance with said notice, such
Equipment Note shall be redeemed at the redemption price. If any
Equipment Note called for redemption or purchase shall not be so
paid upon surrender thereof for redemption, the principal amount
thereof shall, until paid, continue to bear interest from the
applicable redemption date at the interest rate in effect for
such Equipment Note as of such redemption date.
SECTION 2.13. [Intentionally Omitted.]
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SECTION 2.14. Option to Purchase Equipment Notes
The Owner Trustee and the Owner Participant may, upon
the events and subject to the terms and conditions and for the
price set forth in this Section 2.14, purchase all but not less
than all of the Equipment Notes outstanding hereunder, and each
Note Holder agrees that it will, upon such events and subject to
such terms and conditions and upon receipt of such price, sell,
assign, transfer and convey to such purchaser or its nominee
(without recourse or warranty of any kind except against Liens on
such Equipment Notes arising by, through or under such holder),
all of the right, title and interest of such Note Holder in and
to the Equipment Notes held by it, and such purchaser or its
nominee shall assume all of such holder's obligations under the
Participation Agreement and hereunder; provided, however, that,
prior to consummation of such purchase, the Note Holders and the
Loan Trustee shall be presented with an opinion of counsel, which
counsel shall be reasonably acceptable to the Loan Trustee, that
such sale and purchase does not violate the Securities Act or any
applicable state securities Laws.
Such option to purchase the Equipment Notes may be
exercised by the Owner Trustee or the Owner Participant upon any
of the following events, and in any such event the purchase price
thereof shall equal for each Equipment Note, the aggregate unpaid
Original Amount thereof, plus accrued and unpaid interest thereon
to the date of purchase and all other Secured Obligations owed to
the holder thereof. Such option to purchase the Equipment Notes
may be exercised (x) upon a Loan Trustee Event or (y) in the
event there shall have occurred and be continuing a Lease Event
of Default, provided that if such option is exercised pursuant to
this clause (y) at a time when there shall have occurred and be
continuing for less than 120 days a Lease Event of Default, the
purchase price thereof shall equal the price provided in the
preceding sentence plus (subject to Section 4.04(b) hereof) the
Make-Whole Amount, if any.
Such option to purchase the Equipment Notes may be
exercised by the Owner Trustee or the Owner Participant giving
written notice of its election of such option to the Loan
Trustee, which notice shall specify a date for such purchase
within 30 days of the date of such notice. The Loan Trustee shall
not exercise any of the remedies hereunder and, without the
consent of the Owner Trustee or the Owner Participant, under the
Lease, during the period from the time that an exercise by the
Owner Participant of such option to purchase becomes irrevocable
until the date on which such purchase is required to occur
pursuant to the terms of the preceding sentence. Such election to
purchase the Equipment Notes shall become irrevocable upon the
sixteenth day following the giving of written notice as provided
above.
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If the Owner Trustee or the Owner Participant on or
before the date of such purchase shall so request, the Note
Holders will comply with all the provisions of Section 2.07 to
enable new Equipment Notes to be issued to the Owner Trustee or
the Owner Participant or its nominee in such denominations as the
Owner Trustee or the Owner Participant shall request. All taxes,
charges and expenses required pursuant to Section 2.09 in
connection with the issuance of such new Equipment Note shall be
borne by the Owner Participant.
SECTION 2.15. Subordination
(a) The Owner Trustee and, by acceptance of its
Equipment Notes of any Series, each Note Holder of such Series,
hereby agree that no payment or distribution shall be made on or
in respect of the Secured Obligations owed to such Note Holder of
such Series, including any payment or distribution of cash,
property or securities after the commencement of a proceeding of
the type referred to in Section 4.02(g) hereof, except as
expressly provided in Article III hereof.
(b) By the acceptance of its Equipment Notes of any
Series (other than Series A), each Note Holder of such Series
agrees that in the event that such Note Holder, in its capacity
as a Note Holder, shall receive any payment or distribution on
any Secured Obligations in respect of such Series which it is not
entitled to receive under this Section 2.15 or Article III
hereof, it will hold any amount so received in trust for the
Senior Holder (as defined in Section 2.15(c) hereof) and will
forthwith turn over such payment to the Loan Trustee in the form
received to be applied as provided in Article III hereof.
(c) As used in this Section 2.15, the term "Senior
Holder" shall mean, (i) the Note Holders of Series A until the
Secured Obligations in respect of Series A Equipment Notes have
been paid in full, (ii) after the Secured Obligations in respect
of Series A Equipment Notes have been paid in full, the Note
Holders of Series B until the Secured Obligations in respect of
Series B Equipment Notes have been paid in full and (iii) after
the Secured Obligations in respect of Series B Equipment Notes
have been paid in full, the Note Holders of Series C until the
Secured Obligations in respect of Series C Equipment Notes have
been paid in full.
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ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Basic Rent Distribution
Except as otherwise provided in Section 3.03 hereof,
each installment of Basic Rent, any payment of interest on
overdue installments of Basic Rent and any payment received by
the Loan Trustee pursuant to Section 4.03 hereof shall be
promptly distributed in the following order of priority:
First, (i) so much of such installment or payment as
shall be required to pay in full the
aggregate amount of the payment or payments
of Original Amount and interest and other
amounts (as well as any interest on any
overdue Original Amount and, to the extent
permitted by Law, on any overdue interest and
any other overdue amounts) then due under all
Series A Equipment Notes shall be distributed
to the Note Holders of Series A ratably,
without priority of one over the other, in
the proportion that the amount of such
payment or payments then due under each
Series A Equipment Note bears to the
aggregate amount of the payments then due
under all Series A Equipment Notes;
(ii) after giving effect to paragraph (i) above, so
much of such installment or payment remaining as
shall be required to pay in full the aggregate
amount of the payment or payments of Original
Amount and interest and other amounts (as well as
any interest on any overdue Original Amount and,
to the extent permitted by Law, on interest and
any other overdue amounts) then due under all
Series B Equipment Notes shall be distributed to
the Note Holders of Series B ratably, without
priority of one over the other, in the proportion
that the amount of such payment or payments then
due under each Series B Equipment Note bears to
the aggregate amount of the payments then due
under all Series B Equipment Notes;
(iii) after giving effect to paragraph (ii) above,
so much of such installment or payment
remaining as shall be required to pay in
full the aggregate amount of the payment or
payments of Original Amount and interest and
any other overdue amounts (as well as any
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interest on any overdue Original Amount and,
to the extent permitted by Law, on any
overdue interest and any other overdue
amounts) then due under all Series C
Equipment Notes shall be distributed to the
Note Holders of Series C ratably, without
priority of one over the other, in the
proportion that the amount of such payment
or payments then due under each Series C
Equipment Note bears to the aggregate amount
of the payments then due under all Series C
Equipment Notes; and
(iv) after giving effect to paragraph (iii) above, so
much of such installment or payment remaining as
shall be required to pay in full the aggregate
amount of the payment or payments of Original
Amount and interest and other amounts (as well as
any interest on any overdue original Amount and,
to the extent permitted by Law, on any overdue
interest and any other overdue amounts) then due
under all Series D Equipment Notes shall be
distributed to the Note Holders of Series D
ratably, without priority of one over the other,
in the proportion that the amount of such payment
or payments then due under each Series D
Equipment Note bears to the aggregate amount of
the payments then due under all Series D
Equipment Notes; and
Second, the balance, if any, of such installment remaining
thereafter shall be distributed to the Owner Trustee;
provided, however, that if an Event of Default shall
have occurred and be continuing, then such balance
shall not be distributed as provided in this clause
"Second" but shall be held by the Loan Trustee as part
of the Trust Indenture Estate and invested in
accordance with Section 5.09 hereof until whichever of
the following shall first occur: (i) all Events of
Default shall have been cured or waived, in which event
such balance shall be distributed as provided in this
clause "Second", (ii) Section 3.03 hereof shall be
applicable, in which event such balance shall be
distributed in accordance with the provisions of such
Section 3.03, or (iii) the 120th day after the receipt
of such payment in which case such payment shall be
distributed as provided in this clause "Second".
SECTION 3.02. Event of Loss; Replacement; Voluntary
Termination; Optional Redemption
Except as otherwise provided in Section 3.03 hereof,
any payments received by the Loan Trustee (i) with respect to the
31
Airframe or the Airframe and one or more Engines as the result of
an Event of Loss, (ii) pursuant to a voluntary termination of the
Lease pursuant to Section 9 thereof, or (iii) pursuant to an
optional redemption of the Equipment Notes pursuant to Section 13
of the Participation Agreement shall be applied to redemption of
the Equipment Notes and to all other Secured Obligations by
applying such funds in the following order of priority:
First, (a) to reimburse the Loan Trustee and the Note
Holders for any reasonable costs or expenses
incurred in connection with such redemption for
which they are entitled to reimbursement, or
indemnity by Lessee, under the Operative
Agreements and then (b) to pay any other amounts
then due to the Loan Trustee and the Note Holders
under this Trust Indenture, the Participation
Agreement or the Equipment Notes;
Second, (i) to pay the amounts specified in paragraph (i)
of clause "Third" of Section 3.03 hereof plus
Make- Whole Amount, if any, then due and payable
in respect of the Series A Equipment Notes;
(ii) after giving effect to paragraph (i) above, to
pay the amounts specified in paragraph (ii) of
clause "Third" of Section 3.03 hereof plus
Make-Whole Amount, if any, then due and payable
in respect of
the Series B Equipment Notes;
(iii) after giving effect to paragraph (ii) above,
to pay the amounts specified in paragraph
(iii) of clause "Third" of Section 3.03
hereof plus Make-Whole Amount, if any, then
due and payable in respect of the Series C
Equipment Notes; and
(iv) after giving effect to paragraph (iii) above, to
pay the amounts specified in paragraph (iv) of
clause "Third" of Section 3.03 hereof plus
Make-Whole Amount, if any, then due and payable
in respect of the Series D Equipment Notes: and
Third, as provided in clause "Fourth" of Section 3.03 hereof;
provided, however, that if a Replacement Airframe or Replacement
Engine shall be substituted for the Airframe or Engine subject to
such Event of Loss as provided in Section 10 of the Lease and in
accordance with Section 5.06 hereof, any insurance, condemnation
or similar proceeds which result from such Event of Loss and are
paid over to the Loan Trustee shall be held by the Loan Trustee
as permitted by Section 6.04 hereof (provided that such moneys
shall be invested as provided in Section 5.09 hereof) as
32
additional security for the obligations of Lessee under the
Lessee Operative Agreements and, unless otherwise applied
pursuant to the Lease, such proceeds (and such investment
earnings) shall be released to the Lessee at the Lessee's written
request upon the release of such damaged Airframe or Engine and
the replacement thereof as provided in the Lease.
SECTION 3.03. Payments After Event of Default
Except as otherwise provided in Section 3.04 hereof,
all payments received and amounts held or realized by the Loan
Trustee (including any amounts realized by the Loan Trustee from
the exercise of any remedies pursuant to Section 15 of the Lease
or Article V hereof) after an Event of Default shall have
occurred and be continuing and after the declaration specified in
Section 4.04(b) hereof, as well as all payments or amounts then
held by the Loan Trustee as part of the Trust Indenture Estate,
shall be promptly distributed by the Loan Trustee in the
following order of priority:
First, so much of such payments or amounts as shall be
required to reimburse the Loan Trustee or WTC for
any tax (except to the extent resulting from a
failure of the Loan Trustee to withhold taxes
pursuant to Section 2.04(b) hereof), expense or
other loss (including, without limitation, all
amounts to be expended at the expense of, or
charged upon the rents, revenues, issues, products
and profits of, the property included in the Trust
Indenture Estate (all such property being herein
called the "Mortgaged Property") pursuant to
Section 4.05(b) hereof) incurred by the Loan
Trustee or WTC (to the extent not previously
reimbursed), the expenses of any sale, or other
proceeding, reasonable attorneys' fees and
expenses, court costs, and any other expenditures
incurred or expenditures or advances made by the
Loan Trustee, WTC or the Note Holders in the
protection, exercise or enforcement of any right,
power or remedy or any damages sustained by the
Loan Trustee, WTC or any Note Holder, liquidated
or otherwise, upon such Event of Default shall be
applied by the Loan Trustee as between itself, WTC
and the Note Holders in reimbursement of such
expenses and any other expenses for which the Loan
Trustee, WTC or the Note Holders are entitled to
reimbursement under any Operative Agreement and in
the case the aggregate amount to be so distributed
is insufficient to pay as aforesaid, then ratably,
without priority of one over the other, in
proportion to the amounts owed each hereunder;
33
Second, so much of such payments or amounts remaining as shall
be required to reimburse the then existing or prior
Note Holders for payments made pursuant to Section 5.03
hereof (to the extent not previously reimbursed) shall
be distributed to such then existing or prior Note
Holders ratably, without priority of one over the
other, in accordance with the amount of the payment or
payments made by each such then existing or prior Note
Holder pursuant to said Section 5.03 hereof;
Third, (i) so much of such payments or amounts remaining as
shall be required to pay in full the aggregate
unpaid Original Amount of all Series A Equipment
Notes, and the accrued but unpaid interest and
other amounts due thereon (other than Make-Whole
Amount which shall not be due and payable) and all
other Secured Obligations in respect of the Series
A Equipment Notes (other than Make-Whole Amount)
to the date of distribution, shall be distributed
to the Note Holders of Series A, and in case the
aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other,
in the proportion that the aggregate unpaid
Original Amount of all Series A Equipment Notes
held by each holder plus the accrued but unpaid
interest and other amounts due hereunder or
thereunder (other than Make-Whole Amount, if any)
to the date of distribution, bears to the
aggregate unpaid Original Amount of all Series A
Equipment Notes held by all such holders plus the
accrued but unpaid interest and other amounts due
thereon (other than Make-Whole Amount) to the date
of distribution;
(ii) after giving effect to paragraph (i) above, so
much of such payments or amounts remaining as
shall be required to pay in full the aggregate
unpaid Original Amount of all Series B Equipment
Notes, and the accrued but unpaid interest and
other amounts due thereon (other than Make-Whole
Amount which not be due and payable) and all
other Secured Obligations in respect of the
Series B Equipment Notes (other than Make-Whole
Amount) to the date of distribution, shall be
distributed to the Note Holders of Series B, and
in case the aggregate amount so to be distributed
shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one
over the other, in the proportion that the
aggregate unpaid Original Amount of all Series B
Equipment Notes held by each holder plus the
accrued but unpaid
34
interest and other amounts due hereunder or
thereunder (other than the Make-Whole Amount, if
any) to the date of distribution, bears to the
aggregate unpaid Original Amount of all Series B
Equipment Notes held by all such holders plus the
accrued but unpaid interest and other amounts due
thereon (other than the Make-Whole Amount) to the
date of distribution;
(iii) after giving effect to paragraph (ii) above,
so much of such payments or amounts remaining
as shall be required to pay in full the
aggregate unpaid Original Amount of all
Series C Equipment Notes, and the accrued but
unpaid interest and other amounts due thereon
(other than Make-Whole Amount which shall not
be due and payable) and all other Secured
Obligations in respect of the Series C
Equipment Notes (other than Make-Whole
Amount) to the date of distribution, shall be
distributed to the Note Holders of Series C,
and in case the aggregate amount so to be
distributed shall be insufficient to pay in
full as aforesaid, then ratably, without
priority of one over the other, in the
proportion that the aggregate unpaid Original
Amount of all Series C Equipment Notes held
by each holder plus the accrued but unpaid
interest and other amounts due hereunder or
thereunder (other than the Make-Whole Amount,
if any) to the date of distribution, bears to
the aggregate unpaid Original Amount of all
Series C Equipment Notes held by all such
holders plus the accrued but unpaid interest
and other amounts due thereon (other than the
Make-Whole Amount) to the date of
distribution; and
(iv) after giving effect to paragraph (iii) above, so
much of such payments or amounts remaining as
shall be required to pay in full the aggregate
unpaid Original Amount of all Series D Equipment
Notes, and the accrued but unpaid interest and
other amounts due thereon (other than Make-Whole
Amount which shall not be due and payable) and
all other Secured Obligations in respect of the
Series D Equipment Notes (other than Make-Whole
Amount) to the date of distribution, shall be
distributed to the Note Holders of Series D, and
in case the aggregate amount so to be distributed
shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one
over the other,
35
in the proportion that the aggregate unpaid
Original Amount of all Series D Equipment Notes
held by each holder plus the accrued but unpaid
interest and other amounts due hereunder or
thereunder (other than the Make-Whole Amount, if
any) to the date of distribution, bears to the
aggregate unpaid Original Amount of all Series D
Equipment Notes held by all such holders plus the
accrued but unpaid interest and other amounts due
thereon (other than the Make-Whole Amount) to the
date of distribution; and
Fourth, the balance, if any, of such payments or amounts
remaining thereafter shall be distributed to the Owner
Trustee.
No Make-Whole Amount shall be due and payable on the
Equipment Notes as a consequence of the acceleration of the
Equipment Notes as a result of an Event of Default.
SECTION 3.04. Certain Payments
(a) Any payments received by the Loan Trustee for
which no provision as to the application thereof is made in this
Trust Indenture and for which such provision is made in the
Lease, the Participation Agreement or any other Operative
Agreement shall be applied forthwith to the purpose for which
such payment was made in accordance with the terms of the Lease,
the Participation Agreement or such other Operative Agreement, as
the case may be.
(b) The Loan Trustee will distribute promptly upon
receipt any indemnity payment received by it from the Owner
Trustee or Lessee in respect of (i) the Loan Trustee in its
individual capacity, (ii) any Note Holder, (iii) the
Subordination Agent, (iv) the Liquidity Provider and (v) the Pass
Through Trustees, in each case whether pursuant to Section 10 of
the Participation Agreement or as Supplemental Rent, directly to
the Person entitled thereto. Any payment received by the Loan
Trustee under the third paragraph of Section 2.02 shall be
distributed to the Subordination Agent to be distributed in
accordance with the terms of the Intercreditor Agreement.
(c) [Intentionally Omitted]
(d) Notwithstanding anything to the contrary contained
in this Article III, any payments received by the Loan Trustee
which constitute Excluded Payments shall be distributed promptly
upon receipt by the Loan Trustee directly to the Person or
Persons entitled thereto.
36
(e) Notwithstanding any provision of this Trust
Indenture to the contrary, any amounts held by Loan Trustee
pursuant to the terms of the Lease shall be held by the Loan
Trustee as security for the obligations of Lessee under the
Lessee Operative Agreements and, if and when required by the
Lease, paid and/or applied in accordance with the applicable
provisions of the Lease.
37
SECTION 3.05. Other Payments
Any payments received by the Loan Trustee for which no
provision as to the application thereof is made in the Lease,
Participation Agreement, elsewhere in this Trust Indenture or in
any other Operative Agreement shall be distributed by the Loan
Trustee to the extent received or realized at any time (i) prior
to the payment in full of all Secured Obligations due the Note
Holders, in the order of priority specified in Section 3.01
hereof subject to the proviso thereto, and (ii) after payment in
full of all Secured Obligations due the Note Holders, in the
following order of priority:
First, to the extent payments or amounts described in clause
"First" of Section 3.03 hereof are otherwise
obligations of Lessee under the Operative Agreements
or for which the Lessee is obligated to indemnify
against thereunder, in the manner provided in clause
"First" of Section 3.03 hereof, and
Second, in the manner provided in clause "Fourth" of Section
3.03 hereof.
Further, and except as otherwise provided in Sections
3.02, 3.03 and 3.04 hereof, all payments received and amounts
realized by the Loan Trustee under the Lease or otherwise with
respect to the Aircraft (including, without limitation, all
amounts realized upon the sale or release of the Aircraft after
the termination of the Lease with respect thereto), to the extent
received or realized at any time after payment in full of all
Secured Obligations due the Note Holders, shall be distributed by
the Loan Trustee in the order of priority specified in clause
(ii) of the immediately preceding sentence of this Section 3.05.
SECTION 3.06. Payments to Owner Trustee
Any amounts distributed hereunder by the Loan Trustee
to the Owner Trustee shall be paid to the Owner Trustee (within
the time limits contemplated by Section 2.04(a)) by wire transfer
of funds of the type received by the Loan Trustee at such office
and to such account or accounts of such entity or entities as
shall be designated by notice from the Owner Trustee to the Loan
Trustee from time to time. The Owner Trustee hereby notifies the
Loan Trustee that unless and until the Loan Trustee receives
notice to the contrary from the Owner Trustee, all amounts to be
distributed to the Owner Trustee pursuant to clause "Second" of
Section 3.01 or clause "Fourth" of Section 3.03 hereof shall be
distributed by wire transfer of funds of the type received by the
Loan Trustee to the Owner Participant's account (within the time
limits contemplated by Section 2.04(a)) specified in Schedule 1
to the Participation Agreement.
38
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; EVENTS OF
DEFAULT; REMEDIES OF LOAN TRUSTEE
SECTION 4.01. Covenants of Owner Trustee
The Owner Trustee hereby covenants and agrees (the
covenants and agreements only in clause (b) below being made by
the Owner Trustee in its individual capacity) as follows:
(a) the Owner Trustee will duly and punctually pay the
Original Amount of, Make-Whole Amount, if any, and interest
on and other amounts due under the Equipment Notes and
hereunder in accordance with the terms of the Equipment
Notes and this Trust Indenture and all amounts, if any,
payable by it to the Note Holders under the Participation
Agreement;
(b) the Owner Trustee in its individual capacity
covenants and agrees that it shall not, directly or
indirectly, cause or permit to exist a Lessor Lien
attributable to it in its individual capacity with respect
to the Aircraft or any other portion of the Trust Estate;
that it will promptly, at its own expense, take such action
as may be necessary to duly discharge such Lessor Lien
attributable to it in its individual capacity; and that it
will make restitution to the Trust Estate for any actual
diminution of the assets of the Trust Estate resulting from
such Lessor Liens attributable to it in its individual
capacity;
(c) in the event the Owner Trustee shall have Actual
Knowledge of an Event of Default, a Default or an Event of
Loss, the Owner Trustee will give prompt written notice of
such Event of Default, Default or Event of Loss to the Loan
Trustee, each Note Holder, Lessee and the Owner
Participant;
(d) the Owner Trustee will furnish to the Note Holders
and the Loan Trustee, promptly upon receipt thereof,
duplicates or copies of all reports, notices, requests,
demands, certificates and other instruments
furnished to the Owner Trustee under the Lease,
including, without limitation, a copy of any
Termination Notice and a copy of each report or
notice received pursuant to Section 9 or 8.2 or
Annex D, Paragraph E of the Lease to the extent
that the same shall not have been furnished to
the Note Holders or the Loan Trustee pursuant to
the Lease;
39
(e) except with the consent of the Loan Trustee
(acting pursuant to instructions given in accordance with
Section 9.01 hereof) or as provided in Sections 2, 13 and
15 of the Participation Agreement, the Owner Trustee will
not contract for, create, incur, assume or suffer to exist
any Debt, and will not guarantee (directly or indirectly or
by an instrument having the effect of assuring another's
payment or performance on any obligation or capability of
so doing, or otherwise), endorse or otherwise be or become
contingently liable, directly or indirectly, in connection
with the Debt of any other person; and
(f) the Owner Trustee will not enter into any business
or other activity other than the business of owning the
Aircraft, the leasing thereof to Lessee and the carrying
out of the transactions contemplated hereby and by the
Lease, the Participation Agreement and the Trust Agreement
and the other Operative Agreements.
SECTION 4.02. Event of Default
"Event of Default" means any of the following events
(whatever the reason for such Event of Default and whether such
event shall be voluntary or involuntary or come about or be
effected by operation of Law or pursuant to or in compliance with
any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) any Lease Event of Default (provided that any such
Lease Event of Default caused solely by a failure of Lessee
to pay to the Owner Trustee or the Owner Participant when
due any amount that is included in the definition of
Excluded Payments shall not constitute an Event of Default
unless notice is given by the Owner Trustee to the Loan
Trustee that such failure shall constitute an Event of
Default); or
(b) the failure of the Owner Trustee to pay when due
any payment of Original Amount of, interest on, Make-Whole
Amount, if any, or other amount due and payable under any
Equipment Note or hereunder (other than as a result of a
Lease Event of Default or a Lease Default) and such failure
shall have continued unremedied for ten Business Days in
the case of any payment of Original Amount or interest or
Make- Whole Amount, if any, thereon and, in the case of any
other amount, for ten Business Days after the Owner Trustee
or the Owner Participant receives written demand from the
Loan Trustee or any Note Holder; or
(c) any Lien required to be discharged by the Owner
Trustee, in its individual capacity pursuant to Section
4.01(b) hereof or in its individual or trust capacity
40
pursuant to Section 8.3.1 of the Participation Agreement,
or by the Owner Participant pursuant to Section 8.2.1 of
the Participation Agreement shall remain undischarged for a
period of 30 days after the Owner Trustee or the Owner
Participant, as the case may be, shall have received
written notice from the Loan Trustee or any Note Holder of
such Lien; or
(d) any representation or warranty made by the Owner
Participant or the Owner Trustee in the Participation
Agreement or the Refunding Agreement or in any certificate
furnished by the Owner Participant or the Owner Trustee to
the Loan Trustee or any Note Holder in connection with the
transactions contemplated by the Operative Agreements shall
prove to have been false or incorrect when made in any
material respect and continues to be material; and if such
misrepresentation is capable of being corrected and if such
correction is being sought diligently, such
misrepresentation shall not have been corrected within 60
days (or, without affecting Section 4.02(f) hereof, in the
case of the representation made in Section 7.3.6 or 7.2.6
of the Participation Agreement as to citizenship of the
Owner Trustee in its individual capacity or of the Owner
Participant, respectively, as soon as is reasonably
practicable but in any event within 60 days) following
notice thereof from the Loan Trustee or any Note Holder to
the Owner Trustee or the Owner Participant, as the case may
be; or
(e) other than as provided in (c) above or (f) below,
any failure by the Owner Trustee or Owner Participant to
observe or perform any other covenant or obligation of the
Owner Trustee or Owner Participant, as the case may be, for
the benefit of the Loan Trustee or the Note Holders
contained in the Participation Agreement, Section 4.01(a)
of the Trust Agreement, the Equipment Notes or this Trust
Indenture which is not remedied within a period of 60 days
after notice thereof has been given to the Owner Trustee
and the Owner Participant; or
(f) if at any time when the Aircraft is registered
under the Laws of the United States, the Owner Participant
shall not be a "citizen of the United States" within the
meaning of Section 40102(a)(15) of Part A of Subtitle VII
of Title 49, United States Code, and as the result thereof
the registration of the Aircraft under the Federal Aviation
Act, and regulations then applicable thereunder, shall
cease to be effective; provided that no Event of Default
shall be deemed to have occurred under this paragraph (f)
unless such circumstances continue unremedied for more than
60 days after the Owner Participant has Actual Knowledge of
41
the state of facts that resulted in such ineffectiveness and of
such loss of citizenship; or
(g) at any time either (i) the commencement of an
involuntary case or other proceeding in respect of the
Owner Participant, the Owner Trustee, the Trust or the
Trust Estate under the federal bankruptcy Laws, as now
constituted or hereafter amended, or any other applicable
federal or state bankruptcy, insolvency or other similar
Law in the United States or seeking the appointment of a
receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Owner
Participant, the Owner Trustee, the Trust or the Trust
Estate or for all or substantially all of its property, or
seeking the winding-up or liquidation of its affairs and
the continuation of any such case or other proceeding
undismissed and unstayed for a period of 60 consecutive
days; or (ii) the commencement by the Owner Participant,
the Owner Trustee, the Trust or the Trust Estate of a
voluntary case or proceeding under the federal bankruptcy
Laws, as now constituted or hereafter amended, or any other
applicable federal or state bankruptcy, insolvency or other
similar Law in the United States, or the consent by the
Owner Participant, the Owner Trustee, the Trust or the
Trust Estate to the appointment of or taking possession by
a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Owner
Participant, the Owner Trustee, the Trust or the Trust
Estate or for all or substantially all of its property, or
the making by the Owner Participant, the Owner Trustee, the
Trust or the Trust Estate of any assignment for the benefit
of creditors or the Owner Participant or the Owner Trustee
shall take any action to authorize any of the foregoing;
provided, however, that an event referred to in this
Section 4.02(g) with respect to the Owner Participant shall
not constitute an Event of Default if within 30 days of the
commencement of the case or proceeding a full
non-appealable order, judgment or decree shall be entered
in such case or proceeding by a court or a trustee,
custodian, receiver or liquidator, to the effect that, no
part of the Trust Estate (except for the Owner
Participant's beneficial interest therein) and no right,
title or interest under the Trust Indenture Estate shall be
included in, or be subject to, any declaration or
adjudication of, or proceedings with respect to, the
bankruptcy, insolvency or liquidation of the Owner
Participant referred to in this Section 4.02(g).
SECTION 4.03. Certain Rights
The Loan Trustee shall give the Note Holders, the
Owner Trustee and the Owner Participant prompt written notice of
any Event of Default of which the Loan Trustee has Actual
Knowledge and shall give the Note Holders, the Owner Trustee and
the Owner
42
Participant not less than ten Business Days' prior written notice
of the date (the "Enforcement Date") on or after which the Loan
Trustee may, subject to the limitation set forth in Section
4.04(a), commence and consummate the exercise of any remedy or
remedies described in Section 4.04, 4.05 or 4.06 hereof, or the
exercise of any remedy or remedies pursuant to the provisions of
Section 15 of the Lease; provided, however, that in the event the
Loan Trustee shall have validly terminated the Lease, the Loan
Trustee shall not sell or lease, or otherwise afford the use of,
the Aircraft or any portion thereof to the Lessee or any
Affiliate thereof. Without limiting the generality of the
foregoing, the Loan Trustee shall give the Owner Trustee, the
Owner Participant and the Lessee at least ten Business Days'
prior written notice of any declaration of the Lease to be in
default pursuant to Sections 14 and 15 of the Lease or any
termination of the Lease or of the exercise of any remedy or
remedies pursuant to Section 15 of the Lease. If an Event of
Default shall have occurred and be continuing, the Owner Trustee
shall have the rights set forth below, any of which may be
exercised directly by the Owner Participant.
If as a result of the occurrence of an Event of
Default in respect of the nonpayment by Lessee of Basic Rent due
under the Lease, the Loan Trustee shall have insufficient funds
to make any payment of Original Amount and interest on any
Equipment Note on the day it becomes due and payable, the Owner
Trustee may, but shall not be obligated to, pay the Loan Trustee
prior to the Enforcement Date, in the manner provided in Section
2.04 hereof, for application in accordance with Section 3.01
hereof, an amount equal to the portion of the Original Amount and
interest (including interest, if any, on any overdue payments of
such portion of Original Amount and interest) then due and
payable on the Equipment Notes, and, unless the Owner Trustee has
cured Events of Default in respect of payments of Basic Rent on
each of the six immediately preceding Basic Rent payment dates
(or, for so long as Gaucho-2 Inc. or any other Affiliate of The
Boeing Company is the Owner Participant, the nine immediately
preceding Basic Rent payment dates), or the Owner Trustee has
cured twelve previous Events of Default (or, for so long as
Gaucho-2 Inc. or any other Affiliate of The Boeing Company is the
Owner Participant, sixteen previous Events of Default) in respect
of payments of Basic Rent, such payment by the Owner Trustee
shall, solely for purposes of this Trust Indenture be deemed to
cure any Event of Default which would otherwise have arisen on
account of the nonpayment by Lessee of such installment of Basic
Rent (but not any other Default or Event of Default which shall
have occurred and be continuing).
If any Event of Default (other than in respect of the
nonpayment of Basic Rent by the Lessee) which can be cured by the
payment of money has occurred, the Owner Trustee may, but shall
not be obligated to, cure such Event of Default by making such
43
payment prior to the Enforcement Date as is necessary to
accomplish the observance or performance of the defaulted
covenant, condition or agreement to the party entitled to the
same.
Except as hereinafter in this Section 4.03 provided,
the Owner Trustee shall not, as a result of exercising the right
to cure any such Event of Default, obtain any Lien on any of the
Mortgaged Property or any Rent payable under the Lease for or on
account of costs or expenses incurred in connection with the
exercise of such right, nor shall any claim of the Owner Trustee
against Lessee or any other party for the repayment of such costs
or expenses impair the prior right and security interest of the
Loan Trustee in and to the Mortgaged Property. Upon any payment
by the Owner Trustee pursuant to the first or second preceding
paragraphs of this Section 4.03, the Owner Trustee shall be
subrogated to the rights of the Loan Trustee and the Note Holders
in respect of the Basic Rent which was overdue at the time of
such payment and interest payable by the Lessee on account of its
being overdue and any Supplemental Rent in respect of the
reimbursement of amounts paid by Owner Trustee pursuant to the
immediately preceding paragraph (but in either case shall have no
rights as a secured party hereunder), and thereafter, the Owner
Trustee shall be entitled to receive such overdue Basic Rent or
Supplemental Rent, as the case may be, and interest thereon upon
receipt thereof by the Loan Trustee; provided, however, that (i)
if the Original Amount and interest on the Equipment Notes shall
have become due and payable pursuant to Section 4.04(b) hereof,
such subrogation shall, until the Secured Obligations shall have
been paid in full, be subordinate to the rights of the Loan
Trustee and the Note Holders in respect of such payment of
overdue Basic Rent, Supplemental Rent and such interest and (ii)
the Owner Trustee shall not be entitled to seek to recover any
such payment (or any payment in lieu thereof) except pursuant to
the foregoing right of subrogation.
Neither the Owner Trustee nor the Owner Participant
shall have the right to cure any Lease Event of Default or Lease
Default except as specified in this Section 4.03.
SECTION 4.04. Remedies
(a) If an Event of Default shall have occurred and be
continuing and so long as the same shall continue unremedied,
then and in every such case the Loan Trustee may, subject to the
second and third paragraphs of this Section 4.04(a), exercise any
or all of the rights and powers and pursue any and all of the
remedies pursuant to this Article IV and shall have and may
exercise all of the rights and remedies of a secured party under
the Uniform Commercial Code and, in the event such Event of
Default is also a Lease Event of Default, any and all of the
remedies pursuant to Section 15 of the Lease and may take
44
possession of all or any part of the properties covered or
intended to be covered by the Lien created hereby or pursuant
hereto and may exclude the Owner Participant, the Owner Trustee
and Lessee and all persons claiming under any of them wholly or
partly therefrom; provided, that the Loan Trustee shall give the
Owner Trustee and the Owner Participant twenty days' prior
written notice of its intention to sell the Aircraft; and
provided, further, that in the event the Loan Trustee shall have
validly terminated the Lease, the Loan Trustee shall not sell or
lease, or otherwise afford the use of, the Aircraft or any
portion thereof to the Lessee or any Affiliate thereof. Unless an
Event of Default not resulting from or relating to a Lease Event
of Default has occurred and is continuing, the Owner Participant
may bid at the sale and become the purchaser. Without limiting
any of the foregoing, it is understood and agreed that the Loan
Trustee may exercise any right of sale of the Aircraft available
to it, even though it shall not have taken possession of the
Aircraft and shall not have possession thereof at the time of
such sale.
Anything in this Trust Indenture to the contrary
notwithstanding, the Loan Trustee shall not be entitled to
exercise any remedy hereunder as a result of an Event of Default
which arises solely by reason of one or more events or
circumstances which constitute a Lease Event of Default unless
the Loan Trustee as security assignee of the Owner Trustee shall
have exercised or concurrently be exercising one or more of the
dispossessory remedies provided for in Section 15 of the Lease
with respect to the Aircraft; provided, however, that such
requirement to exercise one or more of such remedies under the
Lease shall not apply in circumstances where the Loan Trustee is,
and has been, for a continuous period in excess of 60 days or
such other period as may be specified in Section 1110(a)(1)(A) of
the Bankruptcy Code (such 60-day or other period being the "New
Section 1110 Period"), involuntarily stayed or prohibited by
applicable law or court order from exercising such remedies under
the Lease (a "Continuous Stay Period"); provided further,
however, that the requirement to exercise one or more of such
remedies under the Lease shall nonetheless be applied during a
Continuous Stay Period subsequent to the expiration of the New
Section 1110 Period to the extent that the continuation of such
Continuous Stay Period subsequent to the expiration of the New
Section 1110 Period (A) results from an agreement by the trustee
or the debtor-in-possession in such proceeding during the New
Section 1110 Period with the approval of the relevant court to
perform the Lease in accordance with Section 1110(a)(1)(A) of the
Bankruptcy Code and continues to perform as required by Section
1110(a)(1)(A-B) of the Bankruptcy Code or (B) is an "extension of
the New Section 1110 Period with the consent of the Loan Trustee
pursuant to Section 1110(b) of the Bankruptcy Code or (C) results
from the Lessee's assumption during the New Section 1110 Period
with the approval of the relevant court of the Lease pursuant to
45
Section 365 of the Bankruptcy Code or (D) is the consequence of
the Loan Trustee's own failure to give any requisite notice to
any person. In the event that the applicability of Section 1110
of Bankruptcy Code to the Aircraft is being contested by Lessee
in judicial proceedings, both of the Loan Trustee and the Owner
Trustee shall have the right to participate in such proceedings;
provided that any such participation by the Owner Trustee shall
not affect in any way any rights or remedy of the Loan Trustee
hereunder.
It is expressly understood and agreed that, subject
only to the two preceding paragraphs, the inability, described in
such paragraphs, of the Loan Trustee to exercise any right or
remedy under the Lease shall in no event and under no
circumstances prevent the Loan Trustee from exercising any or all
of its rights, powers and remedies under this Trust Indenture,
including, without limitation, this Article IV.
(b) If an Event of Default shall have occurred and be
continuing, then and in every such case the Loan Trustee may (and
shall, upon receipt of a written demand therefor from a Majority
in Interest of Note Holders), subject to Section 4.03 hereof, at
any time, by delivery of written notice or notices to the Owner
Trustee and the Owner Participant, declare all the Equipment
Notes to be due and payable, whereupon the unpaid Original Amount
of all Equipment Notes then outstanding, together with accrued
but unpaid interest thereon (without Make-Whole Amount) and other
amounts due thereunder, shall immediately become due and payable
without presentment, demand, protest or notice, all of which are
hereby waived; provided that, in the event of a reorganization
proceeding involving the Lessee instituted under Chapter 11 of
the Bankruptcy Code, if no Lease Event of Default (including any
Lease Event of Default set forth in Section 14.7 of the Lease)
and no other Event of Default (other than the failure to pay the
Original Amount of the Equipment Notes which by such declaration
shall have become payable) exists at any time after the
consummation of such proceeding, such declaration shall be
automatically rescinded without any further action on the part of
any Note Holder.
This Section 4.04(b), however, is subject to the
condition that, if at any time after the Original Amount of the
Equipment Notes shall have become so due and payable, and before
any judgment or decree for the payment of the money so due, or
any thereof, shall be entered, all overdue payments of interest
upon the Equipment Notes and all other amounts payable under the
Equipment Notes (except the Original Amount of the Equipment
Notes which by such declaration shall have become payable) shall
have been duly paid, and every other Default and Event of Default
with respect to any covenant or provision of this Trust Indenture
shall have been cured, then and in every such case a Majority in
Interest of Note Holders may (but shall not be obligated to), by
46
written instrument filed with the Loan Trustee, rescind and annul
the Loan Trustee's declaration (or such automatic acceleration)
and its consequences; but no such rescission or annulment extend
to or affect any subsequent Default or Event of Default or impair
any right consequent thereon.
(c) The Note Holders shall be entitled, at any sale
pursuant to Section 15 of the Lease or this Section 4.04, to
credit against any purchase price bid at such sale by such holder
all or any part of the unpaid obligations owing to such Note
Holder and secured by the Lien of this Trust Indenture (only to
the extent that such purchase price would have been paid to such
Note Holder pursuant to Article III hereof if such purchase price
were paid in cash and the foregoing provisions of this subsection
(c) were not given effect).
(d) In the event of any sale of the Trust Indenture
Estate, or any part thereof, pursuant to any judgment or decree
of any court or otherwise in connection with the enforcement of
any of the terms of this Trust Indenture, the unpaid Original
Amount of all Equipment Notes then outstanding, together with
accrued interest thereon (without Make-Whole Amount), and other
amounts due thereunder, shall immediately become due and payable
without presentment, demand, protest or notice, all of which are
hereby waived.
(e) Upon consummation of the Refinancing Transaction,
notwithstanding anything contained herein, so long as the Pass
Through Trustee under any Pass Through Trust Agreement (or its
designee) is a Note Holder, the Loan Trustee will not be
authorized or empowered to acquire title to any Mortgaged
Property or take any action with respect to any Mortgaged
Property so acquired by it if such acquisition or action would
cause any Trust to fail to qualify as a "grantor trust" for
federal income tax purposes.
SECTION 4.05. Return of Aircraft, Etc.
(a) If an Event of Default shall have occurred and be
continuing, subject to Section 4.03 hereof, at the request of the
Loan Trustee, the Owner Trustee shall promptly execute and
deliver to the Loan Trustee such instruments of title and other
documents as the Loan Trustee may deem necessary or advisable to
enable the Loan Trustee or an agent or representative designated
by the Loan Trustee, at such time or times and place or places as
the Loan Trustee may specify, to obtain possession of all or any
part of the Mortgaged Property included in the Trust Indenture
Estate to which the Loan Trustee shall at the time be entitled
hereunder. If the Owner Trustee shall for any reason fail to
execute and deliver such instruments and documents after such
request by the Loan Trustee, the Loan Trustee may (i) obtain a
judgment conferring on the Loan Trustee the right to immediate
47
possession and requiring the Owner Trustee to execute and deliver
such instruments and documents to the Loan Trustee, to the entry
of which judgment the Owner Trustee hereby specifically consents
to the fullest extent permitted by Law, and (ii) pursue all or
part of such Mortgaged Property wherever it may be found and, in
the event that a Lease Event of Default has occurred and is
continuing, may enter any of the premises of Lessee wherever such
Mortgaged Property may be or be supposed to be and search for
such Mortgaged Property and take possession of and remove such
Mortgaged Property. All expenses of obtaining such judgment or of
pursuing, searching for and taking such property shall, until
paid, be secured by the Lien of this Trust Indenture.
(b) Upon every such taking of possession, the Loan
Trustee may, from time to time, at the expense of the Mortgaged
Property, make all such expenditures for maintenance, use,
operation, storage, insurance, leasing, control, management,
disposition, modifications or alterations to and of the Mortgaged
Property, as it may deem proper. In each such case, the Loan
Trustee shall have the right to maintain, use, operate, store,
insure, lease, control, manage, dispose of, modify or alter the
Mortgaged Property and to carry on the business and to exercise
all rights and powers of the Owner Participant and the Owner
Trustee relating to the Mortgaged Property, as the Loan Trustee
shall deem best, including the right to enter into any and all
such agreements with respect to the maintenance, use, operation,
storage, insurance, leasing, control, management, disposition,
modification or alteration of the Mortgaged Property or any part
thereof as the Loan Trustee may determine, and the Loan Trustee
shall be entitled to collect and receive directly all tolls,
rents (including Rent), revenues, issues, income, products and
profits of the Mortgaged Property and every part thereof, except
Excluded Payments, without prejudice, however, to the right of
the Loan Trustee under any provision of this Trust Indenture to
collect and receive all cash held by, or required to be deposited
with, the Loan Trustee hereunder. Such tolls, rents (including
Rent), revenues, issues, income, products and profits shall be
applied to pay the expenses of the maintenance, use, operation,
storage, insurance, leasing, control, management, disposition,
improvement, modification or alteration of the Mortgaged Property
and of conducting the business thereof, and to make all payments
which the Loan Trustee may be required or may elect to make, if
any, for taxes, assessments, insurance or other proper charges
upon the Mortgaged Property or any part thereof (including the
employment of engineers and accountants to examine, inspect and
make reports upon the properties and books and records of the
Owner Trustee), and all other payments which the Loan Trustee may
be required or authorized to make under any provision of this
Trust Indenture, as well as just and reasonable compensation for
the services of the Loan Trustee, and of all persons properly
engaged and employed by the Loan Trustee with respect hereto.
48
SECTION 4.06. Remedies Cumulative
Each and every right, power and remedy given to the
Loan Trustee specifically or otherwise in this Trust Indenture
shall be cumulative and shall be in addition to every other
right, power and remedy herein specifically given or now or
hereafter existing at Law, in equity or by statute, and each and
every right, power and remedy whether specifically herein given
or otherwise existing may be exercised from time to time and as
often and in such order as may be deemed expedient by the Loan
Trustee, and the exercise or the beginning of the exercise of any
power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other right,
power or remedy. No delay or omission by the Loan Trustee in the
exercise of any right, remedy or power or in the pursuance of any
remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner
Trustee or Lessee or to be an acquiescence therein.
SECTION 4.07. Discontinuance of Proceedings
In case the Loan Trustee shall have instituted any
proceeding to enforce any right, power or remedy under this Trust
Indenture by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any
reason or shall have been determined adversely to the Loan
Trustee, then and in every such case the Owner Trustee, the Loan
Trustee and Lessee shall, subject to any determination in such
proceedings, be restored to their former positions and rights
hereunder with respect to the Mortgaged Property, and all rights,
remedies and powers of the Owner Trustee, the Loan Trustee or
Lessee shall continue as if no such proceedings had been
instituted.
SECTION 4.08. Waiver of Past Defaults
Upon written instruction from a Majority in Interest
of Note Holders, the Loan Trustee shall waive any past Default
hereunder and its consequences and upon any such waiver such
Default shall cease to exist and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of
this Trust Indenture, but no such waiver shall extend to any
subsequent or other Default or impair any right consequent
thereon; provided, that in the absence of written instructions
from all the Note Holders, the Loan Trustee shall not waive any
Default (i) in the payment of the Original Amount, Make-Whole
Amount, if any, and interest and other amounts due under any
Equipment Note then outstanding, or (ii) in respect of a covenant
or provision hereof which, under Article IX hereof, cannot be
modified or amended without the consent of each Note Holder.
49
SECTION 4.09. Appointment of Receiver
The Loan Trustee shall, as a matter of right, be
entitled to the appointment of a receiver (who may be the Loan
Trustee or any successor or nominee thereof) for all or any part
of the Mortgaged Property, whether such receivership be
incidental to a proposed sale of the Mortgaged Property or the
taking of possession thereof or otherwise, and the Owner Trustee
hereby consents to the appointment of such a receiver and will
not oppose any such appointment. Any receiver appointed for all
or any part of the Mortgaged Property shall be entitled to
exercise all the rights and powers of the Loan Trustee with
respect to the Mortgaged Property.
SECTION 4.10. Loan Trustee Authorized to Execute Bills
of Sale, Etc.
The Owner Trustee irrevocably appoints the Loan
Trustee the true and lawful attorney-in-fact of the Owner Trustee
in its name and stead and on its behalf, for the purpose of
effectuating any sale, assignment, transfer or delivery for the
enforcement of the Lien of this Trust Indenture, whether pursuant
to foreclosure or power of sale, assignments and other
instruments as may be necessary or appropriate, with full power
of substitution, the Owner Trustee hereby ratifying and
confirming all that such attorney or any substitute shall do by
virtue hereof in accordance with applicable law. Nevertheless, if
so requested by the Loan Trustee or any purchaser, the Owner
Trustee shall ratify and confirm any such sale, assignment,
transfer or delivery, by executing and delivering to the Loan
Trustee or such purchaser all bills of sale, assignments,
releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
SECTION 4.11. Rights of Note Holders to Receive
Payment
Notwithstanding any other provision of this Trust
Indenture, the right of any Note Holder to receive payment of
principal of, and premium, if any, and interest on an Equipment
Note on or after the respective due dates expressed in such
Equipment Note, or to bring suit for the enforcement of any such
payment on or after such respective dates in accordance with the
terms hereof, shall not be impaired or affected without the
consent of such Note Holder.
50
ARTICLE V
DUTIES OF THE LOAN TRUSTEE
SECTION 5.01. Notice of Event of Default
If the Loan Trustee shall have Actual Knowledge of an
Event of Default or of a Default arising from a failure to pay
Rent, the Loan Trustee shall give prompt written notice thereof
to the Owner Trustee, the Owner Participant, Lessee, and each
Note Holder. Subject to the terms of Sections 4.04, 4.08, 5.02
and 5.03 hereof, the Loan Trustee shall take such action, or
refrain from taking such action, with respect to such Event of
Default or Default (including with respect to the exercise of any
rights or remedies hereunder) as the Loan Trustee shall be
instructed in writing by a Majority in Interest of Note Holders.
Subject to the provisions of Section 5.03, if the Loan Trustee
shall not have received instructions as above provided within 20
days after mailing notice of such Event of Default to the Note
Holders, the Loan Trustee may, subject to instructions thereafter
received pursuant to the preceding provisions of this Section
5.01, take such action, or refrain from taking such action, but
shall be under no duty to take or refrain from taking any action,
with respect to such Event of Default or Default as it shall
determine advisable in the best interests of the Note Holders;
provided, however, that the Loan Trustee may not sell the
Aircraft or any Engine without the consent of a Majority in
Interest of Note Holders. For all purposes of this Trust
Indenture, in the absence of Actual Knowledge on the part of the
Loan Trustee, the Owner Trustee or the Owner Participant, the
Loan Trustee, the Owner Trustee or the Owner Participant, as the
case may be, shall not be deemed to have knowledge of a Default
or an Event of Default (except, in the case of the Loan Trustee,
the failure of Lessee to pay any installment of Basic Rent within
one Business Day after the same shall become due, if any portion
of such installment was then required to be paid to the Loan
Trustee, which failure shall constitute knowledge of a Default)
unless notified in writing by Lessee, the Owner Trustee, the
Owner Participant or one or more Note Holders.
SECTION 5.02. Action Upon Instructions; Certain Rights
and Limitations
(a) Subject to the terms of Sections 2.14, 4.03,
4.04(a) and (b), 4.08, 5.01 and 5.03 hereof, upon the written
instructions at any time and from time to time of a Majority in
Interest of Note Holders, the Loan Trustee shall, subject to the
terms of this Section 5.02, take such of the following actions as
may be specified in such instructions: (i) give such notice or
direction or exercise such right, remedy or power hereunder as
shall be specified in such instructions; (ii) give such notice or
direction or exercise such right, remedy or power under the
51
Lease, the Participation Agreement, the Purchase Agreement, the
Purchase Agreement Assignment, or any other part of the Trust
Indenture Estate as shall be specified in such instructions; and
(iii) approve as satisfactory to the Loan Trustee all matters
required by the terms of the Lease to be satisfactory to the
Owner Trustee, it being understood that without the written
instructions of a Majority in Interest of Note Holders, the Loan
Trustee shall not approve any such matter as satisfactory to the
Loan Trustee; provided, that anything contained in this Trust
Indenture, the Lease or the other Operative Agreements to the
contrary notwithstanding, but subject to the next paragraph
hereof:
(1) the Owner Trustee or the Owner Participant, may,
without the consent of the Loan Trustee, demand, collect,
sue for or otherwise obtain all amounts included in
Excluded Payments from Lessee and seek legal or equitable
remedies to require Lessee to maintain the insurance
coverage referred to in Section 11 of the Lease; provided,
that the rights referred to in this clause (1) shall not be
deemed to include the exercise of any remedies provided for
in Section 15 of the Lease other than the right to proceed
by appropriate court action, either at Law or in equity, to
enforce payment by Lessee of such amounts included in
Excluded Payments or performance by Lessee of such
insurance covenant or to recover damages for the breach
thereof;
(2) unless a Loan Trustee Event shall have occurred
and be continuing, the Loan Trustee shall not, without the
consent of the Owner Trustee, which consent shall not be
withheld if no right or interest of the Owner Trustee or
the Owner Participant shall be diminished or impaired
thereby, (i) enter into, execute and deliver amendments,
modifications, waivers or consents in respect of any of the
provisions of the Lease, or (ii) approve any accountants,
engineers, appraisers or counsel as satisfactory to render
services for or issue opinions to the Owner Trustee
pursuant to the Operative Agreements, provided that so long
as no Loan Trustee Event has occurred and is continuing,
the Owner Trustee's consent shall be required with respect
to the matters set forth in clauses (i) and (ii) above;
provided, however, that if the Loan Trustee is permitted to
take any action described in such clauses (i) or (ii)
without the consent of the Owner Trustee as a result of a
Loan Trustee Event arising out of a Lease Event of Default,
the Loan Trustee shall, prior to taking any such action,
endeavor to consult with the Owner Participant (as
practicable under the circumstances) in an effort to
minimize adverse consequences to the Owner Trustee and the
Owner Participant from such proposed action; and provided,
further, that under no circumstances shall any action taken
by Loan Trustee as to matters set forth in clauses (i) or (ii) above
52
(1) reduce the amount of, or postpone the due date of, any
payments required to be made by Lessee or any Permitted Sublessee
under or pursuant to the Lease or any Permitted Sublease,
or otherwise payable by Lessee as Basic Rent, Stipulated
Loss Value or Termination Value, (2) extend the Basic Term
or any Renewal Term of the Lease, (3) alter any terms or
conditions upon which the Lessee is permitted to exercise
any options to renew the Lease or purchase the Aircraft or
(4) permit the Lessee to alter, avoid or postpone any of
its obligations under the Lease or the other Operative
Agreements if any right or interest of the Owner Trustee or
the Owner Participant shall be diminished or impaired as a
result thereof;
(3) whether or not a Default or Event of Default under
the Trust Indenture has occurred and is continuing, the
Owner Trustee and the Owner Participant shall have the
right, together with the Loan Trustee, (i) to receive from
Lessee certificates and other documents and information
which Lessee is required to give or furnish to the Owner
Trustee or the Lessor pursuant to any Operative Agreement
and (ii) to inspect in accordance with the Lease the
Airframe and Engines and all Aircraft Documents;
(4) whether or not a Default or Event of Default under
the Trust Indenture has occurred and is continuing, the
Owner Trustee shall have the right to adjust upwards Rent,
Stipulated Loss Values and Termination Values as provided
in Section 3.2.1 of the Lease;
(5) so long as no Loan Trustee Event has occurred and
is continuing, the Owner Trustee shall have the right, to
the exclusion of the Loan Trustee, to adjust Basic Rent,
Stipulated Loss Values and Termination Values as provided
in Section 3.2 of the Lease or to adjust downward any
installment or amount of Basic Rent, Stipulated Loss Value
or Termination Value, as such installments and amounts are
set forth in Schedules 2, 3 and 4, respectively, to the
Lease, to the extent of the portion of such installment or
amount that would, under Section 3.01, 3.02 or 3.03 hereof,
as the case may be, be distributable to the Owner Trustee
or the Owner Participant;
(6) whether or not a Default or Event of Default under
the Trust Indenture has occurred and is continuing, the
Owner Trustee may, without the consent of the Loan Trustee,
(i) solicit and make bids with respect to the Aircraft
under Section 9 of the Lease in respect of a termination of
the Lease by Lessee pursuant to Section 9 thereof, (ii)
determine Fair Market Sales Value and Fair Market Rental
Value under Section 17 of the Lease for all purposes except
following a Loan Trustee Event pursuant to Section 15 of
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the Lease, and (iii) make an election pursuant to and in
accordance with the provisions of Section 9.1(b), 9.2 and
9.3 of the Lease; and
(7) so long as no Loan Trustee Event shall have
occurred and be continuing, all other rights of the
"Lessor" under the Lease shall be exercised by the Owner
Trustee to the exclusion of the Loan Trustee including,
without limitation, the right to (i) exercise all rights
with respect to Lessee's use and operation, modification or
maintenance of the Aircraft and any Engine which the Lease
specifically confers on the Lessor, and (ii) consent to and
approve any assignment pursuant to Section 13 of the Lease;
provided that the foregoing shall not limit (A) any rights
separately granted to the Loan Trustee under the Operative
Agreements or (B) the right of the Loan Trustee to receive
any funds to be delivered to the "Lessor" under the Lease
(except with respect to Excluded Payments) and under the
Purchase Agreement.
Notwithstanding anything to the contrary contained
herein (including this Section 5.02), the Loan Trustee shall have
the right, to the exclusion of the Owner Trustee and the Owner
Participant, to (A) declare the Lease to be in default under
Section 15 thereof (other than with respect to a Lease Event of
Default described in clause (i) of the proviso to Section 14.1
thereof) and (B) subject only to the provisions of Sections 4.03,
4.04(a) and (b) and 2.14 hereof, exercise the remedies set forth
in such Section 15 (other than in connection with Excluded
Payment and provided that each of the Owner Trustee, Owner
Participant and Loan Trustee shall independently retain the
rights set forth in clause (ii) of Section 15.1.5 of the Lease)
at any time that a Lease Event of Default shall have occurred and
be continuing.
The Loan Trustee will execute and the Owner Trustee
will file or cause to be filed such continuation statements with
respect to financing statements relating to the security interest
created hereunder in the Trust Indenture Estate as may be
specified from time to time in written instructions of a Majority
in Interest of Note Holders (which instructions shall be
accompanied by the form of such continuation statement so to be
filed). The Loan Trustee will furnish to each Note Holder (and,
during the continuation of a Loan Trustee Event, to the Owner
Trustee and Owner Participant), promptly upon receipt thereof,
duplicates or copies of all reports, notices, requests, demands,
certificates and other instruments furnished to the Loan Trustee
under the Lease or hereunder, including, without limitation, a
copy of any Termination Notice (as defined in the Lease) and a
copy of each report or notice received pursuant to Section 9 and
Paragraph E of Annex D of the Lease, respectively to the extent
54
that the same shall not have been furnished to such holder
pursuant hereto or the Lease.
(b) If any Lease Event of Default shall have occurred
and be continuing and the Owner Trustee shall not have cured
fully such Lease Event of Default under and in accordance with
Section 4.03 hereof, on request of a Majority in Interest of Note
Holders, the Loan Trustee shall declare the Lease to be in
default pursuant to Section 15 thereof and exercise those
remedies specified by such Note Holders. The Loan Trustee agrees
to provide to the Note Holders, the Owner Trustee and the Owner
Participant concurrently with such declaration by the Loan
Trustee, notice of such declaration by the Loan Trustee.
SECTION 5.03. Indemnification
The Loan Trustee shall not be required to take any
action or refrain from taking any action under Section 5.01
(other than the first sentence thereof), 5.02 or Article IV
hereof unless the Loan Trustee shall have been indemnified to its
reasonable satisfaction against any liability, cost or expense
(including counsel fees) which may be incurred in connection
therewith pursuant to a written agreement with one or more Note
Holders. The Loan Trustee agrees that it shall look solely to the
Note Holders for the satisfaction of any indemnity (except
expenses for foreclosure of the type referred to in clause
"First" of Section 3.03 hereof) owed to it pursuant to this
Section 5.03. The Loan Trustee shall not be under any obligation
to take any action under this Trust Indenture or any other
Operative Agreement and nothing herein or therein shall require
the Loan Trustee to expend or risk its own funds or otherwise
incur the risk of any financial liability in the performance of
any of its rights or powers if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it
(the written indemnity of any Note Holder who is a QIB, signed by
an authorized officer thereof, in favor of, delivered to and in
form reasonably satisfactory to the Loan Trustee shall be
accepted as reasonable assurance of adequate indemnity). The Loan
Trustee shall not be required to take any action under Section
5.01 (other than the first sentence thereof) or 5.02 or Article
IV hereof, nor shall any other provision of this Trust Indenture
or any other Operative Agreement be deemed to impose a duty on
the Loan Trustee to take any action, if the Loan Trustee shall
have been advised by counsel that such action is contrary to the
terms hereof or of the Lease or is otherwise contrary to Law.
55
SECTION 5.04. No Duties Except as Specified in Trust
Indenture or Instructions
The Loan Trustee shall not have any duty or obligation
to use, operate, store, lease, control, manage, sell, dispose of
or otherwise deal with the Aircraft or any other part of the
Trust Indenture Estate, or to otherwise take or refrain from
taking any action under, or in connection with, this Trust
Indenture or any part of the Trust Indenture Estate, except as
expressly provided by the terms of this Trust Indenture or as
expressly provided in written instructions from Note Holders as
provided in this Trust Indenture; and no implied duties or
obligations shall be read into this Trust Indenture against the
Loan Trustee. The Loan Trustee agrees that it will in its
individual capacity and at its own cost and expense (but without
any right of indemnity in respect of any such cost or expense
under Section 7.01 hereof), promptly take such action as may be
necessary duly to discharge all liens and encumbrances on any
part of the Trust Indenture Estate which result from claims
against it in its individual capacity not related to the
ownership of the Aircraft or the administration of the Trust
Indenture Estate or any other transaction pursuant to this Trust
Indenture or any document included in the Trust Indenture Estate.
SECTION 5.05. No Action Except Under Lease, Trust
Indenture or Instructions
The Owner Trustee and the Loan Trustee agree that they
will not use, operate, store, lease, control, manage, sell,
dispose of or otherwise deal with the Aircraft or any other part
of the Trust Indenture Estate except (i) as required by the terms
of the Lease or (ii) in accordance with the powers granted to, or
the authority conferred upon, the Owner Trustee and the Loan
Trustee pursuant to this Trust Indenture and in accordance with
the express terms hereof.
SECTION 5.06. Replacement Airframes and Replacement
Engines
At any time an Airframe or Engine is to be replaced
under or pursuant to Section 10 of the Lease by a Replacement
Airframe or Replacement Engine, if no Lease Event of Default is
continuing, the Owner Trustee shall direct the Loan Trustee to
execute and deliver to the Owner Trustee an appropriate
instrument releasing such Airframe and/or Engine as appropriate
from the Lien of this Trust Indenture and the Loan Trustee shall
execute and deliver such instrument as aforesaid, but only upon
compliance by Lessee with the applicable provisions of Section 10
of the Lease.
SECTION 5.07. Indenture Supplements for Replacements
56
If a Replacement Airframe or Replacement Engine is
being substituted as contemplated by Section 10 of the Lease, the
Owner Trustee and the Loan Trustee agree for the benefit of the
Note Holders and Lessee, subject to fulfillment of the conditions
precedent and compliance by Lessee with its obligations set forth
in Section 10 of the Lease and the requirements of Section 5.06
hereof with respect to such Replacement Airframe or Replacement
Engine, to execute and deliver a Supplement and a Trust Indenture
Supplement, as applicable, as contemplated by Section 10 of the
Lease.
SECTION 5.08. Effect of Replacement
In the event of the substitution of an Airframe or of
a Replacement Engine pursuant to Section 10 of the Lease, all
provisions of this Trust Indenture relating to the Airframe or
Engine or Engines being replaced shall be applicable to such
Replacement Airframe or Replacement Engine or Engines with the
same force and effect as if such Replacement Airframe or
Replacement Engine or Engines were the same airframe or engine or
engines, as the case may be, as the Airframe or Engine or Engines
being replaced but for the Event of Loss with respect to the
Airframe or Engine or Engines being replaced.
SECTION 5.09. Investment of Amounts Held by Loan
Trustee
Any amounts held by the Loan Trustee as assignee of
the Owner Trustee's rights to hold monies for security pursuant
to Section 4.5.1 of the Lease shall be held in accordance with
the terms of such Section and the Loan Trustee agrees, for the
benefit of Lessee, to perform the duties of the Owner Trustee
under such Section. Any amounts held by the Loan Trustee pursuant
to the proviso to the first sentence of Section 3.01, pursuant to
Section 3.02, or pursuant to any provision of any other Operative
Agreement providing for amounts to be held by the Loan Trustee
which are not distributed pursuant to the other provisions of
Article III hereof shall be invested by the Loan Trustee from
time to time in Cash Equivalents as directed by the Owner Trustee
so long as the Loan Trustee may acquire the same using its best
efforts. Unless otherwise expressly provided in this Trust
Indenture, any income realized as a result of any such
investment, net of the Loan Trustee's reasonable fees and
expenses in making such investment, shall be held and applied by
the Loan Trustee in the same manner as the principal amount of
such investment is to be applied and any losses, net of earnings
and such reasonable fees and expenses, shall be charged against
the principal amount invested. The Loan Trustee shall not be
liable for any loss resulting from any investment required to be
made by it under this Trust Indenture other than by reason of its
willful misconduct or gross negligence, and any such investment
may be sold (without regard to its maturity) by the Loan Trustee
57
without instructions whenever such sale is necessary to make a
distribution required by this Trust Indenture.
ARTICLE VI
THE OWNER TRUSTEE AND THE LOAN TRUSTEE
SECTION 6.01. Acceptance of Trusts and Duties
The Loan Trustee accepts the duties hereby created and
applicable to it and agrees to perform the same but only upon the
terms of this Trust Indenture and agrees to receive and disburse
all monies constituting part of the Trust Indenture Estate in
accordance with the terms hereof. The Owner Trustee, in its
individual capacity, and the Loan Trustee, in its individual
capacity, shall not be answerable or accountable under any
circumstances, except (i) for their own willful misconduct or
gross negligence (other than for the handling of funds, for which
the standard of accountability shall be willful misconduct or
negligence), (ii) in the case of the Loan Trustee, as provided in
the fourth sentence of Section 2.04(a) hereof and the last
sentence of Section 5.04 hereof, and (iii) for liabilities that
may result, in the case of the Owner Trustee, from the inaccuracy
of any representation or warranty of the Owner Trustee expressly
made in its individual capacity in the Participation Agreement
(or, upon consummation of the Refinancing Transaction, the
Refunding Agreement) or in Section 4.01(b) or 6.03 hereof (or in
any certificate furnished to the Loan Trustee or any Note Holder
in connection with the transactions contemplated by the Operative
Agreements) or, in the case of the Loan Trustee (in its
individual capacity), from the inaccuracy of any representation
or warranty of the Loan Trustee (in its individual capacity) in
the Participation Agreement (or, upon consummation of the
Refinancing Transaction, the Refunding Agreement) or expressly
made hereunder. Neither the Owner Trustee nor the Loan Trustee
shall be liable for any action or inaction of the other or of the
Owner Participant.
SECTION 6.02. Absence of Duties
In the case of the Loan Trustee, except in accordance
with written instructions furnished pursuant to Section 5.01 or
5.02 hereof, and except as provided in, and without limiting the
generality of, Sections 5.03 and 5.04 hereof and, in the case of
the Owner Trustee, except as provided in Section 4.01(b) hereof,
the Owner Trustee and the Loan Trustee shall have no duty (i) to
see to any registration of the Aircraft or any recording or
filing of the Lease or of this Trust Indenture or any other
document, or to see to the maintenance of any such registration,
recording or filing, (ii) to see to any insurance on the Aircraft
or to effect or maintain any such insurance, whether or not
58
Lessee shall be in default with respect thereto, (iii) to see to
the payment or discharge of any lien or encumbrance of any kind
against any part of the Trust Estate or the Trust Indenture
Estate, (iv) to confirm, verify or inquire into the failure to
receive any financial statements from Lessee, or (v) to inspect
the Aircraft at any time or ascertain or inquire as to the
performance or observance of any of Lessee's covenants under the
Lease with respect to the Aircraft. The Owner Participant shall
not have any duty or responsibility hereunder, including, without
limitation, any of the duties mentioned in clauses (i) through
(v) above; provided, that nothing contained in this sentence
shall limit any obligations of the Owner Participant under the
Participation Agreement or relieve the Owner Participant from any
restriction under Section 4.03 hereof.
SECTION 6.03. No Representations or Warranties as to
Aircraft or Documents
NEITHER THE LOAN TRUSTEE IN ITS INDIVIDUAL OR TRUST
CAPACITY NOR THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS
OWNER TRUSTEE UNDER THE TRUST AGREEMENT, MAKES OR SHALL BE DEEMED
TO HAVE MADE AND EACH HEREBY EXPRESSLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION,
DESIGN, QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR
FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY
ENGINE, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR
NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY
PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS
BASED ON STRICT LIABILITY IN TORT OR ANY OTHER REPRESENTATION OR
WARRANTY WHATSOEVER, except the Owner Trustee in its individual
capacity warrants that (i) the Owner Trustee has received on the
Delivery Date whatever title was conveyed to it, and (ii) the
Aircraft is free and clear of Lessor Liens attributable to the
Owner Trustee in its individual capacity. Neither the Owner
Trustee, in its individual capacity or as Owner Trustee under the
Trust Agreement, nor the Loan Trustee, in its individual or trust
capacities, makes or shall be deemed to have made any
representation or warranty as to the validity, legality or
enforceability of this Trust Indenture, the Trust Agreement, the
Participation Agreement (or, upon consummation of the Refinancing
Transaction, the Refunding Agreement), the Equipment Notes, the
Lease, the Purchase Agreement or the Purchase Agreement
Assignment with the Consent and Agreement and the Engine Consent
and Agreement attached thereto, or as to the correctness of any
statement contained in any thereof, except for the
representations and warranties of the Owner Trustee made in its
individual capacity and the representations and warranties of the
Loan Trustee in its individual capacity, in each case expressly
made in this Trust Indenture or in the Participation Agreement
(or, upon consummation of the Refinancing Transaction, the
Refunding Agreement). The Loan Participants, the Note Holders
59
and the Owner Participant make no representation or warranty
hereunder whatsoever.
SECTION 6.04. No Segregation of Monies; No Interest
Any monies paid to or retained by the Loan Trustee
pursuant to any provision hereof and not then required to be
distributed to the Note Holders, Lessee or the Owner Trustee as
provided in Article III hereof need not be segregated in any
manner except to the extent required by Law or Section 4.5.1 of
the Lease and Section 5.09 hereof, and may be deposited under
such general conditions as may be prescribed by Law, and the Loan
Trustee shall not be liable for any interest thereon (except that
the Loan Trustee shall invest all monies held as directed by
Lessee so long as no Lease Event of Default or Lease Default has
occurred and is continuing (or in the absence of such direction,
by the Majority In Interest of Note Holders) in Cash Equivalents;
provided, however, that any payments received, or applied
hereunder, by the Loan Trustee shall be accounted for by the Loan
Trustee so that any portion thereof paid or applied pursuant
hereto shall be identifiable as to the source thereof.
SECTION 6.05. Reliance; Agreements; Advice of Counsel
Neither the Owner Trustee nor the Loan Trustee shall
incur any liability to anyone in acting upon any signature,
instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper
believed by it to be genuine and believed by it to be signed by
the proper party or parties. The Owner Trustee and the Loan
Trustee may accept a copy of a resolution of the Board of
Directors (or Executive Committee thereof) of any party to the
Participation Agreement, certified by the Secretary or an
Assistant Secretary thereof as duly adopted and in full force and
effect, as conclusive evidence that such resolution has been duly
adopted and that the same is in full force and effect. As to the
aggregate unpaid Original Amount of Equipment Notes outstanding
as of any date, the Owner Trustee may for all purposes hereof
rely on a certificate signed by any Vice President or other
authorized corporate trust officer of the Loan Trustee. As to any
fact or matter relating to Lessee the manner of which is not
specifically described herein, the Owner Trustee and the Loan
Trustee may for all purposes hereof rely on a certificate, signed
by a duly authorized officer of Lessee, as to such fact or
matter, and such certificate shall constitute full protection to
the Owner Trustee and the Loan Trustee for any action taken or
omitted to be taken by them in good faith in reliance thereon.
The Loan Trustee shall assume, and shall be fully protected in
assuming, that the Owner Trustee is authorized by the Trust
Agreement to enter into this Trust Indenture and to take all
action to be taken by it pursuant to the provisions hereof, and
shall not inquire into the authorization of the Owner Trustee
60
with respect thereto. In the administration of the trusts
hereunder, the Owner Trustee and the Loan Trustee each may
execute any of the trusts or powers hereof and perform its powers
and duties hereunder directly or through agents or attorneys and
may, at the expense of the Trust Indenture Estate, advise with
counsel, accountants and other skilled persons to be selected and
retained by it, and the Owner Trustee and the Loan Trustee shall
not be liable for anything done, suffered or omitted in good
faith by them in accordance with the written advice or written
opinion of any such counsel, accountants or other skilled
persons.
SECTION 6.06. Capacity in Which Acting
The Owner Trustee acts hereunder solely as trustee as
herein and in the Trust Agreement provided, and not in its
individual capacity, except as otherwise expressly provided
herein, in the Trust Agreement and in the Participation
Agreement.
SECTION 6.07. Compensation
The Trustee shall be entitled to reasonable
compensation, including expenses and disbursements (including the
reasonable fees and expenses of counsel), for all services
rendered hereunder and shall, on and subsequent to an Event of
Default hereunder, have a priority claim on the Trust Indenture
Estate for the payment of such compensation, to the extent that
such compensation shall not be paid by Lessee, and shall have the
right, on and subsequent to an Event of Default hereunder, to use
or apply any monies held by it hereunder in the Trust Indenture
Estate toward such payments. The Loan Trustee agrees that it
shall have no right against the Loan Participants, the Note
Holders, the Owner Trustee or the Owner Participant for any fee
as compensation for its services as trustee under this Trust
Indenture.
SECTION 6.08. Instructions from Note Holders
In the administration of the trusts created hereunder,
the Loan Trustee shall have the right to seek instructions from a
Majority in Interest of Note Holders should any provision of this
Trust Indenture appear to conflict with any other provision
herein or should the Loan Trustee's duties or obligations
hereunder be unclear, and the Loan Trustee shall incur no
liability in refraining from acting until it receives such
instructions. The Loan Trustee shall be fully protected for
acting in accordance with any instructions received under this
Section 6.08.
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ARTICLE VII
INDEMNIFICATION OF LOAN TRUSTEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification
The Owner Trustee, not in its individual capacity, but
solely as Owner Trustee, hereby agrees, whether or not any of the
transactions contemplated hereby or the Refinancing Transaction
shall be consummated, except as to matters covered by any
indemnity furnished as contemplated by Section 5.03 hereof and
except as otherwise provided in Section 2.03 or 2.04(b) hereof,
to assume liability for, and does hereby indemnify, protect, save
and keep harmless the Loan Trustee (in its individual and trust
capacities), and its successors, assigns, agents and servants,
from and against any and all liabilities, obligations, losses,
damages, penalties, taxes (excluding any taxes payable by the
Loan Trustee on or measured by any compensation received by the
Loan Trustee for its services under this Trust Indenture),
claims, actions, suits, costs, expenses or disbursements
(including legal fees and expenses) of any kind and nature
whatsoever, which may be imposed on, incurred by or asserted
against the Loan Trustee (whether or not also indemnified against
by any other person under any other document) in any way relating
to or arising out of this Trust Indenture (or, upon consummation
of the Refinancing Transaction, the Refunding Agreement) or any
other Operative Agreement to which it is a party or the
enforcement of any of the terms of any thereof, or in any way
relating to or arising out of the manufacture, purchase,
acceptance, non-acceptance, rejection, ownership, delivery,
lease, possession, use, operation, condition, sale, return or
other disposition of the Aircraft or any Engine (including,
without limitation, latent or other defects, whether or not
discoverable, and any claim for patent, trademark or copyright
infringement), or in any way relating to or arising out of the
administration of the Trust Indenture Estate or the action or
inaction of the Loan Trustee hereunder except only in the case of
willful misconduct or gross negligence (or negligence in the case
of handling funds) of the Loan Trustee in the performance of its
duties hereunder or resulting from the inaccuracy of any
representation or warranty of the Loan Trustee (in its individual
capacity) referred to in Section 6.03 hereof, or as provided in
Section 6.01 hereof or in the last sentence of Section 5.04
hereof, or as otherwise excluded by the terms of Section 10.1 or
10.3 of the Participation Agreement from Lessee's indemnities
under such Sections. In addition, if necessary, the Loan Trustee
shall be entitled to indemnification from the Trust Indenture
Estate for any liability, obligation, loss, damage, penalty,
claim, action, suit, cost, expense or disbursement indemnified
against pursuant to this Section 7.01 to the extent not
reimbursed by Lessee or others, but without releasing any of them
from their respective agreements of reimbursement; and to secure
62
the same the Loan Trustee shall have a prior Lien on the Trust
Indenture Estate. Without limiting the foregoing, the Loan
Trustee agrees that, prior to seeking indemnification from the
Trust Indenture Estate, it will demand, and diligently pursue in
good faith (but with no duty to exhaust all legal remedies
therefor), indemnification available to the Loan Trustee from
Lessee under the Lease or the Participation Agreement.
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee
In the case of any appointment of a successor to the
Owner Trustee pursuant to the Trust Agreement including upon any
merger, conversion, consolidation or sale of substantially all of
the corporate trust business of the Owner Trustee pursuant to the
Trust Agreement, the successor Owner Trustee shall give prompt
written notice thereof to the Loan Trustee, Lessee and the Note
Holders.
SECTION 8.02. Resignation of Loan Trustee; Appointment
of Successor
(a) The Loan Trustee or any successor thereto may
resign at any time without cause by giving at least 30 days'
prior written notice to Lessee, the Owner Trustee, the Owner
Participant and each Note Holder, such resignation to be
effective upon the acceptance of the trusteeship by a successor
Loan Trustee. In addition, a Majority in Interest of Note Holders
may at any time (but only with the consent of Lessee, which
consent shall not be unreasonably withheld, except that such
consent shall not be necessary if a Lease Event of Default is
continuing) remove the Loan Trustee without cause by an
instrument in writing delivered to the Owner Trustee, Lessee, the
Owner Participant and the Loan Trustee, and the Loan Trustee
shall promptly notify each Note Holder thereof in writing, such
removal to be effective upon the acceptance of the trusteeship by
a successor Loan Trustee. In the case of the resignation or
removal of the Loan Trustee, a Majority in Interest of Note
Holders may appoint a successor Loan Trustee by an instrument
signed by such holders, which successor, so long as no Lease
Event of Default shall have occurred and be continuing, shall be
subject to Lessee's reasonable approval. If a successor Loan
Trustee shall not have been appointed within 30 days after such
notice of resignation or removal, the Loan Trustee, the Owner
Trustee, the Owner Participant or any Note Holder may apply to
any court of competent jurisdiction to appoint a successor Loan
Trustee to act until such time, if any, as a successor shall have
been appointed as above provided. The successor Loan Trustee so
appointed by such court shall immediately and without further act
63
be superseded by any successor Loan Trustee appointed as above
provided.
(b) Any successor Loan Trustee, however appointed,
shall execute and deliver to the Owner Trustee, the predecessor
Loan Trustee and Lessee an instrument accepting such appointment
and assuming the obligations of the Loan Trustee under the
Participation Agreement arising from and after the time of such
appointment, and thereupon such successor Loan Trustee, without
further act, shall become vested with all the estates,
properties, rights, powers and duties of the predecessor Loan
Trustee hereunder in the trust hereunder applicable to it with
like effect as if originally named the Loan Trustee herein; but
nevertheless upon the written request of such successor Loan
Trustee, such predecessor Loan Trustee shall execute and deliver
an instrument transferring to such successor Loan Trustee, upon
the trusts herein expressed applicable to it, all the estates,
properties, rights and powers of such predecessor Loan Trustee,
and such predecessor Loan Trustee shall duly assign, transfer,
deliver and pay over to such successor Loan Trustee all monies or
other property then held by such predecessor Loan Trustee
hereunder.
(c) Any successor Loan Trustee, however appointed,
shall be a bank or trust company having its principal place of
business in the Borough of Manhattan, City and State of New York;
Chicago, Illinois; Hartford, Connecticut; Wilmington, Delaware;
or Boston, Massachusetts and having (or whose obligations under
the Operative Agreements are guaranteed by an affiliated entity
having) a combined capital and surplus of at least $100,000,000,
if there be such an institution willing, able and legally
qualified to perform the duties of the Loan Trustee hereunder
upon reasonable or customary terms.
(d) Any corporation into which the Loan Trustee may be
merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or
consolidation to which the Loan Trustee shall be a party, or any
corporation to which substantially all the corporate trust
business of the Loan Trustee may be transferred, shall, subject
to the terms of paragraph (c) of this Section 8.02, be a
successor Loan Trustee and the Loan Trustee under this Trust
Indenture without further act.
SECTION 8.03. Appointment of Additional and Separate
Trustees
(a) Whenever (i) the Loan Trustee shall deem it
necessary or desirable in order to conform to any Law of any
jurisdiction in which all or any part of the Trust Indenture
Estate shall be situated or to make any claim or bring any suit
with respect to or in connection with the Trust Indenture Estate,
64
this Trust Indenture, any other Indenture Agreement, the
Equipment Notes or any of the transactions contemplated by the
Participation Agreement, (ii) the Loan Trustee shall be advised
by counsel satisfactory to it that it is so necessary or prudent
in the interests of the Note Holders (and the Loan Trustee shall
so advise the Owner Trustee and Lessee), or (iii) the Loan
Trustee shall have been requested to do so by a Majority in
Interest of Note Holders, then in any such case, the Loan Trustee
and, upon the written request of the Loan Trustee, the Owner
Trustee, shall execute and deliver an indenture supplemental
hereto and such other instruments as may from time to time be
necessary or advisable either (1) to constitute one or more bank
or trust companies or one or more persons approved by the Loan
Trustee, either to act jointly with the Loan Trustee as
additional trustee or trustees of all or any part of the Trust
Indenture Estate, or to act as separate trustee or trustees of
all or any part of the Trust Indenture Estate, in each case with
such rights, powers, duties and obligations consistent with this
Trust Indenture as may be provided in such supplemental indenture
or other instruments as the Loan Trustee or a Majority in
Interest of Note Holders may deem necessary or advisable, or (2)
to clarify, add to or subtract from the rights, powers, duties
and obligations theretofore granted any such additional or
separate trustee, subject in each case to the remaining
provisions of this Section 8.03. If the Owner Trustee shall not
have taken any action requested of it under this Section 8.03(a)
that is permitted or required by its terms within 15 days after
the receipt of a written request from the Loan Trustee so to do,
or if an Event of Default shall have occurred and be continuing,
the Loan Trustee may act under the foregoing provisions of this
Section 8.03(a) without the concurrence of the Owner Trustee; and
the Owner Trustee hereby irrevocably appoints (which appointment
is coupled with an interest) the Loan Trustee, its agent and
attorney-in-fact to act for it under the foregoing provisions of
this Section 8.03(a) in either of such contingencies. The Loan
Trustee may, in such capacity, execute, deliver and perform any
such supplemental indenture, or any such instrument, as may be
required for the appointment of any such additional or separate
trustee or for the clarification of, addition to or subtraction
from the rights, powers, duties or obligations theretofore
granted to any such additional or separate trustee. In case any
additional or separate trustee appointed under this Section
8.03(a) shall die, become incapable of acting, resign or be
moved, all the assets, property, rights, powers, trusts, duties
and obligations of such additional or separate trustee shall
revert to the Loan Trustee until a successor additional or
separate trustee is appointed as provided in this Section
8.03(a).
(b) No additional or separate trustee shall be
entitled to exercise any of the rights, powers, duties and
obligations conferred upon the Loan Trustee in respect of the
65
custody, investment and payment of monies and all monies received
by any such additional or separate trustee from or constituting
part of the Trust Indenture Estate or otherwise payable under any
Operative Agreement to the Loan Trustee shall be promptly paid
over by it to the Loan Trustee. All other rights, powers, duties
and obligations conferred or imposed upon any additional or
separate trustee shall be exercised or performed by the Loan
Trustee and such additional or separate trustee jointly except to
the extent that applicable Law of any jurisdiction in which any
particular act is to be performed renders the Loan Trustee
incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations (including the
holding of title to all or part of the Trust Indenture Estate in
any such jurisdiction) shall be exercised and performed by such
additional or separate trustee. No additional or separate trustee
shall take any discretionary action except on the instructions of
the Loan Trustee or a Majority in Interest of Note Holders. No
trustee hereunder shall be personally liable by reason of any act
or omission of any other trustee hereunder, except that the Loan
Trustee shall be liable for the consequences of its lack of
reasonable care in selecting, and the Loan Trustee's own actions
in acting with, any additional or separate trustee. Each
additional or separate trustee appointed pursuant to this Section
8.03 shall be subject to, and shall have the benefit of Articles
IV through VIII and Article X hereof insofar as they apply to the
Loan Trustee. The powers of any additional or separate trustee
appointed pursuant to this Section 8.03 shall not in any case
exceed those of the Loan Trustee hereunder.
(c) If at any time the Trustee shall deem it no longer
necessary or in order to conform to any such Lease or take any
such action or shall be advised by such counsel that it is no
longer so necessary or desirable in the interest of the Note
Holders, or in the event that the Loan Trustee shall have been
requested to do so in writing by a Majority in Interest of Note
Holders, the Loan Trustee and, upon the written request of the
Loan Trustee, the Owner Trustee, shall execute and deliver an
indenture supplemental hereto and all other instruments and
agreements necessary or proper to remove any additional or
separate trustee. The Loan Trustee may act on behalf of the Owner
Trustee under this Section 8.03(c) when and to the extent it
could so act under Section 8.03(a) hereof.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 9.01. Instructions of Majority; Limitations
66
(a) Except as provided in Section 5.02 hereof, the
Owner Trustee agrees it shall not enter into any amendment of or
supplement to the Lease, the Purchase Agreement, the Purchase
Agreement Assignment, the Consent and Agreement or the Engine
Consent and Agreement, or execute and deliver any written waiver
or modification of, or consent under, the terms of the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the
Consent and Agreement or the Engine Consent and Agreement, unless
such supplement, amendment, waiver, modification or consent is
consented to in writing by the Loan Trustee and a Majority in
Interest of Note Holders. Anything to the contrary contained
herein notwithstanding, without the necessity of the consent of
any of the Note Holders or the Loan Trustee, (i) any Excluded
Payments payable to the Owner Participant may be modified,
amended, changed or waived in such manner as shall be agreed to
by the Owner Participant and Lessee and (ii) the Owner Trustee
and Lessee may enter into amendments of or additions to the Lease
to modify Section 5 (except to the extent that such amendment
would affect the rights or exercise of remedies under Section 15
of the Lease) or Section 17 of the Lease so long as such
amendments, modifications and changes do not and would not affect
the time of, or reduce the amount of, Rent payments until after
the payment in full of all Secured Obligations or otherwise
adversely affect the Note Holders.
(b) Without limiting the provisions of Section 9.01
hereof, the Loan Trustee agrees with the Note Holders that it
shall not enter into any amendment, waiver or modification of,
supplement or consent to this Trust Indenture, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the
Consent and Agreement, the Engine Consent and Agreement or the
Participation Agreement, or any other agreement included in the
Trust Indenture Estate, unless such supplement, amendment,
waiver, modification or consent is consented to in writing by a
Majority in Interest of Note Holders, but upon the written
request of a Majority in Interest of Note Holders, the Trustee
shall from time to time enter into any such supplement or
amendment, or execute and deliver any such waiver, modification
or consent, as may be specified in such request and as may be (in
the case of any such amendment, supplement or modification), to
the extent such agreement is required, agreed to by the Owner
Trustee and Lessee or, as may be appropriate, the Airframe
Manufacturer or the Engine Manufacturer; provided, however, that,
without the consent of each holder of an affected Equipment Note
then outstanding, no such amendment of or supplement to this
Trust Indenture, the Lease, the Purchase Agreement, the Purchase
Agreement Assignment, the Consent and Agreement, the Engine
Consent and Agreement or the Participation Agreement or waiver or
modification of the terms of, or consent under, any thereof,
shall (i) modify any of the provisions of this Section 9.01, or
of Article II or III or Section 4.02, 4.04(c), 4.04(d), 5.02 or
5.06 hereof, Section 13.3, 14 (except to add an Event of Default)
67
or 16 of the Lease, Section 19 of the Participation Agreement,
the definitions of "Event of Default," "Default," "Lease Event of
Default," "Lease Default," "Majority in Interest of Note
Holders," "Make-Whole Amount" or "Note Holder," or the percentage
of Note Holders required to take or approve any action hereunder,
(ii) reduce the amount, or change the time of payment or method
of calculation of any amount, of Original Amount, Make-Whole
Amount, if any, or interest with respect to any Equipment Note,
or alter or modify the provisions of Article III hereof with
respect to the order of priorities in which distribution
thereunder shall be made as among the Note Holders, the Owner
Trustee and Lessee, except as contemplated by Section 2.13
hereof, (iii) reduce, modify or amend any indemnities in favor of
the Owner Trustee, the Loan Trustee or the Note Holders (except
that the Owner Trustee (in its individual capacity) or the Loan
Trustee, as the case may be, may consent to any waiver or
reduction of an indemnity payable to it), (iv) consent to any
change in the Trust Indenture or the Lease which would permit
redemption of Equipment Notes earlier permitted under Section
2.10 or 2.11 hereof or the purchase or exchange of the Equipment
Notes other than as permitted by Section 2.14 hereof, (v) except
as contemplated by the Lease or the Participation Agreement,
reduce the amount or extend the time of payment of Basic Rent,
Stipulated Loss Value, or Termination Value for the Aircraft in
each case as set forth in the Lease, or modify, amend or
supplement the Lease or consent to any assignment of the Lease,
in either case releasing Lessee from its obligations in respect
of the payment of Basic Rent, Stipulated Loss Value or
Termination Value for the Aircraft or altering the absolute and
unconditional character of the obligations of Lessee to pay Rent
as set forth in Sections 3 and 16 of the Lease or (vi) permit the
creation of any Lien on the Trust Indenture Estate or any part
thereof other than Permitted Liens or deprive any Note Holder of
the benefit of the Lien of this Trust Indenture on the Trust
Indenture Estate, except as provided in connection with the
exercise of remedies under Article IV hereof.
(c) At any time after the date hereof, the Owner
Trustee and the Loan Trustee may enter into one or more
agreements supplemental hereto without the consent of any Note
Holder for any of the following purposes: (i) (a) to cure any
defect or inconsistency herein or in the Equipment Notes, or to
make any change not inconsistent with the provisions hereof
(provided that such change does not adversely affect the
interests of any Note Holder in its capacity solely as Note
Holder) or (b) to cure any ambiguity or correct any mistake; (ii)
to evidence the succession of another party as the Owner Trustee
in accordance with the terms of the Trust Agreement or to
evidence the succession of a new trustee hereunder pursuant
hereto, the removal of the trustee hereunder or the appointment
of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage
68
or pledge any property to or with the Loan Trustee or to make any
other provisions with respect to matters or questions arising
hereunder so long as such action shall not adversely affect the
interests of the Note Holders in its capacity solely as Note
Holder; (iv) to correct or amplify the description of any
property at any time subject to the Lien of this Trust Indenture
or better to assure, convey and confirm unto the Loan Trustee any
property subject or required to be subject to the Lien of this
Trust Indenture, the Airframe or Engines or any Replacement
Airframe or Replacement Engine; (v) to add to the covenants of
the Owner Trustee for the benefit of the Note Holders, or to
surrender any rights or power herein conferred upon the Owner
Trustee, the Owner Participant or Lessee; (vi) to add to the
rights of the Note Holders; and (vii) to include on the Equipment
Notes any legend as may be required by Law.
SECTION 9.02. Trustees Protected
If, in the opinion of the institution acting as Owner
Trustee under the Trust Agreement or the institution acting as
Loan Trustee hereunder, any document required to be executed by
it pursuant to the terms of Section 9.01 hereof affects any
right, duty, immunity or indemnity with respect to such
institution under this Trust Indenture or the Lease, such
institution may in its discretion decline to execute such
document.
SECTION 9.03. Documents Mailed to Note Holders
Promptly after the execution by the Owner Trustee or
the Loan Trustee of any document entered into pursuant to Section
9.01 hereof, the Loan Trustee shall mail, by first class mail,
postage prepaid, a copy thereof to Lessee and to each Note Holder
at its address last set forth in the Equipment Note Register, but
the failure of the Loan Trustee to mail such copies shall not
impair or affect the validity of such document.
69
SECTION 9.04. No Request Necessary for Lease
Supplement or Trust Indenture Supplement
No written request or consent of the Loan Trustee, the
Note Holders or the Owner Participant pursuant to Section 9.01
hereof shall be required to enable the Owner Trustee to enter
into any Lease Supplement specifically required by the terms of
the Lease or to execute and deliver a Trust Indenture Supplement
specifically required by the terms hereof.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Trust Indenture
Upon (or at any time after) payment in full of the
Original Amount of, Make-Whole Amount, if any, and interest on
and all other amounts due under all Equipment Notes and provided
that there shall then be no other Secured Obligations due to the
Loan Participants, the Note Holders and the Loan Trustee
hereunder or under the Participation Agreement, the Owner Trustee
shall direct the Loan Trustee to execute and deliver to or as
directed in writing by the Owner Trustee an appropriate
instrument releasing the Aircraft and the Engines from the Lien
of this Trust Indenture and releasing the Lease, the Purchase
Agreement, the Purchase Agreement Assignment with the Consent and
Agreement and the Engine Consent and Agreement attached thereto
from the assignment and pledge thereof hereunder and the Loan
Trustee shall execute and deliver such instrument as aforesaid
and give written notice thereof to Lessee; provided, however,
that this Trust Indenture and the trusts created hereby shall
earlier terminate and this Trust Indenture shall be of no further
force or effect upon any sale or other final disposition by the
Loan Trustee of all property constituting part of the Trust
Indenture Estate and the final distribution by the Loan Trustee
of all monies or other property or proceeds constituting part of
the Trust Indenture Estate in accordance with the terms hereof.
Except as aforesaid otherwise provided, this Trust Indenture and
the trusts created hereby shall continue in full force and effect
in accordance with the terms hereof.
SECTION 10.02. No Legal Title to Trust Indenture
Estate in Note Holders
No holder of an Equipment Note shall have legal title
to any part of the Trust Indenture Estate. No transfer, by
operation of law or otherwise, of any Equipment Note or other
right, title and interest of any Note Holder in and to the Trust
Indenture Estate or hereunder shall operate to terminate this
Trust Indenture or entitle such holder or any successor or
70
transferee of such holder to an accounting or to the transfer to
it of any legal title to any part of the Trust Indenture Estate.
SECTION 10.03. Sale of Aircraft by Loan Trustee Is
Binding
Any sale or other conveyance of the Trust Indenture
Estate, or any part thereof (including any part thereof or
interest therein), by the Loan Trustee made pursuant to the terms
of this Trust Indenture shall bind the Note Holders and shall be
effective to transfer or convey all right, title and interest of
the Trustee, the Owner Trustee, the Owner Participant and such
holders in and to such Trust Indenture Estate or part thereof. No
purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such sale
or conveyance or as to the application of any sale or other
proceeds with respect thereto by the Loan Trustee.
SECTION 10.04. Trust Indenture for Benefit of Owner
Trustee, Loan Trustee, Owner Participant and Note Holders
Except as provided in Section 8.7.8 of the
Participation Agreement, nothing in this Trust Indenture, whether
express or implied, shall be construed to give any person other
than the Owner Trustee, the Loan Trustee, the Owner Participant
and the Note Holders, any legal or equitable right, remedy or
claim under or in respect of this Trust Indenture.
SECTION 10.05. Notices
Unless otherwise expressly specified or permitted by
the terms hereof, all notices, requests, demands, authorizations,
directions, consents, waivers or documents provided or permitted
by this Trust Indenture to be made, given, furnished or filed
shall be in writing, personally delivered or mailed by certified
mail, postage prepaid, or by facsimile or confirmed telex, and
(i) if to the Owner Trustee, addressed to it at 79 South Main
Street, Salt Lake City, Utah 84111 with a copy to the Owner
Participant addressed as provided in clause (iii) below, (ii) if
to Loan Trustee, addressed to it at its office at Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890,
Attention: Corporate Trust Administration, facsimile number (302)
651-8882, (iii) if to any Participant, Lessee or any Note Holder,
addressed to such party at such address as such party shall have
furnished by notice to the Owner Trustee and the Loan Trustee,
or, until an address is so furnished, addressed to the address of
such party (if any) set forth on Schedule 1 to the Participation
Agreement or in the Equipment Note Register. Whenever any notice
in writing is required to be given by the Owner Trustee, any
Participant or the Loan Trustee or any Note Holder to any of the
other of them, such notice shall be deemed given and such
requirement satisfied when such notice is received, or if such
71
notice is mailed by certified mail, postage prepaid, three
Business Days after being mailed, addressed as provided above.
Any party hereto may change the address to which notices to such
party will be sent by giving notice of such change to the other
parties to this Trust Indenture.
SECTION 10.06. Severability
Any provision of this Trust Indenture which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof. Any such prohibition or unenforceability in any
particular jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10.07. No Oral Modification or Continuing
Waivers
No term or provision of this Trust Indenture or the
Equipment Notes may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the Owner
Trustee and the Loan Trustee, in compliance with Section 9.01
hereof. Any waiver of the terms hereof or of any Equipment Note
shall be effective only in the specific instance and for the
specific purpose given.
SECTION 10.08. Successors and Assigns
All covenants and agreements contained herein shall be
binding upon, and inure to the benefit of, each of the parties
hereto and the permitted successors and assigns of each, all as
herein provided. Any request, notice, direction, consent, waiver
or other instrument or action by any Note Holder shall bind the
successors and assigns of such holder. This Trust Indenture and
the Trust Indenture Estate shall not be affected by any amendment
or supplement to the Trust Agreement or by any other action taken
under or in respect of the Trust Agreement, except that each
reference in this Trust Indenture to the Trust Agreement shall
mean the Trust Agreement as amended and supplemented from time to
time to the extent permitted hereby, thereby and by the
Participation Agreement. Each Note Holder by its acceptance of an
Equipment Note agrees to be bound by this Trust Indenture and all
provisions of the Participation Agreement applicable to a Loan
Participant or a Note Holder.
SECTION 10.09. Headings
The headings of the various Articles and sections
herein and in the table of contents hereto are for convenience of
reference only and shall not define or limit any of the terms or
provisions hereof.
72
SECTION 10.10. Normal Commercial Relations
Anything contained in this Trust Indenture to the
contrary notwithstanding, Owner Trustee, Loan Trustee, any
Participant or any bank or other Affiliate of such Participant
may conduct any banking or other financial transactions, and have
banking or other commercial relationships, with Lessee, fully to
the same extent as if this Trust Indenture were not in effect,
including without limitation the making of loans or other
extensions of credit to Lessee for any purpose whatsoever,
whether related to any of the transactions contemplated hereby or
otherwise.
SECTION 10.11. Governing Law; Counterpart Form
THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE. THIS TRUST INDENTURE IS BEING DELIVERED
IN THE STATE OF NEW YORK. This Trust Indenture may be executed by
the parties hereto in separate counterparts (or upon separate
signature pages bound together into one or more counterparts),
each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but
one and the same instrument.
SECTION 10.12. Voting By Note Holders
All votes of the Note Holders shall be governed by a
vote of a Majority in Interest of Note Holders, except as
otherwise provided herein.
SECTION 10.13. Bankruptcy
It is the intention of the parties that the Owner
Trustee, as lessor under the Lease (and the Loan Trustee as
assignee of the Owner Trustee hereunder), shall be entitled to
the benefits of Section 1110 with respect to the right to take
possession of the Aircraft, Airframe, Engines and Parts as
provided in the Lease in the event of a case under Chapter 11 of
the Bankruptcy Code in which Lessee is a debtor, and in any
instance where more than one construction is possible of the
terms and conditions hereof or any other pertinent Operative
Agreement, each such party agrees that a construction which would
preserve such benefits shall control over any construction which
would not preserve such benefits.
* * *
73
IN WITNESS WHEREOF, the parties hereto have caused
this Trust Indenture and Mortgage 116 to be duly executed by
their respective officers thereof duly authorized as of the day
and year first above written.
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION, not in
its individual capacity,
except as expressly provided
herein, but solely as Owner
Trustee, as Owner Trustee
By:_________________________
Name:_______________________
Title:______________________
WILMINGTON TRUST COMPANY, as
Loan Trustee
By:_________________________
Name:_______________________
Title:______________________
74
--------------------------------
EXHIBIT A
TO
TRUST INDENTURE AND MORTGAGE
--------------------------------
TRUST INDENTURE AND MORTGAGE 116 SUPPLEMENT NO. 1
This TRUST INDENTURE AND MORTGAGE 116 SUPPLEMENT NO.
1, dated , (herein called this "Trust Indenture Supplement") of
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not in its
individual capacity, but solely as Owner Trustee (herein called
the "Owner Trustee") under that certain Trust Agreement 116 dated
as of , 1996 (the "Trust Agreement"), between the Owner Trustee
and the Owner Participant named therein.
W I T N E S S E T H:
WHEREAS, the Amended and Restated Trust Indenture and
Mortgage 116, dated as of , 1996 (as amended and supplemented to
the date hereof, the "Trust Indenture") between the Owner Trustee
and Wilmington Trust Company, as Loan Trustee (the "Loan
Trustee"), provides for the execution and delivery of a
supplement thereto substantially in the form hereof, which shall
particularly describe the Aircraft, and shall specifically
mortgage such Aircraft to the Loan Trustee; and
WHEREAS, each of the Trust Agreement and Trust
Indenture relates to the Airframe and Engines described below,
and a counterpart of the Trust Indenture is attached hereto and
made a part hereof and this Trust Indenture Supplement, together
with such counterpart of the Trust Indenture, is being filed for
recordation on the date hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement
witnesseth that the Owner Trustee hereby confirms that the Lien
of the Trust Indenture on the Trust Indenture Estate covers all
of Owner Trustee's right, title and interest in and to the
following described property:
AIRFRAME
One airframe identified as follows:
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
The Boeing Company 757-224 N12116 27558
together with all of the Owner Trustee's right, title and
interest in and to all Parts of whatever nature, whether now
owned or hereinafter acquired and which are from time to time
incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or
more rated take-off horsepower or the equivalent thereof,
identified as follows:
Manufacturer Manufacturer's Model Serial Number
------------ -------------------- -------------
Rolls-Royce plc RB211-535E4-B-37 31402
Rolls Royce plc RB211-535E4-B-37 31403
together with all of Owner Trustee's right, title and interest in
and to all Parts of whatever nature, whether now owned or
hereafter acquired and which are from time to time incorporated
or installed in or attached to either of such engines.
Together with all of Owner Trustee's right, tide and
interest in and to (a) all Parts of whatever nature, which from
time to time are included within the definition of "Airframe" or
"Engine", whether now owned or hereafter acquired, including all
substitutions, renewals and replacements of and additions,
improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and
accumulations which constitute appliances, parts, instruments,
appurtenances, accessories, furnishings or other equipment
excluded from the definition of Parts) and (b) all Aircraft
Documents.
As further security for the obligations referred to
above and secured by the Trust Indenture and hereby, the Owner
Trustee has granted, bargained, sold, assigned, transferred,
conveyed, mortgaged, pledged and confirmed, and does hereby
grant, bargain, sell, assign, transfer, convey, mortgage, pledge
and confirm, unto the Loan Trustee, its successors and assigns,
for the security and benefit of the Loan Participants and of the
Note Holders, in the trust created by the Trust Indenture, all of
2
the right, title and interest of the Owner Trustee in, to and
under the Lease Supplement of even date herewith covering the
property described above.
Notwithstanding any provision hereof, no Excluded
Payment shall constitute security for any of the aforementioned
obligations.
TO HAVE AND TO HOLD all and singular the aforesaid
property unto the Loan Trustee, its successors and assigns, in
trust for the equal and proportionate benefit and security of the
Note Holders, except as provided in Section 2.15 and Article III
of the Trust Indenture without any preference, distinction or
priority of any one Equipment Note over any other by reason of
priority of time of issue, sale, negotiation, date of maturity
thereof or otherwise for any reason whatsoever, and for the uses
and purposes and subject to the terms and provisions set forth in
the Trust Indenture.
This Trust Indenture Supplement shall be construed as
supplemental to the Trust Indenture and shall form a part
thereof. The Trust Indenture is each hereby incorporated by
reference herein and is hereby ratified, approved and confirmed.
AND, FURTHER, the Owner Trustee hereby acknowledges
that the Aircraft referred to in this Trust Indenture Supplement
and the aforesaid Lease Supplement has been delivered to the
Owner Trustee and is included in the property of the Owner
Trustee covered by all the terms and conditions of the Trust
Agreement, subject to the pledge and mortgage thereof under the
Trust Indenture.
* * *
IN WITNESS WHEREOF, the Owner Trustee has caused this
Trust Indenture Supplement to be duly executed by one of its
officers, thereunto duly authorized, on the day and year first
above written.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, not in its individual
capacity, but solely as Owner
Trustee, Owner Trustee
By:____________________________________
Name:
Title:
3
--------------------------------
AMENDED AND RESTATED
TRUST INDENTURE AND
MORTGAGE 116
--------------------------------
SCHEDULE I
Original Amount Interest Rate
Series A:
Series B:
Series C:
Series D:
1
Equipment Note Amortization
Series A
--------
Percentage of Original
Payment Date Amount to be Paid
------------ -----------------
1
Equipment Note Amortization
Series B
--------
Percentage of Original
Payment Date Amount to be Paid
------------ -----------------
Equipment Note Amortization
Series C
--------
Percentage of Original
Payment Date Amount to be Paid
------------ -----------------
Equipment Note Amortization
Series D
--------
Percentage of Original
Payment Date Amount to be Paid
------------ -----------------
SCHEDULE I
Original Amount Interest Rate
--------------- -------------
Series A.........
Series B.........
Series C.........
Series D.........
[Intentionally omitted from the version of
this document filed with the FAA as
containing confidential financial information.]
1
Equipment Note Amortization
SERIES A
--------
Percentage of Original
Payment Date Amount to be Paid
------------ -----------------
[Intentionally omitted from the version of
this document filed with the FAA as
containing confidential financial information.]
2
SERIES B
--------
Percentage of Original
Payment Date Amount to be Paid
------------ -----------------
[Intentionally omitted from the version of
this document filed with the FAA as
containing confidential financial information.]
3
SERIES C
--------
Percentage of Original
Payment Date Amount to be Paid
------------ -----------------
[Intentionally omitted from the version of
this document filed with the FAA as
containing confidential financial information.]
4
SERIES D
--------
Percentage of Original
Payment Date Amount to be Paid
------------ -----------------
[Intentionally omitted from the version of
this document filed with the FAA as
containing confidential financial information.]
5
- ------------------------------------------------------------
NOTE PURCHASE AGREEMENT 637
Dated as of May 20, 1996
Among
CONTINENTAL AIRLINES, INC.,
as Owner
WILMINGTON TRUST COMPANY,
as Pass Through Trustee under each of the
Continental Airlines 1996-2 Pass Through Trust Agreements
WILMINGTON TRUST COMPANY,
as Subordination Agent
and
WILMINGTON TRUST COMPANY,
as Loan Trustee
-------------
One Boeing 737-524 Aircraft
MSN 27540
Owned by Continental Airlines, Inc.
- ------------------------------------------------------------
INDEX TO NOTE PURCHASE AGREEMENT 637
Page
SECTION 1. Purchase of Equipment Notes; Funding .........2
SECTION 2. Equipment Notes..................................3
SECTION 3. Conditions Precedent.............................3
SECTION 4. Certain Conditions Precedent to the
Obligations of the Owner;
Conditions Precedent with Respect
to the Pass Through Trustee.....................6
SECTION 5. [Intentionally Omitted]..........................6
SECTION 6. Owner's Representations and Warranties..........6
SECTION 7. Representations, Warranties and Covenants ....9
SECTION 8. Notices.........................................14
SECTION 9. Expenses........................................14
SECTION 10. Indemnity......................................15
SECTION 11. Miscellaneous..................................32
SECTION 12. Governing Law..................................32
Schedules
Schedule I Pass Through Trust Agreements
Schedule II Equipment Notes, Purchasers and
Purchase Prices
NOTE PURCHASE AGREEMENT 637
This NOTE PURCHASE AGREEMENT, dated as of May 20,
1996, among (i) CONTINENTAL AIRLINES, INC., a Delaware
corporation (the "Owner"), (ii) WILMINGTON TRUST COMPANY, a
Delaware banking corporation, not in its individual capacity
except as otherwise expressly provided herein, but solely as
trustee (in such capacity, the "Pass Through Trustee") under each
of the four separate Pass Through Trust Agreements (as defined
below), (iii) WILMINGTON TRUST COMPANY, a Delaware banking
corporation, not in its individual capacity, but solely as
subordination agent and trustee (in such capacity, the
"Subordination Agent") under the Intercreditor Agreement (as
defined below), and (iv) WILMINGTON TRUST COMPANY, a Delaware
banking corporation, not in its individual capacity, but solely
as Loan Trustee (the "Loan Trustee") under the Indenture (as
defined below).
W I T N E S S E T H:
WHEREAS, the Owner is the owner of a Boeing 737-524
aircraft bearing United States registration number N33637 (the
"Aircraft") for which it desires to obtain financing;
WHEREAS, pursuant to each of the Pass Through Trust
Agreements set forth in Schedule 1 hereto (the "Pass Through
Trust Agreements"), on the Funding Date (as defined in Section 1
below), a separate grantor trust (collectively, the "Pass Through
Trusts" and, individually, a "Pass Through Trust") will be
created to facilitate certain of the transactions contemplated
hereby, including, without limitation, the issuance and sale of
pass through certificates pursuant thereto (collectively, the
"Certificates") to provide the financing of the Aircraft;
WHEREAS, the proceeds from the issuance and sale of
the Certificates will be applied by the Pass Through Trustee to
purchase from the Owner, on behalf of each Pass Through Trust,
four series of equipment notes (collectively, the "Equipment
Notes") bearing the same interest rate as the Certificates issued
by such Pass Through Trust, which Equipment Notes shall be issued
under the Trust Indenture and Mortgage 637, as supplemented by
Trust Indenture and Mortgage 637 Supplement No. 1, each dated as
of the Funding Date, between the Owner and the Loan Trustee (as
so supplemented, the "Indenture");
1
WHEREAS, concurrently with the execution and delivery
of this Agreement, (i) De Nationale Investeringsbank N.V., a bank
organized under the laws of The Netherlands (the "Liquidity
Provider"), entered into three revolving credit agreements (each,
a "Liquidity Facility") for the benefit of the Certificateholders
of each Pass Through Trust (other than the Continental Airlines
1996-2D Pass Through Trust (the "Class D Trust")), with the
Subordination Agent, as agent for the Pass Through Trustee on
behalf of each such Pass Through Trust; and (ii) the Pass Through
Trustee, the Liquidity Provider and the Subordination Agent
entered into the Intercreditor Agreement, dated as of the date
hereof (the "Intercreditor Agreement"); and
WHEREAS, capitalized terms used but not defined herein
shall have the meanings ascribed to such terms in Annex A to the
Indenture, which such definitions are hereby incorporated by
reference;
NOW, THEREFORE, in consideration of the foregoing
premises and the mutual agreements herein contained and other
good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Purchase of Equipment Notes; Funding. (a)
Subject to the satisfaction or waiver of the conditions set forth
herein, on the date hereof or on such other date agreed to by the
parties hereto (the "Funding Date"):
(i) the Pass Through Trustee for each Pass Through
Trust shall pay to the Owner the purchase price set forth
on Schedule II hereto of the Equipment Note being issued to
such Pass Through Trust; and
(ii) the Owner shall issue, pursuant to Article II of
the Indenture, to the Subordination Agent on behalf of the
Pass Through Trustee for each of the Pass Through Trusts,
an Equipment Note of the maturity and principal amount and
bearing the interest rate set forth on Schedule II hereto
opposite the name of such Pass Through Trust.
(b) The closing (the "Closing") of the transactions
described in this Agreement shall take place at the offices
Cleary, Gottlieb, Steen & Hamilton, One Liberty Plaza, New York,
New York 10006, on the Funding Date, or at such other place as
the parties hereto may agree.
(c) All payments pursuant to this Section 1 shall be
made in immediately available funds to such accounts and at such
banks as the parties hereto shall designate in writing not less
2
than one Business Day prior to the Funding Date.
(d) In order to facilitate the transactions
contemplated hereby, the Owner has entered into the Purchase
Agreement, dated as of May 9, 1996, among the Owner and the
several purchasers (the "Initial Purchasers") named therein (the
"Purchase Agreement"), and, subject to the terms and conditions
hereof, the Owner will enter into each of the Pass Through Trust
Agreements and will undertake to perform certain administrative
and ministerial duties under such Pass Through Trust Agreements.
SECTION 2. Equipment Notes. The Equipment Notes shall
be payable as to principal in accordance with the terms of the
Indenture, and the Equipment Notes shall provide for a fixed rate
of interest per annum (subject to certain adjustments
contemplated thereby) and shall contain the terms and provisions
provided for the Equipment Notes in the Indenture. The Owner
shall execute, and the Loan Trustee shall authenticate and
deliver to the Pass Through Trustee for each Pass Through Trust,
a principal amount of Equipment Notes bearing the interest rate
set forth opposite the name of such Pass Through Trust on
Schedule II hereto, which Equipment Notes in the aggregate shall
be in the principal amounts set forth on Schedule II hereto.
Subject to the terms hereof, of the Pass Through Agreements and
of the other Operative Agreements, all such Equipment Notes shall
be dated and authenticated as of the Funding Date and shall bear
interest therefrom, shall be registered in such names as shall be
specified by the Subordination Agent and shall be paid in the
manner and at such places as are set forth in the Indenture.
SECTION 3. Conditions Precedent. The obligation of the
Pass Through Trustee to make the payment described in Section
1(a)(i) and the obligations of the Owner to participate in the
transactions contemplated by this Agreement on the Funding Date
are subject to the fulfillment, prior to or on the Funding Date,
of the following conditions precedent (except that paragraph (a)
shall not be a condition precedent to the obligations of the
Owner hereunder):
(a) The Owner shall have tendered the Equipment Notes
to the Loan Trustee for authentication, and the Loan Trustee
shall have authenticated such Equipment Notes and shall have
tendered the Equipment Notes to the Subordination Agent on behalf
of the Pass Through Trustee in accordance with Section 1.
(b) The Pass Through Trustee and the Owner each shall
have received executed counterparts or conformed copies of the
following documents:
3
(1) this Agreement;
(2) the Indenture;
(3) each of the Pass Through Trust
Agreements;
(4) the Intercreditor Agreement;
(5) the Liquidity Facility for each of the
Class A, Class B and Class C Trusts; and
(6) the Registration Rights Agreement, dated the
date hereof, among the Owner, the Pass
Through Trustee and each of the Initial
Purchasers, with respect to the Certificates
(the "Registration Rights
Agreement").
(c) The Pass Through Trustee shall have received
the following:
(1) an incumbency certificate of the Owner as to
the person or persons authorized to execute and
deliver this Agreement, the Indenture, the Pass
Through Trust Agreements, the Registration Rights
Agreement and any other documents to be executed on
behalf of the Owner in connection with the
transactions contemplated hereby and the signatures of
such person or persons;
(2) a copy of the resolutions of the board of
directors of the Owner or the executive committee
thereof, certified by the Secretary or an Assistant
Secretary of the Owner, duly authorizing the
transactions contemplated hereby and the execution and
delivery of each of the documents required to be
executed and delivered on behalf of the Owner in
connection with the transactions contemplated hereby;
and
(3) a copy of the certificate of incorporation of
the Owner, certified by the Secretary of State of the
State of Delaware, a copy of the by-laws of the Owner,
certified by the Secretary or Assistant Secretary of
the Owner, and a certificate or other evidence from
the Secretary of State of the State of Delaware, dated
as of a date reasonably near the date of this
Agreement, as to the due incorporation and good
standing of the Owner in such state.
(d) If the Funding Date occurs on a date
subsequent to the date hereof, the Pass Through Trustee
4
shall have received a certificate signed by an authorized officer
of the Owner, dated the Funding Date, certifying that, to the
best knowledge of such officer, after due inquiry, the
representations and warranties contained herein of the Owner are
correct as though made on and as of the Funding Date, except to
the extent that such representations and warranties relate solely
to an earlier date (in which case such representations and
warranties are correct on and as of such earlier date).
(e) The Pass Through Trustee shall have received a
certificate signed by an authorized officer of the Loan Trustee,
dated the Funding Date, certifying that the representations and
warranties contained herein of the Loan Trustee are correct as
though made on and as of the Funding Date, except to the extent
that such representations and warranties relate solely to an
earlier date (in which case such representations and warranties
are correct on and as of such earlier date).
(f) The Pass Through Trustee shall have received an
independent insurance broker's report, together with certificates
of insurance from such broker, as to the due compliance with the
terms of Section 4.06 of the Indenture relating to insurance with
respect to the Aircraft.
(g) The Pass Through Trustee shall have received an
opinion addressed to it from Cleary, Gottlieb, Steen & Hamilton,
counsel for the Owner, an opinion addressed to it from Hughes
Hubbard & Reed LLP, counsel for the Owner, and an opinion
addressed to it from the Owner's legal department, in each case
in form and substance reasonably satisfactory to the Pass Through
Trustee.
(h) The Pass Through Trustee shall have received an
opinion addressed to it from Richards, Layton & Finger, special
counsel for the Loan Trustee, in form and substance satisfactory
to the Pass Through Trustee.
(i) The Pass Through Trustee shall have received an
opinion of Whitman, Breed, Abbott & Morgan, United States counsel
to the Liquidity Provider, and internal counsel to the Liquidity
Provider, in each case in form and substance reasonably
satisfactory to the Pass Through Trustee.
(j) The Pass Through Trustee shall have received an
opinion addressed to it from Lytle, Soule & Curlee, special
counsel in Oklahoma City, Oklahoma, in form and substance
reasonably satisfactory to the Pass Through Trustee.
(k) The Owner shall have entered into the Purchase
Agreement and each of the Pass Through Trust Agreements, the
Certificates shall have been issued and sold pursuant to
5
the Purchase Agreement and the Pass Through Trust Agreements,
and the Initial Purchasers shall have transferred to the
Pass Through Trustees in immediately available funds an
amount equal to the aggregate purchase price of the Equipment
Notes to be purchased from the Owner.
(l) No change shall have occurred after the date of
this Agreement in applicable law or regulations thereunder or
interpretations thereof by appropriate regulatory authorities or
any court that would make it illegal for the Pass-Through
Trustees to make the payments described in Section 1(a)(i) or for
the Owner to participate in the transactions contemplated by this
Agreement on the Funding Date.
(m) All approvals and consents of any trustee or
holder of any indebtedness or obligations of the Owner which are
required in connection with the Pass Through Trustee's making of
the payments described in Section 1(a)(i) or the Owner's
participation in the transactions contemplated by this Agreement
on the Funding Date shall have been duly obtained.
Promptly following the recording of the Indenture
pursuant to 49 U.S.C. Sections 40101-46507 (the "Aviation Act"),
the Owner will cause Lytle, Soule & Curlee, special counsel in
Oklahoma City, Oklahoma, to deliver to the Pass Through Trustee
and the Loan Trustee an opinion as to the due recording of the
Indenture.
SECTION 4. Certain Conditions Precedent to the
Obligations of the Owner; Conditions Precedent with Respect to
the Pass Through Trustee. (a) The Owner's obligation to
participate in the transactions contemplated by this Agreement
and to execute and deliver the Indenture are subject to the
receipt by the Owner of (i) each opinion referred to in
subsections (h) through (j) of Section 3, addressed to the Owner
or accompanied by a letter from counsel rendering such opinion
authorizing the Owner to rely on such opinion as if it were
addressed to the Owner, and (ii) such other documents and
evidence with respect to each other party hereto as it may
reasonably request in order to establish the due consummation of
the transactions contemplated by this Agreement, the taking of
all necessary corporate action in connection therewith and
compliance with the conditions herein set forth.
(b) The respective obligations of each of the Owner
and the Loan Trustee to participate in the transactions
contemplated hereby is subject to the receipt by each of them of
(i) a certificate signed by an authorized officer of the Pass
Through Trustee, dated the Funding Date, certifying that the
representations and warranties contained herein of the Pass
Through Trustee are correct as though made on and as of
6
the Funding Date, except to the extent that such representations
and warranties relate solely to an earlier date (in which
case such representations and warranties are correct on
and as of such earlier date), (ii) an opinion addressed
to each of them of Richards, Layton & Finger, special
counsel for the Pass Through Trustee, in form and substance
reasonably satisfactory to each of them, and (iii) such other
documents and evidence with respect to the Pass Through Trustee
as it may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement,
the taking of all necessary corporate action in connection
therewith and compliance with the conditions herein set forth.
SECTION 5. [Intentionally Omitted]
SECTION 6. Owner's Representations and Warranties. The
Owner represents and warrants to the Pass Through Trustee and the
Loan Trustee that:
(a) the Owner is duly incorporated, validly existing
and in good standing under the laws of the State of Delaware, is
an "air carrier" within the meaning of 49 U.S.C. Section
40102(a), holds a certificate of public convenience and necessity
in accordance with 49 U.S.C. Section 41102, and an air carrier
operating certificate issued by the Secretary of Transportation
pursuant to Chapter 447 of Title 49 of United States Code for
aircraft capable of carrying 10 or more individuals or 6,000
pounds or more of cargo, is a "citizen of the United States" as
defined in 49 U.S.C. Section 40102, has the corporate power and
authority to own or hold under lease its properties, has, or had
on the respective dates of execution thereof, the corporate power
and authority to enter into and perform its obligations under
this Agreement, the Indenture, the Pass Through Trust Agreements,
the Registration Rights Agreement, the Purchase Agreement and the
other Operative Agreements to which it is a party, and is duly
qualified to do business as a foreign corporation in good
standing in each state in which it has a principal office or a
major overhaul facility and in which such qualification is
required, except where the failure to so qualify would not be
reasonably likely to have a material adverse effect on the
financial condition, properties or results of operations of the
Owner, and its chief executive office (as such term is used in
Article 9 of the Uniform Commercial Code in effect in the State
of Texas) is located at 2929 Allen Parkway, Houston, Texas 77019;
(b) the execution and delivery by the Owner of this
Agreement, the Indenture, the Pass Through Trust Agreements, the
Registration Rights Agreement, the Purchase Agreement and each
other Operative Agreement to which it is a party, and the
performance of its obligations under this Agreement, the
7
Indenture, the Pass Through Trust Agreements, the Registration
Rights Agreement, the Purchase Agreement and each other
Operative Agreement to which it is a party, have been duly
authorized by all necessary corporate action on the part of the
Owner, do not require any stockholder approval, or approval or
consent of any trustee or holder of any material indebtedness or
material obligations of the Owner, except such as have been duly
obtained and are in full force and effect, and do not contravene
any law, governmental rule, regulation or order binding on the
Owner or the certificate of incorporation or by-laws of the
Owner, or contravene the provisions of, or constitute a default
under, or result in the creation of any Lien (other than
Permitted Liens) upon the property of the Owner under, any
indenture, mortgage, contract or other agreement to which the
Owner is a party or by which it may be bound or affected which
contravention, default or Lien, individually or in the aggregate,
would be reasonably likely to have a material adverse effect on
the financial condition, properties or results of operations of
the Owner;
(c) neither the execution and delivery by the Owner of
this Agreement, the Indenture, the Pass Through Trust Agreements,
the Registration Rights Agreement, the Purchase Agreement or any
other Operative Agreement to which it is a party, nor the
performance of its obligations hereunder or under the Indenture,
the Pass Through Trust Agreements, the Registration Rights
Agreement, the Purchase Agreement or the other Operative
Agreements to which it is a party, nor the consummation by the
Owner of any of the transactions contemplated hereby or thereby,
requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect
of, the Department of Transportation, the FAA, or any other
federal, state or foreign governmental authority having
jurisdiction, other than (i) the registration of the Exchange
Certificates (as defined in each Pass Through Trust Agreement),
if any, pursuant to the provisions of the Pass Through Trust
Agreements, under the Securities Act of 1933, as amended, and
under the securities laws of any state in which the Certificates
may be offered for sale if the laws of such state require such
action, (ii) the qualification of the Pass Through Trust
Agreements under the Trust Indenture Act of 1939, as amended,
which qualification will be duly obtained upon the effectiveness
of any Registration Statement (as defined in the Registration
Rights Agreement) pursuant to an order of the Securities and
Exchange Commission, (iii) the registrations and filings referred
to in Section 6(e) and (iv) authorizations, consents, approvals,
actions, notices and filings required to be obtained, taken,
given or made the failure of which to obtain, take, give or make
would not be reasonably likely to have a material adverse effect
on the financial condition, properties or results of operations
of the Owner;
8
(d) each of this Agreement, the Pass Through Trust
Agreements, the Registration Rights Agreement and each other
Operative Agreement to which the Owner is a party constitutes,
and the Indenture, when it shall have been executed and delivered
by each of the parties thereto, and the Equipment Notes, when
they shall have been executed and delivered by the Owner and
authenticated by the Loan Trustee in accordance with the terms of
the Indenture, will constitute, the legal, valid and binding
obligations of the Owner enforceable against the Owner in
accordance with their respective terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, whether considered
in a proceeding at law or in equity, and except as limited by
applicable laws which may affect the remedies provided in the
Indenture, which laws, however, do not make the remedies provided
in the Indenture inadequate for practical realization of the
rights and benefits intended to be afforded thereby;
(e) except for (i) the filing for recording of the
Indenture pursuant to the Aviation Act and (ii) the filing of a
Uniform Commercial Code financing statement and continuation
statements, in respect of the security interests created by the
Indenture, under Article 9 of the Uniform Commercial Code in the
office of the Secretary of State of the State of Texas in Austin,
Texas, no further filing or recording of any document is
necessary under the laws of the United States of America or any
State thereof in order to perfect the security interest in favor
of the Loan Trustee in the Owner's interest in the Aircraft (with
respect to such portion of the Aircraft as is covered by the
recording system established by the FAA pursuant to 49 U.S.C.
Section 44107) in any applicable jurisdiction in the United
States;
(f) neither the Owner nor any of its affiliates has
directly or indirectly offered the Equipment Notes or the Pass
Through Certificates for sale to any Person other than in a
manner permitted by the Securities Act of 1933, as amended, and
by the rules and regulations thereunder;
(g) the Owner is not an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended;
(h) no event has occurred and is continuing which
constitutes an Indenture Event of Default or would constitute an
Indenture Event of Default but for the requirement that notice be
given or time lapse or both;
(i) no event has occurred and is continuing which
constitutes an Event of Loss or would constitute an Event of
9
Loss with the lapse of time;
(j) the Aircraft has been duly certified by the FAA as
to type and airworthiness in accordance with the terms of Article
IV of the Indenture and has a current, valid certificate of
airworthiness;
(k) the FAA Bill of Sale has been duly recorded, and
on or prior to the Funding Date, the Indenture will be duly
filed, with the FAA pursuant to the Aviation Act;
(l) the Aircraft has been registered with the FAA in
the name of the Owner, the Owner has legal title to the Aircraft
and the Owner has authority to operate the Aircraft;
(m) on the Funding Date, the Collateral shall be
free of any Liens attributable to the Owner, other than
Permitted Liens; and
(n) there has been no material adverse change in the
financial condition of the Owner since March 31, 1996.
SECTION 7. Representations, Warranties and Covenants.
Each of the parties below represents, warrants and covenants to
each of the other parties to this Agreement as follows:
(a) The Loan Trustee represents, warrants and
covenants that:
(1) the Loan Trustee is duly incorporated, validly
existing and in good standing under the laws of the State
of Delaware, is a "citizen of the United States" as defined
in 49 U.S.C. Section 40102 and will resign as Loan Trustee
promptly after it obtains actual knowledge that it has
ceased to be such a citizen, and has the full corporate
power, authority and legal right under the laws of the
State of Delaware and the United States pertaining to its
banking, trust and fiduciary powers to execute and deliver
each of this Agreement, the Indenture Amendment and each
other Operative Agreement to which it is a party and to
carry out its obligations under this Agreement, the
Indenture and each other Operative Agreement to which it is
a party;
(2) the execution and delivery by the Loan Trustee of
this Agreement and each other Operative Agreement to which
it is a party and the performance by the Loan Trustee of
its obligations under this Agreement, the Indenture and
each other Operative Agreement to which it is a party have
been duly authorized by the Loan Trustee and will not
violate its articles of association or by-laws or the
provisions of any indenture, mortgage, contract or
10
other agreement to which it is a party or by which it
is bound; and
(3) this Agreement constitutes, and the Indenture,
when it has been executed and delivered by the Loan
Trustee, will constitute, the legal, valid and binding
obligations of the Loan Trustee enforceable against it in
accordance with their respective terms, except as the same
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in
equity.
(b) The Pass Through Trustee represents, warrants
and covenants that:
(1) the Pass Through Trustee is duly incorporated,
validly existing and in good standing under the laws of the
State of Delaware, and has the full corporate power,
authority and legal right under the laws of the State of
Delaware and the United States pertaining to its banking,
trust and fiduciary powers to execute and deliver each of
the Pass Through Trust Agreements, the Registration Rights
Agreement, the Intercreditor Agreement and this Agreement
and to perform its obligations under this Agreement, the
Pass Through Trust Agreements, the Registration Rights
Agreement and the Intercreditor Agreement;
(2) each of the Pass Through Trust Agreements, the
Registration Rights Agreement, the Intercreditor Agreement
and this Agreement has been duly authorized, executed and
delivered by the Pass Through Trustee; this Agreement and
each of the Pass Through Trust Agreements, the Registration
Rights Agreement and the Intercreditor Agreement constitute
the legal, valid and binding obligations of the Pass
Through Trustee enforceable against it in accordance with
their respective terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity,
whether considered in a proceeding at law or in equity;
(3) none of the execution, delivery and performance by
the Pass Through Trustee of any of the Pass Through Trust
Agreements, the Registration Rights Agreement, the
Intercreditor Agreement or this Agreement, the purchase by
the Pass Through Trustee of the Equipment Notes pursuant to
this Agreement, or the issuance of the Certificates pursuant
to the Pass Through Trust Agreements, contravene any law, rule
11
or regulation of the State of Delaware or any United States
governmental authority or agency regulating the Pass
Through Trustee's banking, trust or fiduciary powers or any
judgment or order applicable to or binding on the Pass
Through Trustee and does not contravene or result in any
breach of, or constitute a default under, the Pass Through
Trustee's articles of association or by-laws or any
agreement or instrument to which the Pass Through Trustee
is a party or by which it or any of its properties may be
bound;
(4) neither the execution and delivery by the Pass
Through Trustee of any of the Pass Through Trust
Agreements, the Registration Rights Agreement, the
Intercreditor Agreement or this Agreement, nor the
consummation by the Pass Through Trustee of any of the
transactions contemplated hereby or thereby, requires the
consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with
respect to, any Delaware governmental authority or agency
or any federal governmental authority or agency regulating
the Pass Through Trustee's banking, trust or fiduciary
powers;
(5) there are no Taxes payable by the Pass Through
Trustee imposed by the State of Delaware or any political
subdivision or taxing authority thereof in connection with
the execution, delivery and performance by the Pass Through
Trustee of this Agreement, any of the Pass Through Trust
Agreements, the Registration Rights Agreement or the
Intercreditor Agreement (other than franchise or other
taxes based on or measured by any fees or compensation
received by the Pass Through Trustee for services rendered
in connection with the transactions contemplated by any of
the Pass Through Trust Agreements), and there are no Taxes
payable by the Pass Through Trustee imposed by the State of
Delaware or any political subdivision thereof in connection
with the acquisition, possession or ownership by the Pass
Through Trustee of any of the Equipment Notes (other than
franchise or other taxes based on or measured by any fees
or compensation received by the Pass Through Trustee for
services rendered in connection with the transactions
contemplated by any of the Pass Through Trust Agreements),
and, assuming that the trusts created by the Pass Through
Trust Agreements will not be taxable as corporations, but,
rather, each will be characterized as a grantor trust under
subpart E, Part I of Subchapter J of the Code, such trusts
will not be subject to any Taxes imposed by the State of
Delaware or any political subdivision thereof;
(6) there are no pending or threatened actions or
12
proceedings against the Pass Through Trustee before any
court or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Pass Through Trustee to
perform its obligations under this Agreement, the
Participation Agreement, the Registration Rights Agreement,
the Intercreditor Agreement or any Pass Through Trust
Agreement;
(7) except for the issue and sale of the Certificates
contemplated hereby, the Pass Through Trustee has not
directly or indirectly offered any Equipment Note for sale
to any Person or solicited any offer to acquire any
Equipment Notes from any Person, nor has the Pass Through
Trustee authorized anyone to act on its behalf to offer
directly or indirectly any Equipment Note for sale to any
Person, or to solicit any offer to acquire any Equipment
Note from any Person; and the Pass Through Trustee is not
in default under any Pass Through Trust Agreement; and
(8) the Pass Through Trustee is not directly or
indirectly controlling, controlled by or under common
control with any Initial Purchaser or the Owner.
(c) The Subordination Agent represents, warrants
and covenants that:
(1) the Subordination Agent is duly incorporated,
validly existing and in good standing under the laws of the
State of Delaware, and has the full corporate power,
authority and legal right under the laws of the State of
Delaware and the United States pertaining to its banking,
trust and fiduciary powers to execute and deliver each of
the Liquidity Facilities, the Intercreditor Agreement and
this Agreement and to perform its obligations under this
Agreement, the Liquidity Facilities and the Intercreditor
Agreement;
(2) each of the Liquidity Facilities, the
Intercreditor Agreement and this Agreement has been duly
authorized, executed and delivered by the Subordination
Agent; this Agreement, each of the Liquidity Facilities and
the Intercreditor Agreement constitute the legal, valid and
binding obligations of the Subordination Agent enforceable
against it in accordance with their respective terms,
except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at
law or in equity;
(3) none of the execution, delivery and
13
performance by the Subordination Agent of each of the
Liquidity Facilities, the Intercreditor Agreement or this
Agreement contravenes any law, rule or regulation of the
State of Delaware or any United States governmental
authority or agency regulating the Subordination Agent's
banking, trust or fiduciary powers or any judgment or order
applicable to or binding on the Subordination Agent and do
not contravene or result in any breach of, or constitute a
default under, the Subordination Agent's articles of
association or by-laws or any agreement or instrument to
which the Subordination Agent is a party or by which it or
any of its properties may be bound;
(4) neither the execution and delivery by the
Subordination Agent of any of the Liquidity Facilities, the
Intercreditor Agreement or this Agreement nor the
consummation by the Subordination Agent of any of the
transactions contemplated hereby or thereby requires the
consent or approval of, the giving of notice to, the
registration with, or the taking of any other action with
respect to, any Delaware governmental authority or agency
or any federal governmental authority or agency regulating
the Subordination Agent's banking, trust or fiduciary
powers;
(5) there are no Taxes payable by the Subordination
Agent imposed by the State of Delaware or any political
subdivision or taxing authority thereof in connection with
the execution, delivery and performance by the
Subordination Agent of this Agreement, any of the Liquidity
Facilities or the Intercreditor Agreement (other than
franchise or other taxes based on or measured by any fees
or compensation received by the Subordination Agent for
services rendered in connection with the transactions
contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities), and there are no Taxes payable by
the Subordination Agent imposed by the State of Delaware or
any political subdivision thereof in connection with the
acquisition, possession or ownership by the Subordination
Agent of any of the Equipment Notes (other than franchise
or other taxes based on or measured by any fees or
compensation received by the Subordination Agent for
services rendered in connection with the transactions
contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities);
(6) there are no pending or threatened actions or
proceedings against the Subordination Agent before any
court or administrative agency which individually or in the
aggregate, if determined adversely to it, would materially
adversely affect the ability of the Subordination Agent to
14
perform its obligations under this Agreement, the
Intercreditor Agreement or any Liquidity Facility;
(7) the Subordination Agent has not directly or
indirectly offered any Equipment Note for sale to any
Person or solicited any offer to acquire any Equipment
Notes from any Person, nor has the Subordination Agent
authorized anyone to act on its behalf to offer directly or
indirectly any Equipment Note for sale to any Person, or to
solicit any offer to acquire any Equipment Note from any
Person; and the Subordination Agent is not in default under
any Liquidity Facility; and
(8) the Subordination Agent is not directly or
indirectly controlling, controlled by or under common
control with any Initial Purchaser or the Owner.
(d) The Owner agrees to give the Loan Trustee and the
Pass Through Trustee at least 30 days' prior written notice of
any relocation of its chief executive office from its present
location.
SECTION 8. Notices. Unless otherwise specifically
provided herein, all notices required or permitted by the terms
of this Agreement shall be in English and in writing, and any
such notice shall become effective upon being deposited in the
United States mail, with proper postage for first-class
registered or certified mail prepaid, or when delivered
personally or, if promptly confirmed by mail as provided above,
when dispatched by telegram, telex, facsimile or other written
telecommunication, addressed, if to the Owner, the Pass Through
Trustee, the Subordination Agent or the Loan Trustee, at their
respective addresses or facsimile numbers set forth below the
signatures of such parties at the foot of this Agreement.
SECTION 9. Expenses. All of the reasonable
out-of-pocket costs, fees and expenses incurred by the Pass
Through Trustee, the Subordination Agent and the Loan Trustee in
connection with the transactions contemplated by this Agreement,
the other Operative Agreements, the Pass Through Trust
Agreements, the Registration Rights Agreement, the Intercreditor
Agreement, the Liquidity Facilities and the Purchase Agreement
(except, in each case, as otherwise provided therein) shall be
paid promptly by the Owner, including, without limitation, the
reasonable fees, expenses and disbursements allocable to the
Equipment Notes issued under the Indenture of (A) Richards,
Layton & Finger, special counsel for the Pass Through Trustee and
the Loan Trustee, (B) Lytle, Soule & Curlee, special counsel in
Oklahoma City, Oklahoma, and (C) Shearman & Sterling, special
15
counsel for the Initial Purchasers, in an amount separately
agreed.
Notwithstanding the foregoing, the Owner shall pay, in
amounts separately agreed, the fees, expenses and disbursements
of Cleary, Gottlieb, Steen & Hamilton and Hughes Hubbard & Reed
LLP, special counsel for the Owner.
To the extent that any provision in this Section 9
conflicts with any provision of Section 10.1, the provisions of
Section 9 shall govern.
SECTION 10. Indemnity.
10.1.1 General Indemnity
Whether or not any of the transactions contemplated
hereby are consummated but without duplication of the obligations
of Owner under Section 9 hereof with respect to the expenses
enumerated therein, Owner shall indemnify, protect, defend and
hold harmless each Indemnitee from, against and in respect of,
and shall pay on demand, any and all Expenses of any kind or
nature whatsoever, and whether arising before, on or after the
Funding Date, that may be imposed on, incurred by or asserted
against any Indemnitee, in any way relating to, resulting from,
or arising out of or in connection with, in each case, directly
or indirectly, any one or more of the following:
(a) The Operative Agreements, any Permitted
Lease, the Pass Through Trust Agreements, the Intercreditor
Agreement and the Liquidity Facilities or the enforcement of any
of the terms of any of the Operative Agreements, a Permitted
Lease, the Pass Through Trust Agreements, the Intercreditor
Agreement and the Liquidity Facilities;
(b) The Aircraft, the Airframe, any Engine or any
Part, including, without limitation, with respect thereto, (i)
the manufacture, design, purchase, acceptance, nonacceptance or
rejection, ownership, registration, re-registration,
de-registration, financing, delivery, nondelivery, lease,
sublease, assignment, possession, use or non-use, operation,
maintenance, testing, repair, overhaul, condition, alteration,
modification, addition, improvement, storage, airworthiness,
replacement, repair, sale, substitution, return, abandonment,
redelivery or other disposition of the Aircraft, any Engine or
any Part, (ii) any claim or penalty arising out of violations of
applicable Laws by the Owner (or any Permitted Lessee), (iii)
tort liability, whether or not arising out of the negligence of
any Indemnitee (whether active, passive or imputed), (iv) death
or property damage of passengers, shippers or others, (v)
environmental control, noise or pollution and (vi) any Liens in
respect of the Aircraft, any Engine or any Part;
16
(c) The offer, sale, resale, purchase, delivery
or holding of any Equipment Note or Pass Through Certificate or
any interest in or represented by any Equipment Note or Pass
Through Certificate, whether before, on or after the Funding
Date;
(d) The offer or sale of any interest in the
Aircraft, the Equipment Notes, the Pass Through Certificates, the
Collateral or any similar interest or in any way resulting from
or arising out of the Collateral (including for claims resulting
from or arising under the Securities Act or other applicable
federal, state or foreign securities Law or at common law) in
each case on or prior to the Funding Date or on or prior to the
date on which registered Pass Through Certificates are issued, as
contemplated by the Registration Rights Agreement, in exchange
for the initial Pass Through Certificates; and
(e) Any breach of or failure to perform or
observe, or any other noncompliance with, any covenant or
agreement or other obligation to be performed by Owner hereunder
or under any Operative Agreement or any Pass Through Trust
Agreement or the falsity of any representation or warranty of
Owner herein or in any Operative Agreement or the occurrence of
any Indenture Event of Default.
10.1.2 Exceptions
Notwithstanding anything contained in Section 10.1.1,
Owner shall not be required to indemnify, protect, defend and
hold harmless any Indemnitee pursuant to Section 10.1.1 in
respect of any Expense of such Indemnitee:
(a) For any Taxes, whether or not Owner is
required to indemnify therefor pursuant to Section 10.3;
(b) Except to the extent fairly attributable to
acts or events occurring or conditions or circumstances existing
prior thereto, acts or events (other than acts or events related
to the performance by Owner of its obligations pursuant to the
terms of the Operative Agreements) that occur after the earliest
of: (i) the termination of the Indenture in accordance with
Section 2.11 of the Indenture (voluntary redemption of Equipment
Notes), (ii) the termination of the Indenture in accordance with
Sections 2.06 and 11.01 of the Indenture (payment in full), or
(iii) the termination of the Indenture in accordance with
Sections 2.10 and 4.05 of the Indenture (an Event of Loss with
respect to the Aircraft); provided, that nothing in this clause
(b) shall be deemed to exclude or limit any claim that any
Indemnitee may have under applicable Law by reason of an
Indenture Event of Default or for damages from Owner for
17
breach of Owner's covenants contained in the Operative Agree-
ments or to release Owner from any of its obligations under
the Operative Agreements that expressly provide for performance
after termination of the Indenture;
(c) If such Indemnitee shall be a Note Holder,
for any Expense attributable to any Transfer (voluntary or
involuntary) by or on behalf of such Indemnitee of any Equipment
Note or interest therein, except for out-of-pocket costs and
expenses incurred as a result of any such Transfer pursuant to
the exercise of remedies under any Operative Agreement resulting
from a Indenture Event of Default or any such Transfer required
by an Operative Agreement;
(d) [Intentionally Omitted]
(e) To the extent such Expense is attributable to
the gross negligence or willful misconduct of such Indemnitee or
any Related Indemnitee (as defined below) (other than gross
negligence or willful misconduct imputed to such person by reason
of its interest in the Aircraft or any Operative Agreement);
(f) [Intentionally Omitted]
(g) Any Expense to the extent attributable to the
incorrectness or breach of any representation or warranty of such
Indemnitee or Related Indemnitee contained in or made pursuant to
any Operative Agreement, any Pass Through Agreement, the
Intercreditor Agreement or any
Liquidity Facility;
(h) Any Expense to the extent attributable to the
failure by such Indemnitee or any Related Indemnitee to perform
or observe any agreement, covenant or condition on its part to be
performed or observed in any Operative Agreement, any Pass
Through Trust Agreement, the Intercreditor Agreement, any
Liquidity Facility or the Fee Letter (as defined in the
Intercreditor Agreement);
(i) Any Expense to the extent attributable to the
offer or sale by such Indemnitee or any related Indemnitee of any
interest in the Aircraft, any Equipment Note, any Pass Through
Trust Certificate (except with respect to the Liquidity Provider)
or any similar interest (except with respect to the Liquidity
Provider), in violation of the Securities Act, other applicable
federal, state or foreign securities laws or any other Law, in
each case, on or prior to the Funding Date or on or prior to the
date on which registered Pass Through Certificates are issued, as
contemplated by the Registration Rights Agreement, in exchange
for the initial Pass Through Certificates;
18
(j) (i) With respect to any Indemnitee (other
than Loan Trustee), any Expense to the extent attributable to the
failure of the Loan Trustee to distribute funds received and
distributable by it in accordance with the Indenture (ii) with
respect to any Indemnitee (other than the Subordination Agent),
any Expense to the extent attributable to the failure of the
Subordination Agent to distribute funds received and
distributable by it in accordance with the Intercreditor
Agreement, (iii) with respect to any Indemnitee (other than the
Pass Through Trustees), any Expense to the extent attributable to
the failure of a Pass Through Trustee to distribute funds
received and distributable by it in accordance with the Pass
Through Trust Agreements, (iv) with respect to Loan Trustee, any
Expense to the extent attributable to the negligence or willful
misconduct of Loan Trustee in the distribution of funds received
and distributable by it in accordance with the Indenture, (v)
with respect to the Subordination Agent, any Expense to the
extent attributable to the negligence or willful misconduct of
the Subordination Agent in the distribution of funds received and
distributable by it in accordance with the Intercreditor
Agreement, and (vi) with respect to the Pass Through Trustees,
any Expense to the extent attributable to the negligence or
willful misconduct of a Pass Through Trustee in the distribution
of funds received and distributable by it in accordance with the
Pass Through Trust Agreements;
(k) Other than during the continuation of an
Indenture Event of Default, any Expense attributable to the
authorization or giving or withholding of any future amendments,
supplements, waivers or consents with respect to any Operative
Agreement other than such as have been requested by Owner or as
are required by or made pursuant to the terms of the Operative
Agreements (unless such requirement results from the actions of
an Indemnitee not required by or made pursuant to the Operative
Agreements);
(l) Any Expense or other amount which such
Indemnitee expressly agrees to pay or such Indemnitee expressly
agrees shall not be paid by or be reimbursed by Owner;
(m) Any Expense that is an ordinary and
usual operating or overhead expense;
(n) [Intentionally Omitted]
(o) For any Lien attributable to such
Indemnitee or any Related Indemnitee;
(p) Any Expense to the extent constituting
principal, Make-Whole Amount, if any, or interest on the
19
Equipment Notes attributable solely to an Indenture Default
not constituting an Indenture Event of Default; or
(q) If such Indemnitee shall be a Note Holder, or
any Related Indemnitee, for any Expense incurred by or asserted
against such Indemnitee as a result of any "prohibited
transaction", within the meaning of Section 406 of ERISA or
Section 4975(c)(1) of the Code;
(r) [Intentionally Omitted]
For purposes of this Section 10.1, a Person shall be
considered a "Related Indemnitee" with respect to an Indemnitee
if such Person is a director, officer, employee, agent, Affiliate
or employer thereof.
10.1.3 Separate Agreement
This Section 10.1 (including the terms of Annex A to
the Indenture that are incorporated by reference herein)
constitutes a separate agreement with respect to each Indemnitee
and is enforceable directly by each such Indemnitee.
10.1.4 Notice
If a claim for any material Expense that an Indemnitee
shall be indemnified against under this Section 10.1 is made,
such Indemnitee shall give prompt written notice thereof to
Owner. Notwithstanding the foregoing, the failure of any
Indemnitee to notify Owner as provided in this Section 10.1.4, or
in Section 10.1.5, shall not release Owner from any of its
obligations to indemnify such Indemnitee hereunder, unless such
failure is solely responsible for effectively foreclosing Owner's
right to contest such claim.
10.1.5 Notice of Proceedings; Defense of
Claims; Limitations
(a) In case any action, suit or proceeding shall
be brought against any Indemnitee for which Owner is responsible
under this Section 10.1, such Indemnitee shall notify Owner of
the commencement thereof and Owner may, at its expense,
participate in and to the extent that it shall wish (subject to
the provisions of subsection (b) hereof), assume and control the
defense thereof, with counsel reasonably satisfactory to such
Indemnitee and, subject to Section 10.1.5(c), settle or
compromise the same.
(b) Owner or its insurer(s) shall have the right,
at its or their expense, to investigate or, if Owner or its
insurer(s) shall agree not to dispute liability hereunder or
under any insurance policies pursuant to which coverage is
20
sought, defend, or participate in the defense of, any action,
suit or proceeding, with counsel reasonably satisfactory
to the relevant Indemnitee, relating to any Expense for which
indemnification is sought pursuant to this Section 10.1, and each
Indemnitee shall cooperate with Owner or its insurer(s) with
respect thereto; provided, that Owner shall not be entitled to
control the defense of any such action, suit or proceeding, or
compromise any such Expense, (i) during the continuance of any
Indenture Event of Default, (ii) if in the reasonable judgment of
any Indemnitee, compromise of such Expense could have an adverse
impact on the business of such Indemnitee or involve the
potential imposition of criminal liability on such Indemnitee or
(iii) if such defense or compromise would at any time involve any
material risk of the sale, forfeiture or loss of, or the loss of
use of, or the creation of any Lien (other than a Permitted Lien)
on, the Aircraft, the Airframe, any Engine, any Part, the
Collateral or the Equipment Notes unless Owner shall have posted
a bond or other security reasonably satisfactory to such
Indemnitee with respect to such risk. In connection with any such
action, suit or proceeding being controlled by Owner, such
Indemnitee shall have the right to participate therein, at its
sole cost and expense, with counsel of its choice; provided, that
such Indemnitee's participation does not, in the reasonable
opinion of the independent counsel appointed by the Owner or its
insurers to conduct such proceedings, interfere with the defense
of such case. Owner shall supply the Indemnitee with such
information reasonably requested by the Indemnitee as is
necessary or advisable for the Indemnitee to control or
participate in any proceeding to the extent permitted by this
Section 10.1.
(c) In no event shall any Indemnitee enter into a
settlement or other compromise with respect to any Expense (i)
unless (x) the Indemnitee has given Owner at least 30 days' prior
written notice of the nature and scope of the proposed settlement
or compromise and (y) such Indemnitee has received Owner's prior
written consent (except during the continuance of an Indenture
Event of Default when such consent shall not be required), which
consent shall not be unreasonably withheld or delayed, or (ii)
unless such Indemnitee waives its right to be indemnified with
respect to such Expense under this Section 10.1. Owner shall not
enter into a settlement or other compromise with respect to any
Expense absent the giving to such Indemnitee of prior written
notice of such settlement or compromise, and Owner will not enter
into such a settlement or other compromise absent such
Indemnitee's prior written consent, which consent shall not be
unreasonably withheld or delayed (provided that such consent
shall not be required if such settlement or compromise provides
for the total and irrevocable release of such Indemnitee with
respect to all claims relating to such Expense without admission
21
of any liability of such Indemnitee with respect to such Expense
and imposes no conditions or restrictions upon such Indemnitee).
(d) In any circumstance in which Owner shall not
be entitled to control the defense of any action, suit or
proceeding, described above, or any compromise or settlement
discussions or proceedings relating to any Expense, Owner shall
have the right to participate therein, at its sole cost and
expense, with counsel reasonably acceptable to the involved
Indemnitee; provided, that Owner's participation does not, in the
reasonable opinion of independent counsel appointed by such
Indemnitee to conduct such proceedings, interfere with the
defense of such case, discussions or proceedings.
(e) In the case of any Expense indemnified by the
Owner hereunder which is covered by a policy of insurance
maintained by Owner pursuant to Section 4.06 of the Indenture, at
Owner's expense, each Indemnitee hereby agrees to cooperate with
the insurers in the exercise of the insurers' rights to
investigate, defend or compromise such Expense as may be required
to retain the benefits of such insurance with respect to such
Expense.
(f) If an Indemnitee is not a party to this
Agreement, Owner may require such Indemnitee to agree in writing
to the terms of this Section 10 and such other Sections hereof as
the Owner may require prior to making any payment to such
Indemnitee under this Section 10.
(g) Nothing herein shall be deemed to be (i) an
assumption by (A) Owner of obligations of any amounts payable by
an Indemnitee upon Equipment Notes or (B) any Person with respect
to, or a guarantee by Owner of, any amounts payable by such
Person upon Pass Through Trust Certificates or (ii) a guarantee
of any residual value of the Aircraft.
(h) Nothing contained in this Section 10.1.5
shall be deemed to require an Indemnitee to contest any Expense
or to assume responsibility for or control of any judicial
proceeding with respect thereto.
22
10.1.6 Information
Owner will provide the relevant Indemnitee with such
information not within the control of such Indemnitee, as is in
Owner's control or is reasonably available to Owner, which such
Indemnitee may reasonably request, and will otherwise cooperate
with such Indemnitee so as to enable such Indemnitee to fulfill
its obligations under Section 10.1.5. The Indemnitee shall supply
Owner with such information not within the control of Owner, as
is in such Indemnitee's control or is reasonably available to
such Indemnitee, which Owner may reasonably request to control or
participate in any proceeding to the extent permitted by Section
10.1.5.
10.1.7 Effect of Other Indemnities;
Subrogation; Further Assurances
Owner's obligations under the indemnities provided for
in this Agreement shall be those of a primary obligor, whether or
not the person indemnified is also indemnified with respect to
the same matter under the terms of this Agreement, any Operative
Agreement or any other agreement, instrument or document, whether
or not related to the transactions contemplated hereby, and the
person seeking indemnification from Owner pursuant to any
provision of this Agreement may proceed directly against Owner
without first seeking to enforce any other right of
indemnification. Upon the payment in full by Owner of any
indemnity provided for under this Agreement, Owner, without any
further action and to the full extent permitted by Law, will be
subrogated to all rights and remedies of the person indemnified
(other than with respect to any of such Indemnitee's insurance
policies or in connection with any indemnity claim such
Indemnitee may have under Section 6.03 (Indemnification) or 8.01
(Scope of Indemnification) of the Indenture) in respect of the
matter as to which such indemnity was paid. Each Indemnitee will
give such further assurances or agreements and cooperate with
Owner to permit Owner to pursue such claims, if any, to the
extent reasonably requested by Owner and at Owner's expense.
23
10.1.8 Refunds
If an Indemnitee receives any refund, in whole or in
part, with respect to any Expense paid by Owner hereunder,
Indemnitee will promptly pay the amount refunded (but not an
amount in excess of the amount Owner or any of its insurers has
paid in respect of such Expense) over to Owner unless an
Indenture Event of Default shall have occurred and be continuing,
in which case, so long as the Indenture shall not have been
discharged, such amounts shall be paid over to Loan Trustee to
hold as security for Owner's obligations under the Operative
Agreements or, if requested by Owner, applied to satisfy such
obligations.
10.2 [Intentionally Omitted]
10.3 Tax Indemnity
10.3.1 General
Except as provided in Section 10.3.2, Owner agrees
that each payment by Owner under the Equipment Notes, and any
other payment or indemnity paid by Owner to a Tax Indemnitee or
Indemnitee under any Operative Agreement, shall be free of all
withholdings or deductions with respect to Taxes of any nature
(other than U.S. federal, state or local withholding taxes on,
based on or measured by gross or net income), and in the event
that Owner shall be required by applicable law to make any such
withholding or deduction for any such payment:
(x) the amount payable by Owner shall be
increased so that after making all required withholdings or
deductions such Indemnitee or Tax Indemnitee, as the case may be,
receives the same amount that it would have received had no such
withholdings or deductions been made;
(y) Owner shall make all such withholdings
or deductions, and
(z) Owner shall pay the full amount withheld or
deducted to the relevant Taxing Authority in accordance with
applicable law.
Except as provided in Section 10.3.2 and whether or
not any of the transactions contemplated hereby are consummated,
Owner shall pay, indemnify, protect, defend and hold each Tax
Indemnitee harmless from all Taxes imposed by any Taxing
Authority that may from time to time be imposed on or asserted
against any Tax Indemnitee or the Aircraft, the Airframe, any
Engine or any Part or any interest in any of the foregoing
(whether or not indemnified against by any other Person), upon or
with respect to the Operative Agreements or the transactions or
payments contemplated thereby, including but not limited to
24
any Tax imposed upon or with respect to:
(x) the Aircraft, the Airframe, any Engine, any
Part, any Operative Agreement (including without limitation any
Equipment Note) or any data or any other thing delivered or to be
delivered under an Operative Agreement;
(y) the purchase, manufacture, acceptance,
rejection, sale, transfer of title, return, ownership,
mortgaging, delivery, transport, charter, rental, lease, release,
sublease, assignment, possession, repossession, presence, use,
condition, storage, preparation, maintenance, modification,
alteration, improvement, operation, registration, transfer or
change of registration, re-registration, repair, replacement,
overhaul, location, control, the imposition of any Lien,
financing, refinancing requested by the Owner, abandonment or
other disposition of the Aircraft, the Airframe, any Engine, any
Part, any data or any other thing delivered or to be delivered
under an Operative Agreement; or
(z) interest, fees or any other income, proceeds,
receipts or earnings, whether actual or deemed, arising upon, in
connection with, or in respect of, any of the Operative
Agreements (including the property or income or other proceeds
with respect to property held as part of the Collateral) or the
transactions contemplated thereby.
10.3.2 Certain Exceptions
The provisions of Section 10.3.1 shall not apply to,
and Owner shall have no liability hereunder for, Taxes:
(a) imposed on a Tax Indemnitee by the United
States Federal government on, based on, or measured by, gross or
net income (including any capital gains taxes, excess profits
taxes, minimum taxes from tax preferences, alternative minimum
taxes, branch profits taxes, accumulated earnings taxes, personal
holding company taxes, succession taxes and estate taxes and any
withholding taxes on, based on, or measured by, net or gross
income but excluding any Taxes in the nature of sales, use,
rental, ad valorem, license, property, value added or similar
Taxes);
(b) imposed on a Tax Indemnitee by any
Taxing Authority (other than the United States Federal
government)
(i) on, based on, or measured by, the
gross or net income or gross or net receipts of any Tax
Indemnitee, including capital gains taxes, excess profits taxes,
minimum taxes from tax preferences, alternative minimum taxes,
25
branch profits taxes, accumulated earnings taxes, personal
holding company taxes, succession taxes and estate taxes,
and any state or local withholding taxes on, based on, or
measured by, gross or net income or
(ii) on, or with respect to, or measured
by, the capital or net worth of any Tax Indemnitee or in the
nature of a franchise tax or a tax for the privilege of
doing business
(other than, in the case of either clause (i) or (ii), (A) any
such Taxes in the nature of sales, use, rental, ad valorem,
license, property, value added or similar Taxes, (B) any
withholding Taxes (other than withholding taxes, imposed by any
state or local Taxing Authority within the United States, on,
based on or measured by gross or net income), and (C) any such
Tax if Taxes of such type would not have been imposed on such Tax
Indemnitee by such Taxing Authority (other than any Taxing
Authority within the jurisdiction of which the Tax Indemnitee is
incorporated or maintains its principal place of business) but
for (I) the location, use or operation of the Aircraft, the
Airframe, any Engine or any Part by Owner within the jurisdiction
of the Taxing Authority imposing such Tax, (II) the activities of
Owner in such jurisdiction, including, but not limited to, use of
any other aircraft by Owner in such jurisdiction, (III) the
status of Owner as a foreign entity or as an entity owned in
whole or in part by foreign persons, or (IV) Owner having made
(or having been deemed to have made) payments to such Tax
Indemnitee from the relevant jurisdiction);
(c) on, or with respect to, or measured by,
any trustee fees, commissions or compensation received by
Loan Trustee;
(d) that are being contested as provided in
Section 10.3.4 hereof;
(e) imposed on any Tax Indemnitee to the extent
that such Taxes result from the gross negligence or willful
misconduct of such Tax Indemnitee or any Affiliate thereof;
(f) imposed on or with respect to a Tax
Indemnitee (including the transferee in those cases in which the
Tax on transfer is imposed on, or is collected from, the
transferee) as a result of a transfer or other disposition by
such Tax Indemnitee of any interest in the Aircraft, the
Airframe, any Engine or any Part of any of the foregoing, or any
interest arising under the Operative Agreements or any Equipment
Note or a transfer of any interest in the Tax Indemnitee.
26
(g) consisting of any interest, penalties or
additions to tax imposed on a Tax Indemnitee as a result of (in
whole or in part) failure of a Tax Indemnitee to file any return
properly and timely unless such failure shall be caused by the
failure of Owner to fulfill its obligations, if any, under
Section 10.3.6 with respect to such return;
(h) imposed on any Tax Indemnitee as a result of
the breach by such Tax Indemnitee or any Affiliate thereof of any
covenant of such Tax Indemnitee or any Affiliate thereof
contained in any Operative Agreement or the inaccuracy of any
representation or warranty by such Tax Indemnitee or any
Affiliate thereof in any Operative Agreement;
(i) in the nature of an intangible or similar Tax
upon or with respect to the value or principal amount of the
interest of any Certificate Holder in any Equipment Note or the
loan evidenced thereby, but only if such Taxes are in the nature
of franchise Taxes or result from the Tax Indemnitee doing
business in the taxing jurisdiction and are imposed because of
the place of incorporation or the activities in the taxing
jurisdiction of such Tax Indemnitee;
(j) imposed on any Tax Indemnitee that is
incorporated or has its principal place of business outside the
United States by any foreign government or political subdivision
or taxing authority thereof or any territory or possession of the
United States or by any international authority (a "Foreign
Jurisdiction"), other than any such Tax that would not have been
imposed but for, or the amount of which was increased as a result
of, the registration, operation, location or use of the Aircraft
or the operations of Owner in the Foreign Jurisdiction imposing
such Tax (but only to the extent attributable to the
registration, operation, location or use of the Aircraft or
activities of the Owner in such jurisdiction);
(k) relating to ERISA or Section 4975 of the
Code; or
(l) imposed with respect to any period after
termination of the Indenture, unless (i) such Taxes relate to
events, obligations or other matters arising or occurring prior
to or coincidental with such expiration or (ii) an Indenture
Event of Default shall have occurred and be continuing.
10.3.3 Payment
(a) Owner's indemnity obligation to a Tax
Indemnitee under this Section 10.3 shall equal the amount which,
after taking into account any Tax imposed upon the receipt or
27
accrual of the amounts payable under this Section 10.3 and
any tax benefits actually recognized by such Tax Indemnitee
(including, without limitation, any benefits recognized as a
result of an indemnifiable Tax being utilized by such Tax
Indemnitee as a credit against Taxes not indemnifiable under this
Section 10.3), as determined in good faith by the relevant Tax
Indemnitee (provided, that no Note Holder shall have any
obligation to claim any benefits, credits or deductions in
priority to any other benefits, credits or deductions available
to it), shall equal the amount of the Tax indemnifiable under
this Section 10.3.
(b) At Owner's request, the computation of the
amount of any indemnity payment owed by Owner or any amount owed
by a Tax Indemnitee to Owner pursuant to this Section 10.3 shall
be verified and certified by an independent public accounting
firm selected by such Tax Indemnitee and reasonably satisfactory
to Owner. Such verification shall be binding. The costs of such
verification (including the fee of such public accounting firm)
shall be borne by Owner unless such verification shall result in
an adjustment in Owner's favor of 5% or more of the net present
value of the payment as computed by such Tax Indemnitee, in which
case such costs shall be paid by such Tax Indemnitee.
(c) Each Tax Indemnitee shall provide Owner with
such certifications, information and documentation as shall be in
such Tax Indemnitee's possession and as shall be reasonably
requested by Owner to minimize any indemnity payment pursuant to
this Section 10.3; provided, that notwithstanding anything to the
contrary contained herein, no Tax Indemnitee shall be required to
provide Owner with any Tax returns.
(d) Each Tax Indemnitee shall promptly forward to
Owner any written notice, bill or advice received by it from any
Taxing Authority concerning any Tax for which it seeks
indemnification under this Section 10.3. Owner shall pay any
amount for which it is liable pursuant to this Section 10.3
directly to the appropriate Taxing Authority if legally
permissible or upon demand of a Tax Indemnitee, to such Tax
Indemnitee within 30 days of such demand (or, if a contest occurs
in accordance with Section 10.3.4, within 30 days after a Final
Determination (as defined below)), but in no event more than one
Business Day prior to the date the Tax to which such amount
payable hereunder relates is due. If requested by a Tax
Indemnitee in writing, Owner shall furnish to the appropriate Tax
Indemnitee the original or a certified copy of a receipt for
Owner's payment of any Tax paid by Owner or such other evidence
of payment of such Tax as is acceptable to such Tax Indemnitee.
Owner shall also furnish promptly upon written request such data
as any Tax Indemnitee may reasonably require to enable such Tax
28
Indemnitee to comply with the requirements of any taxing
jurisdiction unless such data is not reasonably available to
Owner or, unless such data is specifically requested by a Taxing
Authority, is not customarily furnished by domestic air carriers
under similar circumstances. For purposes of this Section 10.3, a
"Final Determination" shall mean (i) a decision, judgment, decree
or other order by any court of competent jurisdiction that occurs
pursuant to the provisions of Section 10.3.4, which decision,
judgment, decree or other order has become final and
unappealable, (ii) a closing agreement or settlement agreement
entered into in accordance with Section 10.3.4 that has become
binding and is not subject to further review or appeal (absent
fraud or misrepresentation), or (iii) the termination of
administrative proceedings and the expiration of the time for
instituting a claim in a court proceeding.
(e) If any Tax Indemnitee shall actually
recognize (as determined in good faith by the relevant Tax
Indemnitee) a tax benefit by reason of any Tax paid or
indemnified by Owner pursuant to this Section 10.3 (whether such
tax benefit shall be by means of a foreign tax credit,
depreciation or cost recovery deduction or otherwise) not
otherwise taken into account in computing such payment or
indemnity, such Tax Indemnitee shall pay to Owner an amount equal
to the lesser of
(i) the amount of such tax benefit plus
any tax benefit recognized as the result of any payment made
pursuant to this sentence, when, as, if, and to the extent,
recognized or
(ii) the amount of all payments pursuant
to this Section 10.3 by Owner to such Tax Indemnitee (less any
payments previously made by such Tax Indemnitee to Owner pursuant
to this Section 10.3.3(e))
(and the excess, if any, of the amount described in clause (i)
over the amount described in clause (ii) shall be carried forward
and applied to reduce pro tanto any subsequent obligations of
Owner to make payments pursuant to this Section 10.3); provided,
that such Tax Indemnitee shall not be required to make any
payment pursuant to this sentence if and so as long as an
Indenture Event of Default of a monetary nature has occurred and
is continuing.
If a tax benefit is later disallowed or denied, the
disallowance or denial shall be treated as a Tax indemnifiable
under Section 10.3.1 without regard to the provisions of Section
10.3.2 (other than Section 10.3.2(e)). Each such Tax Indemnitee
shall in good faith use reasonable efforts in filing its tax
returns and in dealing with Taxing Authorities to seek and claim
any such tax benefit (provided, that the Note Holders shall not
have any
29
obligation to claim any such benefits, credits or deductions in
priority to any other benefits, credits or deductions available
to it).
10.3.4 Contest
(a) If a written claim is made against a Tax
Indemnitee for Taxes with respect to which Owner could be liable
for payment or indemnity hereunder, or if a Tax Indemnitee makes
a determination that a Tax is due for which Owner could have an
indemnity obligation hereunder, such Tax Indemnitee shall
promptly give Owner notice in writing of such claim; (provided,
that failure to so notify Owner shall not relieve Owner of its
indemnity obligations hereunder unless such failure to notify
effectively forecloses Owner's rights to require a contest of
such claim) and shall take no action with respect to such claim
without the prior written consent of Owner for 30 days following
the receipt of such notice by Owner; provided, further, that, in
the case of a claim made against a Tax Indemnitee, if such Tax
Indemnitee shall be required by law to take action prior to the
end of such 30-day period, such Tax Indemnitee shall, in such
notice to Owner, so inform Owner, and such Tax Indemnitee shall
take no action for as long as it is legally able to do so (it
being understood that a Tax Indemnitee shall be entitled to pay
the tax claimed and sue for a refund prior to the end of such
30-day period if (i)(A) the failure to so pay the tax would
result in substantial penalties (unless immediately reimbursed by
Owner) and the act of paying the tax would not materially
prejudice the right to contest or (B) the failure to so pay would
result in criminal penalties and (ii) such Tax Indemnitee shall
take any action so required in connection with so paying the tax
in a manner that is the least prejudicial to the pursuit of the
contest). In addition, such Tax Indemnitee shall (provided, that
Owner shall have agreed to keep such information confidential
other than to the extent necessary in order to contest the claim)
furnish Owner with copies of any requests for information from
any Taxing Authority relating to such Taxes with respect to which
Owner may be required to indemnify hereunder. If requested by
Owner in writing within 30 days after its receipt of such notice,
such Tax Indemnitee shall, at the expense of Owner (including,
without limitation, all reasonable costs, expenses and reasonable
attorneys' and accountants' fees and disbursements), in good
faith contest (or, if permitted by applicable law and in such Tax
Indemnitee's sole discretion, allow Owner to contest) through
appropriate administrative and judicial proceedings (including,
without limitation, by pursuit of appeals, other than an appeal
to the U.S. Supreme Court) the validity, applicability or amount
of such Taxes by, in the relevant Tax Indemnitee's sole
discretion, (I) resisting payment thereof, (II) not paying the
same except under protest if protest is necessary and proper or
(III) if
30
the payment is made, using reasonable efforts to obtain a refund
thereof in an appropriate administrative and/or judicial
proceeding. Such Tax Indemnitee shall consult with Owner in good
faith regarding the manner of contesting such claim and shall
keep Owner reasonably informed regarding the progress of such
contest. If and to the extent the Tax Indemnitee is able to
separate the contested issue or issues from other issues arising
in the same administrative or judicial proceeding that are
unrelated to the transactions contemplated by the Operative
Agreements without, in the good faith judgment of such Tax
Indemnitee, adversely affecting such Tax Indemnitee or any
Affiliate, agent or customer thereof, such Tax Indemnitee shall
permit Owner to participate in the conduct of any such
proceeding. A Tax Indemnitee shall not fail to take any action
expressly required by this Section 10.3.4 (including, without
limitation, any action regarding any appeal of an adverse
determination with respect to any claim) or settle or compromise
any claim without the prior written consent of the Owner (except
as contemplated by Section 10.3.4(b) or (c)).
(b) Notwithstanding the foregoing, in no event
shall a Tax Indemnitee be required to pursue any contest (or to
permit Owner to pursue any contest) unless (i) Owner shall have
agreed to pay such Tax Indemnitee, on demand, all reasonable
costs and expenses incurred by such Tax Indemnitee in connection
with contesting such Taxes, including, without limitation, all
reasonable out of pocket costs and expenses and reasonable
attorneys' and accountants' fees and disbursements, (ii) if such
contest shall involve the payment of the claim, Owner shall
advance the amount thereof (to the extent indemnified hereunder)
plus interest, penalties and additions to tax with respect
thereto that are required to be paid prior to the commencement of
such contest on an interest-free after-Tax basis to such Tax
Indemnitee (and such Tax Indemnitee shall promptly pay to the
Owner any net realized tax benefits resulting from such advance
including any tax benefits resulting from making such payment to
the extent Owner realizes any net tax detriment from having made
the advance), (iii) no Indenture Default relating to payments or
bankruptcy or Indenture Event of Default shall have occurred and
be continuing unless Owner has provided security for its
obligations hereunder by advancing to such Tax Indemnitee before
proceeding or continuing with such contest, the amount of the Tax
being contested, plus any interest and penalties and an amount
estimated in good faith by such Tax Indemnitee for expenses and
(iv) prior to commencing any judicial action, Owner shall have
acknowledged its liability for such claim hereunder, provided
that Owner shall not be bound by its acknowledgment if the Final
Determination articulates conclusions of law and fact that
clearly and unambiguously demonstrate that Owner has no liability
for
31
the contested amounts hereunder. Notwithstanding the foregoing,
if any Tax Indemnitee shall release, waive, compromise or settle
any claim that may be indemnifiable by Owner pursuant to this
Section 10.3 without the written permission of Owner, Owner's
obligation to indemnify such Tax Indemnitee with respect to such
claim (and all directly related claims and claims based on the
outcome of such claim) shall terminate, subject to Section
10.3.4(c); and subject to Section 10.3.4(c), such Tax Indemnitee
shall repay to Owner any amount previously paid or advanced to
such Tax Indemnitee with respect to such claim, plus interest at
the rate that would have been payable by the relevant Taxing
Authority with respect to a refund of such Tax.
(c) Notwithstanding anything contained in this
Section 10.3, a Tax Indemnitee will not be required to contest
the imposition of any Tax and shall be permitted to settle or
compromise any claim without Owner's consent if such Tax
Indemnitee (i) shall waive its right to indemnity under this
Section 10.3 with respect to such Tax (and any directly related
claim and any claim the outcome of which is determined based upon
the outcome of such claim), (ii) shall pay to Owner any amount
previously paid or advanced by Owner pursuant to this Section
10.3 with respect to such Tax, plus interest at the rate that
would have been payable by the relevant Taxing Authority with
respect to a refund of such Tax, and (iii) shall agree to discuss
with Owner the views or positions of any relevant Taxing
Authority with respect to the imposition of such Tax; provided,
that if Owner has agreed in writing to settle a claim for a
stated amount and the relevant Tax Indemnitee settles the claim
at a higher amount, such Tax Indemnitee shall not be required to
waive the indemnity for such claim to the extent of the amount
agreed to by Owner.
10.3.5 Refund
If any Tax Indemnitee shall receive a refund of, or be
entitled to a credit against other liability for, all or any part
of any Taxes paid, reimbursed or advanced by Owner, such Tax
Indemnitee shall pay to Owner within 30 days of such receipt an
amount equal to the lesser of (a) the amount of such refund or
credit plus any net tax benefit (taking into account any Taxes
incurred by such Tax Indemnitee by reason of the receipt of such
refund or realization of such credit) actually recognized by such
Tax Indemnitee as a result of any payment by such Tax Indemnitee
made pursuant to this sentence (including this clause (a)) and
(b) such tax payment, reimbursement or advance by Owner to such
Tax Indemnitee theretofore made pursuant to this Section 10.3
(and the excess, if any, of the amount described in clause (a)
over the amount described in clause (b) shall be carried forward
and applied to reduce pro tanto any subsequent obligation of
32
Owner to make payments pursuant to this Section 10.3). If,
in addition to such refund or credit, such Tax Indemnitee
shall receive (or be credited with) an amount representing
interest on the amount of such refund or credit, such Tax
Indemnitee shall pay to Owner within 30 days of such
receipt or realization of such credit that proportion of such
interest that shall be fairly attributable to Taxes paid,
reimbursed or advanced by Owner prior to the receipt of such
refund or realization of such credit.
10.3.6 Tax Filing
If any report, return or statement is required to be
filed with respect to any Tax that is subject to indemnification
under this Section 10.3, Owner shall timely file the same (except
for any such report, return or statement that a Tax Indemnitee
has timely notified the Owner in writing that such Tax Indemnitee
intends to file, or for which such Tax Indemnitee is required by
law to file, in its own name); provided, that the relevant Tax
Indemnitee shall furnish Owner with any information in such Tax
Indemnitee's possession or control that is reasonably necessary
to file any such return, report or statement and is reasonably
requested in writing by Owner (it being understood that the Tax
Indemnitee shall not be required to furnish copies of its actual
tax returns, although it may be required to furnish relevant
information contained therein). Owner shall either file such
report, return or statement and send a copy of such report,
return or statement to such Tax Indemnitee, or, where Owner is
not permitted to file such report, return or statement, it shall
notify such Tax Indemnitee of such requirement and prepare and
deliver such report, return or statement to such Tax Indemnitee
in a manner satisfactory to such Tax Indemnitee within a
reasonable time prior to the time such report, return or
statement is to be filed.
10.3.7 Forms
Each Tax Indemnitee agrees to furnish from time to
time to Owner or Loan Trustee or to such other person as Owner or
Loan Trustee may designate, at Owner's or Loan Trustee's request,
such duly executed and properly completed forms as may be
necessary or appropriate in order to claim any reduction of or
exemption from any withholding or other Tax imposed by any Taxing
Authority, if (x) such reduction or exemption is available to
such Tax Indemnitee and (y) Owner has provided such Tax
Indemnitee with any information necessary to complete such form
not otherwise reasonably available to such Tax Indemnitee.
10.3.8 Non-Parties
33
If a Tax Indemnitee is not a party to this Agreement,
Owner may require the Tax Indemnitee to agree in writing, in a
form reasonably acceptable to Owner, (a) to the terms of this
Section 10.3, (b) to submit to the non-exclusive jurisdiction of
the courts of the State of New York and United States federal
courts, in each case sitting in The City of New York, Borough of
Manhattan to adjudicate any dispute arising under this Agreement
and (c) to waive any objection to such forum on the grounds of
forum non conveniens prior to making any payment to such Tax
Indemnitee under this Section 10.3.
10.3.9 Subrogation
Upon payment of any Tax by Owner pursuant to this
Section 10.3 to or on behalf of a Tax Indemnitee, Owner, without
any further action, shall be subrogated to any claims that such
Tax Indemnitee may have relating thereto. Such Tax Indemnitee
shall cooperate with Owner (to the extent such cooperation does
not result in any unreimbursed cost, expense or liability to such
Tax Indemnitee) to permit Owner to pursue such claims.
10.4 [Intentionally Omitted]
10.5 Payments
Any payments made pursuant to this Section 10 shall be
due on demand therefor and shall be made directly to the relevant
Indemnitee, Tax Indemnitee or Owner, as the case may be, in
immediately available funds at such bank or to such account as
specified by such Indemnitee, Tax Indemnitee or Owner, as the
case may be, in written directives to the payor, or, if no such
direction shall have been given, by check of the payor payable to
the order of, and mailed to, such Indemnitee, Tax Indemnitee or
Owner, as the case may be, by certified mail, postage prepaid, at
the payee's address as set forth in this Agreement.
10.6 Interest
If any amount, payable by Owner, any Indemnitee or any
Tax Indemnitee under this Section 10 is not paid when due, Owner,
such Indemnitee or such Tax Indemnitee shall pay on demand, to
the extent permitted by Law, to the person entitled thereto,
interest on any such amount for the period from and including the
due date for such amount to but excluding the date the same is
paid, at the Payment Due Rate. Such interest shall be paid in the
same manner as the unpaid amount in respect of which such
interest is due.
10.7 Benefit of Indemnities
The obligations of Owner in respect of all
34
indemnities, obligations, adjustments and payments in this
Section 10 are expressly made for the benefit of, and shall be
enforceable by, the Indemnitee or Tax Indemnitee entitled
thereto, without declaring the Indenture to be in default or
taking other action thereunder, and notwithstanding any provision
of the Indenture.
SECTION 11. Miscellaneous. (a) Provided that the
transactions contemplated hereby have been consummated, and
except as otherwise provided for herein, the representations,
warranties and agreements herein of the Owner, the Loan Trustee,
the Subordination Agent and the Pass Through Trustee, and the
Owner's, the Loan Trustee's, the Subordination Agent's and the
Pass Through Trustee's obligations under any and all thereof,
shall survive the expiration or other termination of this
Agreement and the other agreements referred to herein.
(b) This Agreement may be executed in any number of
counterparts (and each of the parties hereto shall not be
required to execute the same counterpart). Each counterpart of
this Agreement, including a signature page executed by each of
the parties hereto, shall be an original counterpart of this
Agreement, but all of such counterparts together shall constitute
one instrument. Neither this Agreement nor any of the terms
hereof may be terminated, amended, supplemented, waived or
modified orally, but only by an instrument in writing signed by
the party against which the enforcement of the termination,
amendment, supplement, waiver or modification is sought; and no
such termination, amendment, supplement, waiver or modification
shall be effective unless a signed copy thereof shall have been
delivered to the Loan Trustee. The index preceding this Agreement
and the headings of the various Sections of this Agreement are
for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions hereof. The terms
of this Agreement shall be binding upon, and shall inure to the
benefit of, the Owner and its successors and permitted assigns,
the Pass Through Trustee and its successors as Pass Through
Trustee (and any additional trustee appointed) under any of the
Pass Through Trust Agreements, the Loan Trustee and its
successors as Loan Trustee (and any additional Loan Trustee
appointed) under the Indenture and the Subordination Agent and
its successors as Subordination Agent under the Intercreditor
Agreement.
(c) This Agreement is not intended to, and shall not,
provide any person not a party hereto (other than the Liquidity
Provider, which is an intended third-party beneficiary with
respect to the provisions of Section 10.1) with any rights of any
nature whatsoever against any of the parties hereto, and no
person not a party hereto (other than the Liquidity Provider with
respect to the provisions of Section 10.1) shall have any
35
right, power or privilege in respect of, or have any benefit
or interest arising out of, this Agreement.
SECTION 12. Governing Law. THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. THIS AGREEMENT IS BEING DELIVERED IN THE
STATE OF NEW YORK.
36
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective officers
thereunto duly authorized as of the day and year first above
written.
CONTINENTAL AIRLINES, INC.,
as Owner
By _________________________________
Name:
Title:
Address: 2929 Allen Parkway
Suite 2010
Houston, TX 77019
Attention: Senior Vice
President and Chief Financial
Officer
Facsimile: (713) 520-6329
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as
otherwise provided herein, but solely
as Loan Trustee, Pass Through Trustee
and Subordination Agent
By__________________________________
Name:
Title:
Address: One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust
Administration
Facsimile: (302) 651-8882
SCHEDULE I to
Note Purchase Agreement
PASS THROUGH TRUST AGREEMENTS
1. Continental Airlines 1996-2A Pass Through Trust Agreement.
2. Continental Airlines 1996-2B Pass Through Trust Agreement.
3. Continental Airlines 1996-2C Pass Through Trust Agreement.
4. Continental Airlines 1996-2D Pass Through Trust Agreement.
SCHEDULE II to
Note Purchase Agreement
637
EQUIPMENT NOTES, PURCHASERS AND PURCHASE PRICE
Purchaser Interest Rate and Maturity Principal Amount
Continental
Airlines Pass
Through Trust
1996-2A 7.75% Equipment Notes due $9,449,333
4/2/2008
1996-2B 8.56% Equipment Notes due 4,050,000
4/2/2008
1996-2C 10.22% Equipment Notes due 4,050,000
4/2/2008
1996-2D 11.50% Equipment Notes due 4,050,519
4/2/2008
---------------------------------------------------------------------
TRUST INDENTURE AND MORTGAGE 637
Dated as of May 20, 1996
Between
CONTINENTAL AIRLINES, INC.,
Owner
and
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly stated herein,
but solely as Loan Trustee,
Loan Trustee
---------------------------------------------------------------------
EQUIPMENT NOTES COVERING
ONE BOEING 737-524 AIRCRAFT
BEARING U.S. REGISTRATION MARK N33637
---------------------------------------------------------------------
TABLE OF CONTENTS
Page
GRANTING CLAUSE......................................................... 1
ARTICLE I DEFINITIONS.............................................. 4
ARTICLE II THE EQUIPMENT NOTES...................................... 4
SECTION 2.01. Form of Equipment Notes.................................4
SECTION 2.02. Issuance and Terms of Equipment Notes...................8
SECTION 2.03. [Intentionally Omitted]................................10
SECTION 2.04. Method of Payment......................................10
SECTION 2.05. Application of Payments................................12
SECTION 2.06. Termination of Interest in Collateral..................13
SECTION 2.07. Registration, Transfer and Exchange
of Equipment Notes...................................13
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Equipment Notes......................................14
SECTION 2.09. Payment of Expenses on Transfer; Cancellation..........15
SECTION 2.10. Mandatory Redemptions of Equipment Notes...............15
SECTION 2.11. Voluntary Redemptions of Equipment Notes...............15
SECTION 2.12. Redemptions; Notice of Redemption......................16
SECTION 2.13. Subordination..........................................16
ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF
PAYMENTS.................................................17
SECTION 3.01. Distribution of Payments...............................17
SECTION 3.02. Event of Loss; Replacement; Optional Redemption........18
SECTION 3.03. Payments After Event of Default........................20
SECTION 3.04. Certain Payments.......................................22
SECTION 3.05. Other Payments.........................................22
ARTICLE IV COVENANTS OF THE OWNER...................................23
SECTION 4.01. Liens..................................................23
SECTION 4.02. Possession, Operation and Use, Maintenance,
Registration and Insignia............................23
SECTION 4.03. Inspection.............................................29
SECTION 4.04. Replacement and Pooling of Parts; Alterations,
Modifications and Additions; Substitution
of Engines...........................................30
SECTION 4.05. Loss, Destruction or Requisition.......................33
SECTION 4.06. Insurance..............................................38
SECTION 4.07. Filings................................................43
SECTION 4.08. Corporate Existence....................................43
SECTION 4.09. Merger, Consolidation, Etc.............................43
ARTICLE V EVENTS OF DEFAULT; REMEDIES OF LOAN TRUSTEE..............44
SECTION 5.01. Event of Default.......................................44
SECTION 5.02. Remedies...............................................46
SECTION 5.03. Return of Aircraft, Etc................................47
i
SECTION 5.04. Remedies Cumulative....................................48
SECTION 5.05. Discontinuance of Proceedings..........................48
SECTION 5.06. Waiver of Past Defaults................................49
SECTION 5.07. Appointment of Receiver................................49
SECTION 5.08. Loan Trustee Authorized to Execute Bills
of Sale, Etc.........................................49
SECTION 5.09. Rights of Note Holders to Receive Payment..............49
ARTICLE VI DUTIES OF THE LOAN TRUSTEE...............................50
SECTION 6.01. Notice of Event of Default.............................50
SECTION 6.02. Action Upon Instructions; Certain Rights and
Limitations..........................................50
SECTION 6.03. Indemnification........................................51
SECTION 6.04. No Duties Except as Specified in Trust
Indenture or Instructions............................51
SECTION 6.05. No Action Except Under Trust Indenture
or Instructions......................................52
SECTION 6.06. Investment of Amounts Held by Loan Trustee.............52
ARTICLE VII THE LOAN TRUSTEE.........................................52
SECTION 7.01. Acceptance of Trusts and Duties........................52
SECTION 7.02. Absence of Duties......................................53
SECTION 7.03. No Representations or Warranties as to Aircraft
or Documents.........................................53
SECTION 7.04. No Segregation of Monies; No Interest..................53
SECTION 7.05. Reliance; Agreements; Advice of Counsel................54
SECTION 7.06. Compensation...........................................54
SECTION 7.07. Instructions from Note Holders.........................55
ARTICLE VIII INDEMNIFICATION.........................................55
SECTION 8.01. Scope of Indemnification...............................55
ARTICLE IX SUCCESSOR AND SEPARATE TRUSTEES..........................55
SECTION 9.01. Resignation of Loan Trustee; Appointment
of Successor.........................................55
SECTION 9.02. Appointment of Additional and Separate Trustees........56
ARTICLE X SUPPLEMENTS AND AMENDMENTS TO THIS TRUST
INDENTURE AND OTHER DOCUMENTS............................58
SECTION 10.01. Instructions of Majority; Limitations.................58
SECTION 10.02. Trustee Protected.....................................59
SECTION 10.03. Documents Mailed to Note Holders......................59
SECTION 10.04. No Request Necessary for Trust
Indenture Supplement................................59
ii
ARTICLE XI MISCELLANEOUS............................................60
SECTION 11.01. Termination of Trust Indenture........................60
SECTION 11.02. No Legal Title to Collateral in Note Holders..........60
SECTION 11.03. Sale of Aircraft by Loan Trustee Is Binding...........60
SECTION 11.04. Trust Indenture for Benefit of Owner, Loan
Trustee, and Note Holders...........................60
SECTION 11.05. Notices...............................................61
SECTION 11.06. Severability..........................................61
SECTION 11.07. No Oral Modification or Continuing Waivers............61
SECTION 11.08. Successors and Assigns................................61
SECTION 11.09. Headings..............................................62
SECTION 11.10. Governing Law; Counterpart Form.......................62
SECTION 11.11. Voting By Note Holders................................62
SECTION 11.12. Bankruptcy............................................62
ANNEX A Definitions
EXHIBIT A Form of Trust Indenture and Mortgage Supplement
SCHEDULE I Equipment Notes Amortization
iii
TRUST INDENTURE AND MORTGAGE 637
TRUST INDENTURE AND MORTGAGE 637, dated as of May 20,
1996 ("Trust Indenture") between CONTINENTAL AIRLINES, INC., a
Delaware corporation ("Owner"), and WILMINGTON TRUST COMPANY, a
Delaware banking corporation, not in its individual capacity,
except as expressly stated herein, but solely as Loan Trustee
hereunder (together with its successors hereunder, the "Loan
Trustee").
W I T N E S S E T H
WHEREAS, all capitalized terms used herein shall have
the respective meanings set forth or referred to in Article I
hereof;
WHEREAS, the parties desire by this Trust Indenture,
among other things, (i) to provide for the issuance by the Owner
of the Equipment Notes and (ii) to provide for the assignment,
mortgage and pledge by the Owner to the Loan Trustee, as part of
the Collateral hereunder, among other things, of all of the
Owner's right, title and interest in and to the Aircraft and,
except as hereinafter expressly provided, all payments and other
amounts received hereunder in accordance with the terms hereof,
as security for, among other things, the Owner's obligations to
the Loan Trustee, for the ratable benefit and security of the
Note Holders;
WHEREAS, all things have been done to make the
Equipment Notes, when executed by the Owner and authenticated and
delivered by the Loan Trustee hereunder, the valid, binding and
enforceable obligations of the Owner; and
WHEREAS, all things necessary to make this Trust
Indenture the valid, binding and legal obligation of the Owner
for the uses and purposes herein set forth, in accordance with
its terms, have been done and performed and have happened;
GRANTING CLAUSE
NOW, THEREFORE, THIS TRUST INDENTURE WITNESSETH, that,
to secure the prompt payment of the Original Amount of, interest
on, Make-Whole Amount, if any, and all other amounts due with
respect to, all Equipment Notes from time to time outstanding
hereunder according to their tenor and effect and to secure the
performance and observance by the Owner of all the agreements,
covenants and provisions contained herein and in the Equipment
Notes, for the benefit of the Note Holders and in consideration
of the premises and of the covenants herein contained, and of the
acceptance of the Equipment Notes by the holders thereof, and for
other good and valuable consideration, the receipt and adequacy
whereof are hereby acknowledged, the Owner has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged,
pledged and confirmed, and does hereby grant, bargain, sell,
assign, transfer, convey, mortgage, pledge and confirm, unto the
1
Loan Trustee, its successors in trust and assigns, for the
security and benefit of the Note Holders, a first priority
security interest in and mortgage lien on all right, title and
interest of the Owner in, to and under the following described
property, rights and privileges, whether now or hereafter
acquired (which collectively, including all property hereafter
specifically subjected to the Lien of this Trust Indenture by the
terms hereof or any supplement hereto, are included within, and
are referred to as, the "Collateral"), to wit:
(1) The Airframe which is one Boeing 737-524 aircraft
with the FAA Registration number of N33637 and the manufacturer's
serial number of 27540 and Engines, each of which Engines is a
CFM International, Inc. 56-3 engine with the manufacturer's
serial numbers of 858302 and 858306, is of 750 or more rated
takeoff horsepower or the equivalent of such horsepower as the
same is now and will hereafter be constituted, whether now owned
by the Owner or hereafter acquired, and in the case of such
Engines, whether or not any such Engine shall be installed on or
attached to the Airframe or any other airframe, together with all
Parts of whatever nature, which are from time to time included
within the definitions of "Airframe" or "Engines", whether now
owned or hereafter acquired, including all substitutions,
renewals and replacements of and additions, improvements,
accessions and accumulations to the Airframe and Engines (other
than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances,
accessories, furnishings or other equipment excluded from the
definition of Parts);
(2) All logs, records and data, non-proprietary
manuals supplied to the Owner by vendors and manufacturers (to
the extent the same can be so assigned without the consent of any
such vendor or manufacturer) and inspection, modification,
maintenance and overhaul records and other documents, in each
case, maintained in respect of the Airframe and Engines,
including without limitation all such logs, records, data and
other documents maintained pursuant to requirements of the FAA
(collectively, "Aircraft Documents");
(3) The Purchase Agreement and the Bills of Sale to
the extent the same relate to continuing rights of the Owner in
respect of any warranty, indemnity or agreement, express or
implied, as to title, materials, workmanship, design or patent
infringement or related matters with respect to the Airframe or
the Engines (reserving to the Owner, however, all of the Owner's
other rights and interest in and to the Purchase Agreement)
together with all rights, powers, privileges, options and other
benefits of the Owner thereunder (subject to such reservation)
with respect to the Airframe or the Engines, including, without
limitation, the right to make all waivers and agreements, to give
and receive all notices and other instruments or communications,
to take such action upon the occurrence of a default thereunder,
including the commencement, conduct and consummation of legal,
administrative or other proceedings, as shall be permitted
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thereby or by law, and to do any and all other things which the
Owner is or may be entitled to do thereunder (subject to such
reservation), subject, with respect to the Purchase Agreement, to
the terms and conditions of the Consent and Agreement;
(4) All proceeds with respect to the requisition of
title to the Aircraft or any part thereof or any other property
described in any of these Granting Clauses or from the sale or
other disposition of the Aircraft or such part or other property
described in any of these Granting Clauses by the Loan Trustee
pursuant to the terms of this Trust Indenture, and all insurance
proceeds with respect to the Aircraft or any part thereof, but
excluding any insurance maintained by the Owner and not required
under Section 4.06;
(5) All moneys and securities now or hereafter paid or
deposited or required to be paid or deposited to or with the Loan
Trustee by or for the account of the Owner pursuant to any term
hereof or held or required to be held by the Loan Trustee
hereunder; and
(6) All proceeds of the foregoing.
PROVIDED, HOWEVER, that notwithstanding any of the
foregoing provisions, so long as no Event of Default shall have
occurred and be continuing under any Indenture, (a) the Loan
Trustee shall not take or cause to be taken any action contrary
to the Owner's right hereunder to quiet enjoyment of the Airframe
and Engines, and to possess, use, retain and control the Airframe
and Engines and all revenues, income and profits derived
therefrom, and (b) the Owner shall have the right, to the
exclusion of the Loan Trustee, with respect to the Purchase
Agreement, to exercise in the Owner's name all rights and powers
of the buyer under the Purchase Agreement (other than to amend,
modify or waive any of the warranties or indemnities contained
therein, except in the exercise of the Owner's reasonable
business judgment) and to retain any recovery or benefit
resulting from the enforcement of any warranty or indemnity under
the Purchase Agreement; and provided further that,
notwithstanding the occurrence or continuation of an Event of
Default, the Loan Trustee shall not enter into any amendment of
the Purchase Agreement which would increase the obligations of
the Owner thereunder.
TO HAVE AND TO HOLD all and singular the aforesaid
property unto the Loan Trustee, and its successors and assigns,
in trust for the equal and proportionate benefit and security of
the Note Holders, except as provided in Section 2.13 and Article
III hereof without any preference, distinction or priority of any
one Equipment Note over any other by reason of priority of time
of issue, sale, negotiation, date of maturity thereof or
otherwise for any reason whatsoever, and for the uses and
purposes and in all cases and as to all property specified in
paragraphs (1) through (6) inclusive above, subject to the terms
and provisions set forth in this Trust Indenture.
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It is expressly agreed that anything herein contained
to the contrary notwithstanding, the Owner shall remain liable
under the Indenture Agreements, to perform all of the obligations
assumed by it thereunder, except to the extent prohibited or
excluded from doing so pursuant to the terms and provisions
thereof, and the Loan Trustee, and the Note Holders shall have no
obligation or liability under the Indenture Agreements, by reason
of or arising out of the assignment hereunder, nor shall the Loan
Trustee or the Note Holders be required or obligated in any
manner to perform or fulfill any obligations of the Owner under
or pursuant to the Indenture Agreements, or, except as herein
expressly provided, to make any payment, or to make any inquiry
as to the nature or sufficiency of any payment received by it, or
present or file any claim, or take any action to collect or
enforce the payment of any amounts which may have been assigned
to it or to which it may be entitled at any time or times.
The Owner does hereby constitute the Loan Trustee the
true and lawful attorney of the Owner, irrevocably, granted for
good and valuable consideration and coupled with an interest and
with full power of substitution, and with full power (in the name
of the Owner or otherwise) to ask for, require, demand, receive,
compound and give acquittance for any and all monies and claims
for monies (in each case including insurance and requisition
proceeds), due and to become due under or arising out of the
Indenture Agreements, and all other property which now or
hereafter constitutes part of the Collateral, to endorse any
checks or other instruments or orders in connection therewith and
to file any claims or to take any action or to institute any
proceedings which the Loan Trustee may deem to be necessary or
advisable in the premises; provided that the Loan Trustee shall
not exercise any such rights except upon the occurrence and
during the continuance of an Event of Default hereunder.
The Owner agrees that at any time and from time to
time, upon the written request of the Loan Trustee, the Owner
will promptly and duly execute and deliver or cause to be duly
executed and delivered any and all such further instruments and
documents as the Loan Trustee may reasonably deem necessary or
desirable to perfect, preserve or protect the mortgage, security
interests and assignments created or intended to be created
hereby or to obtain for the Loan Trustee the full benefits of the
assignment hereunder and of the rights and powers herein granted.
IT IS HEREBY COVENANTED AND AGREED by and between the
parties hereto as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used but not defined herein shall
have the respective meanings set forth or incorporated by
reference, and shall be construed in the manner described, in
Annex A hereto.
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ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes
The Equipment Notes shall be
substantially in the form set forth
below:
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO
THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT
NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND
SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH
REGISTRATIONS IS AVAILABLE.
CONTINENTAL AIRLINES, INC.
SERIES [_____] EQUIPMENT NOTE DUE [______________] ISSUED IN
CONNECTION WITH THE BOEING MODEL 737-524 AIRCRAFT BEARING UNITED
STATES REGISTRATION NUMBER N33637.
No. _____ Date: [________,
$______________________
INTEREST RATE MATURITY DATE
[_______] [__________, ____]
CONTINENTAL AIRLINES, INC., a Delaware corporation
(the "Owner") hereby promises to pay to _______________, or the
registered assignee thereof, the principal sum of $__________
(the "Original Amount"), together with interest on the amount of
the Original Amount remaining unpaid from time to time
(calculated on the basis of a year of 360 days comprised of
twelve 30-day months) from the date hereof until paid in full at
a rate per annum equal to the Debt Rate. The Original Amount of
this Equipment Note shall be payable in installments on the dates
set forth in Schedule I hereto equal to the corresponding
percentage of the Original Amount of this Equipment Note set
forth in Schedule I hereto. Accrued but unpaid interest shall be
due and payable in quarterly installments commencing on July 2,
1996, and thereafter on October 2, January 2, April 2 and July 2
of each year, to and including _________, ____. Notwithstanding
the foregoing, the final payment made on this Equipment Note
shall be in an amount sufficient to discharge in full the unpaid
Original Amount and all accrued and unpaid interest on, and any
other amounts due under, this Equipment Note. Notwithstanding
anything to the contrary contained herein, if any date on which a
payment under this Equipment Note becomes due and payable is not
a Business Day then such payment shall not be made on such
scheduled date but shall be made on the next succeeding Business
Day and if such payment is made on such next succeeding Business
Day, no interest shall accrue on the amount of such payment
during such extension.
5
For purposes hereof, the term "Trust Indenture" means
the Trust Indenture and Mortgage 637, dated as of May 20, 1996,
between the Owner and Wilmington Trust Company (the "Loan
Trustee"), as the same may be amended or supplemented from time
to time. All other capitalized terms used in this Equipment Note
and not defined herein shall have the respective meanings
assigned in the Trust Indenture.
This Equipment Note shall bear interest, payable on
demand, at the Payment Due Rate (calculated on the basis of a
year of 360 days comprised of twelve 30-day months) on any
overdue Original Amount, any overdue Make-Whole Amount, if any,
and (to the extent permitted by applicable Law) any overdue
interest and any other amounts payable hereunder which are
overdue, in each case for the period the same is overdue. Amounts
shall be overdue if not paid when due (whether at stated
maturity, by acceleration or otherwise).
The interest rate borne by this Equipment Note shall
be subject to adjustments to the extent, and under the
circumstances, specified by the Registration Rights Agreement.
There shall be maintained an Equipment Note Register
for the purpose of registering transfers and exchanges of
Equipment Notes at the Corporate Trust Office of the Loan Trustee
or at the office of any successor in the manner provided in
Section 2.07 of the Trust Indenture.
The Original Amount and interest and other amounts due
hereunder shall be payable in Dollars in immediately available
funds at the Corporate Trust Office of the Loan Trustee, or as
otherwise provided in the Trust Indenture. Each such payment
shall be made on the date such payment is due and without any
presentment or surrender of this Equipment Note, except that in
the case of any final payment with respect to this Equipment
Note, the Equipment Note shall be surrendered promptly thereafter
by the Loan Trustee to the Owner for cancellation.
The holder hereof, by its acceptance of this Equipment
Note, agrees that, except as provided in the Trust Indenture,
each payment received by it hereunder shall be applied, first, to
the payment of accrued interest on this Equipment Note (as well
as any interest on any overdue Original Amount, any overdue
Make-Whole Amount, if any, or, to the extent permitted by Law,
any overdue interest and other amounts hereunder) to the date of
such payment, second, to the payment of the Original Amount of
this Equipment Note then due, third, to the payment of Make-Whole
Amount, if any, and any other amount due hereunder or under the
Trust Indenture, and fourth, the balance, if any, remaining
thereafter, to the payment of Original Amount of this Equipment
Note remaining unpaid in the inverse order of their normal
maturity.
This Equipment Note is one of the Equipment Notes
referred to in the Trust Indenture which have been or are to be
6
issued by the Owner pursuant to the terms of the Trust Indenture.
The Collateral is held by the Loan Trustee as security, in part,
for the Equipment Notes. The provisions of this Equipment Note
are subject to the Trust Indenture. Reference is hereby made to
the Trust Indenture for a complete statement of the rights and
obligations of the holder of, and the nature and extent of the
security for, this Equipment Note and the rights and obligations
of the holders of, and the nature and extent of the security for,
any other Equipment Notes executed and delivered under the Trust
Indenture, as well as for a statement of the terms and conditions
of the Trust created by the Trust Indenture, to all of which
terms and conditions in the Trust Indenture each holder hereof
agrees by its acceptance of this Equipment Note.
As provided in the Trust Indenture and subject to
certain limitations therein set forth, this Equipment Note is
exchangeable for a like aggregate Original Amount of Equipment
Notes of different authorized denominations, as requested by the
holder surrendering the same.
Prior to due presentment for registration of transfer
of this Equipment Note, the Owner and the Loan Trustee shall
treat the person in whose name this Equipment Note is registered
as the owner hereof for all purposes, whether or not this
Equipment Note be overdue, and neither of the Owner nor the Loan
Trustee shall be affected by notice to the contrary.
7
This Equipment Note is subject to redemption as
provided in Sections 2.10, 2.11 and 2.12 of the Trust Indenture
but not otherwise.
[The indebtedness evidenced by this Equipment Note is,
to the extent and in the manner provided in the Trust Indenture,
subordinate and subject in right of payment to the prior payment
in full of the Secured Obligations (as defined in the Trust
Indenture) in respect of [Series A Equipment Notes]1 [Series A
and Series B Equipment Notes]2 [Series A, Series B and Series C
Equipment Notes]3, and this Equipment Note is issued subject to
such provisions. The Note Holder of this Equipment Note, by
accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Loan Trustee on his
behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in the Trust Indenture
and (c) appoints the Loan Trustee his attorney-in-fact for such
purpose.]*
Unless the certificate of authentication hereon has
been executed by or on behalf of the Loan Trustee by manual
signature, this Equipment Note shall not be entitled to any
benefit under the Trust Indenture or be valid or obligatory for
any purpose.
THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
IN WITNESS WHEREOF, the Owner has caused this
Equipment Note to be executed in its corporate name by its
officer thereunto duly authorized on the date hereof.
CONTINENTAL AIRLINES, INC.
By_________________________________
Name:
Title:
- ---------------
1. To be inserted in the case of a Series B Equipment Note.
2. To be inserted in the case of a Series C Equipment Note.
3. To be inserted in the case of a Series D Equipment Note.
* To be inserted for each Equipment Note other than any
Series A Equipment Note.
8
LOAN TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the
within-mentioned Trust Indenture.
WILMINGTON TRUST COMPANY,
as Loan Trustee
By____________________________
Name:
Title:
SCHEDULE I
EQUIPMENT NOTE AMORTIZATION
Percentage of
Original Amount to
Payment Date be Paid
------------ ------------------
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. Issuance and Terms of Equipment Notes
The Equipment Notes shall be dated the date of
issuance thereof, shall be issued in four separate series
consisting of Series A, Series B, Series C and Series D and in
the maturities and principal amounts and shall bear interest as
specified in Schedule I hereto. On the date hereof, each Initial
Equipment Note shall be issued to the Pass Through Trustees (or
their designee) under the Pass Through Trust Agreements as shall
be set forth in Schedule II to be attached hereto in connection
therewith. The Equipment Notes shall be issued in registered form
only. The Equipment Notes shall be issued in denominations of
$1,000 and integral multiples thereof, except that one Equipment
Note of each Series may be in an amount that is not an integral
multiple of $1,000.
9
Each Equipment Note shall bear interest at the Debt
Rate (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) on the unpaid Original Amount thereof from
time to time outstanding, payable in arrears on July 2, 1996, and
on each October 2, January 2, April 2, and July 2 thereafter
until maturity. The Original Amount of each Equipment Note shall
be payable on the dates and in the installments equal to the
corresponding percentage of the Original Amount as set forth in
Schedule I hereto which shall be attached as Schedule I to the
Equipment Notes. Notwithstanding the foregoing, the final payment
made under each Equipment Note shall be in an amount sufficient
to discharge in full the unpaid Original Amount and all accrued
and unpaid interest on, and any other amounts due under, such
Equipment Note. Each Equipment Note shall bear interest at the
Payment Due Rate (calculated on the basis of a year of 360 days
comprised of twelve 30-day months) on any part of the Original
Amount, Make-Whole Amount, if any, and to the extent permitted by
applicable Law, interest and any other amounts payable thereunder
not paid when due for any period during which the same shall be
overdue, in each case for the period the same is overdue. Amounts
shall be overdue if not paid when due (whether at stated
maturity, by acceleration or otherwise). Notwithstanding anything
to the contrary contained herein, if any date on which a payment
under any Equipment Note becomes due and payable is not a
Business Day then such payment shall not be made on such
scheduled date but shall be made on the next succeeding Business
Day and if such payment is made on such next succeeding Business
Day, no interest shall accrue on the amount of such payment
during such extension.
The Owner agrees to pay to the Loan Trustee for
distribution in accordance with Section 3.04 hereof (a) any and
all indemnity amounts payable by the Owner to (i) the Loan
Trustee in its individual capacity, (ii) the Note Holders, (iii)
the Subordination Agent, (iv) the Liquidity Provider and (v) the
10
Pass Through Trustees, in each case pursuant to Section 10.1 of
the Note Purchase Agreement, (b) (i) an amount equal to the fees
payable to the Liquidity Provider under Section 2.03 of each
Liquidity Facility and the related Fee Letter (as defined in the
Intercreditor Agreement) multiplied by a fraction the numerator
of which shall be the then outstanding aggregate principal amount
of the Series A Equipment Notes, Series B Equipment Notes and
Series C Equipment Notes and the denominator of which shall be
the then outstanding aggregate principal amount of all "Series A
Equipment Notes", "Series B Equipment Notes" and "Series C
Equipment Notes" (as defined in each of the Operative Leases and
hereunder); (ii) (x) the amount equal to interest on any
Downgrade Advance (other than any Applied Downgrade Advance)
payable under Section 3.07(a)(i) of each Liquidity Facility minus
Investment Earnings from such Downgrade Advance multiplied by (y)
the fraction specified in the foregoing clause (i); (iii) if any
payment default shall have occurred and be continuing with
respect to interest on any Series A Equipment Note, Series B
Equipment Note or Series C Equipment Note, (x) the amount equal
to interest on any Unpaid Advance or Applied Downgrade Advance
payable under Section 3.07(a)(i) of each Liquidity Facility minus
Investment Earnings from any Final Advance multiplied by (y) a
fraction the numerator of which shall be the then aggregate
overdue amounts of interest on the Series A Equipment Notes,
Series B Equipment Notes and Series C Equipment Notes (other than
interest becoming due and payable solely as a result of the
acceleration of any such Equipment Notes) and the denominator of
which shall be the aggregate overdue amounts of interest on all
"Series A Equipment Notes", "Series B Equipment Notes" and
"Series C Equipment Notes" (as defined in each of the Operative
Leases and hereunder) (other than interest becoming due and
payable solely as a result of acceleration of any such "Equipment
Notes"); and (iv) Owner's pro rata share of any other amounts
owed to the Liquidity Provider by the Subordination Agent as
borrower under each Liquidity Facility (other than amounts due as
repayment of advances thereunder or as interest on such advances,
except to the extent payable pursuant to clause (ii) or (iii)
above) and any other amounts owed to the Liquidity Provider under
Section 9 of the Note Purchase Agreement and Section 11 of each
Refunding Agreement, (c) Owner's pro rata share of all
compensation and reimbursement of expenses, disbursements and
advances payable by Owner under the Pass Through Trust Agreements
and (d) Owner's pro rata share of all compensation and
reimbursement of expenses and disbursements payable to the
Subordination Agent under the Intercreditor Agreement except with
respect to any income or franchise taxes incurred by the
Subordination Agent in connection with the transactions
contemplated by the Intercreditor Agreement. As used herein,
"Owner's pro rata share" means as of any time a fraction, the
numerator of which is the principal balance then outstanding of
the Equipment Notes and the denominator of which is the aggregate
principal balance then outstanding of (x) the Equipment Notes and
(y) all "Equipment Notes" issued under (and as defined in) each
of the Refunding Agreements. For purposes of this paragraph,
"Applied Downgrade Advance", "Cash Collateral Account",
11
"Downgrade Advance", "Final Advance", "Investment Earnings" and
"Unpaid Advance" shall have the meanings specified in each
Liquidity Facility.
The Equipment Notes shall be executed on behalf of the
Owner by its President or one of its Vice Presidents or other
authorized officer. Equipment Notes bearing the signatures of
individuals who were at any time the proper officers of the Owner
shall bind the Owner, notwithstanding that such individuals or
any of them have ceased to hold such offices prior to the
authentication and delivery of such Equipment Notes or did not
hold such offices at the respective dates of such Equipment
Notes. The Owner may from time to time execute and deliver
Equipment Notes with respect to the Aircraft to the Loan Trustee
for authentication upon original issue and such Equipment Notes
shall thereupon be authenticated and delivered by the Loan
Trustee upon the written request of the Owner signed by a Vice
President or other authorized officer of the Owner; provided,
however, that each such request shall specify the aggregate
Original Amount of all Equipment Notes to be authenticated
hereunder on original issue with respect to the Aircraft. No
Equipment Note shall be secured by or entitled to any benefit
under this Trust Indenture or be valid or obligatory for any
purposes, unless there appears on such Equipment Note a
certificate of authentication in the form provided for herein
executed by the Loan Trustee by the manual signature of one of
its authorized officers and such certificate upon any Equipment
Notes shall be conclusive evidence, and the only evidence, that
such Equipment Note has been duly authenticated and delivered
hereunder.
The aggregate Original Amount of the Equipment Notes
to be issued and outstanding hereunder shall be $21,599,852.
SECTION 2.03. [Intentionally Omitted]
SECTION 2.04. Method of Payment
(a) The Original Amount of, interest on, Make-Whole
Amount, if any, and other amounts due under each Equipment Note
or hereunder will be payable in Dollars by wire transfer of
immediately available funds not later than 12:00 noon, New York
City time, on the due date of payment to the Loan Trustee at the
Corporate Trust Office for distribution among the Note Holders in
the manner provided herein. The Owner shall not have any
responsibility for the distribution of such payment to any Note
Holder. Notwithstanding the foregoing or any provision in any
Equipment Note to the contrary, the Loan Trustee will use
reasonable efforts to pay or cause to be paid, if so directed in
writing by any Note Holder (with a copy to the Owner), all
amounts paid by the Owner hereunder and under such holder's
Equipment Note or Equipment Notes to such holder or a nominee
therefor (including all amounts distributed pursuant to Article
III of this Trust Indenture) by transferring, or causing to be
transferred, by wire transfer of immediately available funds in
12
Dollars, prior to 2:00 p.m., New York City time, on the due date
of payment, to an account maintained by such holder with a bank
located in the continental United States the amount to be
distributed to such holder, for credit to the account of such
holder maintained at such bank. If the Loan Trustee shall fail to
make any such payment as provided in the immediately foregoing
sentence after its receipt of funds at the place and prior to the
time specified above, the Loan Trustee, in its individual
capacity and not as trustee, agrees to compensate such holders
for loss of use of funds at the Debt Rate until such payment is
made and the Loan Trustee shall be entitled to any interest
earned on such funds until such payment is made. Any payment made
hereunder shall be made without any presentment or surrender of
any Equipment Note, except that, in the case of the final payment
in respect of any Equipment Note, such Equipment Note shall be
surrendered to the Loan Trustee for cancellation promptly after
such payment. Notwithstanding any other provision of this Trust
Indenture to the contrary, the Loan Trustee shall not be required
to make, or cause to be made, wire transfers as aforesaid prior
to the first Business Day on which it is practicable for the Loan
Trustee to do so in view of the time of day when the funds to be
so transferred were received by it if such funds were received
after 12:00 noon, New York City time, at the place of payment.
Prior to the due presentment for registration of transfer of any
Equipment Note, the Owner and the Loan Trustee shall deem and
treat the Person in whose name any Equipment Note is registered
on the Equipment Note Register as the absolute owner and holder
of such Equipment Note for the purpose of receiving payment of
all amounts payable with respect to such Equipment Note and for
all other purposes, and none of the Owner or the Loan Trustee
shall be affected by any notice to the contrary.
(b) The Loan Trustee, as agent for the Owner, shall
exclude and withhold at the appropriate rate from each payment of
Original Amount of, interest on, Make-Whole Amount, if any, and
other amounts due hereunder or under each Equipment Note (and
such exclusion and withholding shall constitute payment in
respect of such Equipment Note) any and all United States
withholding taxes applicable thereto as required by Law. The Loan
Trustee agrees to act as such withholding agent and, in
connection therewith, whenever any present or future United
States taxes or similar charges are required to be withheld with
respect to any amounts payable hereunder or in respect of the
Equipment Notes, to withhold such amounts and timely pay the same
to the appropriate authority in the name of and on behalf of the
Note Holders, that it will file any necessary United States
withholding tax returns or statements when due, and that as
promptly as possible after the payment thereof it will deliver to
each Note Holder (with a copy to the Owner) appropriate receipts
showing the payment thereof, together with such additional
documentary evidence as any such Note Holder may reasonably
request from time to time.
If a Note Holder which is a Non-U.S. Person has
13
furnished to the Loan Trustee a properly completed, accurate and
currently effective U.S. Internal Revenue Service Form 1001 or
W-8 (or such successor form or forms as may be required by the
United States Treasury Department) during the calendar year in
which the payment hereunder or under the Equipment Note(s) held
by such holder is made (but prior to the making of such payment),
or in either of the two preceding calendar years, and has not
notified the Loan Trustee of the withdrawal or inaccuracy of such
form prior to the date of such payment (and the Loan Trustee has
no reason to believe that any information set forth in such form
is inaccurate), the Loan Trustee shall withhold only the amount,
if any, required by Law (after taking into account any applicable
exemptions properly claimed by the Note Holder) to be withheld
from payments hereunder or under the Equipment Notes held by such
holder in respect of United States federal income tax. If a Note
Holder (x) which is a Non-U.S. Person has furnished to the Loan
Trustee a properly completed, accurate and currently effective
U.S. Internal Revenue Service Form 4224 in duplicate (or such
successor certificate, form or forms as may be required by the
United States Treasury Department as necessary in order to
properly avoid withholding of United States federal income tax),
for each calendar year in which a payment is made (but prior to
the making of any payment for such year), and has not notified
the Loan Trustee of the withdrawal or inaccuracy of such
certificate or form prior to the date of such payment (and the
Loan Trustee has no reason to know that any information set forth
in such form is inaccurate) or (y) which is a U.S. Person has
furnished to the Loan Trustee a properly completed, accurate and
currently effective U.S. Internal Revenue Service Form W-9, if
applicable, prior to a payment hereunder or under the Equipment
Notes held by such holder, no amount shall be withheld from
payments in respect of United States federal income tax. If any
Note Holder has notified the Loan Trustee that any of the
foregoing forms or certificates is withdrawn or inaccurate, or if
such holder has not filed a form claiming an exemption from
United States withholding tax or if the Code or the regulations
thereunder or the administrative interpretation thereof are at
any time after the date hereof amended to require such
withholding of United States federal income taxes from payments
under the Equipment Notes held by such holder, the Loan Trustee
agrees to withhold from each payment due to the relevant Note
Holder withholding taxes at the appropriate rate under Law and
will, on a timely basis as more fully provided above, deposit
such amounts with an authorized depository and make such returns,
statements, receipts and other documentary evidence in connection
therewith as required by Law.
SECTION 2.05. Application of Payments
In the case of each Equipment Note, each payment of
Original Amount, Make-Whole Amount, if any, and interest or other
amounts due thereon shall be applied:
First: to the payment of accrued interest on such
Equipment Note (as well as any interest on any overdue
14
Original Amount, any overdue Make-Whole Amount, if any, and
to the extent permitted by Law, any overdue interest and
any other overdue amounts thereunder) to the date of such
payment;
Second: to the payment of the Original Amount of such
Equipment Note (or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any,
and any other amount due hereunder or under such Equipment
Note; and
Fourth: the balance, if any, remaining thereafter, to
the payment of the Original Amount of such Equipment Note
remaining unpaid (provided that such Equipment Note shall
not be subject to redemption except as provided in Sections
2.10, 2.11 and 2.12 hereof).
The amounts paid pursuant to clause "Fourth" above shall be
applied to the installments of Original Amount of such Equipment
Note in the inverse order of their normal maturity.
SECTION 2.06. Termination of Interest in Collateral
A Note Holder shall not, as such, have any further
interest in, or other right with respect to, the Collateral when
and if the Original Amount of, Make-Whole Amount, if any, and
interest on and other amounts due under all Equipment Notes held
by such Note Holder and all other sums then payable to such Note
Holder or the Loan Trustee hereunder (including, without
limitation, under the third paragraph of Section 2.02 hereof) and
under the other Operative Agreements by the Owner (collectively,
the "Secured Obligations") shall have been paid in full.
SECTION 2.07. Registration, Transfer and Exchange of
Equipment Notes
The Loan Trustee shall keep a register (the "Equipment
Note Register") in which the Loan Trustee shall provide for the
registration of Equipment Notes and the registration of transfers
of Equipment Notes. No such transfer shall be given effect unless
and until registration hereunder shall have occurred. The
Equipment Note Register shall be kept at the Corporate Trust
Office of the Loan Trustee. The Loan Trustee is hereby appointed
"Equipment Note Registrar" for the purpose of registering
Equipment Notes and transfers of Equipment Notes as herein
provided. A holder of any Equipment Note intending to exchange
such Equipment Note shall surrender such Equipment Note to the
Loan Trustee at the Corporate Trust Office, together with a
written request from the registered holder thereof for the
issuance of a new Equipment Note, specifying, in the case of a
surrender for transfer, the name and address of the new holder or
holders. Upon surrender for registration of transfer of any
Equipment Note, the Owner shall execute, and the Loan Trustee
shall authenticate and deliver, in the name of the designated
15
transferee or transferees, one or more new Equipment Notes of a
like aggregate Original Amount and of the same series. At the
option of the Note Holder, Equipment Notes may be exchanged for
other Equipment Notes of any authorized denominations of a like
aggregate Original Amount, upon surrender of the Equipment Notes
to be exchanged to the Loan Trustee at the Corporate Trust
Office. Whenever any Equipment Notes are so surrendered for
exchange, the Owner shall execute, and the Loan Trustee shall
authenticate and deliver, the Equipment Notes which the Note
Holder making the exchange is entitled to receive. All Equipment
Notes issued upon any registration of transfer or exchange of
Equipment Notes (whether under this Section 2.07 or under Section
2.08 hereof or otherwise under this Trust Indenture) shall be the
valid obligations of the Owner evidencing the same respective
obligations, and entitled to the same security and benefits under
this Trust Indenture, as the Equipment Notes surrendered upon
such registration of transfer or exchange. Every Equipment Note
presented or surrendered for registration of transfer, shall (if
so required by the Loan Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form
satisfactory to the Loan Trustee duly executed by the Note Holder
or such holder's attorney duly authorized in writing, and the
Loan Trustee shall require evidence satisfactory to it as to the
compliance of any such transfer with the Securities Act, and the
securities Laws of any applicable state. The Loan Trustee shall
make a notation on each new Equipment Note of the amount of all
payments of Original Amount previously made on the old Equipment
Note or Equipment Notes with respect to which such new Equipment
Note is issued and the date to which interest on such old
Equipment Note or Equipment Notes has been paid. Interest shall
be deemed to have been paid on such new Equipment Note to the
date on which interest shall have been paid on such old Equipment
Note, and all payments of the Original Amount marked on such new
Equipment Note, as provided above, shall be deemed to have been
made thereon. The Owner shall not be required to exchange any
surrendered Equipment Notes as provided above during the ten-day
period preceding the due date of any payment on such Equipment
Note. The Owner shall in all cases deem the Person in whose name
any Equipment Note shall have been issued and registered as the
absolute owner and holder of such Equipment Note for the purpose
of receiving payment of all amounts payable by the Owner with
respect to such Equipment Note and for all purposes until a
notice stating otherwise is received from the Loan Trustee and
such change is reflected on the Equipment Note Register. The Loan
Trustee will promptly notify the Owner of each registration of a
transfer of an Equipment Note. Any such transferee of an
Equipment Note, by its acceptance of an Equipment Note, agrees to
the provisions of this Trust Indenture. Subject to compliance by
the Note Holder and its transferee (if any) of the requirements
set forth in this Section 2.07, Loan Trustee and Owner shall use
all reasonable efforts to issue new Equipment Notes upon transfer
or exchange within 10 Business Days of the date an Equipment Note
is surrendered for transfer or exchange.
16
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen
Equipment Notes
If any Equipment Note shall become mutilated,
destroyed, lost or stolen, the Owner shall, upon the written
request of the holder of such Equipment Note, execute and the
Loan Trustee shall authenticate and deliver in replacement
thereof a new Equipment Note, payable in the same Original Amount
dated the same date and captioned as issued in connection with
the Aircraft. If the Equipment Note being replaced has become
mutilated, such Equipment Note shall be surrendered to the Loan
Trustee and a photocopy thereof shall be furnished to the Owner.
If the Equipment Note being replaced has been destroyed, lost or
stolen, the holder of such Equipment Note shall furnish to the
Owner and the Loan Trustee such security or indemnity as may be
required by them to save the Owner and the Loan Trustee harmless
and evidence satisfactory to the Owner and the Loan Trustee of
the destruction, loss or theft of such Equipment Note and of the
ownership thereof. If a "qualified institutional buyer" of the
type referred to in paragraph (a)(1)(i)(A), (B), (D) or (E) of
Rule 144A under the Securities Act (a "QIB") is the holder of any
such destroyed, lost or stolen Equipment Note, then the written
indemnity of such QIB, signed by an authorized officer thereof,
in favor of, delivered to and in form reasonably satisfactory to
Owner and Loan Trustee shall be accepted as satisfactory
indemnity and security and no further indemnity or security shall
be required as a condition to the execution and delivery of such
new Equipment Note. Subject to compliance by the Note Holder of
the requirements set forth in this Section 2.08, Loan Trustee and
Owner shall use all reasonable efforts to issue new Equipment
Notes within 10 Business Days of the date of the written request
therefor from the Note Holder.
SECTION 2.09. Payment of Expenses on Transfer;
Cancellation
(a) No service charge shall be made to a Note Holder
for any registration of transfer or exchange of Equipment Notes,
but the Loan Trustee, as Equipment Note Registrar, may require
payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any
registration of transfer or exchange of Equipment Notes.
(b) The Loan Trustee shall cancel all Equipment Notes
surrendered for replacement, redemption, transfer, exchange,
payment or cancellation and shall destroy the canceled Equipment
Notes.
SECTION 2.10. Mandatory Redemptions of Equipment Notes
On the date on which Owner is required pursuant to
Section 4.05 hereof to make payment for an Event of Loss with
respect to the Aircraft, all of the Equipment Notes shall be
redeemed in whole at a redemption price equal to 100% of the
unpaid Original Amount thereof, together with all accrued
17
interest thereon to the date of redemption and all other amounts
payable hereunder to the Note Holders but without Make-Whole
Amount.
SECTION 2.11. Voluntary Redemptions of Equipment Notes
Any or all of the Equipment Notes may be redeemed by
the Owner at any time upon at least 30 days' revocable prior
written notice to the Loan Trustee and the Note Holders (such
notice to become irrevocable on the third day prior to the date
on which such Equipment Notes are to be redeemed), and the
Equipment Notes shall be redeemed in whole at a redemption price
equal to 100% of the unpaid Original Amount thereof, together
with accrued interest thereon to the date of redemption and all
other amounts payable hereunder to the Note Holders plus, if such
redemption occurs on or prior to the Premium Termination Date,
Make-Whole Amount, if any.
SECTION 2.12. Redemptions; Notice of Redemption
(a) Neither any redemption of any Equipment Note nor
any purchase by the Owner of any Equipment Note may be made
except to the extent and in the manner expressly permitted by
this Trust Indenture. No purchase of any Equipment Note may be
made by the Loan Trustee.
(b) Notice of redemption or purchase with respect to
the Equipment Notes shall be given by the Loan Trustee by
first-class mail, postage prepaid, mailed not less than 25 nor
more than 60 days prior to the applicable redemption date, to
each Note Holder of such Equipment Notes to be redeemed or
purchased, at such Note Holder's address appearing in the
Equipment Note Register. All notices of redemption shall state:
(1) the redemption date, (2) the applicable basis for determining
the redemption price, (3) that on the redemption date, the
redemption price will become due and payable upon each such
Equipment Note, and that, if any such Equipment Notes are then
outstanding, interest on such Equipment Notes shall cease to
accrue on and after such redemption date, and (4) the place or
places where such Equipment Notes are to be surrendered for
payment of the redemption price.
(c) On or before the redemption date, the Owner (or
any person on behalf of the Owner) shall, to the extent an amount
equal to the redemption price for the Equipment Notes to be
redeemed or purchased on the redemption date shall not then be
held in the Collateral, deposit or cause to be deposited with the
Loan Trustee by 12:00 noon on the redemption date in immediately
available funds the redemption price of the Equipment Notes to be
redeemed or purchased.
(d) Notice of redemption or purchase having been given
as aforesaid, the Equipment Notes to be redeemed or purchased
shall, on the redemption date, become due and payable at the
Corporate Trust Office of the Loan Trustee or at any office or
18
agency maintained for such purposes pursuant to Section 2.07, and
from and after such redemption date (unless there shall be a
default in the payment of the redemption price) any such
Equipment Notes then outstanding shall cease to bear interest.
Upon surrender of any such Equipment Note for redemption or
purchase in accordance with said notice, such Equipment Note
shall be redeemed at the redemption price. If any Equipment Note
called for redemption or purchase shall not be so paid upon
surrender thereof for redemption, the principal amount thereof
shall, until paid, continue to bear interest from the applicable
redemption date at the interest rate in effect for such Equipment
Note as of such redemption date.
SECTION 2.13. Subordination
(a) The Owner and, by acceptance of its Equipment
Notes of any Series, each Note Holder of such Series, hereby
agree that no payment or distribution shall be made on or in
respect of the Secured Obligations owed to such Note Holder of
such Series, including any payment or distribution of cash,
property or securities after the commencement of a proceeding of
the type referred to in Section 5.01(vi) hereof, except as
expressly provided in Article III hereof.
(b) By the acceptance of its Equipment Notes of any
Series (other than Series A), each Note Holder of such Series
agrees that in the event that such Note Holder, in its capacity
as a Note Holder, shall receive any payment or distribution on
any Secured Obligations in respect of such Series which it is not
entitled to receive under this Section 2.13 or Article III
hereof, it will hold any amount so received in trust for the
Senior Holder (as defined in Section 2.13(c) hereof) and will
forthwith turn over such payment to the Loan Trustee in the form
received to be applied as provided in Article III hereof.
(c) As used in this Section 2.13, the term "Senior
Holder" shall mean, (i) the Note Holders of Series A until the
Secured Obligations in respect of Series A Equipment Notes have
been paid in full, (ii) after the Secured Obligations in respect
of Series A Equipment Notes have been paid in full, the Note
Holders of Series B until the Secured Obligations in respect of
Series B Equipment Notes have been paid in full and (iii) after
the Secured Obligations in respect of Series B Equipment Notes
have been paid in full, the Note Holders of Series C until the
Secured Obligations in respect of Series C Equipment Notes have
been paid in full.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF PAYMENTS
SECTION 3.01. Distribution of Payments
Except as otherwise provided in Section 3.03 hereof,
each periodic payment of principal or interest and any payment
19
received by the Loan Trustee pursuant to Section 5.02 hereof
shall be promptly distributed in the following order of priority:
First, (i) so much of such installment or payment as shall be
required to pay in full the aggregate amount of the
payment or payments of Original Amount and interest
and other amounts (as well as any interest on any
overdue Original Amount and, to the extent permitted
by Law, on any overdue interest and any other overdue
amounts) then due under all Series A Equipment Notes
shall be distributed to the Note Holders of Series A
ratably, without priority of one over the other, in
the proportion that the amount of such payment or
payments then due under each Series A Equipment Note
bears to the aggregate amount of the payments then
due under all Series A Equipment Notes;
(ii) after giving effect to paragraph (i) above, so much
of such installment or payment remaining as shall be
required to pay in full the aggregate amount of the
payment or payments of Original Amount and interest
and other amounts (as well as any interest on any
overdue Original Amount and, to the extent permitted
by Law, on interest and any other overdue amounts)
then due under all Series B Equipment Notes shall be
distributed to the Note Holders of Series B ratably,
without priority of one over the other, in the
proportion that the amount of such payment or
payments then due under each Series B Equipment Note
bears to the aggregate amount of the payments then
due under all Series B Equipment Notes;
(iii) after giving effect to paragraph (ii) above, so much
of such installment or payment remaining as shall be
required to pay in full the aggregate amount of the
payment or payments of Original Amount and interest
and any other overdue amounts (as well as any
interest on any overdue Original Amount and, to the
extent permitted by Law, on any overdue interest and
any other overdue amounts) then due under all
Series C Equipment Notes shall be distributed to the
Note Holders of Series C ratably, without priority of
one over the other, in the proportion that the amount
of such payment or payments then due under each
Series C Equipment Note bears to the aggregate amount
of the payments then due under all Series C Equipment
Notes; and
(iv) after giving effect to paragraph (iii) above, so
much of such installment or payment remaining as
shall be required to pay in full the aggregate
amount of the payment or payments of Original Amount
and interest and other amounts (as well as any
interest on any overdue Original Amount and, to the
extent permitted by Law, on any overdue interest and
any other overdue
20
amounts) then due under all Series D Equipment Notes
shall be distributed to the Note Holders of Series D
ratably, without priority of one over the other, in
the proportion that the amount of such payment or
payments then due under each Series D Equipment Note
bears to the aggregate amount of the payments then
due under all Series D Equipment Notes; and
Second, the balance, if any, of such installment remaining
thereafter shall be distributed to the Owner;
provided, however, that if an Event of Default shall
-------- -------
have occurred and be continuing, then such balance
shall not be distributed as provided in this clause
"Second" but shall be held by the Loan Trustee as
part of the Collateral and invested in accordance
with Section 6.06 hereof until whichever of the
following shall first occur: (i) all Events of
Default shall have been cured or waived, in which
event such balance shall be distributed as provided
in this clause "Second", or (ii) Section 3.03 hereof
shall be applicable, in which event such balance
shall be distributed in accordance with the
provisions of such Section 3.03.
SECTION 3.02. Event of Loss; Replacement; Optional
Redemption
Except as otherwise provided in Section 3.03 hereof,
any payments received by the Loan Trustee (i) with respect to the
Airframe or the Airframe and one or more Engines as the result of
an Event of Loss, or (ii) pursuant to an optional redemption of
the Equipment Notes pursuant to Section 2.11 hereof shall be
applied to redemption of the Equipment Notes and to all other
amounts payable hereunder by applying such funds in the following
order of priority:
First, (a) to reimburse the Loan Trustee and the Note Holders
for any reasonable costs or expenses incurred in
connection with such redemption for which they are
entitled to reimbursement, or indemnity by the Owner,
under the Operative Agreements and then (b) to pay any
other amounts then due to the Loan Trustee and the Note
Holders under this Trust Indenture or the Equipment
Notes;
Second, (i) to pay the amounts specified in paragraph
(i) of clause "Third" of Section 3.03 hereof
plus Make-Whole Amount, if any, then due and
payable in respect of the Series A Equipment
Notes;
(ii) after giving effect to paragraph (i) above,
to pay the amounts specified in paragraph (ii)
of clause "Third" of Section 3.03 hereof plus
Make-Whole Amount, if any, then due and payable
in respect of the Series B Equipment Notes;
21
(iii) after giving effect to paragraph (ii)
above, to pay the amounts specified in paragraph
(iii) of clause "Third" of Section 3.03 hereof
plus Make-Whole Amount, if any, then due and
payable in respect of the Series C Equipment
Notes; and
(iv) after giving effect to paragraph (iii)
above, to pay the amounts specified in paragraph
(iv) of clause "Third" of Section 3.03 hereof
plus Make-Whole Amount, if any, then due and
payable in respect of the Series D Equipment
Notes; and
Third, as provided in clause "Fourth" of Section 3.03 hereof;
provided, however, that if a Replacement Airframe or Replacement
Engine shall be substituted for the Airframe or any Engine
subject to such Event of Loss as provided in Section 4.05 hereof,
any insurance, condemnation or similar proceeds which result from
such Event of Loss and are paid over to the Loan Trustee shall be
held by the Loan Trustee as permitted by Section 7.04 hereof
(provided that such moneys shall be invested as provided in
Section 6.06 hereof) as additional security for the obligations
of Owner under the Operative Agreements and such proceeds (and
such investment earnings) shall be released to the Owner at the
Owner's written request upon the release of such damaged Airframe
or any Engine and the replacement thereof as provided herein.
SECTION 3.03. Payments After Event of Default
Except as otherwise provided in Section 3.04 hereof,
all payments received and amounts held or realized by the Loan
Trustee (including any amounts realized by the Loan Trustee from
the exercise of any remedies pursuant to Article V hereof) after
an Event of Default shall have occurred and be continuing and
after the declaration specified in Section 5.02(b) hereof, as
well as all payments or amounts then held by the Loan Trustee as
part of the Collateral, shall be promptly distributed by the Loan
Trustee in the following order of priority:
First, so much of such payments or amounts as shall be
required to reimburse the Loan Trustee or WTC for any
tax (except to the extent resulting from a failure of
the Loan Trustee to withhold taxes pursuant to
Section 2.04(b) hereof), expense or other loss
(including, without limitation, all amounts to be
expended at the expense of, or charged upon the
proceeds of, the Collateral pursuant to Section 5.03(b)
hereof) incurred by the Loan Trustee or WTC (to the
extent not previously reimbursed), the expenses of any
sale, taking or other proceeding, reasonable attorneys'
fees and expenses, court costs, and any other
expenditures incurred or expenditures or advances made
by the Loan Trustee, WTC or the Note Holders in the
protection, exercise or enforcement of any right, power
or remedy or any damages sustained by the Loan Trustee,
22
WTC or any Note Holder, liquidated or otherwise, upon
such Event of Default shall be applied by the Loan
Trustee as between itself, WTC and the Note Holders in
reimbursement of such expenses and any other expenses
for which the Loan Trustee, WTC or the Note Holders
are entitled to reimbursement under any Operative
Agreement and in the case the aggregate amount to be
so distributed is insufficient to pay as aforesaid,
then ratably, without priority of one over the other,
in proportion to the amounts owed each hereunder;
Second, so much of such payments or amounts remaining as shall
be required to reimburse the then existing or prior
Note Holders for payments made pursuant to Section 6.03
hereof (to the extent not previously reimbursed) shall
be distributed to such then existing or prior Note
Holders ratably, without priority of one over the
other, in accordance with the amount of the payment or
payments made by each such then existing or prior Note
Holder pursuant to said Section 6.03 hereof;
Third, (i) so much of such payments or amounts remaining as
shall be required to pay in full the aggregate
unpaid Original Amount of all Series A Equipment
Notes, and the accrued but unpaid interest and
other amounts due thereon (other than Make-Whole
Amount which shall not be due and payable) and
all other Secured Obligations in respect of the
Series A Equipment Notes (other than Make-Whole
Amount) to the date of distribution, shall be
distributed to the Note Holders of Series A, and
in case the aggregate amount so to be distributed
shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one
over the other, in the proportion that the
aggregate unpaid Original Amount of all Series A
Equipment Notes held by each holder plus the
accrued but unpaid interest and other amounts due
hereunder or thereunder (other than Make-Whole
Amount, if any) to the date of distribution,
bears to the aggregate unpaid Original Amount of
all Series A Equipment Notes held by all such
holders plus the accrued but unpaid interest and
other amounts due thereon (other than Make-Whole
Amount) to the date of distribution;
(ii) after giving effect to paragraph (i) above,
so much of such payments or amounts remaining as
shall be required to pay in full the aggregate
unpaid Original Amount of all Series B Equipment
Notes, and the accrued but unpaid interest and
other amounts due thereon (other than Make-Whole
Amount which shall not be due and payable) and
all other Secured Obligations in respect of the
Series B Equipment Notes (other than Make-Whole
23
Amount) to the date of distribution, shall be
distributed to the Note Holders of Series B, and
in case the aggregate amount so to be
distributed shall be insufficient to pay in full
as aforesaid, then ratably, without priority of
one over the other, in the proportion that the
aggregate unpaid Original Amount of all Series B
Equipment Notes held by each holder plus the
accrued but unpaid interest and other amounts
due hereunder or thereunder (other than the
Make-Whole Amount, if any) to the date of
distribution, bears to the aggregate unpaid
Original Amount of all Series B Equipment Notes
held by all such holders plus the accrued but
unpaid interest and other amounts due thereon
(other than the Make-Whole Amount) to the date
of distribution;
(iii) after giving effect to paragraph (ii)
above, so much of such payments or amounts
remaining as shall be required to pay in full
the aggregate unpaid Original Amount of all
Series C Equipment Notes, and the accrued but
unpaid interest and other amounts due thereon
(other than Make-Whole Amount which shall not be
due and payable) and all other Secured
Obligations in respect of the Series C Equipment
Notes (other than Make-Whole Amount) to the date
of distribution, shall be distributed to the
Note Holders of Series C, and in case the
aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then
ratably, without priority of one over the other,
in the proportion that the aggregate unpaid
Original Amount of all Series C Equipment Notes
held by each holder plus the accrued but unpaid
interest and other amounts due hereunder or
thereunder (other than the Make-Whole Amount, if
any) to the date of distribution, bears to the
aggregate unpaid Original Amount of all Series C
Equipment Notes held by all such holders plus
the accrued but unpaid interest and other
amounts due thereon (other than the Make-Whole
Amount) to the date of distribution; and
(iv) after giving effect to paragraph (iii)
above, so much of such payments or amounts
remaining as shall be required to pay in full
the aggregate unpaid Original Amount of all
Series D Equipment Notes, and the accrued but
unpaid interest and other amounts due thereon
(other than Make-Whole Amount which shall not be
due and payable) and all other Secured
Obligations in respect of the Series D Equipment
Notes (other than Make-Whole Amount) to the date
of distribution, shall be
24
distributed to the Note Holders of Series D, and
in case the aggregate amount so to be
distributed shall be insufficient to pay in full
as aforesaid, then ratably, without priority of
one over the other, in the proportion that the
aggregate unpaid Original Amount of all Series D
Equipment Notes held by each holder plus the
accrued but unpaid interest and other amounts
due hereunder or thereunder (other than the
Make-Whole Amount, if any) to the date of
distribution, bears to the aggregate unpaid
Original Amount of all Series D Equipment Notes
held by all such holders plus the accrued but
unpaid interest and other amounts due thereon
(other than the Make-Whole Amount) to the date
of distribution; and
Fourth, the balance, if any, of such payments or amounts
remaining thereafter shall be distributed to the
Owner.
No Make-Whole Amount shall be due and payable on the
Equipment Notes as a consequence of the acceleration of the
Equipment Notes as a result of an Event of Default.
SECTION 3.04. Certain Payments
(a) Any payments received by the Loan Trustee for
which no provision as to the application thereof is made in this
Trust Indenture and for which such provision is made in other
Operative Agreement shall be applied forthwith to the purpose for
which such payment was made in accordance with the terms of such
other Operative Agreement, as the case may be.
(b) The Loan Trustee will distribute promptly upon
receipt any indemnity payment received by it from the Owner in
respect of the Loan Trustee in its individual capacity or any
Note Holder pursuant to the terms hereof, directly to the Person
entitled thereto.
SECTION 3.05. Other Payments
Any payments received by the Loan Trustee for which no
provision as to the application thereof is made elsewhere in this
Trust Indenture or in any other Operative Agreement shall be
distributed by the Loan Trustee to the extent received or
realized at any time (i) prior to the payment in full of all
Secured Obligations due the Note Holders, in the order of
priority specified in Section 3.01 hereof subject to the proviso
thereto, and (ii) after payment in full of all Secured
Obligations due the Note Holders, in the following order of
priority:
First, to the extent payments or amounts described in clause
"First" of Section 3.03 hereof are otherwise
obligations of Owner under the Operative Agreements or
25
for which the Owner is obligated to indemnify against
thereunder, in the manner provided in clause "First" of
Section 3.03 hereof, and
Second, in the manner provided in clause "Fourth" of Section
3.03 hereof.
Further, and except as otherwise provided in Sections
3.02, 3.03 and 3.04 hereof, all payments received and
amounts realized by the Loan Trustee under this Trust
Indenture with respect to the Aircraft (including
without limitation, all amounts realized upon the sale
or release of the Aircraft), to the extent received or
realized at any time after payment in full of all
Secured Obligations due the Note Holders, shall be
distributed by the Loan Trustee in the order of
priority specified in clause (ii) of the immediately
preceding sentence of this Section 3.05.
ARTICLE IV
COVENANTS OF THE OWNER
SECTION 4.01. Liens
The Owner will not directly or indirectly create, incur, assume
or suffer to exist any Lien on or with respect to the Airframe
or any Engine or any of the other Collateral or title thereto or
any
interest therein, except Permitted Liens. The Owner shall
promptly, at its own expense, take such action as may be
necessary to duly discharge (by bonding or otherwise) any Lien
other than a Permitted Lien arising at any time.
SECTION 4.02. Possession, Operation and Use,
Maintenance, Registration and Insignia
(a) General.
Except as otherwise expressly provided herein, the
Owner shall be entitled to operate, use, locate, employ or
otherwise utilize or not utilize the Airframe, any Engine or any
Parts in any lawful manner or place in accordance with the
Owner's business judgment.
(b) Possession.
The Owner shall not lease, or otherwise in any manner
deliver, relinquish or transfer possession of, the Airframe or
any Engine to any Person or install any Engine, or permit any
Engine to be installed, on any airframe other than the Airframe
so long as such Engine is subject to the Lien of this Trust
Indenture without the prior consent of the Loan Trustee, except
that the Owner may, without the prior consent of the Loan
Trustee:
26
(i) enter into a charter or Wet Lease or other similar
arrangement with respect to the Aircraft or any other
aircraft on which any Engine is installed under which the
Owner has operational control thereof in the course of the
Owner's business (which shall not be considered a transfer
of possession hereunder); provided that the Owner's
obligations hereunder shall continue in full force and
effect notwithstanding any such charter or wet lease or
other similar arrangement;
(ii) deliver possession of the Airframe or any Engine
or any Part to the manufacturer thereof or to any
organization for testing, service, repair, maintenance,
overhaul work or other similar purposes or for alterations
or modifications or additions required or permitted by the
terms of this Trust Indenture;
(iii) subject the Airframe and any Engines installed
thereon to interchange agreements or any Engine to
interchange or pooling agreements or arrangements, in each
case which are customary in the United States airline
industry and applicable to other similar property owned by
or leased to the Owner in the course of its airline
business with any air carrier; provided that (A) no such
agreement or arrangement shall under any circumstances
result in, contemplate or require the transfer of title to
the Aircraft, Airframe or any Engine constituting a part of
the Aircraft and (B) if the Owner's title to any Engine
shall be divested under any such agreement or arrangement,
such divestiture shall be deemed to be an Event of Loss
with respect to such Engine and the Owner shall comply with
Section 4.04(e) in respect thereof;
(iv) install an Engine on an airframe owned by the
Owner free and clear of all Liens except (A) Permitted
Liens, (B) those which apply only to the engines (other
than the Engines), appliances, parts, instruments,
appurtenances, accessories, furnishings and other equipment
(other than Parts) installed on such airframe, and (C)
those created by the rights of other air carriers under
interchange or pooling agreements or other arrangements
customary in the United States airline industry which do
not contemplate, permit or require the transfer of title to
such Airframe or any Engines installed thereon;
(v) install an Engine on an airframe leased to the
Owner or purchased by the Owner subject to a conditional
sale or other security agreement, provided that such
airframe is free and clear of all Liens except (x) the
rights of the parties to the lease, conditional sale or
other security agreement and (y) Liens of the type
permitted under clause (iv) above, and such lease,
conditional sale or other security agreement effectively
provides (or the Owner shall obtain from the lessor or
secured party of such airframe a separate agreement) that
such Engine shall not
27
thereby become subject to the lien of such lease,
conditional sale or other security agreement,
notwithstanding the installation thereof on such airframe;
(vi) install an Engine on an airframe owned by the
Owner, leased by the Owner or purchased by the Owner
subject to a conditional sale or other security agreement
under circumstances where neither clause (iv) nor clause
(v) above is applicable, provided that any divestiture of
title to such Engine resulting from such installation shall
be deemed an Event of Loss with respect to such Engine and
the Owner shall comply with Section 4.04(e);
(vii) transfer possession of the Airframe or any
Engine to the United States of America or any
instrumentality thereof pursuant to the Civil Reserve Air
Fleet Program (as established and administered pursuant to
Executive Order 11490, as amended, as superseded by United
States Executive Order No.12656) or any similar or
substitute program;
(viii) transfer possession of the Airframe or any
Engine to the United States of America, or to a foreign
government, when required by Applicable Law in the
circumstances referred to in clause (e) of the definition
of an Event of Loss (it being understood that nothing in
this clause (viii) shall relieve the Owner from its
obligations under Section 4.04(e) or 4.05(a), as the case
may be, if such transfer becomes an Event of Loss);
(ix) transfer possession of the Airframe or any Engine
to the United States of America or any instrumentality or
agency thereof (to the extent the obligations of such
instrumentality or agency are backed by the full faith and
credit of the United States of America) pursuant to a
lease, contract or other instrument; and
(x) so long as no Event of Default shall have occurred
and be continuing, and subject to the provisions of the
immediately following paragraph, enter into a lease with
respect to any Engine or the Airframe and Engines or
engines then installed on such Airframe (I) to any
Permitted Air Carrier that is not the subject of a petition
filed under any bankruptcy laws or other insolvency laws in
effect at the time such lease is entered into or (II) to
any other foreign air carrier that is not the subject of a
petition filed under any bankruptcy laws or other
insolvency laws in effect at the time such lease is entered
into and is organized and operating under the laws of a
country (other than Taiwan) with which the United States
maintains normal diplomatic relations; provided that, in
the case only of a lease to a foreign air carrier that is
not a Permitted Air Carrier, the Loan Trustee receives at
the time of such lease an opinion of counsel to the effect
that there exist no possessory rights in favor of the
lessee under the laws of
28
such lessee's country which would, upon bankruptcy or
insolvency of or other default by the Owner or the lessee,
prevent the return of such Engine or Airframe and such
Engine or engine to the Loan Trustee in accordance with and
when permitted by the terms of Section 5.02 upon the
exercise by the Loan Trustee of its remedies pursuant to
such Section;
provided, that (1) the rights of any transferee who receives
possession by reason of a transfer permitted by this Section
4.02(b) (other than by a transfer of an Engine which is deemed an
Event of Loss) shall be subject and subordinate to all the terms
of this Trust Indenture, (2) the Owner shall remain primarily
liable for the performance of all of the terms of this Trust
Indenture and all the terms and conditions of this Trust
Indenture and the other Operative Agreements shall remain in
effect and (3) no lease or transfer of possession otherwise in
compliance with this Section 4.02(b) shall (x) result in any
registration or reregistration of an Aircraft except to the
extent permitted by Section 4.02(c) or the maintenance, operation
or use thereof except in compliance with Sections 4.02(c) and
4.02(d) or (y) permit any action not permitted to the Owner
hereunder.
In the case of any lease permitted under this Section
4.02(b), the Owner will include in such lease appropriate
provisions which (t) make such lease expressly subject and
subordinate to all of the terms of this Trust Indenture,
including the rights of the Loan Trustee to avoid such lease in
the exercise of its rights to repossession of the Airframe and
Engines hereunder; (u) expressly prohibit any subleasing of the
Airframe or any Engine subject thereto; (v) require that the
Airframe or any Engine subject thereto be maintained in
accordance with a maintenance program approved by the FAA
applicable thereto; (w) require the lessee to comply with the
terms of Section 4.06; and (x) require that the Airframe or any
Engine subject thereto be used in accordance with the limitations
applicable to the Owner's possession and use provided in this
Trust Indenture. Except as otherwise provided herein and without
in any way relieving the Owner from its primary obligation for
the performance of its obligations under this Trust Indenture,
the Owner may in its sole discretion permit a lessee to exercise
any or all rights which the Owner would be entitled to exercise
under Sections 4.02 and 4.04, and may cause a lessee to perform
any or all of the Owner's obligations under Article IV, and the
Loan Trustee agrees to accept actual and full performance thereof
by a lessee in lieu of performance by the Owner.
In the event the Loan Trustee (or Owner for the
benefit of the Loan Trustee) shall have received from the lessor
or secured party of any airframe (other than the Airframe) leased
to the Owner or purchased by the Owner subject to a conditional
sale or other security agreement a written agreement which
provides that the lessor or secured party under such agreement
shall not acquire or claim any right, title or interest in any
Engine by
29
reason of the installation of such Engine on such airframe at any
time while such Engine is subject to the security interest in
favor of the Loan Trustee, and the lease or conditional sale or
other security agreement covering such airframe also covers an
engine or engines owned by the lessor under such lease or subject
to a security interest in favor of the secured party under such
conditional sale or other security agreement, the Loan Trustee
hereby agrees for the benefit of such lessor or secured party
that, so long as such lessor or secured party does not acquire or
claim any such right, title or interest, the Loan Trustee will
not acquire or claim, as against such lessor or secured party,
any right, title or interest in any such engine or engines owned
by the lessor under such lease or subject to a security interest
in favor of the secured party under such conditional sale or
other security agreement as the result of such engine or engines
being installed on the Airframe at any time while such engine or
engines are owned by such lessor or are subject to such lease or
conditional sale or other security agreement or security interest
in favor of such secured party.
The Loan Trustee hereby agrees, and each Note Holder
agrees, for the benefit of the lessor or secured party of any
engine or engines leased to the Owner or owned by the Owner
subject to a conditional sale or other security agreement, which
lease or conditional sale or other security agreement does not
also cover an airframe, that neither the Loan Trustee nor any
Note Holder will acquire or claim, as against such lessor or
secured party, any right, title or interest in any such engine or
engines owned by the lessor under such lease or subject to a
security interest in favor of the secured party under such
conditional sale or other security agreement as the result of
such engine or engines being installed on the Airframe at any
time while such engine or engines are owned by such lessor or are
subject to such lease or conditional sale or other security
agreement or security interest in favor of such secured party.
(c) Operation and Use.
So long as the Airframe or any Engine is subject to
the Lien of this Trust Indenture, the Owner shall not operate,
use or locate such Airframe or any Engine, or suffer such
Airframe or any Engine to be operated, used or located, (i) in
any area excluded from coverage by any insurance required by the
terms of Section 4.06, except in the case of a requisition by the
United States of America where the Owner obtains indemnity from
the United States of America against substantially the same risks
and for at least the amounts of the insurance required by Section
4.06 covering such area, or (ii) outside the United States or
Canada in any recognized or, in the Owner's reasonable judgment,
threatened area of hostilities unless covered by war risk and
allied perils insurance, or in either case unless such Airframe
or any Engine is operated or used under contract with the
government of the United States or any agency or instrumentality
thereof (to the extent the obligations of such agency or
instrumentality are backed by the full faith and credit of the
30
United States of America) under which contract such government
assumes liability for substantially the same risks in at least
the same amounts as would be covered by such insurance. So long
as the Airframe or any Engine is subject to the Lien of this
Trust Indenture, the Owner shall not permit such Airframe or any
Engine to be used or operated in violation of any Applicable Law
or in violation of any airworthiness certificate, license or
registration relating to such Aircraft any Engine issued by any
competent governmental authority, unless (i) the validity thereof
is being contested in good faith and by appropriate proceedings
which do not involve a material danger of the sale, forfeiture or
loss of such Airframe or any Engine or a material danger of the
loss of the Loan Trustee's security interest in such Airframe or
any Engine or (ii) it is not possible for the Owner to comply
with the laws of a jurisdiction other than the United States (or
other than any jurisdiction in which an Aircraft is then
registered) because of a conflict with the applicable laws of the
United States (or such jurisdiction in which such Aircraft is
then registered).
(d) Maintenance and Repair.
So long as the Airframe or any Engine is subject to
the Lien of this Trust Indenture, the Owner shall (i) service,
repair, maintain, overhaul and test such Airframe and Engine (and
any engine which is not an Engine but which is installed on an
Aircraft) or cause the same to be done in accordance with a
maintenance program approved by the FAA (and in compliance with
all airworthiness directives thereof), and shall keep or cause to
be kept such Airframe and Engine (x) in good operating condition,
ordinary wear and tear excepted, as may be necessary to enable
the airworthiness certification of such Aircraft to be maintained
in good standing at all times under the applicable rules and
regulations of the FAA, except when aircraft of the same type,
model or series as such Aircraft (powered by engines of the same
type as those with which the Airframe shall be equipped at the
time of grounding) registered in the same country have been
grounded by the FAA; provided, however, that if the airworthiness
certificate of an Aircraft shall be withdrawn, then, subject to
the provisions of Section 4.5, so long as the Owner is taking or
causing to be taken all necessary action to promptly correct the
condition which caused such withdrawal or such grounding, no
Event of Default under any Indenture shall arise from such
withdrawal. Nothing herein shall be deemed to prevent the Owner
from taking an Aircraft out of service for maintenance or
modifications permitted hereunder or storage in accordance with
applicable FAA requirements and sound practice for such storage.
The Owner shall maintain or cause to be maintained in the English
language all records, logs and other documents required by the
FAA to be maintained in respect of each Aircraft.
(e) Registration.
The Owner on or prior to the date of the Closing shall
cause the Aircraft to be duly registered in its name under the
31
Act and except as otherwise permitted by this Section 4.02(e) at
all times thereafter shall cause each Aircraft to remain so
registered. In the event the Owner leases an Aircraft to a
Permitted Air Carrier operating pursuant to a license issued
under the laws of a country other than the United States, the
Owner may cause such Aircraft to be appropriately re-registered
under the laws of such country, provided that no Event of Default
shall have occurred and be continuing and the Loan Trustee
receives the opinions of counsel referred to below. In connection
with any such re-registration, the Owner shall, at its cost and
to the extent permitted by the laws of such country, cause the
interests of the Loan Trustee in the Aircraft to be duly
registered or recorded under the laws of such country and at all
times thereafter to remain so duly registered or recorded unless
and until changed as provided herein, and shall cause to be done
at all times all other acts (including the filing, recording and
delivery of any document or instrument and the payment of any
sum) necessary or, by reference to prudent industry practice in
such country, advisable in order to establish and perfect the
Loan Trustee's interest in and to such Aircraft as against the
Owner, any Permitted Air Carrier or any third parties in such
jurisdiction. Prior to any such re-registration under the laws of
a foreign country and at no expense or liability to the Loan
Trustee, the Loan Trustee shall have received a favorable opinion
of counsel to it to the effect that (i) the laws of the new
country of registration will recognize the Owner's right of
ownership and repossession under the lease entered into with such
lessee and will give effect to the Lien and security interest
created by this Trust Indenture and (ii) this Trust Indenture and
the Loan Trustee's Lien and right to repossession thereunder is
valid and enforceable under the laws of such country.
Concurrently with any such change in registration, the Trust
Indenture shall have been duly filed in all offices in such
country necessary to perfect and protect the rights of the Loan
Trustee and the Loan Trustee shall have received a satisfactory
opinion of counsel with respect to such filing and any refiling
requirements in such country.
The Loan Trustee shall execute and deliver all such
documents as the Owner may reasonably request and otherwise
cooperate with the Owner for the purpose of effecting, continuing
or (as provided in this Section 4.02(e)) changing the
registration of the Aircraft.
(f) Insignia.
The Owner shall maintain or cause to be maintained in
the cockpit of the Airframe in a location reasonably adjacent to
the airworthiness certificate and on each Engine, a metal
nameplate identifying the security interest of the Loan Trustee
in the Aircraft, as follows:
"Subject to a security interest in favor
of Wilmington Trust Company,
as Loan Trustee"
32
The Owner will not allow the name of any Person other than the
Loan Trustee, or its respective successors or assigns, to be
placed on any Airframe or any Engine as a designation that might
be interpreted as a claim of ownership or of any security
interest therein, except that the Owner or any permitted lessee
may operate the Airframes and Engines in its livery, including
its name and logo.
SECTION 4.03. Inspection
At all reasonable times so long as the Aircraft is
subject to the Lien of this Trust Indenture, upon at least 15
days' prior notice to the Owner and at a time and place
reasonably acceptable to the Owner, the Loan Trustee or its
authorized representative may at its own expense and risk conduct
a visual walk-around inspection of such Aircraft and any Engine
and may inspect the books, logs and records of the Owner relating
to the operation and maintenance thereof; provided that (a) any
such inspection shall be subject to the safety, security and
workplace rules applicable at the location where such inspection
is conducted and any applicable governmental rules or
regulations, (b) in the case of an inspection during a
maintenance visit, such inspection shall not in any respect
interfere with the normal conduct of such maintenance visit or
extend the time required for such maintenance visit or, in any
event, at any time interfere with the use or operation of the
Airframe or any Engine or with the normal conduct of the Owner's
or a permitted lessee's business, and (c) the Owner shall not be
required to undertake or incur any additional liabilities in
connection with any such inspection. All information obtained in
connection with any such inspection shall be held confidential by
the Loan Trustee and shall not be furnished or disclosed by it to
anyone other than its bank examiners, regulators, auditors,
accountants, agents and legal counsel, and except as may be
required by an order of any court or administrative agency or by
any statute, rule, regulation or order of any governmental
authority or as may he necessary to enforce the terms of this
Trust Indenture. The Loan Trustee shall have no duty to make any
such inspection and shall not incur any liability or obligation
by reason of not making any such inspection. No inspection under
this Section 4.03 shall relieve the Owner of any of its
obligations under this Trust Indenture.
SECTION 4.04. Replacement and Pooling of Parts;
Alterations, Modifications and Additions; Substitution of Engines
(a) Replacement of Parts.
Except as otherwise provided in the proviso to the
third sentence of Section 4.04(d) or if the Airframe or an Engine
to which a Part relates has suffered an Event of Loss, the Owner,
at its own cost and expense, will so long as such Airframe or any
Engine is subject to the Lien of this Trust Indenture promptly
replace all Parts that may from time to time become worn out,
lost, stolen, destroyed, seized, confiscated, damaged beyond
33
repair or permanently rendered unfit for use for any reason
whatsoever. In addition, in the ordinary course of maintenance,
service, repair, overhaul or testing, the Owner, at its own cost
and expense, may remove any Parts, whether or not worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use; provided that the Owner, at
its own cost and expense, shall, except as otherwise provided in
the proviso to the third sentence of Section 4.04(d), replace
such Parts as promptly as practicable with replacement Parts or
temporary replacement parts as provided in Section 4.04(c). All
replacement Parts shall be free and clear of all Liens except for
Permitted Liens and shall be in as good operating condition as,
and shall have a value and utility at least equal to, the Parts
replaced assuming such replaced Parts were in the condition and
repair required to be maintained by the terms hereof.
(b) Parts.
Except as otherwise provided in the proviso to the
third sentence of Section 4.04(d), any Part at any time removed
from the Airframe or any Engine shall remain subject to the Lien
of this Trust Indenture, no matter where located, until such time
as such Part shall be replaced by a Part that has been
incorporated or installed in or attached to such Airframe or any
Engine and that meets the requirements for replacement Parts
specified in Section 4.04(a). Immediately upon any replacement
Part becoming incorporated or installed in or attached to such
Airframe or any Engine as provided in Section 4.04(a), without
further act, (i) the replaced Part shall thereupon be free and
clear of all rights of the Loan Trustee and shall no longer be
deemed a Part hereunder, and (ii) such replacement Part shall
become subject to this Trust Indenture and be deemed part of such
Airframe or any Engine, as the case may be, for all purposes
hereof to the same extent as the Parts originally incorporated or
installed in or attached to such Airframe or any Engine.
(c) Pooling or Parts Leasing.
Any Part removed from the Airframe or an Engine as
provided in Section 4.04(a) may be subjected by the Owner to a
pooling or parts leasing agreement or arrangement of a type
customary in the airline industry entered into in the ordinary
course of the Owner's business with any air carrier; provided
that the part replacing such removed Part shall be incorporated
or installed in or attached to such Airframe or any Engine in
accordance with Sections 4.04(a) and 4.04(b) as promptly as
practicable after the removal of such removed Part. In addition,
any temporary replacement part when incorporated or installed in
or attached to the Airframe or any Engine in accordance with
Section 4.04(a) may be owned by another airline or vendor as
customary in the United States airline industry, subject to a
pooling or parts leasing arrangement; provided that the Owner, at
its expense within a commercially reasonable time, either (i)
causes such temporary replacement part to become subject to the
Lien of this Trust Indenture, free and clear of all Liens except
34
Permitted Liens, at which time such temporary replacement part
shall become a Part or (ii) replaces such temporary replacement
part by incorporating or installing in or attaching to such
Airframe or any Engine a further replacement Part owned by the
Owner free and clear of all Liens except Permitted Liens and
which shall become subject to the Lien of this Trust Indenture in
accordance with Section 4.04(b).
(d) Alterations, Modifications and Additions.
The Owner, at its own expense, shall make alterations
and modifications in and additions to the Airframe and each
Engine as may be required to be made from time to time by
Applicable Law regardless of upon whom such requirements are, by
their terms, nominally imposed; provided that the Owner may, in
good faith, contest the validity or application of any such
standard in any reasonable manner which does not materially
adversely affect the Lien of this Trust Indenture. In addition,
the Owner, at its own expense, may from time to time make or
cause to be made such alterations and modifications in and
additions to the Airframe or any Engine as the Owner may deem
desirable in the proper conduct of its business (including,
without limitation, removal of Parts); provided that no such
alteration, modification or addition diminishes, in the Owner's
reasonable judgment, the value, utility, condition, airworthiness
or remaining useful life of such Airframe or any Engine below the
value, utility, condition, airworthiness or remaining useful life
thereof immediately prior to such alteration, modification or
addition, assuming such Airframe or any Engine was then in the
condition required to be maintained by the terms of this Trust
Indenture, except that the value (but not the utility, condition,
airworthiness or remaining useful life) of the Aircraft may be
reduced by the value of Parts which the Owner deems obsolete or
no longer suitable or appropriate for use in such Aircraft which
shall have been removed and not replaced, if the aggregate
original cost of all such obsolete or unsuitable Parts removed
from such Aircraft and not replaced shall not exceed $250,000.
All Parts incorporated or installed in or attached or added to
any Airframe or any Engine as the result of any alteration,
modification or addition effected by the Owner shall be free and
clear of any Liens except Permitted Liens and become subject to
the Lien of this Trust Indenture; provided that the Owner may, at
any time so long as the Airframe or any Engine is subject to the
Lien of this Trust Indenture, remove any such Part from such
Airframe or an Engine if (i) such Part is in addition to, and not
in replacement of or in substitution for, any Part originally
incorporated or installed in or attached to such Airframe or any
Engine at the time of delivery thereof hereunder or any Part in
replacement of, or in substitution for, any such original Part,
(ii) such Part is not required to be incorporated or installed in
or attached or added to such Airframe or any Engine pursuant to
the terms of Section 4.02(d) or the first sentence of this
Section 4.04(d) and (iii) such Part can be removed from such
Airframe or any Engine without diminishing or impairing the
value, condition, utility, airworthiness or remaining useful life
35
which such Airframe or any Engine would have had at the time of
removal had such alteration, modification or addition not been
effected by the Owner, assuming the Aircraft was otherwise
maintained in the condition required by this Trust Indenture.
Upon the removal by the Owner of any such Part as above provided,
title thereto shall, without further act, be free and clear of
all rights of the Loan Trustee and such Part shall no longer be
deemed a Part hereunder.
(e) Substitution of Engines.
The Owner shall have the right at its option at any
time, on at least 30 days' prior notice to the Loan Trustee, to
substitute, and if an Event of Loss shall have occurred with
respect to an Engine, shall within 60 days of the occurrence of
such Event of Loss and on at least five days' prior notice to the
Loan Trustee substitute, a Replacement Engine for any Engine not
then installed or held for use on the Aircraft of which it is
part. In such event, immediately upon the effectiveness of such
substitution on the date set forth in such notice and without
further act, (i) the Replacement Engine shall be owned by the
Owner and free and clear of all Liens (other than Permitted
Liens), (ii) the replaced Engine shall thereupon be free and
clear of all rights of the Loan Trustee and the Lien of this
Trust Indenture and shall no longer be deemed an Engine
hereunder, and (iii) such Replacement Engine shall become subject
to this Trust Indenture and be deemed part of the Aircraft for
all purposes hereof to the same extent as the Engine originally
installed on or attached to such Airframe. The Owner's right to
make a replacement hereunder shall be subject to the fulfillment
(which may be simultaneous with such replacement) of the
following conditions precedent at the Owner's sole cost and
expense and the Loan Trustee agrees to cooperate with the Owner
to the extent necessary to enable it to timely satisfy such
conditions:
(i) the following documents shall be duly authorized,
executed and delivered by the respective party or parties
thereto, and an executed counterpart of each shall be
delivered to the Loan Trustee:
(A) a Trust Indenture Supplement covering the
Replacement Engine, which shall have been duly filed
for recordation pursuant to the Act or such other
applicable law of the jurisdiction other than the
United States in which the Aircraft of which such
Engine is a part is registered in accordance with
Section 4.02(e), as the case may be;
(B) a full warranty bill of sale (as to title),
covering the Replacement Engine, executed by the
former owner thereof in favor of the Owner (or, at the
Owner's option, other evidence of the Owner's
ownership of such Replacement Engine, reasonably
satisfactory to the Loan Trustee); and
36
(C) Uniform Commercial Code financing statements
covering the security interests created by this Trust
Indenture (or any similar statements or other
documents required to be filed or delivered pursuant
to the laws of the jurisdiction in which such Aircraft
may be registered) as are deemed necessary or
desirable by counsel for the Loan Trustee to protect
the security interests of the Loan Trustee in the
Replacement Engine;
(ii) the Owner shall cause to be delivered to the Loan
Trustee, if requested by it, an opinion of counsel to the
effect that the Lien of this Trust Indenture continues to
be in full force and effect with respect to the Replacement
Engine; and
(iii) the Owner shall deliver to the Loan Trustee an
Officer's Certificate stating that in the opinion of such
signer, all conditions precedent provided for in this
Section 4.04(e) relating to such replacement have been
complied with.
Upon satisfaction of all conditions to such
substitution, (x) the Loan Trustee shall execute and deliver to
the Owner such documents and instruments, prepared at the Owner's
expense, as the Owner shall reasonably request to evidence the
release of such replaced Engine from the Lien of this Trust
Indenture, (y) the Loan Trustee shall assign to the Owner all
claims it may have against any other Person relating to any Event
of Loss giving rise to such substitution and (z) the Owner shall
receive all insurance proceeds (other than those reserved to
others under Section 4.06(f)) and proceeds in respect of any
Event of Loss giving rise to such replacement to the extent not
previously applied to the purchase price of the Replacement
Engine as provided in Sections 4.06(e)(A) and 4.05(d)(B).
SECTION 4.05. Loss, Destruction or Requisition
(a) Event of Loss With Respect to the Airframe.
Upon the occurrence of an Event of Loss with respect
to the Airframe, the Owner shall promptly (and in any event
within 10 days after such occurrence) give the Loan Trustee
written notice of such Event of Loss. The Owner shall, within 20
days after such occurrence, give the Loan Trustee written notice
of Owner's election to either replace the Airframe as provided
under Section 4.05(a)(i) or to make payment in respect of such
Event of Loss as provided under Section 4.05(a)(ii) (which notice
of election or any subsequent notice shall specify the date,
which shall be at least 25 days after the date of such notice, on
which such payment shall be made) (it being agreed that if Owner
shall not have given the Loan Trustee such notice of such
election within the above specified time period, the Owner shall
be deemed to have elected to make payment in respect of such
Event of Loss as provided under Section 4.05(a)(ii)):
37
(i) if owner elects to replace the Airframe, Owner
shall, subject to the satisfaction of the closing
conditions contained in Section 4.05(c), as promptly as
possible and in any event within 60 days after the
occurrence of such Event of Loss, cause to be subjected to
the Lien of this Trust Indenture, in replacement of the
Airframe and Engines with respect to which the Event of
Loss occurred, a Replacement Airframe (together with the
same number of Replacement Engines as the number of
Engines, if any, which were subject to such Event of Loss),
such Replacement Airframe and Replacement Engines to be
free and clear of all Liens except Permitted Liens and to
have a value, utility and remaining useful life at least
equal to, and being in as good operating condition and
repair and airworthiness as, the Airframe and Engines, if
any, so replaced (assuming such Airframe and Engines were
in the condition and repair required by the terms hereof);
provided that if the Owner shall not perform its obligation
to effect such replacement under this clause (i) during the
60-day period of time provided herein, it shall give the
Loan Trustee notice to such effect upon or before the
expiration of such period of time and shall pay the amounts
required to be paid pursuant to and within the time frame
specified in clause (ii) below; or
(ii) if owner elects to make a payment in respect of
such Event of Loss of the Airframe, Owner shall make a
payment to the Loan Trustee for purposes of allowing a
distribution under Section 2.05 in order to prepay
Equipment Notes in accordance with Section 2.10 hereof on a
date specified at least 25 days in advance by the Owner,
which date shall be on or before the Business Day next
following the earlier of (x) the sixty-first day following
the date of the occurrence of such Event of Loss, and (y)
the second Business Day following the receipt of insurance
proceeds with respect to such Event of Loss; and upon such
payment, the Loan Trustee shall, at the cost and expense of
the Owner, release from the Lien of this Trust Indenture
the Airframe, and the Engine or engines, if any, attached
to the Airframe, subject to such Event of Loss, by
executing and delivering to the Owner all documents and
instruments as the Owner may reasonably request to evidence
such release.
(b) Effect of Replacement.
Should the Owner have provided a Replacement Airframe
and Replacement Engines, if any, as provided for in Section
4.05(a)(i), (i) the Lien of this Trust Indenture shall continue
with respect to such Replacement Airframe and Replacement
Engines, if any, as though no Event of Loss had occurred; (ii)
the Loan Trustee shall, at the cost and expense of the Owner,
release from the Lien of this Trust Indenture the replaced
Airframe and the Engine or engines, if any, attached to the
replaced Airframe upon the occurrence of the Event of Loss by
executing and delivering to the Owner such documents and
38
instruments as the Owner may reasonably request to evidence such
release; and (iii) in the case of a replacement upon an Event of
Loss, the Loan Trustee shall assign to the Owner all claims the
Loan Trustee may have against any other Person arising from the
Event of Loss and the Owner shall receive all insurance proceeds
(other than those reserved to others under Section 4.06(f)) and
proceeds from any award in respect of condemnation, confiscation,
seizure or requisition, including any investment interest
thereon, to the extent not previously applied to the purchase
price of the Replacement Airframe and Replacement Engines, if
any, as provided in Sections 4.05(d)(A) and 4.06(e)(C).
(c) Conditions to Airframe Replacement.
The Owner's right to substitute a Replacement Airframe
and Replacement Engines, if any, as provided in Section
4.05(a)(i) shall be subject to the fulfillment, at the Owner's
sole cost and expense, in addition to the conditions contained in
such Section 4.05(a)(i), of the following conditions precedent:
(i) on the date when the Replacement Airframe and
Replacement Engines, if any, is subjected to the Lien of
this Trust Indenture (such date being referred to in this
Section 4.05 as the "Replacement Closing Date"), no Event
of Default under any Indenture shall have occurred and be
continuing;
(ii) on the Replacement Closing Date the following
documents shall have been duly authorized, executed and
delivered by the respective party or parties thereto and
shall be in full force and effect, and an executed
counterpart of each thereof (or, in the case of the FAA
Bill of Sale and full warranty bill of sale referred to
below, a photocopy thereof) shall have been delivered to
the Loan Trustee:
(A) a Trust Indenture Supplement covering the
Replacement Airframe and Replacement Engines, if any,
which shall have been duly filed for recordation
pursuant to the Act or such other applicable law of
such jurisdiction other than the United States in
which the Replacement Airframe and Replacement
Engines, if any, are to be registered in accordance
with Section 4.02(e), as the case may be;
(B) an FAA Bill of Sale (or a comparable
document, if any, of another Aviation Authority, if
applicable) covering the Replacement Airframe and
Replacement Engines, if any, executed by the former
owner thereof in favor of the Owner;
(C) a full warranty (as to title) bill of sale,
covering the Replacement Airframe and Replacement
Engines, if any, executed by the former owner thereof
in favor of the Owner (or, at the Owner's option,
other
39
evidence of the Owner's ownership of such Replacement
Airframe and Replacement Engines, if any, reasonably
satisfactory to the Loan Trustee); and
(D) Uniform Commercial Code financing statements
(or any similar statements or other documents required
to be filed or delivered pursuant to the laws of the
jurisdiction in which the Replacement Airframe and
Replacement Engines, if any, may be registered in
accordance with Section 4.02(e)) as are deemed
necessary or desirable by counsel for the Loan Trustee
to protect the security interests of the Loan Trustee
in the Replacement Airframe and Replacement Engines,
if any;
(iii) the Replacement Airframe and Replacement
Engines, if any, shall be of the same series as the
Airframe or Engines, as the case may be, or an improved
model of such aircraft or engines of the manufacturer
thereof, shall have a value and utility at least equal to,
and be in as good operating condition and repair as, the
Airframe and any Engines replaced (assuming such Airframe
and Engines were in the condition required by the terms
hereof) as evidenced by the appraisal referred to in
Section 4.05(c)(vii)(1);
(iv) the Loan Trustee (acting directly or by
authorization to its special counsel) shall have received
satisfactory evidence as to the compliance with Section
4.06 with respect to the Replacement Airframe and
Replacement Engines, if any;
(v) on the Replacement Closing Date, (A) the Owner
shall cause the Replacement Airframe and Replacement
Engines, if any, to be subject to the Lien of this Trust
Indenture free and clear of Liens (other than Permitted
Liens), (B) the Replacement Airframe shall have been duly
certified by the FAA as to type and airworthiness in
accordance with the terms of this Trust Indenture and (C)
application for registration of the Replacement Airframe
and Replacement Engines, if any, in accordance with Section
4.02(e) shall have been duly made with the FAA and the
Owner shall have authority to operate the Replacement
Airframe;
(vi) the Loan Trustee at the expense of the Owner,
shall have received (acting directly or by authorization to
its special counsel) (A) an Opinion of Counsel, addressed
to the Loan Trustee, to the effect that the Replacement
Airframe and Replacement Engine, if any, has or have duly
been made subject to the Lien of this Trust Indenture, that
all required action has been taken in order to maintain,
and such action shall maintain, the effectiveness and
priority (to the extent the same existed immediately prior
to the occurrence of such Event of Loss, assuming the Owner
was in compliance with all relevant terms hereof) of the
security interests in the Airframe, the Engines and title
thereto
40
created by this Trust Indenture and that the protections
afforded to the Loan Trustee by 11 U.S.C. ss. 1110 will not
be less than such protections immediately prior to the
occurrence of such Event of Loss (assuming the Owner was in
compliance with all relevant terms hereof) and (B) an
opinion of qualified FAA counsel (or counsel in
jurisdiction outside the United States where the Aircraft
may be registered in accordance with Section 4.02(e)),
addressed to the Loan Trustee, as to, in the case of FAA
counsel, the due recordation of the Trust Indenture
Supplement and all other documents or instruments the
recordation of which is necessary to perfect and protect
the rights of the Loan Trustee in the Replacement Airframe
and Replacement Engines, if any, or, in the case of counsel
in another jurisdiction, the taking of all action necessary
in such jurisdiction for such purposes; and
(vii) the Loan Trustee (acting directly or by
authorization to special counsel) shall have received:
(1) an appraisal by an Appraiser with respect to the
Replacement Airframe and Replacement Engines, if any; and
(2) an Officer's Certificate stating that in the
opinion of the signer, all conditions precedent provided
for in this Trust Indenture relating to such replacement
have been complied with.
(d) Non-Insurance Payments Received on Account of an
Event of Loss.
With respect to the Aircraft, as between the Loan
Trustee and the Owner, any payments on account of an Event of
Loss (other than insurance proceeds or other payments the
application of which is provided for in this Section 4.5 or
elsewhere in this Trust Indenture, as the case may be, or
payments in respect of damage to the business or property of the
Owner) with respect to any Aircraft or an Engine or any Part
received at any time by the Loan Trustee or by the Owner from any
governmental authority or other Person will be applied as
follows:
(A) if such payments are received with respect to an
Event of Loss with respect to the Aircraft, and the
Airframe which is a part of such Aircraft, or such Airframe
and the Engines or engines installed thereon, are being
replaced by the Owner pursuant to Section 4.05(a)(i), such
payments shall be paid over to, or retained by, the Owner;
provided that, if the Owner has not completed such
replacement, such payments shall be paid over to, or
retained by, the Loan Trustee as security, and upon
completion of, or in connection with a closing for, such
replacement, be paid over to the Owner;
(B) if such payments are received with respect to an
41
Event of Loss with respect to an Engine or Part that has
been or is being replaced by the Owner pursuant to the
terms hereof, such payments shall be paid over to, or
retained by, the Owner; and
(C) if such payments are received with respect to an
Event of Loss with respect to the Aircraft, and if the
Airframe which is a part of such Aircraft, or such Airframe
and the Engines or engines installed thereon, have not been
and will not be replaced as contemplated by Section
4.05(a), such payments shall be paid to the Loan Trustee
for purposes of allowing a distribution towards the
prepayment of the Equipment Notes required pursuant to
Section 2.10 hereof of the and after the Equipment Notes
and all other amounts payable to the Loan Trustee and the
Loan Trustee and the Note Holders under this Trust
Indenture and the other Operative Agreements shall have
been paid in full, the balance, if any, of such payment
shall be promptly paid over to or retained by the Owner.
(e) Requisition for Use.
In the event of a requisition for use by any
government of the Airframe and the Engines, if any, or engines
installed on such Airframe while such Airframe is subject to the
Lien of this Trust Indenture, the Owner shall promptly notify the
Loan Trustee of such requisition and all of the Owner's
obligations under this Trust Indenture shall continue to the same
extent as if such requisition had not occurred except to the
extent that the performance or observance of any obligation by
the Owner shall have been prevented or delayed by such
requisition; provided that the Owner's obligations under this
Section 4.05 with respect to the occurrence of an Event of Loss,
for the payment of money and under Section 4.06 (except while an
assumption of liability by the government of the United States of
the scope referred to in Section 4.02(c) is in effect) shall not
be reduced or delayed by such requisition. Any payments received
by the Loan Trustee or the Owner from such government with
respect to such requisition of use shall be paid over to, or
retained by, the Owner. In the event of an Event of Loss of an
Engine resulting from the requisition for use by a government of
such Engine (but not the Airframe), the Owner will replace such
Engine hereunder by complying with the terms of Section 4.04(e)
and any payments received by the Loan Trustee or the Owner from
such government with respect to such requisition shall be paid
over to, or retained by, the Owner.
(f) Certain Payments to be Held As Security.
Any amount referred to in this Section 4.05 or Section
4.06 which is payable to the Owner shall not be paid to the
Owner, or, if it has been previously paid directly to the Owner,
shall not be retained by the Owner, if at the time of such
payment an Event of Default shall have occurred and be
continuing, but shall be paid to and held by the Loan Trustee as
42
security for the obligations of the Owner under this Trust
Indenture and the Operative Agreements, and at such time as there
shall not be continuing any such Event of Default such amount and
any gain realized as a result of investments required to be made
pursuant to Section 6.06 shall be paid over to the Owner.
SECTION 4.06. Insurance
(a) Public Liability and Property Damage Insurance.
Subject to the rights of the Owner under Section
4.06(d), the Owner shall, without expense to the Loan Trustee or
the Note Holders, maintain or cause to be maintained in effect at
all times as long as the Aircraft is subject to the Lien of this
Trust Indenture with insurers of recognized responsibility public
liability insurance (including, without limitation, bodily
injury, passenger legal liability, cargo liability, property
damage, contractual liability and product liability coverage but
excluding manufacturer's product liability coverage) with respect
to such Aircraft in an amount not less than the amount the Owner
may carry from time to time on other similar aircraft in its
fleet, but not less than the amount evidenced by the certificates
of insurance issued by the Owner's independent insurance broker
delivered to the Loan Trustee on the date of the Closing;
provided that an agreement of the U.S. Government to insure
against or indemnify for substantially the same risks to at least
the same amount shall satisfy the requirements of this Section
4.06(a); provided further that the Owner need not maintain cargo
liability insurance, or may maintain such insurance in an amount
less than that specified above for the Aircraft as long as the
amount of cargo liability insurance, if any, maintained with
respect to such Aircraft is the same as the cargo liability
insurance, if any, maintained for other aircraft of the same
model as such Aircraft owned or operated by the Owner. During any
period when an Aircraft is on the ground and not in operation the
Owner may carry or cause to be carried, in lieu of the insurance
required by this Section, insurance otherwise conforming with the
provisions of this Section except that the amounts of coverage
shall not be required to exceed the amounts of comprehensive
airline liability insurance, and the scope of risks covered and
type of insurance shall be the same, as are from time to time in
effect with respect to aircraft owned or leased by the Owner of
the same type as the Aircraft similarly on the ground and not in
operation. Such insurance shall be of the type usually carried by
the Owner with respect to similar aircraft and engines, and
covering risks of the kind customarily insured against by the
Owner.
(b) Insurance Against Loss or Damage to the Aircraft
and Engines.
Subject to the rights of the Owner under Section
4.06(d), the Owner shall, without expense to the Loan Trustee or
any Note Holders, maintain or cause to be maintained in effect at
all times during which the Aircraft is subject to the Lien of
43
this Trust Indenture with insurers of recognized responsibility
all risk, agreed value, ground and flight hull insurance, which
may exclude war risks and allied perils, covering each Aircraft
for an amount not less than the Insured Amount. To the extent
available at reasonable cost, such hull insurance or other
personal property insurance of the Owner shall cover Engines or
engines and Parts temporarily removed from such Airframe, pending
replacement by installation of the same or similar Engines,
engines or Parts on such Airframe but such insurance need not
cover an Engine while attached to an airframe not owned, leased
or operated by the Owner or a permitted lessee. Such insurance
shall be of the type usually carried by the Owner with respect to
similar aircraft and engines, and covering risks of the kind
customarily insured against by the Owner. If and to the extent
that the Owner or a lessee operates an Aircraft either (A) on
routes where it maintains war risk insurance in effect with
respect to other similar owned or leased aircraft in its fleet,
or (B) on routes (other than routes within or between the United
States, Canada, Mexico, Bermuda and islands other than Cuba in
the Caribbean Basin) where the custom in the industry is to carry
war risk and/or allied perils insurance, the Owner or such lessee
shall maintain or cause to be maintained such insurance in effect
with respect to such Aircraft in an amount equal to the lesser of
the Insured Amount or the amount of such insurance customarily
carried by corporations engaged in the same or similar business
similarly situated with the Owner and owning or operating similar
aircraft and engines on such routes or similar routes; provided
that if the requirement to maintain war risk insurance arises
under clause (A) of this sentence, such insurance shall be
maintained in an amount not less than that maintained by the
Owner or such lessee on similar aircraft in its fleet. An
agreement by the U.S. Government to insure against or indemnify
for substantially the same risks to at least the same amount will
satisfy any of the requirements of this Section 4.06(b)). During
any period when an Aircraft is on the ground and not in operation
the Owner may carry or cause to be carried, in lieu of the
insurance required by this Section, insurance otherwise
conforming hereto except that the scope of the risks covered and
type of insurance shall be the same as are from time to time
applicable to aircraft owned or leased by the Owner of the same
type as the Aircraft similarly on the ground and not in operation
in an amount at least equal to the Insured Amount.
(c) Additional Insured; Loss Payment.
The Owner shall cause all policies of insurance
carried in accordance with this Section 4.06 to name the Loan
Trustee as an additional insured as its interests may appear.
Such policies shall provide with respect to such additional
insured that (i) none of its interests in such policies shall be
invalidated by any act or omission or breach or violation of
warranty, declaration or condition contained in such policies by
the Owner; (ii) no cancellation or lapse of coverage for
nonpayment of premium or otherwise, and no substantial change of
coverage which adversely affects the interests of such additional
insured, shall
44
be effective as to such additional insured until 30 days (or such
lesser period as may be applicable in the case of any war risk
coverage) after receipt by such additional insured of written
notice from the insurers of such cancellation, lapse or change;
(iii) the Loan Trustee shall have no liability for premiums,
commissions, calls, assessments or advances with respect to such
policies; (iv) such policies will be primary without any right of
contribution from any other insurance carried by such additional
insured; and (v) the insurers waive any rights of set-off,
counterclaim, deduction or subrogation against such additional
insured. Each liability policy shall provide that all the
provisions thereof, except the limits of liability, shall operate
in the same manner as if there were a separate policy covering
such additional insured and provide that the exercise by the
insurer of rights of subrogation derived from rights retained by
the Owner will not delay payment of any claim that would
otherwise be payable but for such rights of subrogation. Each
hull policy shall name the Loan Trustee as loss payee as long as
this Trust Indenture shall remain in effect; provided that so
long as the insurers shall not have received written notice that
an Event of Default under any Indenture has occurred and is
continuing, if insurance proceeds in the aggregate equal
$3,000,000 or less, then such proceeds shall be payable to the
Owner and, notwithstanding the foregoing, all amounts of (i) any
proceeds which in the aggregate exceed $3,000,000, (ii) any
proceeds in respect of a total loss or an Event of Loss or (iii)
any proceeds with respect to any single loss after the insurers
shall have received written notice that an Event of Default under
any Indenture has occurred and is after continuing, shall be
payable to the Loan Trustee as long as the Aircraft suffering
such loss shall not have been released from the Lien of this
Trust Indenture.
(d) Deductibles and Self-Insurance.
The Owner may from time to time self-insure, by way of
deductible or premium adjustment provisions in insurance policies
or otherwise, the risks required to be insured against pursuant
to this Section 4.06 in such amounts as are then self-insured
with respect to similar owned or leased aircraft in the Owner's
fleet but in no case shall such self-insurance in the aggregate
exceed for any year (i) 50% of the largest replacement value of
any single aircraft on which the Owner at the time carries
insurance or (ii) 1-1/2% of the aggregate insurable value (during
the preceding calendar year) of all aircraft on which the Owner
carries insurance, whichever is less, unless an insurance broker
of national standing selected by the Owner and reasonably
satisfactory to the Loan Trustee shall certify that the standard
among all other major United States airlines is a higher level of
self-insurance, in which case the Owner may self-insure to such
higher level. A deductible per occurrence used to reduce handling
costs that is not in excess of the prevailing standard market
deductible for similar aircraft shall be permitted in addition to
the self-insurance.
45
(e) Application of Hull Insurance Proceeds.
Subject to Section 4.05(f), as between the Loan
Trustee and the Owner, any payments received under policies of
hull or other property insurance required to be maintained by the
Owner pursuant to Section 4.06(b)), shall be applied as follows:
(A) if such payments are received with respect to loss
or damage (including an Event of Loss with respect to an
Engine) not constituting an Event of Loss with respect to
the Airframe, payments in the aggregate of $3,000,000 or
less shall be paid over to or retained by the Owner and,
subject to Section 4.06(c), the entire amount of any
payments, if such payments in the aggregate are greater
than $3,000,000 shall be paid over to or retained by the
Loan Trustee for payment to the Owner only upon performance
of its repair or replacement obligation;
(B) if such payments are received with respect to an
Event of Loss with respect to the Airframe and such
Airframe is not being replaced by the Owner pursuant to
Section 4.05(a)(i), so much of such payments as shall be
required to be paid by the Owner pursuant to Section
4.05(a) (ii) shall be applied in reduction of the Owner's
obligation to pay such amounts if not already paid by the
Owner, and to reimburse the Owner if such amounts shall
have been paid, and the balance, if any, of such payments
shall be promptly paid over to or retained by the Owner;
and
(C) if such payments are received with respect to the
Airframe, or the Airframe and Engines or engines installed
thereon, and such Airframe, or Airframe and Engines or such
engines are being replaced by the Owner pursuant to Section
4.05(a)(i), such payments shall be paid over to, or
retained by the Owner; provided that if the Owner has not
completed such replacement, such payments shall be paid
over to, or retained by, the Loan Trustee as security, and
upon completion of, or in connection with a closing for,
such replacement, be paid over to or retained by the Owner.
(f) Insurance for Own Account.
Nothing in this Section 4.06 shall prohibit the Loan
Trustee or the Owner from obtaining insurance with respect to the
Aircraft for its own account (including, without limitation, in
the case of the Owner, hull insurance under the same policies
maintained pursuant to this Section 4.06 in amounts in excess of
those required to be maintained pursuant to this Section 4.06)
and any proceeds payable thereunder shall be payable as provided
in the insurance policy relating thereto; provided that no such
insurance may be obtained which would limit or otherwise
adversely affect the availability, coverage or payment of any
insurance required to be obtained or maintained pursuant to this
Section 4.06, it being understood that all salvage rights to the
Airframe and Engines shall remain with the Owner's insurers at
46
all times.
(g) Reports Etc.
The Owner will, so long as the Aircraft is subject to
the Lien of this Trust Indenture, furnish to the Loan Trustee
evidence of renewal of the insurance policies required pursuant
to this Section 4.06 prior to the cancellation, lapse or
expiration of such insurance policies and, on or before the
renewal dates of the insurance policies carried by the Owner
pursuant to this Section 4.06, a report signed by a firm of
aircraft insurance brokers, not affiliated with the Owner,
appointed by the Owner and reasonably satisfactory to the Loan
Trustee, setting forth the insurance carried with respect to such
Aircraft (including public liability insurance) and stating the
opinion of such firm that the insurance then carried and
maintained on such Aircraft (including public liability
insurance) complies with the terms hereof and that such renewal
insurance will on and after the effective date thereof so comply
with the terms hereof; provided that all information contained in
such report shall be held confidential by the Loan Trustee, and
shall not be furnished or disclosed by them to anyone except the
Note Holders, their agents and representatives (provided that any
recipient of such information shall agree for the benefit of the
Owner to hold all such information similarly confidential) or as
may be required by Applicable Law; and provided further that if
such report is not already being provided by such firm on an
annual basis, upon the request of the Loan Trustee, the Owner
shall request its insurers to provide such report on such basis.
The Owner will cause such firm to give prompt written advice to
the Loan Trustee of any default in the payment of any premium and
of any other act or omission on the part of the Owner of which it
has knowledge and which would in such firm's opinion invalidate
or render unenforceable, in whole or in any material part, any
insurance on an Aircraft. The Owner will also cause such firm to
advise the Loan Trustee in writing at least 30 days prior to the
termination or cancellation of, or material adverse change in,
such insurance carried and maintained on any Aircraft pursuant to
this Section 4.06.
SECTION 4.07. Filings
So long as any Equipment Notes or any other Secured
Obligations remain unpaid, the Owner will take, or cause to be
taken, at the Owner's cost and expense, such action with respect
to the recording, filing, rerecording and refiling of this Trust
Indenture, each Trust Indenture Supplement and any financing
statements or other instruments as are necessary or requested by
the Loan Trustee and will take such further action as the Loan
Trustee may from time to time reasonably request and, in each
case, as is appropriate, to maintain, so long as this Trust
Indenture is in effect, the perfection of the security interest
created by this Trust Indenture, and will furnish to the Loan
Trustee timely notice of the necessity of such action, together
with such instruments, in execution form, and such other
47
information as may be required to enable the Loan Trustee to take
such action.
SECTION 4.08. Corporate Existence
So long as the Equipment Notes or any other Secured
Obligations remain unpaid, the Owner shall at all times maintain
its corporate existence, except as permitted by Section 4.09; and
it shall do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate rights, powers,
privileges and franchises, except for any corporate right, power,
privilege or franchise that it determines is no longer necessary
or desirable in the conduct of its business and the loss of which
will not materially adversely affect or diminish the rights of
the Loan Trustee under this Trust Indenture; provided that the
Owner shall, so long as the Equipment Notes or any other Secured
Obligations remain unpaid, maintain at all times to the extent
generally available an air carrier operating certificate issued
by the United States Secretary of Transportation pursuant to
Chapter 447 of the Act or any successor provision if and so long
as such a certificate is a condition to entitlement of benefits
under 11 U.S.C. ss. 1110.
SECTION 4.09. Merger, Consolidation, Etc.
So long as any Equipment Notes or any other Secured
Obligations remain unpaid, the Owner shall not consolidate with
or merge into any other corporation or convey, sell, transfer or
lease all or substantially all its assets as an entirety to any
Person, whether in a single transaction or a series of related
transactions, unless:
(i) The corporation formed by such consolidation or
into which it is merged or the Person which acquires by
conveyance, purchase, transfer or lease all or
substantially all its assets as an entirety shall be a
corporation organized and validly existing under the laws
of the United States or any jurisdiction thereof and shall
after such merger or consolidation be a U.S. Air Carrier,
and shall have executed and delivered to the Loan Trustee
an agreement in form and substance reasonably satisfactory
to the Loan Trustee containing an assumption by such
successor corporation of the due and punctual performance
and observance of each agreement and condition of the
Operative Agreements;
(ii) No Event of Default under this Trust Indenture
shall arise as a result of such asset sale, lease,
conveyance, transfer, merger or consolidation; and
(iii) The Owner shall have delivered to the Loan
Trustee an Officer's Certificate and an opinion of counsel
reasonably satisfactory to the Loan Trustee (which opinion
may be subject to customary exceptions and may rely, as to
factual matters, on an Officer's Certificate of the
48
successor to the Owner) stating that such consolidation,
merger, conveyance, sale, transfer or lease and the
assumption agreement mentioned in clause (i) above comply
with this Section 4.09 and that such assumption agreement
has been duly authorized, executed and delivered by such
successor corporation and constitutes its legal, valid and
binding obligation, enforceable against it in accordance
with its terms.
No such lease, conveyance, sale, transfer, merger or
consolidation shall have the effect of releasing the Owner or any
such successor corporation from its liability hereunder or under
the other Operative Agreements. Nothing contained herein shall
permit any lease or other arrangement for the use, operation or
possession of the Aircraft except in compliance with the
applicable provisions hereof. Upon any consolidation or merger,
or any conveyance, sale, transfer or lease of all or
substantially all the assets of the Owner, as an entirety in
accordance with this Section 4.09, the successor corporation
formed by such consolidation or into which the Owner is merged or
to which such conveyance, transfer or lease is made shall succeed
to, and be substituted for, and may exercise every right and
power of, the Owner under this Trust Indenture and the other
Operative Agreements with the same effect as if such successor
corporation had been named as the Owner herein and therein.
ARTICLE V
EVENTS OF DEFAULT; REMEDIES OF LOAN TRUSTEE
SECTION 5.01. Event of Default
"Event of Default" means any of the following events
(whatever the reason for such Event of Default and whether such
event shall be voluntary or involuntary or come about or be
effected by operation of Law or pursuant to or in compliance with
any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) the failure of the Owner to pay when due any
payment of principal of, interest on or Make-Whole Amount,
if any, under any Equipment Note, and such failure shall
continue unremedied for a period of 15 days;
(ii) the failure by the Owner to procure and maintain
property or liability insurance with respect to the
Collateral complying with the provisions of Section 4.06
hereof or such insurance shall be canceled or lapse;
provided that such lapse or cancellation shall not
constitute an Event of Default until the earlier of (i) 30
days after receipt by the Loan Trustee of written notice of
such lapse or cancellation or (ii) the date that such lapse
or cancellation is effective as to the Loan Trustee;
(iii) the Owner shall operate the Aircraft after having
49
received notice that the insurance required by Section 4.06
hereof has lapsed or has been canceled;
(iv) any representation or warranty made by the Owner
or in any of the Operative Agreements or in any document or
certificate furnished to the Loan Trustee or any Note
Holder in connection herewith or therewith or pursuant
hereto or thereto, shall prove to have been incorrect in
any material respect when made and shall remain material at
the time in question and shall not be remedied within 60
days after notice thereof has been given to the Owner by
the Loan Trustee or from the Note Holders of at least 25%
of the outstanding principal amount of the Equipment Notes;
(v any failure by the Owner to observe or perform any
of its covenants or obligations in the Trust Indenture, and
such failure shall continue for a period of 60 days after
delivery of notice of such failure from the Loan Trustee to
the Owner or from the Note Holders of at least 25% of the
outstanding principal amount of the Equipment Notes, unless
such failure is curable and the Owner shall, after the
delivery of such notice, then be diligently proceeding to
correct such failure and shall in fact correct such failure
within 180 days after delivery of such notice;
(vi) the Owner shall consent to the appointment of or
taking possession by a receiver, trustee or liquidator of
itself or of a substantial part of its property, or the
Owner shall admit in writing its inability to pay its debts
generally as they come due or shall make a general
assignment for the benefit of its creditors, or the Owner
shall file a voluntary petition in bankruptcy or a
voluntary petition or an answer seeking reorganization,
liquidation or other relief under any bankruptcy laws or
insolvency laws (as in effect at such time), or an answer
admitting the material allegations of a petition filed
against it in any such case, or the Owner shall seek relief
by voluntary petition, answer or consent, under the
provisions of any other bankruptcy or similar law providing
for the reorganization or winding-up of corporations (as in
effect at such time), or the Owner shall seek an agreement,
composition, extension or adjustment with its creditors
under such laws or the Owner's board of directors shall
adopt a resolution authorizing corporate action in
furtherance of any of the foregoing;
(vii) an order, judgment or decree shall be entered by
any court of competent jurisdiction appointing, without the
consent of the Owner, a receiver, trustee or liquidator of
the Owner or of any substantial part of its property, or
any substantial part of the property of the Owner shall be
sequestered, or granting any other relief in respect of the
Owner as a debtor under any bankruptcy laws or other
insolvency laws (as in effect at such time), and any such
order, judgment, decree, or decree of appointment or
50
sequestration shall remain in force undismissed, unstayed
or unvacated for a period of 90 days after the date of
entry thereof; or
(viii) a petition against the Owner in a proceeding
under any bankruptcy laws or other insolvency laws (as in
effect at such time) is filed and not withdrawn or
dismissed within 60 days thereafter, or if, under the
provisions of any law providing for reorganization or
winding-up of corporations which may apply to the Owner,
any court of competent jurisdiction shall assume
jurisdiction, custody or control of the Owner of any
substantial part of its property and such jurisdiction,
custody or control shall remain in force unrelinquished,
unstayed or unterminated for a period of 60 days.
SECTION 5.02. Remedies
(a) If an Event of Default shall have occurred and be
continuing and so long as the same shall continue unremedied,
then and in every such case the Loan Trustee may exercise any or
all of the rights and powers and pursue any and all of the
remedies pursuant to this Article V and shall have and may
exercise all of the rights and remedies of a secured party under
the Uniform Commercial Code and may take possession of all or any
part of the properties covered or intended to be covered by the
Lien created hereby or pursuant hereto and may exclude the Owner
and all persons claiming under it wholly or partly therefrom;
provided, that the Loan Trustee shall give the Owner twenty days'
prior written notice of its intention to sell the Aircraft.
Without limiting any of the foregoing, it is understood and
agreed that the Loan Trustee may exercise any right of sale of
the Aircraft available to it, even though it shall not have taken
possession of the Aircraft and shall not have possession thereof
at the time of such sale.
(b) If an Event of Default shall have occurred and be
continuing, then and in every such case the Loan Trustee may (and
shall, upon receipt of a written demand therefor from a Majority
in Interest of Note Holders), at any time, by delivery of written
notice or notices to the Owner, declare all the Equipment Notes
to be due and payable, whereupon the unpaid Original Amount of
all Equipment Notes then outstanding, together with accrued but
unpaid interest thereon (without Make-Whole Amount) and other
amounts due thereunder, shall immediately become due and payable
without presentment, demand, protest or notice, all of which are
hereby waived.
This Section 5.02(b), however, is subject to the
condition that, if at any time after the Original Amount of the
Equipment Notes shall have become so due and payable, and before
any judgment or decree for the payment of the money so due, or
any thereof, shall be entered, all overdue payments of interest
upon the Equipment Notes and all other amounts payable under the
Equipment Notes (except the Original Amount of the Equipment
51
Notes which by such declaration shall have become payable) shall
have been duly paid, and every other Default and Event of Default
with respect to any covenant or provision of this Trust Indenture
shall have been cured, then and in every such case a Majority in
Interest of Note Holders may (but shall not be obligated to), by
written instrument filed with the Loan Trustee, rescind and annul
the Loan Trustee's declaration (or such automatic acceleration)
and its consequences; but no such rescission or annulment shall
extend to or affect any subsequent Default or Event of Default or
impair any right consequent thereon.
(c) The Note Holders shall be entitled, at any sale
pursuant to this Section 5.02, to credit against any purchase
price bid at such sale by such holder all or any part of the
unpaid obligations owing to such Note Holder and secured by the
Lien of this Trust Indenture (only to the extent that such
purchase price would have been paid to such Note Holder pursuant
to Article III hereof if such purchase price were paid in cash
and the foregoing provisions of this subsection (c) were not
given effect).
(d) In the event of any sale of the Collateral, or any
part thereof, pursuant to any judgment or decree of any court or
otherwise in connection with the enforcement of any of the terms
of this Trust Indenture, the unpaid Original Amount of all
Equipment Notes then outstanding, together with accrued interest
thereon (without Make-Whole Amount), and other amounts due
thereunder, shall immediately become due and payable without
presentment, demand, protest or notice, all of which are hereby
waived.
(e) Notwithstanding anything contained herein, so long
as the Pass Through Trustee under any Pass Through Trust
Agreement (or its designee) is a Note Holder, the Loan Trustee
will not be authorized or empowered to acquire title to any
Collateral or take any action with respect to any Collateral so
acquired by it if such acquisition or action would cause any
Trust to fail to qualify as a "grantor trust" for federal income
tax purposes.
SECTION 5.03. Return of Aircraft, Etc.
(a) If an Event of Default shall have occurred and be
continuing, at the request of the Loan Trustee, the Owner shall
promptly execute and deliver to the Loan Trustee such instruments
of title and other documents as the Loan Trustee may deem
necessary or advisable to enable the Loan Trustee or an agent or
representative designated by the Loan Trustee, at such time or
times and place or places as the Loan Trustee may specify, to
obtain possession of all or any part of the Collateral to which
the Loan Trustee shall at the time be entitled hereunder. If the
Owner shall for any reason fail to execute and deliver such
instruments and documents after such request by the Loan Trustee,
the Loan Trustee may (i) obtain a judgment conferring on the Loan
Trustee the right to immediate possession and requiring the Owner
52
to execute and deliver such instruments and documents to the Loan
Trustee, to the entry of which judgment the Owner hereby
specifically consents to the fullest extent permitted by Law, and
(ii) pursue all or part of such Collateral wherever it may be
found and may enter any of the premises of Owner wherever such
Collateral may be or be supposed to be and search for such
Collateral and take possession of and remove such Collateral. All
expenses of obtaining such judgment or of pursuing, searching for
and taking such property shall, until paid, be secured by the
Lien of this Trust Indenture.
(b) Upon every such taking of possession, the Loan
Trustee may, from time to time, at the expense of the Collateral,
make all such expenditures for maintenance, use, operation,
storage, insurance, leasing, control, management, disposition,
modifications or alterations to and of the Collateral, as it may
deem proper. In each such case, the Loan Trustee shall have the
right to maintain, use, operate, store, insure, lease, control,
manage, dispose of, modify or alter the Collateral and to
exercise all rights and powers of the Owner relating to the
Collateral, as the Loan Trustee shall deem best, including the
right to enter into any and all such agreements with respect to
the maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, modification or alteration of
the Collateral or any part thereof as the Loan Trustee may
determine, and the Loan Trustee shall be entitled to collect and
receive directly all proceeds of the Collateral and every part
thereof, without prejudice, however, to the right of the Loan
Trustee under any provision of this Trust Indenture to collect
and receive all cash held by, or required to be deposited with,
the Loan Trustee hereunder. Such proceeds shall be applied to pay
the expenses of the maintenance, use, operation, storage,
insurance, leasing, control, management, disposition,
improvement, modification or alteration of the Collateral and of
conducting the business thereof, and to make all payments which
the Loan Trustee may be required or may elect to make, if any,
for taxes, assessments, insurance or other proper charges upon
the Collateral or any part thereof (including the employment of
engineers and accountants to examine, inspect and make reports
upon the properties and books and records of the Owner), and all
other payments which the Loan Trustee may be required or
authorized to make under any provision of this Trust Indenture,
as well as just and reasonable compensation for the services of
the Loan Trustee, and of all persons properly engaged and
employed by the Loan Trustee with respect hereto.
SECTION 5.04. Remedies Cumulative
Each and every right, power and remedy given to the
Loan Trustee specifically or otherwise in this Trust Indenture
shall be cumulative and shall be in addition to every other
right, power and remedy herein specifically given or now or
hereafter existing at Law, in equity or by statute, and each and
every right, power and remedy whether specifically herein given
or otherwise existing may be exercised from time to time and as
53
often and in such order as may be deemed expedient by the Loan
Trustee, and the exercise or the beginning of the exercise of any
power or remedy shall not be construed to be a waiver of the
right to exercise at the same time or thereafter any other right,
power or remedy. No delay or omission by the Loan Trustee in the
exercise of any right, remedy or power or in the pursuance of any
remedy shall impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Owner
or to be an acquiescence therein.
SECTION 5.05. Discontinuance of Proceedings
In case the Loan Trustee shall have instituted any
proceeding to enforce any right, power or remedy under this Trust
Indenture by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned for any
reason or shall have been determined adversely to the Loan
Trustee, then and in every such case the Owner and the Loan
Trustee shall, subject to any determination in such proceedings,
be restored to their former positions and rights hereunder with
respect to the Collateral, and all rights, remedies and powers of
the Owner or the Loan Trustee shall continue as if no such
proceedings had been instituted.
SECTION 5.06. Waiver of Past Defaults
Upon written instruction from a Majority in Interest
of Note Holders, the Loan Trustee shall waive any past Default
hereunder and its consequences and upon any such waiver such
Default shall cease to exist and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of
this Trust Indenture, but no such waiver shall extend to any
subsequent or other Default or impair any right consequent
thereon; provided, that in the absence of written instructions
from all the Note Holders, the Loan Trustee shall not waive any
Default (i) in the payment of the Original Amount, Make-Whole
Amount, if any, and interest and other amounts due under any
Equipment Note then outstanding, or (ii) in respect of a covenant
or provision hereof which, under Article X hereof, cannot be
modified or amended without the consent of each Note Holder.
SECTION 5.07. Appointment of Receiver
The Loan Trustee shall, as a matter of right, be
entitled to the appointment of a receiver (who may be the Loan
Trustee or any successor or nominee thereof) for all or any part
of the Collateral, whether such receivership be incidental to a
proposed sale of the Collateral or the taking of possession
thereof or otherwise, and the Owner hereby consents to the
appointment of such a receiver and will not oppose any such
appointment. Any receiver appointed for all or any part of the
Collateral shall be entitled to exercise all the rights and
powers of the Loan Trustee with respect to the Collateral.
54
SECTION 5.08. Loan Trustee Authorized to Execute Bills
of Sale, Etc.
The Owner irrevocably appoints, while an Event of
Default has occurred and is continuing, the Loan Trustee the true
and lawful attorney-in-fact of the Owner in its name and stead
and on its behalf, for the purpose of effectuating any sale,
assignment, transfer or delivery for the enforcement of the Lien
of this Trust Indenture, whether pursuant to foreclosure or power
of sale, assignments and other instruments as may be necessary or
appropriate, with full power of substitution, the Owner hereby
ratifying and confirming all that such attorney or any substitute
shall do by virtue hereof in accordance with applicable law.
Nevertheless, if so requested by the Loan Trustee or any
purchaser, the Owner shall ratify and confirm any such sale,
assignment, transfer or delivery, by executing and delivering to
the Loan Trustee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such
ratification and confirmation as may be designated in any such
request.
SECTION 5.09. Rights of Note Holders to Receive
Payment
Notwithstanding any other provision of this Trust
Indenture, the right of any Note Holder to receive payment of
principal of, and premium, if any, and interest on an Equipment
Note on or after the respective due dates expressed in such
Equipment Note, or to bring suit for the enforcement of any such
payment on or after such respective dates in accordance with the
terms hereof, shall not be impaired or affected without the
consent of such Note Holder.
ARTICLE VI
DUTIES OF THE LOAN TRUSTEE
SECTION 6.01. Notice of Event of Default
If the Loan Trustee shall have Actual Knowledge of an
Event of Default or of a Default arising from a failure of Owner
to make any payment hereunder or in respect of the Equipment
Notes, the Loan Trustee shall give prompt written notice thereof
to the Owner and each Note Holder. Subject to the terms of
Sections 5.06, 6.02 and 6.03 hereof, the Loan Trustee shall take
such action, or refrain from taking such action, with respect to
such Event of Default or Default (including with respect to the
exercise of any rights or remedies hereunder) as the Loan Trustee
shall be instructed in writing by a Majority in Interest of Note
Holders. Subject to the provisions of Section 6.03, if the Loan
Trustee shall not have received instructions as above provided
within 20 days after mailing notice of such Event of Default to
the Note Holders, the Loan Trustee may, subject to instructions
thereafter received pursuant to the preceding provisions of this
Section 6.01, take such action, or refrain from taking such
55
action, but shall be under no duty to take or refrain from taking
any action, with respect to such Event of Default or Default as
it shall determine advisable in the best interests of the Note
Holders; provided, however, that the Loan Trustee may not sell
the Aircraft or any Engine without the consent of a Majority in
Interest of Note Holders. If the Loan Trustee shall elect to
foreclose or otherwise enforce this Trust Indenture, the Loan
Trustee shall forthwith notify the Owner. For all purposes of
this Trust Indenture, in the absence of Actual Knowledge on the
part of the Loan Trustee, the Loan Trustee shall not be deemed to
have knowledge of a Default or an Event of Default (except, the
failure of Owner to pay any installment of principal or interest
in respect of the Equipment Notes within one Business Day after
the same shall become due, if any portion of such installment was
then required to be paid to the Loan Trustee, which failure shall
constitute knowledge of a Default) unless notified in writing by
Owner or one or more Note Holders.
SECTION 6.02. Action Upon Instructions; Certain Rights
and Limitations
Subject to the terms of Sections 5.02(a), 5.06, 6.01
and 6.03 hereof, upon the written instructions at any time and
from time to time of a Majority in Interest of Note Holders, the
Loan Trustee shall, subject to the terms of this Section 6.02,
take such of the following actions as may be specified in such
instructions: (i) give such notice or direction or exercise such
right, remedy or power hereunder as shall be specified in such
instructions; and (ii) give such notice or direction or exercise
such right, remedy or power hereunder or with respect to any part
of the Collateral as shall be specified in such instructions; it
being understood that without the written instructions of a
Majority in Interest of Note Holders, the Loan Trustee shall not
approve any such matter as satisfactory to the Loan Trustee.
The Loan Trustee will execute and the Owner will file
or cause to be filed such continuation statements with respect to
financing statements relating to the security interest created
hereunder in the Collateral may be specified from time to time in
written instructions of a Majority in Interest of Note Holders
(which instructions shall be accompanied by the form of such
continuation statement so to be filed). The Loan Trustee will
furnish to each Note Holder, promptly upon receipt thereof,
duplicates or copies of all reports, notices, requests, demands,
certificates and other instruments furnished to the Loan Trustee
hereunder.
SECTION 6.03. Indemnification
The Loan Trustee shall not be required to take any
action or refrain from taking any action under Section 6.01
(other than the first sentence thereof), 6.02 or Article V hereof
unless the Loan Trustee shall have been indemnified to its
reasonable satisfaction against any liability, cost or expense
(including counsel fees) which may be incurred in connection
56
therewith pursuant to a written agreement with one or more Note
Holders. The Loan Trustee agrees that it shall look solely to the
Note Holders for the satisfaction of any indemnity (except
expenses for foreclosure of the type referred to in clause
"First" of Section 3.03 hereof) owed to it pursuant to this
Section 6.03. The Loan Trustee shall not be under any obligation
to take any action under this Trust Indenture or any other
Operative Agreement and nothing herein or therein shall require
the Loan Trustee to expend or risk its own funds or otherwise
incur the risk of any financial liability in the performance of
any of its rights or powers if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it
(the written indemnity of any Note Holder who is a QIB, signed by
an authorized officer thereof, in favor of, delivered to and in
form reasonably satisfactory to Loan Trustee shall be accepted as
reasonable assurance of adequate indemnity). The Loan Trustee
shall not be required to take any action under Section 6.01
(other than the first sentence thereof) or 6.02 or Article V
hereof, nor shall any other provision of this Trust Indenture or
any other Operative Agreement be deemed to impose a duty on the
Loan Trustee to take any action, if the Loan Trustee shall have
been advised by counsel that such action is contrary to the terms
hereof or is otherwise contrary to Law.
SECTION 6.04. No Duties Except as Specified in Trust
Indenture or Instructions
The Loan Trustee shall not have any duty or obligation
to use, operate, store, lease, control, manage, sell, dispose of
or otherwise deal with the Aircraft or any other part of the
Collateral, or to otherwise take or refrain from taking any
action under, or in connection with, this Trust Indenture or any
part of the Collateral, except as expressly provided by the terms
of this Trust Indenture or as expressly provided in written
instructions from Note Holders as provided in this Trust
Indenture; and no implied duties or obligations shall be read
into this Trust Indenture against the Loan Trustee. The Loan
Trustee agrees that it will in its individual capacity and at its
own cost and expense (but without any right of indemnity in
respect of any such cost or expense under Section 8.01 hereof),
promptly take such action as may be necessary duly to discharge
all liens and encumbrances on any part of the Collateral which
result from claims against it in its individual capacity not
related to the ownership of the Aircraft or the administration of
the Collateral or any other transaction pursuant to this Trust
Indenture or any document included in the Collateral.
SECTION 6.05. No Action Except Under Trust Indenture
or Instructions
The Loan Trustee agrees that it will not use, operate,
store, lease, control, manage, sell, dispose of or otherwise deal
with the Aircraft or any other part of the Collateral except in
accordance with the powers granted to, or the authority conferred
57
upon, the Loan Trustee pursuant to this Trust Indenture and in
accordance with the express terms hereof.
SECTION 6.06. Investment of Amounts Held by Loan
Trustee
Any amounts held by the Loan Trustee pursuant to the
proviso to the first sentence of Section 3.01, pursuant to
Section 3.02, or pursuant to any provision of any other Operative
Agreement providing for amounts to be held by the Loan Trustee
which are not distributed pursuant to the other provisions of
Article III hereof shall be invested by the Loan Trustee from
time to time in Cash Equivalents as directed by the Owner so long
as the Loan Trustee may acquire the same using its best efforts.
Unless otherwise expressly provided in this Trust Indenture, any
income realized as a result of any such investment, net of the
Loan Trustee's reasonable fees and expenses in making such
investment, shall be held and applied by the Loan Trustee in the
same manner as the principal amount of such investment is to be
applied and any losses, net of earnings and such reasonable fees
and expenses, shall be charged against the principal amount
invested. The Loan Trustee shall not be liable for any loss
resulting from any investment required to be made by it under
this Trust Indenture other than by reason of its willful
misconduct or gross negligence, and any such investment may be
sold (without regard to its maturity) by the Loan Trustee without
instructions whenever such sale is necessary to make a
distribution required by this Trust Indenture.
ARTICLE VII
THE LOAN TRUSTEE
SECTION 7.01. Acceptance of Trusts and Duties
The Loan Trustee accepts the duties hereby created and
applicable to it and agrees to perform the same but only upon the
terms of this Trust Indenture and agrees to receive and disburse
all monies in accordance with the terms hereof. The Loan Trustee,
in its individual capacity, shall not be answerable or
accountable under any circumstances, except (i) for their own
willful misconduct or gross negligence (other than for the
handling of funds, for which the standard of accountability shall
be willful misconduct or negligence), (ii) as provided in the
fourth sentence of Section 2.04(a) hereof and the last sentence
of Section 6.04 hereof, and (iii) from the inaccuracy of any
representation or warranty of the Loan Trustee (in its individual
capacity) in the Note Purchase Agreement or expressly made
hereunder.
SECTION 7.02. Absence of Duties
Except in accordance with written instructions
furnished pursuant to Section 6.01 or 6.02 hereof, and except as
provided in, and without limiting the generality of, Sections
58
6.03 and 6.04 hereof, the Loan Trustee shall have no duty (i) to
see to any registration of the Aircraft or any recording or
filing of this Trust Indenture or any other document, or to see
to the maintenance of any such registration, recording or filing,
(ii) to see to any insurance on the Aircraft or to effect or
maintain any such insurance, whether or not Owner shall be in
default with respect thereto, (iii) to see to the payment or
discharge of any lien or encumbrance of any kind against any part
of the Collateral, (iv) to confirm, verify or inquire into the
failure to receive any financial statements from Owner, or (v) to
inspect the Aircraft at any time or ascertain or inquire as to
the performance or observance of any of Owner's covenants herein
with respect to the Aircraft.
SECTION 7.03. No Representations or Warranties as to
Aircraft or Documents
THE LOAN TRUSTEE IN ITS INDIVIDUAL OR TRUST CAPACITY
DOES NOT MAKE AND SHALL NOT BE DEEMED TO HAVE MADE AND HEREBY
EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH
SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY,
OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR
PURPOSE OF THE AIRCRAFT OR ANY ENGINE, AS TO THE ABSENCE OF
LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE
ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT
LIABILITY IN TORT OR ANY OTHER REPRESENTATION OR WARRANTY
WHATSOEVER. The Loan Trustee, in its individual or trust
capacities, does not make and shall not be deemed to have made
any representation or warranty as to the validity, legality or
enforceability of this Trust Indenture, the Note Purchase
Agreement, the Equipment Notes, or the Purchase Agreement or as
to the correctness of any statement contained in any thereof,
except for the representations and warranties of the Loan Trustee
in its individual capacity, in each case expressly made in this
Trust Indenture or in the Note Purchase Agreement. The Note
Holders make no representation or warranty hereunder whatsoever.
SECTION 7.04. No Segregation of Monies; No Interest
Any monies paid to or retained by the Loan Trustee
pursuant to any provision hereof and not then required to be
distributed to the Note Holders or the Owner as provided in
Article III hereof need not be segregated in any manner except to
the extent required by Law or Section 6.06 hereof, and may be
deposited under such general conditions as may be prescribed by
Law, and the Loan Trustee shall not be liable for any interest
thereon (except that the Loan Trustee shall invest all monies
held as directed by Owner so long as no Event of Default has
occurred and is continuing (or in the absence of such direction,
by the Majority In Interest of Note Holders) in Cash Equivalents;
provided, however, that any payments received, or applied
hereunder, by the Loan Trustee shall be accounted for by the Loan
Trustee so that any portion thereof paid or applied pursuant
59
hereto shall be identifiable as to the source thereof.
SECTION 7.05. Reliance; Agreements; Advice of Counsel
The Loan Trustee shall not incur any liability to
anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report,
opinion, bond or other document or paper believed by it to be
genuine and believed by it to be signed by the proper party or
parties. The Loan Trustee may accept a copy of a resolution of
the Board of Directors (or Executive Committee thereof) of the
Owner, certified by the Secretary or an Assistant Secretary
thereof as duly adopted and in full force and effect, as
conclusive evidence that such resolution has been duly adopted
and that the same is in full force and effect. As to the
aggregate unpaid Original Amount of Equipment Notes outstanding
as of any date, the Owner may for all purposes hereof rely on a
certificate signed by any Vice President or other authorized
corporate trust officer of the Loan Trustee. As to any fact or
matter relating to Owner the manner of ascertainment of which is
not specifically described herein, the Loan Trustee may for all
purposes hereof rely on a certificate, signed by a duly
authorized officer of Owner, as to such fact or matter, and such
certificate shall constitute full protection to the Loan Trustee
for any action taken or omitted to be taken by them in good faith
in reliance thereon. In the administration of the trusts
hereunder, the Loan Trustee may execute any of the trusts or
powers hereof and perform its powers and duties hereunder
directly or through agents or attorneys and may, at the expense
of the Collateral, advise with counsel, accountants and other
skilled persons to be selected and retained by it, and the Loan
Trustee shall not be liable for anything done, suffered or
omitted in good faith by them in accordance with the written
advice or written opinion of any such counsel, accountants or
other skilled persons.
SECTION 7.06. Compensation
The Loan Trustee shall be entitled to reasonable
compensation, including expenses and disbursements (including the
reasonable fees and expenses of counsel), for all services
rendered hereunder and shall, on and subsequent to an Event of
Default hereunder, have a priority claim on the Collateral for
the payment of such compensation, to the extent that such
compensation shall not be paid by Owner, and shall have the
right, on and subsequent to an Event of Default hereunder, to use
or apply any monies held by it hereunder in the Collateral toward
such payments. The Loan Trustee agrees that it shall have no
right against the Note Holders for any fee as compensation for
its services as trustee under this Trust Indenture.
SECTION 7.07. Instructions from Note Holders
In the administration of the trusts created hereunder,
the Loan Trustee shall have the right to seek instructions from a
60
Majority in Interest of Note Holders should any provision of this
Trust Indenture appear to conflict with any other provision
herein or should Loan Trustee's duties or obligations hereunder
be unclear, and Loan Trustee shall incur no liability in
refraining from acting until it receives such instructions. Loan
Trustee shall be fully protected for acting in accordance with
any instructions received under this Section 7.07.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Scope of Indemnification
The Loan Trustee shall be indemnified by the Owner to
the extent and in the manner provided in Section 10 of the Note
Purchase Agreement.
ARTICLE IX
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 9.01. Resignation of Loan Trustee; Appointment
of Successor
(a) The Loan Trustee or any successor thereto may
resign at any time without cause by giving at least 30 days'
prior written notice to the Owner and each Note Holder, such
resignation to be effective upon the acceptance of the
trusteeship by a successor Loan Trustee. In addition, a Majority
in Interest of Note Holders may at any time (but only with the
consent of the Owner, which consent shall not be unreasonably
withheld, except that such consent shall not be necessary if an
Event of Default is continuing) remove the Loan Trustee without
cause by an instrument in writing delivered to the Owner, and the
Loan Trustee, and the Loan Trustee shall promptly notify each
Note Holder thereof in writing, such removal to be effective upon
the acceptance of the trusteeship by a successor Loan Trustee. In
the case of the resignation or removal of the Loan Trustee, a
Majority in Interest of Note Holders may appoint a successor Loan
Trustee by an instrument signed by such holders, which successor,
so long as no Event of Default shall have occurred and be
continuing, shall be subject to Owner's reasonable approval. If a
successor Loan Trustee shall not have been appointed within 30
days after such notice of resignation or removal, the Loan
Trustee, the Owner or any Note Holder may apply to any court of
competent jurisdiction to appoint a successor Loan Trustee to act
until such time, if any, as a successor shall have been appointed
as above provided. The successor Loan Trustee so appointed by
such court shall immediately and without further act be
superseded by any successor Loan Trustee appointed as above
provided.
(b) Any successor Loan Trustee, however appointed,
shall execute and deliver to the Owner and the predecessor Loan
61
Trustee an instrument accepting such appointment and assuming the
obligations of the Loan Trustee hereunder arising from and after
the time of such appointment, and thereupon such successor Loan
Trustee, without further act, shall become vested with all the
estates, properties, rights, powers and duties of the predecessor
Loan Trustee hereunder in the trust hereunder applicable to it
with like effect as if originally named the Loan Trustee herein;
but nevertheless upon the written request of such successor Loan
Trustee, such predecessor Loan Trustee shall execute and deliver
an instrument transferring to such successor Loan Trustee, upon
the trusts herein expressed applicable to it, all the estates,
properties, rights and powers of such predecessor Loan Trustee,
and such predecessor Loan Trustee shall duly assign, transfer,
deliver and pay over to such successor Loan Trustee all monies or
other property then held by such predecessor Loan Trustee
hereunder.
(c) Any successor Loan Trustee, however appointed,
shall be a bank or trust company having its principal place of
business in the Borough of Manhattan, City and State of New York;
Chicago, Illinois; Hartford, Connecticut; Wilmington, Delaware;
or Boston, Massachusetts and having (or whose obligations under
the Operative Agreements are guaranteed by an affiliated entity
having) a combined capital and surplus of at least $100,000,000,
if there be such an institution willing, able and legally
qualified to perform the duties of the Loan Trustee hereunder
upon reasonable or customary terms.
(d) Any corporation into which the Loan Trustee may be
merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or
consolidation to which the Loan Trustee shall be a party, or any
corporation to which substantially all the corporate trust
business of the Loan Trustee may be transferred, shall, subject
to the terms of paragraph (c) of this Section 9.01, be a
successor Loan Trustee and the Loan Trustee under this Trust
Indenture without further act.
SECTION 9.02. Appointment of Additional and Separate
Trustees
(a) Whenever (i) the Loan Trustee shall deem it
necessary or desirable in order to conform to any Law of any
jurisdiction in which all or any part of the Collateral shall be
situated or to make any claim or bring any suit with respect to
or in connection with the Collateral, this Trust Indenture, any
other Operating Agreement, the Equipment Notes or any of the
transactions contemplated by the Note Purchase Agreement, (ii)
the Loan Trustee shall be advised by counsel satisfactory to it
that it is so necessary or prudent in the interests of the Note
Holders (and the Loan Trustee shall so advise the Owner), or
(iii) the Loan Trustee shall have been requested to do so by a
Majority in Interest of Note Holders, then in any such case, the
Loan Trustee and, upon the written request of the Loan Trustee,
the Owner, shall execute and deliver an indenture supplemental
62
hereto and such other instruments as may from time to time be
necessary or advisable either (1) to constitute one or more bank
or trust companies or one or more persons approved by the Loan
Trustee, either to act jointly with the Loan Trustee as
additional trustee or trustees of all or any part of the
Collateral, or to act as separate trustee or trustees of all or
any part of the Collateral, in each case with such rights,
powers, duties and obligations consistent with this Trust
Indenture as may be provided in such supplemental indenture or
other instruments as the Loan Trustee or a Majority in Interest
of Note Holders may deem necessary or advisable, or (2) to
clarify, add to or subtract from the rights, powers, duties and
obligations theretofore granted any such additional or separate
trustee, subject in each case to the remaining provisions of this
Section 9.02. If the Owner shall not have taken any action
requested of it under this Section 9.02(a) that is permitted or
required by its terms within 15 days after the receipt of a
written request from the Loan Trustee so to do, or if an Event of
Default shall have occurred and be continuing, the Loan Trustee
may act under the foregoing provisions of this Section 9.02(a)
without the concurrence of the Owner; and the Owner hereby
irrevocably appoints (which appointment is coupled with an
interest) the Loan Trustee, its agent and attorney-in-fact to act
for it under the foregoing provisions of this Section 9.02(a) in
either of such contingencies. The Loan Trustee may, in such
capacity, execute, deliver and perform any such supplemental
indenture, or any such instrument, as may be required for the
appointment of any such additional or separate trustee or for the
clarification of, addition to or subtraction from the rights,
powers, duties or obligations theretofore granted to any such
additional or separate trustee. In case any additional or
separate trustee appointed under this Section 9.02(a) shall die,
become incapable of acting, resign or be moved, all the assets,
property, rights, powers, trusts, duties and obligations of such
additional or separate trustee shall revert to the Loan Trustee
until a successor additional or separate trustee is appointed as
provided in this Section 9.02(a).
(b) No additional or separate trustee shall be
entitled to exercise any of the rights, powers, duties and
obligations conferred upon the Loan Trustee in respect of the
custody, investment and payment of monies and all monies received
by any such additional or separate trustee from or constituting
part of the Collateral or otherwise payable under any Operative
Agreement to the Loan Trustee shall be promptly paid over by it
to the Loan Trustee. All other rights, powers, duties and
obligations conferred or imposed upon any additional or separate
trustee shall be exercised or performed by the Loan Trustee and
such additional or separate trustee jointly except to the extent
that applicable Law of any jurisdiction in which any particular
act is to be performed renders the Loan Trustee incompetent or
unqualified to perform such act, in which event such rights,
powers, duties and obligations (including the holding of title to
all or part of the Collateral in any such jurisdiction) shall be
exercised and performed by such additional or separate trustee.
63
No additional or separate trustee shall take any discretionary
action except on the instructions of the Loan Trustee or a
Majority in Interest of Note Holders. No trustee hereunder shall
be personally liable by reason of any act or omission of any
other trustee hereunder, except that the Loan Trustee shall be
liable for the consequences of its lack of reasonable care in
selecting, and Loan Trustee's own actions in acting with, any
additional or separate trustee. Each additional or separate
trustee appointed pursuant to this Section 9.02 shall be subject
to, and shall have the benefit of Articles V through IX and
Article XI hereof insofar as they apply to the Loan Trustee. The
powers of any additional or separate trustee appointed pursuant
to this Section 9.02 shall not in any case exceed those of the
Loan Trustee hereunder.
(c) If at any time the Loan Trustee shall deem it no
longer necessary or desirable in order to conform to any such Law
or take any such action or shall be advised by such counsel that
it is no longer so necessary or desirable in the interest of the
Note Holders, or in the event that the Loan Trustee shall have
been requested to do so in writing by a Majority in Interest of
Note Holders, the Loan Trustee and, upon the written request of
the Loan Trustee, the Owner, shall execute and deliver an
indenture supplemental hereto and all other instruments and
agreements necessary or proper to remove any additional or
separate trustee. The Loan Trustee may act on behalf of the Owner
under this Section 9.02(c) when and to the extent it could so act
under Section 9.02(a) hereof.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 10.01. Instructions of Majority; Limitations
(a) The Loan Trustee agrees with the Note Holders that
it shall not enter into any amendment, waiver or modification of,
supplement or consent to this Trust Indenture, the Purchase
Agreement, or any other Operative Agreement to which it is a
party, unless such supplement, amendment, waiver, modification or
consent is consented to in writing by a Majority in Interest of
Note Holders, but upon the written request of a Majority in
Interest of Note Holders, the Loan Trustee shall from time to
time enter into any such supplement or amendment, or execute and
deliver any such waiver, modification or consent, as may be
specified in such request and as may be (in the case of any such
amendment, supplement or modification), to the extent such
agreement is required, agreed to by the Owner or, as may be
appropriate, the Airframe Manufacturer or the Engine
Manufacturer; provided, however, that, without the consent of
each holder of an affected Equipment Note then outstanding, no
such amendment, waiver or modification shall (i) modify any of
the provisions of this Section 10.01, or of Article II or III or
Section 5.01, 5.02(c), 5.02(d), 6.02 hereof, the definitions of
64
"Event of Default," "Default," "Majority in Interest of Note
Holders," "Make-Whole Amount" or "Note Holder," or the percentage
of Note Holders required to take or approve any action hereunder,
(ii) reduce the amount, or change the time of payment or method
of calculation of any amount, of Original Amount, Make-Whole
Amount, if any, or interest with respect to any Equipment Note,
or alter or modify the provisions of Article III hereof with
respect to the order of priorities in which distribution
thereunder shall be made as among the Note Holders and the Owner
(iii) reduce, modify or amend any indemnities in favor of the
Owner, the Loan Trustee or the Note Holders (except that the Loan
Trustee may consent to any waiver or reduction of an indemnity
payable to it), (iv) consent to any change in the Trust Indenture
which would permit redemption of Equipment Notes earlier than
permitted under Section 2.10 or 2.11 hereof or the purchase or
exchange of the Equipment Notes or (v) permit the creation of any
Lien on the Collateral or any part thereof other than Permitted
Liens or deprive any Note Holder of the benefit of the Lien of
this Trust Indenture on the Collateral, except as provided in
connection with the exercise of remedies under Article V hereof.
(b) The Owner and the Loan Trustee may enter into one
or more agreements supplemental hereto without the consent of any
Note Holder for any of the following purposes: (i) (a) to cure
any defect or inconsistency herein or in the Equipment Notes, or
to make any change not inconsistent with the provisions hereof
(provided that such change does not adversely affect the
interests of any Note Holder in its capacity solely as Note
Holder) or (b) to cure any ambiguity or correct any mistake; (ii)
to evidence the succession of another party as the Owner in
accordance with the terms hereof or to evidence the succession of
a new trustee hereunder pursuant hereto, the removal of the
trustee hereunder or the appointment of any co-trustee or
co-trustees or any separate or additional trustee or trustees;
(iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Loan Trustee or to make any other
provisions with respect to matters or questions arising hereunder
so long as such action shall not adversely affect the interests
of the Note Holders in its capacity solely as Note Holder; (iv)
to correct or amplify the description of any property at any time
subject to the Lien of this Trust Indenture or better to assure,
convey and confirm unto the Loan Trustee any property subject or
required to be subject to the Lien of this Trust Indenture, the
Airframe or any Engines or any Replacement Airframe or
Replacement Engine; (v) to add to the covenants of the Owner for
the benefit of the Note Holders, or to surrender any rights or
power herein conferred upon the Owner; (vi) to add to the rights
of the Note Holders; and (vii) to include on the Equipment Notes
any legend as may be required by Law.
SECTION 10.02. Trustee Protected
If, in the opinion of the institution acting as Loan
Trustee hereunder, any document required to be executed by it
pursuant to the terms of Section 10.01 hereof affects any right,
65
duty, immunity or indemnity with respect to such institution
under this Trust Indenture, such institution may in its
discretion decline to execute such document.
SECTION 10.03. Documents Mailed to Note Holders
Promptly after the execution by the Owner or the Loan
Trustee of any document entered into pursuant to Section 10.01
hereof, the Loan Trustee shall mail, by first class mail, postage
prepaid, a copy thereof to each Note Holder at its address last
set forth in the Equipment Note Register, but the failure of the
Loan Trustee to mail such copies shall not impair or affect the
validity of such document.
SECTION 10.04. No Request Necessary for Trust
Indenture Supplement
No written request or consent of the Loan Trustee or
the Note Holders pursuant to Section 10.01 hereof shall be
required to enable the Owner to execute and deliver a Trust
Indenture Supplement specifically required by the terms hereof.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Termination of Trust Indenture
Upon (or at any time after) payment in full of the
Original Amount of, Make-Whole Amount, if any, and interest on
and all other amounts due under all Equipment Notes and provided
that there shall then be no other Secured Obligations due to the
Note Holders and the Loan Trustee hereunder, the Owner shall
direct the Loan Trustee to execute and deliver to or as directed
in writing by the Owner an appropriate instrument releasing the
Aircraft and the Engines and all other Collateral from the Lien
of this Trust Indenture and the Loan Trustee shall execute and
deliver such instrument as aforesaid; provided, however, that
this Trust Indenture and the trusts created hereby shall earlier
terminate and this Trust Indenture shall be of no further force
or effect upon any sale or other final disposition by the Loan
Trustee of all property constituting part of the Collateral and
the final distribution by the Loan Trustee of all monies or other
property or proceeds constituting part of the Collateral in
accordance with the terms hereof. Except as aforesaid otherwise
provided, this Trust Indenture and the trusts created hereby
shall continue in full force and effect in accordance with the
terms hereof.
SECTION 11.02. No Legal Title to Collateral in Note
Holders
No holder of an Equipment Note shall have legal title
to any part of the Collateral. No transfer, by operation of law
or otherwise, of any Equipment Note or other right, title and
66
interest of any Note Holder in and to the Collateral or hereunder
shall operate to terminate this Trust Indenture or entitle such
holder or any successor or transferee of such holder to an
accounting or to the transfer to it of any legal title to any
part of the Collateral.
SECTION 11.03. Sale of Aircraft by Loan Trustee Is
Binding
Any sale or other conveyance of the Collateral, or any
part thereof (including any part thereof or interest therein), by
the Loan Trustee made pursuant to the terms of this Trust
Indenture shall bind the Note Holders and shall be effective to
transfer or convey all right, title and interest of the Loan
Trustee, the Owner and such holders in and to such Collateral or
part thereof. No purchaser or other grantee shall be required to
inquire as to the authorization, necessity, expediency or
regularity of such sale or conveyance or as to the application of
any sale or other proceeds with respect thereto by the Loan
Trustee.
SECTION 11.04. Trust Indenture for Benefit of Owner,
Loan Trustee, and Note Holders
Nothing in this Trust Indenture, whether express or
implied, shall be construed to give any person other than the
Owner, the Loan Trustee, and the Note Holders, any legal or
equitable right, remedy or claim under or in respect of this
Trust Indenture.
SECTION 11.05. Notices
Unless otherwise expressly specified or permitted by
the terms hereof, all notices, requests, demands, authorizations,
directions, consents, waivers or documents provided or permitted
by this Trust Indenture to be made, given, furnished or filed
shall be in writing, personally delivered or mailed by certified
mail, postage prepaid, or by facsimile or confirmed telex, and
(i) if to the Owner, addressed to it at 2929 Allen Parkway,
Houston, Texas 77019, Attention: Chief Financial Officer, (ii) if
to Loan Trustee, addressed to it at its office at Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890,
Attention: Corporate Trust Administration, facsimile number (302)
651-8882, (iii) if to any Note Holder, addressed to such party at
such address as such party shall have furnished by notice to the
Owner and the Loan Trustee, or, until an address is so furnished,
addressed to the address of such party (if any) set forth in the
Equipment Note Register. Whenever any notice in writing is
required to be given by the Owner or the Loan Trustee or any Note
Holder to any of the other of them, such notice shall be deemed
given and such requirement satisfied when such notice is
received, or if such notice is mailed by certified mail, postage
prepaid, three Business Days after being mailed, addressed as
provided above. Any party hereto may change the address to which
notices to such party will be sent by giving notice of such
67
change to the other parties to this Trust Indenture.
SECTION 11.06 Severability
Any provision of this Trust Indenture which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions
hereof. Any such prohibition or unenforceability in any
particular jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.07. No Oral Modification or Continuing
Waivers
No term or provision of this Trust Indenture or the
Equipment Notes may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the Owner
and the Loan Trustee, in compliance with Section 10.01 hereof.
Any waiver of the terms hereof or of any Equipment Note shall be
effective only in the specific instance and for the specific
purpose given.
SECTION 11.08. Successors and Assigns
All covenants and agreements contained herein shall be
binding upon, and inure to the benefit of, each of the parties
hereto and the permitted successors and assigns of each, all as
herein provided. Any request, notice, direction, consent, waiver
or other instrument or action by any Note Holder shall bind the
successors and assigns of such holder. Each Note Holder by its
acceptance of an Equipment Note agrees to be bound by this Trust
Indenture and all provisions of the Operative Agreements
applicable to a Note Holder.
SECTION 11.09. Headings
The headings of the various Articles and sections
herein and in the table of contents hereto are for convenience of
reference only and shall not define or limit any of the terms or
provisions hereof.
SECTION 11.10. Governing Law; Counterpart Form
THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE. THIS TRUST INDENTURE IS BEING DELIVERED
IN THE STATE OF NEW YORK. This Trust Indenture may be executed by
the parties hereto in separate counterparts (or upon separate
signature pages bound together into one or more counterparts),
each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but
one and the same instrument.
68
SECTION 11.11. Voting By Note Holders
All votes of the Note Holders shall be governed by a
vote of a Majority in Interest of Note Holders, except as
otherwise provided herein.
SECTION 11.12. Bankruptcy
It is the intention of the parties that the Loan
Trustee shall be entitled to the benefits of Section 1110 with
respect to the right to take possession of the Aircraft,
Airframe, Engines and Parts as provided herein in the event of a
case under Chapter 11 of the Bankruptcy Code in which Owner is a
debtor, and in any instance where more than one construction is
possible of the terms and conditions hereof or any other
pertinent Operative Agreement, each such party agrees that a
construction which would preserve such benefits shall control
over any construction which would not preserve such benefits.
* * *
69
IN WITNESS WHEREOF, the parties hereto have caused
this Trust Indenture and Mortgage to be duly executed by their
respective officers thereof duly authorized as of the day and
year first above written.
CONTINENTAL AIRLINES, INC., as
Owner
By:_______________________________
Name: Gerald Laderman
Title: Vice President
WILMINGTON TRUST COMPANY, as Loan
Trustee
By:_______________________________
Name:
Title:
70
[737]
ANNEX A
DEFINITIONS
GENERAL PROVISIONS
(a) In each Operative Agreement, unless otherwise expressly
provided, a reference to:
(i) each of "Lessee," "Owner," "Loan Trustee," "Note
Holder" or any other person includes, without prejudice to
the provisions of any Operative Agreement, any successor in
interest to it and any permitted transferee, permitted
purchaser or permitted assignee of it;
(ii) words importing the plural include the singular
and words importing the singular include the plural;
(iii) any agreement, instrument or document, or any
annex, schedule or exhibit thereto, or any other part
thereof, includes, without prejudice to the provisions of
any Operative Agreement, that agreement, instrument or
document, or annex, schedule or exhibit, or part,
respectively, as amended, modified or supplemented from
time to time in accordance with its terms and in accordance
with the Operative Agreements, and any agreement,
instrument or document entered into in substitution or
replacement therefor;
(iv) any provision of any Law includes any such
provision as amended, modified, supplemented, substituted,
reissued or reenacted prior to the Closing Date, and
thereafter from time to time;
(v) the words "Agreement," "this Agreement," "hereby,"
"herein," "hereto," "hereof" and "hereunder" and words of
similar import when used in any Operative Agreement refer
to such Operative Agreement as a whole and not to any
particular provision of such Operative Agreement;
(vi) the words "including," "including, without
limitation," "including, but not limited to," and terms or
phrases of similar import when used in any Operative
Agreement, with respect to any matter or thing, mean
including, without limitation, such matter or thing; and
(vii) a "Section," an "Exhibit," an "Annex" or a
"Schedule" in any Operative Agreement, or in any annex
thereto, is a reference to a section of, or an exhibit, an
annex or a schedule to, such Operative Agreement or such
annex, respectively.
(b) Each exhibit, annex and schedule to each Operative
Agreement is incorporated in, and shall be deemed to be a part
of, such Operative Agreement.
(c) Unless otherwise defined or specified in any Operative
Agreement, all accounting terms therein shall be construed and
all accounting determinations thereunder shall be made in
accordance with GAAP.
(d) Headings used in any Operative Agreement are for
convenience only and shall not in any way affect the construction
of, or be taken into consideration in interpreting, such
Operative Agreement.
DEFINED TERMS
"Act" means 49 U.S.C. ss.ss. 40101-46507.
"Actual Knowledge" means (a) as it applies to Loan Trustee,
actual knowledge of a responsible officer in the Corporate Trust
Office, and (b) as it applies to Owner, actual knowledge of a
Vice President or more senior officer of Owner, or any other
officer of Owner having responsibility for the transactions
contemplated by the Operative Agreements; provided that each of
Owner and Loan Trustee shall be deemed to have "Actual Knowledge"
of any matter as to which it has received notice from each other,
such notice having been given pursuant to Section 11.05 of the
Trust Indenture.
"Affiliate" means, with respect to any person, any other
person directly or indirectly controlling, controlled by or under
common control with such person. For purposes of this definition,
"control" means the power, directly or indirectly, to direct or
cause the direction of the management and policies of such
person, whether through the ownership of voting securities or by
contract or otherwise and "controlling," "controlled by" and
"under common control with" have correlative meanings.
"Aircraft" means, collectively, the Airframe and Engines.
"Aircraft Bill of Sale" means the full warranty bill of
sale covering the Aircraft delivered by Airframe Manufacturer to
Owner.
"Aircraft Documents" is defined in paragraph (2) of the
Granting Clause to the Trust Indenture.
"Airframe" means (a) the aircraft (excluding Engines or
engines from time to time installed thereon) manufactured by
Airframe Manufacturer and identified by Airframe Manufacturer's
model number, United States registration number and Airframe
Manufacturer's serial number set forth in the initial Trust
2
Indenture Supplement and any Replacement Airframe and (b) any and
all Parts incorporated or installed in or attached or appurtenant
to such airframe, and any and all Parts removed from such
airframe, unless title to such Parts shall not be vested in Owner
in accordance with Section 4.04 of the Trust Indenture. Upon
substitution of a Replacement Airframe under and in accordance
with the Trust Indenture, such Replacement Airframe shall become
subject to the Trust Indenture and shall be the "Airframe" for
all purposes of the Trust Indenture and the other Operative
Agreements and thereupon the Airframe for which the substitution
is made shall no longer be subject to the Trust Indenture, and
such replaced Airframe shall cease to be the "Airframe."
"Airframe Manufacturer" means The Boeing Company, a
Delaware corporation, solely in its capacity as manufacturer or
seller of the Aircraft, Airframe, Engines or Parts (other than
any Parts incorporated or installed in or attached or appurtenant
to the Aircraft, Airframe or any Engine after delivery of the
Aircraft, Airframe and Engines to Tramco, Inc. prior to the
Closing Date) under the Purchase Agreement or any other contract
or other services provided for thereunder or related thereto.
"Amortization Amount" means, with respect to any Equipment
Note, as of any Payment Date, the amount determined by
multiplying the percentage set forth opposite such Date on the
Amortization Schedule by the Original Amount of such Equipment
Note.
"Amortization Schedule" means, with respect to each
Equipment Note, the amortization schedule for the Equipment Notes
delivered pursuant to Section 2.02 of the Trust Indenture.
"Appraiser" means a firm of internationally recognized,
independent aircraft appraisers.
"APU" means the auxiliary power unit installed on the
Aircraft on the Closing Date, whether or not installed on the
Aircraft from time to time thereafter, unless title to such APU
shall not be vested in Owner in accordance with Section 4.04 of
the Trust Indenture, and any replacement or substituted auxiliary
power unit installed on the Aircraft in accordance with Article
IV of the Trust Indenture.
"Average Life Date" for any Equipment Note shall be the
date which follows the time of determination by a period equal to
the Remaining Weighted Average Life of such Equipment Note.
"Remaining Weighted Average Life" on a given date with respect to
any Equipment Note shall be the number of days equal to the
quotient obtained by dividing (a) the sum of each of the products
obtained by multiplying (i) the amount of each then remaining
scheduled payment of principal of such Equipment Note by (ii) the
number of days from and including such determination date to but
3
excluding the date on which such payment of principal is
scheduled to be made, by (b) the then outstanding principal
amount of such Equipment Note.
"Aviation Authority" means the FAA or, if the Aircraft is
permitted to be, and is, registered with any other Government
Entity under and in accordance with Section 4.02(e) of the Trust
Indenture, such other Government Entity.
"Bankruptcy Code" means the United States Bankruptcy Code,
11 U.S.C. Sections 102 et seq.
"Beneficial Owner" when used in relation to an Equipment
Note means a Person that, by reason of direct ownership,
contract, share ownership or otherwise, has the right to receive
or participate in receiving, directly or indirectly, payments of
principal, interest or Make-Whole Amount in respect of such
Equipment Note; provided that a Person shall not be deemed to be
a Beneficial Owner of an Equipment Note solely because another
Person in which such a Person owns common stock or other equity
securities is a registered holder or Beneficial Owner of such
Equipment Note unless such Person is an Affiliate of such other
Person.
"Bills of Sale" means the FAA Bill of Sale and the Aircraft
Bill of Sale.
"Business Day" means any day other than a Saturday, Sunday
or other day on which commercial banks are authorized or required
by law to close in New York, New York or Houston, Texas.
"Cash Equivalents" means the following securities (which
shall mature within 90 days of the date of purchase thereof): (a)
direct obligations of the U.S. Government; (b) obligations fully
guaranteed by the U.S. Government; (c) certificates of deposit
issued by, or bankers' acceptances of, or time deposits or a
deposit account with, Loan Trustee or any bank, trust company or
national banking association incorporated or doing business under
the laws of the United States or any state thereof having a
combined capital and surplus and retained earnings of at least
$500,000,000 and having a rate of "C" or better from the Thomson
BankWatch Service; or (d) commercial paper of any issuer doing
business under the laws of the United States or one of the states
thereof and in each case having a rating assigned to such
commercial paper by Standard & Poor's Corporation or Moody's
Investors Service, Inc. equal to A1 or higher.
"Closing" means the closing of the transactions contemplated
by the Trust Indenture on the Closing Date.
"Closing Date" means the date on which the Closing occurs.
4
"Code" means the Internal Revenue Code of 1986, as amended;
provided that, when used in relation to a Plan, "Code" shall mean
the Internal Revenue Code of 1986 and any regulations and rulings
issued thereunder, all as amended and in effect from time to
time.
"Collateral" is defined in the first paragraph of the
Granting Clause to the Trust Indenture.
"Consent and Agreement" means the Manufacturer Consent and
Agreement 637, dated as of even date with the Trust Indenture, of
Airframe Manufacturer.
"Corporate Trust Office" means the principal office of Loan
Trustee located at Loan Trustee's address for notices under
Section 11.05 of the Trust Indenture or such other office at
which Loan Trustee's corporate trust business shall be
administered which Loan Trustee shall have specified by notice in
writing to Owner Trustee and each Note Holder.
"CRAF" means the Civil Reserve Air Fleet Program
established pursuant to 10 U.S.C. Section 9511-13 or any similar
substitute program.
"Debt Rate" means, with respect to any Series, the rate per
annum specified for such Series under the heading "Interest Rate"
in Schedule I to the Trust Indenture.
"Default" means any event or condition that with the giving
of notice or the lapse of time or both would become an Event of
Default.
"Dollars," "United States Dollars" or "$" means the lawful
currency of the United States.
"DOT" means the Department of Transportation of the United
States or any Government Entity succeeding to the functions of
such Department of Transportation.
"Engine" means (a) each of the engines manufactured by
Engine Manufacturer and identified by Engine Manufacturer's model
number and Engine Manufacturer's serial number set forth in the
initial Trust Indenture Supplement and installed on the Airframe
on the Closing Date, and any Replacement Engine, in any case
whether or not from time to time installed on such Airframe or
installed on any other airframe or aircraft, and (b) any and all
Parts incorporated or installed in or attached or appurtenant to
such engine, and any and all Parts removed from such engine,
unless title to such Parts shall not be vested in Owner in
accordance with Section 4.04 of the Trust Indenture. Upon
substitution of a Replacement Engine under and in accordance with
the Trust Indenture, such Replacement Engine shall become subject
5
to the Trust Indenture and shall be an "Engine" for all purposes
of the Trust Indenture and the other Operative Agreements and
thereupon the Engine for which the substitution is made shall no
longer be subject to the Trust Indenture, and such replaced
Engine shall cease to be an "Engine."
"Engine Consent and Agreement" means the Engine
Manufacturer Consent and Agreement 637 dated as of even date with
the Trust Indenture, of Engine Manufacturer.
"Engine Manufacturer" means CFM International, Inc.
"Equipment Note Register" is defined in Section 2.07 of the
Trust Indenture.
"Equipment Notes" means and includes any equipment notes
issued under the Trust Indenture in the form specified in Section
2.01 thereof (as such form may be varied pursuant to the terms of
the Trust Indenture) and any Equipment Note issued under the
Trust Indenture in exchange for or replacement of any other
Equipment Note.
"ERISA" means the Employee Retirement Income Security Act
of 1974 and any regulations and rulings issued thereunder all as
amended and in effect from time to time.
"Event of Default" is defined in Section 5.01 of the Trust
Indenture.
"Event of Loss" means, with respect to the Aircraft,
Airframe or any Engine, any of the following circumstances,
conditions or events with respect to such property, for any
reason whatsoever:
(a) the destruction of such property, damage to such
property beyond practical or economic repair or
rendition of such property permanently unfit for
normal use;
(b) the actual or constructive total loss of such property
or any damage to such property, or requisition of
title or use of such property, which results in an
insurance settlement with respect to such property on
the basis of a total loss or constructive or
compromised total loss;
(c) any loss of such property or loss of use of such
property for a period of 90 days or more as a
consequence of any theft, hijacking or disappearance
of such property;
(d) any seizure, condemnation, confiscation, taking or
6
requisition of title to such property by any Government
Entity or purported non-U.S. Government Entity;
(e) any seizure, condemnation, confiscation, taking or
requisition of use of such property that continues
until the earliest of (i) the date upon which the
Aircraft is modified, altered or adapted in such a
manner as would render conversion of such property for
use in normal commercial passenger service impractical
or uneconomical, (ii) the date on which such property
is operated or located in any area excluded from
coverage by any insurance policy required to be
maintained in respect of such property pursuant to the
Trust Indenture (unless an indemnity in lieu of
insurance is provided to Owner and Loan Trustee in
accordance with Section 4.02 (c) of the Trust
Indenture) or (iii) the date that is 90 days following
the commencement of such loss of use (unless such loss
of use results from action by the U.S. Government, in
which case this clause (iii) shall not apply to such
loss of use); and
(f) as a result of any law, rule, regulation, order or
other action by the Aviation Authority or by any
Government Entity of the government of registry of the
Aircraft or by any Government Entity otherwise having
jurisdiction over the operation or use of the Aircraft,
the use of such property in the normal course of
Owner's business of passenger air transportation is
prohibited for a period expiring on the date that is
180 days following commencement of such prohibition,
provided that if Owner, prior to the expiration of such
180-day period, shall have undertaken and shall be
diligently carrying forward all steps which are
necessary or desirable to permit the normal use of such
property by Owner, then the date that is 360 days
following commencement of such prohibition.
The date of such Event of Loss shall be the date of such loss,
damage, insurance settlement, seizure, condemnation,
confiscation, taking or requisition of title or use or
prohibition, except that, for purposes of clauses (c), (e) and
(f) above, no Event of Loss shall be deemed to have occurred
until the date of expiration of the applicable period referred to
therein.
"Expenses" means any and all liabilities, obligations,
losses, damages, settlements, penalties, claims (including,
without limitation, claims or liabilities based or asserted upon
(a) negligence, (b) strict or absolute liability, (c) liability
in tort, (d) infringement of patent, trademark or other property
or other right and (e) liabilities arising out of violation of
7
any Law), actions, suits, costs, expenses and disbursements
(including, without limitation, reasonable fees and disbursements
of legal counsel, accountants, appraisers, inspectors or other
professionals, and costs of investigation), including, without
limitation, all such costs, expenses and disbursements incurred
by any person in asserting or establishing, or in defending any
claims arising out of its assertion of, any rights it may have
under, or its cooperation in connection with any Expenses
indemnified pursuant to, Article VIII of the Trust Indenture.
"FAA" means the Federal Aviation Administration of the
United States or any Government Entity succeeding to the
functions of such Federal Aviation Administration.
"FAA Bill of Sale" means a bill of sale for the Aircraft on
AC Form 8050-2 (or such other form as may be approved by the FAA)
delivered to Owner by Airframe Manufacturer.
"FAA Filed Documents" means the Trust Indenture, the
initial Trust Indenture Supplement, the FAA Bill of Sale and an
application for registration of the Aircraft with the FAA in the
name of Owner.
"FAA Regulations" means the Federal Aviation Regulations
issued or promulgated pursuant to the Act from time to time.
"Financing Agreements" means the Note Purchase Agreement and
the Refunding Agreements.
"Financing Statements" means, collectively, UCC-1 financing
statements covering the Collateral, by Owner, as debtor, showing
Loan Trustee as secured party, for filing in Texas and each other
jurisdiction that, in the opinion of Loan Trustee, is necessary
to perfect its Lien on the Collateral.
"Funding Date" is defined in Section 1 of the Note Purchase
Agreement.
"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 SEC 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.
"Government Entity" means (a) any federal, state,
provincial or similar government, and any body, board,
department, commission, court, tribunal, authority, agency or
other instrumentality of any such government or otherwise
exercising
8
any executive, legislative, judicial, administrative or
regulatory functions of such government or (b) any other
government entity having jurisdiction over any matter
contemplated by the Operative Agreements or relating to the
observance or performance of the obligations of any of the
parties to the Operative Agreements.
"GTA" means the General Terms Agreement No. 6-7075 dated as
of June 10, 1985, between Engine Manufacturer and Owner
(including all exhibits thereto, together with all letter
agreements that by their terms constitute part of such General
Terms Agreement), to the extent assigned pursuant to the Purchase
Agreement Assignment.
"Indemnitee", as used in Section 10.1 of the Note Purchase
Agreement, means (i) WTC and Loan Trustee, (ii) each separate or
additional trustee appointed pursuant to the Trust Indenture,
(iii) Collateral, (iv) the Subordination Agent, (v) the Liquidity
Provider, (vi) the Pass Through Trustees, (vii) each Affiliate of
the persons described in clauses (i) and (ii); (viii) each
Affiliate of the persons described in clauses (iv), (v) and (vi);
(ix) the respective directors, officers, employees, agents and
servants of each of the persons described in clauses (i), (ii)
and (vii); (x) the respective directors, officers, employees,
agents and servants of each of the persons described in clauses
(iv), (v), (vi) and (viii); (xi) the successors and permitted
assigns of the persons described in clauses (i), (ii), (vii) and
(ix); and (xii) the successors and permitted assigns of the
persons described in clauses (iv), (v), (vi), (viii) and (x). If
any Indemnitee is Airframe Manufacturer or Engine Manufacturer or
any subcontractor or supplier of either thereof, such Person
shall be an Indemnitee only in its capacity as Note Holder.
"Indenture Default" means any condition, circumstance, act
or event that, with the giving of notice, the lapse of time or
both, would constitute an Indenture Event of Default.
"Indenture Agreements" means the Purchase Agreement, the
Consent and Agreement, the Engine Consent and Agreement, the
Bills of Sale and any other contract, agreement or instrument
from time to time assigned or pledged under the Trust Indenture.
"Indenture Event of Default" means any one or more of the
conditions, circumstances, acts or events set forth in Section
5.01 of the Trust Indenture.
"Insured Amount" means, as of any date, an amount equal to
110% of the then outstanding aggregate principal balance of the
Equipment Notes.
"Intercreditor Agreement" means that certain Intercreditor
Agreement among the Pass Through Trustees, the Liquidity Provider
9
and the Subordination Agent.
"Law" means (a) any constitution, treaty, statute, law,
decree, regulation, order, rule or directive of any Government
Entity, and (b) any judicial or administrative interpretation or
application of, or decision under, any of the foregoing.
"Lessee" means Continental Airlines, Inc., a Delaware
corporation.
"Lien" means any mortgage, pledge, lien, charge, claim,
encumbrance, lease or security interest affecting the title to or
any interest in property.
"Liquidity Facilities" means the three Revolving Credit
Agreements between the Subordination Agent, as borrower, and the
Liquidity Provider, and any replacement thereof, in each case as
the same may be amended, modified or supplemented.
"Liquidity Provider" means De Nationale Investeringsbank
N.V., as Class A Liquidity Provider, Class B Liquidity Provider
and Class C Liquidity Provider (as such terms are defined in the
Intercreditor Agreement) under the Liquidity Facilities, or any
successor thereto.
"Loan Trustee" means Wilmington Trust Company, a Delaware
banking corporation, not in its individual capacity but solely as
loan trustee under the Trust Indenture.
"Loan Trustee Event" means in the event of a reorganization
proceeding involving the Owner under Chapter 11 of the Bankruptcy
Code, (i) the trustee in such proceeding or the Owner not
agreeing to perform its obligations under the Trust Indenture, as
contemplated under Section 1110, during the 60-day period under
Section 1110(a)(1)(A) of the Bankruptcy Code (or such longer
period as may apply under Section 1110(b) of the Bankruptcy
Code), (ii) at any time after so agreeing to perform such
obligation, such trustee or the Owner ceasing to perform such
obligations or (iii) Loan Trustee taking action or notifying
Owner that it intends to take action to foreclose the Lien of the
Trust Indenture in accordance with Section 5.02(a) of the Trust
Indenture.
"Majority in Interest of Note Holders" means as of a
particular date of determination, the holders of a majority in
aggregate unpaid Original Amount of all Equipment Notes
outstanding as of such date (excluding any Equipment Notes held
by Owner, Loan Trustee or any Affiliate of any such party or any
interests of Owner therein); provided that for the purposes of
directing any action or casting any vote or giving any consent,
waiver or instruction hereunder, any Note Holder of an Equipment
Note or Equipment Notes may allocate, in such Note Holder's sole
10
discretion, any fractional portion of the principal amount of
such Equipment Note or Equipment Notes in favor of or in
opposition to any such action, vote, consent, waiver or
instruction.
"Make-Whole Amount" means, with respect to any Equipment
Note, an amount (as determined by an independent investment
banker of national standing) equal to the excess, if any, of (a)
the present value of the remaining scheduled payments of
principal and interest to maturity of such Equipment Note
computed by discounting such payments on a quarterly basis on
each Payment Date (assuming a 360-day year of twelve 30-day
months) using a discount rate equal to the Treasury Yield over
(b) the outstanding principal amount of such Equipment Note plus
accrued interest to the date of determination. For purposes of
determining the Make-Whole Amount, "Treasury Yield" means, at the
date of determination with respect to any Equipment Note, the
interest rate (expressed as a quarterly equivalent and as a
decimal and, in the case of United States Treasury bills,
converted to a bond equivalent yield) determined to be the per
annum rate equal to the semi-annual yield to maturity for United
States Treasury securities maturing on the Average Life Date of
such Equipment Note and trading in the public securities markets
either as determined by interpolation between the most recent
weekly average yield to maturity for two series of United States
Treasury securities, trading in the public securities markets,
(A) one maturing as close as possible to, but earlier than, the
Average Life Date of such Equipment Note and (B) the other
maturing as close as possible to, but later than, the Average
Life Date of such Equipment Note, in each case as published in
the most recent H.15(519) or, if a weekly average yield to
maturity for United States Treasury securities maturing on the
Average Life Date of such Equipment Note is reported on the most
recent H.15(519), such weekly average yield to maturity as
published in such H.15(519). "H.15(519) " means the weekly
statistical release designated as such, or any successor
publication, published by the Board of Governors of the Federal
Reserve System. The date of determination of a Make-Whole Amount
shall be the third Business Day prior to the applicable payment
or redemption date and the "most recent H.15(519)" means the
H.15(519) published prior to the close of business on the third
Business Day prior to the applicable payment or redemption date.
"Non-U.S. Person" means any Person other than a United
States person, as defined in Section 7701(a)(30) of the Code.
"Note Holder" means at any time each registered holder of
one or more Equipment Notes.
"Note Purchase Agreement" means the Note Purchase Agreement,
dated as of even date with the Trust Indenture, among the Owner,
the Pass Through Trustee under each Pass Through Trust Agreement
11
and the Loan Trustee, providing for, among other things, the
issuance and sale of the Equipment Notes.
"Officer's Certificate" means, in respect of any party to
the Trust Indenture, a certificate signed by the Chairman, the
President, any Vice President or Assistant Vice President, the
Treasurer or the Secretary of such party.
"Operative Agreements" means, collectively, the Note
Purchase Agreement, the Trust Indenture, the initial Trust
Indenture Supplement, the Bills of Sale and the Equipment Notes.
"Operative Leases" means each of the lease agreements
between Lessor and Lessee identified on Schedule 1 to this Annex
A.
"Original Amount," with respect to an Equipment Note, means
the stated original principal amount of such Equipment Note and,
with respect to all Equipment Notes, means the aggregate stated
original principal amounts of all Equipment Notes.
"Owner" means Continental Airlines, Inc., a Delaware
corporation.
"Parts" means all appliances, parts, components,
instruments, appurtenances, accessories, furnishings, seats and
other equipment of whatever nature (including, without
limitation, all Owner-furnished equipment, avionics, the APU and
Passenger Convenience Equipment, but excluding Engines or
engines), that may from time to time be installed or incorporated
in or attached or appurtenant to the Airframe or any Engine;
provided that the term "Parts" shall not be deemed to include any
Passenger Convenience Equipment if and for so long as such
Equipment shall be owned by, or shall be subject to a security
interest, license or other interest of, another Person (other
than any Affiliate of Owner) as provided under Section 4.04 of
the Trust Indenture.
"Pass Through Certificates" means the pass through
certificates to be issued by the Pass Through Trustees in
connection with the Refinancing Transaction.
"Pass Through Trust Agreement" means each of the four
separate pass through trust agreements to be entered into by and
between the Owner and the Pass Through Trustee in connection with
the Refinancing Transaction.
"Pass Through Trustee" means Wilmington Trust Company, a
Delaware banking corporation, in its capacity as trustee under
each Pass Through Trust Agreement, and each other person which
may from time to time be acting as successor trustee under any
such Pass Through Trust Agreement.
12
"Passenger Convenience Equipment" means components or
systems installed on or affixed to the Airframe that are used to
provide individual telecommunications or electronic entertainment
to passengers aboard the Aircraft.
"Payment Date" means each January 2, April 2, July 2 and
October 2, commencing July 2, 1996.
"Payment Due Rate" means, with respect to (i) any payment
made to a Note Holder under any Series of Equipment Notes, the
lesser of (a) the Debt Rate applicable to such Series plus 2% and
(b) the maximum rate permitted under applicable Law and (ii) any
payment made under any Operative Agreement to any other person,
10.76%.
"Permitted Air Carrier" means any U.S. Air Carrier or any
air carrier listed on Schedule 2 to this Annex A.
"Permitted Lease" means a lease permitted under Section
4.02(b) of the Trust Indenture.
"Permitted Lessee" means the lessee under a Permitted Lease.
"Permitted Lien" means (a) the rights of Loan Trustee under
the Operative Agreements, or of any Permitted Lessee under any
Permitted Lease; (b) Liens attributable to Loan Trustee (both in
its capacity as trustee under the Trust Indenture and in its
individual capacity) created by the Trust Indenture; (c) the
rights of others under agreements or arrangements to the extent
expressly permitted by the terms of Section 4.02(b) or 4.04(c) of
the Trust Indenture; (d) Liens for Taxes of Owner (and its U.S.
federal tax law consolidated group), or Liens for Taxes of any
Tax Indemnitee (and its U.S. federal tax law consolidated group)
for which Owner is obligated to indemnify such Tax Indemnitee
under any of the Operative Agreements, in any such case either
not yet due or being contested in good faith by appropriate
proceedings so long as such Liens and such proceedings do not
involve any material risk of the sale, forfeiture or loss
(including loss of use) of the Aircraft, the Airframe, any Engine
or any of the Aircraft Documents, or any interest therein or any
discernible risk of criminal liability or any material risk of
civil penalty against Loan Trustee; (e) materialmen's,
mechanics', workers', repairers', employees' or other like Liens
arising in the ordinary course of business for amounts the
payment of which is either not yet delinquent or is being
contested in good faith by appropriate proceedings, so long as
such Liens and such proceedings do not involve any material risk
of the sale, forfeiture or loss (including loss of use) of the
Aircraft, the Airframe, any Engine or any of the Aircraft
Documents, or any interest therein or any discernible risk of
criminal liability or any material risk of civil penalty against
Loan Trustee; and (f) Liens arising out of any judgment or award
13
against Owner (or any Permitted Lessee), so long as such judgment
shall, within 30 days after the entry thereof, have been
discharged or vacated, or execution thereof stayed pending appeal
or shall have been discharged, vacated or reversed within 30 days
after the expiration of such stay, and so long as during any such
30-day period there is not, or any such judgment or award does
not involve, any material risk of the sale, forfeiture or loss
(including loss of use) of the Aircraft, the Airframe, any Engine
or any of the Aircraft Documents, or any interest therein or any
discernible risk of criminal liability or any material risk of
civil penalty against Loan Trustee.
"Persons" or "persons" means individuals, firms,
partnerships, joint ventures, trusts, trustees, Government
Entities, organizations, associations, corporations, government
agencies, committees, departments, authorities and other bodies,
corporate or incorporate, whether having distinct legal status or
not, or any member of any of the same.
"Plan" means any employee benefit plan within the meaning
of Section 3(3) of ERISA, and any plan within the meaning of
Section 4975(e)(1) of the Code.
"Premium Termination Date" means (i) with respect to Series
A Equipment Notes, Series B Equipment Notes and Series C
Equipment Notes, September 22, 2006 and (ii) with respect to
Series D Equipment Notes, June 26, 2003.
"Purchase Agreement" means the Purchase Agreement No. 1783,
dated March 18, 1993, between Airframe Manufacturer and Owner
(including all exhibits thereto, together with all letter
agreements entered into that by their terms constitute part of
such Purchase Agreement).
"QIB" is defined in Section 2.08 of the Trust Indenture.
"Refinancing Transaction" means the transactions effected
in accordance with the Note Purchase Agreement.
"Refunding Agreement" means each of the four Refunding
Agreements, dated as of the date of the Note Purchase Agreement,
entered into by and among the Lessee, Gaucho-2 Inc., as owner
participant, First Security Bank of Utah, as owner trustee, the
Pass Through Trustee under each Pass Through Trust Agreement and
the Loan Trustee, providing for, among other things, the issuance
and sale of certain equipment notes.
"Registration Rights Agreement" means the registration
rights agreement to be entered into by and among the Owner and
certain initial purchasers of the Pass Through Certificates to be
issued pursuant to the Refunding Agreement, providing for, among
other things, the exchange offer with respect to such Pass
14
Through Certificates to be registered under the Securities Act or
the shelf registration of such Pass Through Certificates for a
period to be specified therein.
"Related Indemnitee" is defined in the last sentence of
Section 10.1.2 of the Note Purchase Agreement.
"Replacement Airframe" means any airframe substituted for
the Airframe pursuant to Article IV of the Trust Indenture.
"Replacement Engine" means an engine substituted for an
Engine pursuant to Article IV of the Trust Indenture.
"SEC" means the Securities and Exchange Commission of the
United States, or any Government Entity succeeding to the
functions of such Securities and Exchange Commission.
"Section 1110" means 11 U.S.C. Section 1110 of the
Bankruptcy Code or any successor or analogous section of the
federal bankruptcy Law in effect from time to time.
"Secured Obligations" is defined in Section 2.06 of the
Trust Indenture.
"Securities Act" means the Securities Act of 1933, as
amended.
"Security" means a "security" as defined in Section 2(1) of
the Securities Act.
"Senior Holder" is defined in Section 2.13(c) of the Trust
Indenture.
"Series" means any of Series A, Series B, Series C or
Series D.
"Series A" or "Series A Equipment Notes" means Equipment
Notes issued under the Trust Indenture and designated as "Series
A" thereunder, in the Original Amount and maturities and bearing
interest as specified in Schedule I to the Trust Indenture under
the heading "Series A."
"Series B" or "Series B Equipment Notes" means Equipment
Notes issued under the Trust Indenture and designated as "Series
B" thereunder, in the Original Amount and maturities and bearing
interest as specified in Schedule I to the Trust Indenture under
the heading "Series B."
"Series C" or "Series C Equipment Notes" means Equipment
Notes issued under the Trust Indenture and designated as "Series
C" thereunder, in the Original Amount and maturities and bearing
interest as specified in Schedule I to the Trust Indenture under
15
the heading "Series C."
"Series D" or "Series D Equipment Notes" means Equipment
Notes issued under the Trust Indenture and designated as "Series
D" thereunder, in the Original Amount and maturities and bearing
interest as specified in Schedule I to the Trust Indenture under
the heading "Series D."
"Similar Aircraft" means a Boeing Model 737-500 aircraft
(other than the Aircraft) having a passenger compartment
configuration (of the type used in Block Nos. PT801-819 or of the
type used in Block Nos. PT 828-850, in each case as specified in
Boeing Detail Specification D6-38606-11 dated as of March 18,
1993, as amended or supplemented) most similar to the Aircraft.
"Subordination Agent" means Wilmington Trust Company, as
subordination agent under the Intercreditor Agreement, or any
successor thereto.
"Tax Indemnitee" means (a) WTC and Loan Trustee, (b), each
separate or additional trustee appointed pursuant to the Trust
Indenture, (c) each Note Holder, (d) the respective successors,
assigns, agents and servants of the foregoing and (e) the
Collateral.
"Taxes" means all license, recording, documentary,
registration and other similar fees and all taxes, levies,
imposts, duties, charges, assessments or withholdings of any
nature whatsoever imposed by any Taxing Authority, together with
any penalties, additions to tax, fines or interest thereon or
additions thereto.
"Taxing Authority" means any federal, state or local
government or other taxing authority in the United States, any
foreign government or any political subdivision or taxing
authority thereof, any international taxing authority or any
territory or possession of the United States or any taxing
authority thereof.
"Transaction Expenses" means all costs and expenses
incurred by Loan Trustee in connection with (a) the preparation,
execution and delivery of the Operative Agreements and the
recording or filing of any documents, certificates or instruments
in accordance with any Operative Agreement, including, without
limitation, the FAA Filed Documents and the Financing Statements,
(b) any sublease or transfer of possession of the Aircraft or
Airframe or any Engine, any Event of Loss with respect to the
Aircraft, any Engine or any Part, any payment of Insured Amount
and any replacement of any Engine or Part pursuant to the Trust
Indenture, (c) all waivers, amendments or other agreements in
connection with the Operative Agreements or the transactions
contemplated thereby, in each case, except during the
16
continuation of an Indenture Event of Default, only to the extent
requested by Owner or required by or made pursuant to the terms
of the Operative Agreements (unless such requirement results from
the actions of the party incurring such costs or expenses not
required by or made pursuant to the Operative Agreements),
whether or not any of the same are also indemnified against by
any other person, and (d) with respect to Loan Trustee, otherwise
in connection with the administration of the transactions
contemplated by the Trust Indenture or the Note Purchase
Agreement, including, without limitation, in each such case (a)
through (d), (i) the reasonable fees and disbursements of counsel
for each Loan Trustee and special counsel in Oklahoma City,
Oklahoma, in each case, in connection with the Closing, (ii) all
initial and ongoing fees, disbursements and expenses of Loan
Trustee, and (iii) except as may be expressly provided in the
Trust Indenture, the fees, expenses and disbursements of any
Appraiser retained under or as contemplated by the Trust
Indenture.
"Transactions" means the transactions contemplated by the
Note Purchase Agreement and the other Operative Agreements.
"Transfer" means the transfer, sale, assignment or other
conveyance of all or any interest in any property, right or
interest.
"Transferee" means a person to which any Note Holder
purports or intends to Transfer any or all of its right, title or
interest in the Trust Estate or in its Equipment Note and the
Collateral, respectively, as described in Section 2.07 of the
Trust Indenture.
"Trust Indenture" means the Trust Indenture and Mortgage
637, dated as of May 20, 1996, between Owner and Loan Trustee.
"Trust Indenture Supplement" means a Trust Indenture and
Mortgage 637 Supplement, substantially in the form of Exhibit A
to the Trust Indenture, with appropriate modifications to reflect
the purpose for which it is being used.
"UCC" means the Uniform Commercial Code as in effect in any
applicable jurisdiction.
"United States" or "U.S." means the United States of
America; provided that for geographic purposes, "United States"
means, in aggregate, the 50 states and the District of Columbia
of the United States of America.
"U.S. Air Carrier" means any United States air carrier that
is a Citizen of the United States holding an air carrier
operating certificate issued by the Secretary of Transportation
pursuant to chapter 447 of title 49 of the United States Code for
17
aircraft capable of carrying 10 or more individuals or 6000
pounds or more of cargo, and as to which there is in force an air
carrier operating certificate issued pursuant to Part 121 of the
FAA Regulations, or which may operate as an air carrier by
certification or otherwise under any successor or substitute
provisions therefor or in the absence thereof.
"U.S. Government" means the federal government of the United
States, or any instrumentality or agency thereof the obligations
of which are guaranteed by the full faith and credit of the
federal government of the United States.
"U.S. Person" means any Person described in Section
7701(a)(30) of the Code.
"Wet Lease" means any arrangement whereby Owner agrees to
furnish the Airframe and Engines or engines installed thereon to
a third party pursuant to which the Airframe and such Engines or
engines (i) shall at all times be in the sole possession and
control of Owner, (ii) shall be operated in all respects solely
by regular employees of Owner possessing all current certificates
and licenses that are required under the Act or any FAA
Regulations for the possession, use and operation of the Airframe
and such Engines or engines (or, if the Airframe is then under
foreign registration, in accordance with Section 4.02(e) of the
Trust Indenture, the foregoing requirement shall apply in respect
of all certificates and licenses required by such government of
registration and the applicable Aviation Authority for the
possession, use and operation of the Airframe and such Engines or
engines), and (iii) shall in all events be maintained, insured
and otherwise used and operated in compliance with the terms and
provisions of the Trust Indenture.
"WTC" means Wilmington Trust Company, a Delaware banking
corporation, not in its capacity as Loan Trustee under the Trust
Indenture, but in its individual capacity.
18
SCHEDULE 1
OPERATIVE LEASES
1. Lease Agreement 114, dated as of July 1, 1995 between
First Security Bank of Utah, National Association and Continental
Airlines, Inc.
2. Lease Agreement 115, dated as of July 1, 1995 between
First Security Bank of Utah, National Association and Continental
Airlines, Inc.
3. Lease Agreement 116, dated as of March 15, 1996, between
First Security Bank of Utah, National Association and Continental
Airlines, Inc.
4. Lease Agreement 117, dated as of April 15, 1996, between
First Security Bank of Utah, National Association and Continental
Airlines, Inc.
19
SCHEDULE 2
PERMITTED AIR CARRIERS
Aer Lingus
Air Canada
Air France
Air New Zealand
Alitalia
All Nippon
Ansett Airlines of Australia
Australian Airlines
Braathens S.A.F.E.
British Airways
British Midland
Britannia Airways
Canadian Airlines, International
Cathay Pacific Air Lines Ltd.
Condor (Sub of Lufthansa)
Finnair
Icelandair
Iberia Air Lines of Spain
Japan Air Lines
Japan Air System
KLM
Lufthansa
Lux Air
Malaysian Airlines
Martinair
Monarch Airlines
Olympic
Phillipine Airlines
Qantas Airways Ltd.
Sabena
Scandinavian Airlines System
Singapore Airlines Limited
Swissair
TAP (Portugal)
Thai Airways
Transavia
20
EXHIBIT A
TO
TRUST INDENTURE AND MORTGAGE
TRUST INDENTURE AND MORTGAGE 637 SUPPLEMENT NO. 1
This TRUST INDENTURE AND MORTGAGE 637 SUPPLEMENT NO. 1,
dated May 20, 1996 (herein called this "Trust Indenture
Supplement") of CONTINENTAL AIRLINES, INC. as Owner (herein
called the "Owner").
W I T N E S S E T H:
WHEREAS, the Trust Indenture and Mortgage 637, dated
as of May 20, 1996 (the "Trust Indenture") between the Owner and
Wilmington Trust Owner, as Loan Trustee (the "Loan Trustee"),
provides for the execution and delivery of a supplement thereto
substantially in the form hereof, which shall particularly
describe the Aircraft, and shall specifically mortgage such
Aircraft to the Loan Trustee; and
WHEREAS, the Trust Indenture relates to the Airframe
and Engines described below, and a counterpart of the Trust
Indenture is attached hereto and made a part hereof and this
Trust Indenture Supplement, together with such counterpart of the
Trust Indenture, is being filed for recordation on the date
hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement
witnesseth that the Owner hereby confirms that the Lien of the
Trust Indenture on the Collateral covers all of Owner's right,
title and interest in and to the following described property:
AIRFRAME
One airframe identified as follows:
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
------------ ----- ------------ --------------
The Boeing 737-524 N33637 27540
Company
together with all of the Owner's right, title and interest in and
to all Parts of whatever nature, whether now owned or hereinafter
acquired and which are from time to time incorporated or
installed in or attached to said airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more rated
take-off horsepower or the equivalent thereof, identified as
follows:
A-1
Manufacturer Manufacturer's Model Serial Number
------------ -------------------- -------------
CFM 56-3 858302
International, Inc.
CFM 56-3 858306
International, Inc.
together with all of Owner's right, title and interest in and to
all Parts of whatever nature, whether now owned or hereafter
acquired and which are from time to time incorporated or
installed in or attached to either of such engines.
Together with all of Owner's right, title and interest
in and to (a) all Parts of whatever nature, which from time to
time are included within the definition of "Airframe" or
"Engine", whether now owned or hereafter acquired, including all
substitutions, renewals and replacements of and additions,
improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and
accumulations which constitute appliances, parts, instruments,
appurtenances, accessories, furnishings or other equipment
excluded from the definition of Parts) and (b) all Aircraft
Documents.
TO HAVE AND TO HOLD all and singular the aforesaid
property unto the Loan Trustee, its successors and assigns, in
trust for the equal and proportionate benefit and security of the
Note Holders, except as provided in Section 2.13 and Article III
of the Trust Indenture without any preference, distinction or
priority of any one Equipment Note over any other by reason of
priority of time of issue, sale, negotiation, date of maturity
thereof or otherwise for any reason whatsoever, and for the uses
and purposes and subject to the terms and provisions set forth in
the Trust Indenture.
This Trust Indenture Supplement shall be construed as
supplemental to the Trust Indenture and shall form a part
thereof. The Trust Indenture is hereby incorporated by reference
herein and is hereby ratified, approved and confirmed.
AND, FURTHER, the Owner hereby acknowledges that the
Aircraft referred to in this Trust Indenture Supplement has been
delivered to the Owner and is included in the property of the
Owner covered by all the terms and conditions of the Trust
Agreement, subject to the pledge and mortgage thereof under the
Trust Indenture.
* * *
A-2
IN WITNESS WHEREOF, the Owner has caused this Trust
Indenture Supplement to be duly executed by one of its officers,
thereunto duly authorized, on the day and year first above
written.
CONTINENTAL AIRLINES, INC., as
Owner
By:____________________________
Name:
Title:
A-3
SCHEDULE I
Original Amount Interest Rate
--------------- -------------
Series A . . . .
Series B . . . .
Series C . . . .
Series D . . . .
[Intentionally omitted from the version of
this document filed with the FAA as
containing confidential financial information.]
A-1
Equipment Note Amortization
SERIES A
Percentage of Original
Payment Date Amount to be Paid
------------ ----------------------
[Intentionally omitted from the version of
this document filed with the FAA as
containing confidential financial information.]
SERIES B
Percentage of Original
Payment Date Amount to be Paid
------------ ----------------------
[Intentionally omitted from the version of
this document filed with the FAA as
containing confidential financial information.]
SERIES C
Percentage of Original
Payment Date Amount to be Paid
------------ ----------------------
[Intentionally omitted from the version of
this document filed with the FAA as
containing confidential financial information.]
SERIES D
Percentage of Original
Payment Date Amount to be Paid
------------ ----------------------
[Intentionally omitted from the version of
this document filed with the FAA as
containing confidential financial information.]
TRUST INDENTURE AND MORTGAGE 637 SUPPLEMENT NO. 1
This TRUST INDENTURE AND MORTGAGE 637 SUPPLEMENT NO. 1,
dated May 20, 1996 (herein called this "Trust Indenture Supplement")
of CONTINENTAL AIRLINES, INC. as Owner (herein called the "Owner").
W I T N E S S E T H:
WHEREAS, the Trust Indenture and Mortgage 637, dated
as of May 20, 1996 (the "Trust Indenture") between the Owner and
Wilmington Trust Owner, as Loan Trustee (the "Loan Trustee"),
provides for the execution and delivery of a supplement thereto
substantially in the form hereof, which shall particularly
describe the Aircraft, and shall specifically mortgage such
Aircraft to the Loan Trustee; and
WHEREAS, the Trust Indenture relates to the Airframe
and Engines described below, and a counterpart of the Trust
Indenture is attached hereto and made a part hereof and this
Trust Indenture Supplement, together with such counterpart of the
Trust Indenture, is being filed for recordation on the date
hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement
witnesseth that the Owner hereby confirms that the Lien of the
Trust Indenture on the Collateral covers all of Owner's right,
title and interest in and to the following described property:
AIRFRAME
One airframe identified as follows:
FAA Manufacturer's
Manufacturer Model Registration Serial Number
Number
The Boeing 737-524 N33637 27540
Company
together with all of the Owner's right, title and interest in and
to all Parts of whatever nature, whether now owned or hereinafter
acquired and which are from time to time incorporated or
installed in or attached to said airframe.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or
more rated take-off horsepower or the equivalent thereof,
identified as follows:
Manufacturer Manufacturer's Model Serial Number
CFM 56-3 858302
International, Inc.
CFM 56-3 858306
International, Inc.
together with all of Owner's right, title and interest in and to
all Parts of whatever nature, whether now owned or hereafter
acquired and which are from time to time incorporated or
installed in or attached to either of such engines.
Together with all of Owner's right, title and interest
in and to (a) all Parts of whatever nature, which from time to
time are included within the definition of "Airframe" or
"Engine", whether now owned or hereafter acquired, including all
substitutions, renewals and replacements of and additions,
improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and
accumulations which constitute appliances, parts, instruments,
appurtenances, accessories, furnishings or other equipment
excluded from the definition of Parts) and (b) all Aircraft
Documents.
TO HAVE AND TO HOLD all and singular the aforesaid
property unto the Loan Trustee, its successors and assigns, in
trust for the equal and proportionate benefit and security of the
Note Holders, except as provided in Section 2.13 and Article III
of the Trust Indenture without any preference, distinction or
priority of any one Equipment Note over any other by reason of
priority of time of issue, sale, negotiation, date of maturity
thereof or otherwise for any reason whatsoever, and for the uses
and purposes and subject to the terms and provisions set forth in
the Trust Indenture.
This Trust Indenture Supplement shall be construed as
supplemental to the Trust Indenture and shall form a part
thereof. The Trust Indenture is hereby incorporated by reference
herein and is hereby ratified, approved and confirmed.
AND, FURTHER, the Owner hereby acknowledges that the
Aircraft referred to in this Trust Indenture Supplement has been
delivered to the Owner and is included in the property of the
Owner covered by all the terms and conditions of the Trust
Agreement, subject to the pledge and mortgage thereof under the
Trust Indenture.
* * *
2
IN WITNESS WHEREOF, the Owner has caused this Trust
Indenture Supplement to be duly executed by one of its officers,
thereunto duly authorized, on the day and year first above
written.
CONTINENTAL AIRLINES, INC., as Owner
By:_______________________________
Name:
Title:
3
Exhibit 4.26
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO
THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT
NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND
SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH
REGISTRATIONS IS AVAILABLE.
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
AS OWNER TRUSTEE UNDER TRUST AGREEMENT 114
DATED AS OF JULY 1, 1995.
SERIES A LIMITED RECOURSE EQUIPMENT NOTE DUE JANUARY 2, 2013
ISSUED IN CONNECTION WITH THE BOEING MODEL 757-200 AIRCRAFT
BEARING UNITED STATES REGISTRATION NUMBER N12114.
No. A-1 Date: May 20, 1996
$ 18,077,500
INTEREST RATE MATURITY DATE
7.75% January 2, 2013
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not
in its individual capacity but solely as Owner Trustee (herein in
such capacity called the "Owner Trustee") under that certain
Trust Agreement 114, dated as of July 1, 1995, between the Owner
Participant named therein and First Security Bank of Utah,
National Association (herein as such Trust Agreement may be
supplemented or amended from time to time called the "Trust
Agreement"), hereby promises to pay to the Wilmington Trust
Company, as Subordination Agent under the Intercreditor
Agreement, or the registered assignee thereof, the principal sum
of $18,077,500 (the "Original Amount"), together with interest on
the amount of the Original Amount remaining unpaid from time to
time (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) from the date hereof until paid in full at
a rate per annum equal to the Debt Rate. The Original Amount of
this Equipment Note shall be payable in installments on the dates
set forth in Schedule I hereto equal to the corresponding
percentage of the Original Amount of this Equipment Note set
forth in Schedule I hereto. Accrued but unpaid interest shall be
due and payable in quarterly installments commencing on July 2,
1996, and thereafter on October 2, January 2, April 2 and July 2
of each year, to and including January 2, 2013. Notwithstanding
the foregoing, the final payment made on this Equipment Note
shall be in an amount sufficient to discharge in full the unpaid
Original Amount and all accrued and unpaid interest on, and any
other amounts due under, this Equipment Note. Notwithstanding
anything to the contrary contained herein, if any date on which a
payment under this Equipment Note becomes due and payable is not
a Business Day, then such payment shall not be made on such
scheduled date but shall be made on the next succeeding Business
Day and if such payment is made on such next succeeding Business
Day, no interest shall accrue on the amount of such payment
during such extension.
For purposes hereof, the term "Trust Indenture" means
the Amended and Restated Trust Indenture and Mortgage 114, dated
as of May 20, 1996, between the Owner Trustee and Wilmington
Trust Company (the "Loan Trustee"), as the same may be amended or
supplemented from time to time. All other capitalized terms used
in this Equipment Note and not defined herein shall have the
respective meanings assigned in the Trust Indenture.
This Equipment Note shall bear interest, payable on
demand, at the Payment Due Rate (calculated on the basis of a
year of 360 days comprised of twelve 30-day months) on any
overdue Original Amount, any overdue Make-Whole Amount, if any,
and (to the extent permitted by applicable Law) any overdue
interest and any other amounts payable hereunder which are
overdue, in each case for the period the same is overdue. Amounts
shall be overdue if not paid when due (whether at stated
maturity, by acceleration or otherwise).
The interest rate borne by this Equipment Note shall
be subject to adjustments to the extent, and under the
circumstances, specified by the Registration Rights Agreement.
All payments of Original Amount, interest, Make-Whole
Amount, if any, and other amounts, if any, to be made by the
Owner Trustee hereunder and under the Trust Indenture or the
Participation Agreement shall be payable only from the income and
proceeds from the Trust Estate to the extent included in the
Trust Indenture Estate and only to the extent that the Owner
Trustee shall have sufficient income or proceeds from the Trust
Estate to the extent included in the Trust Indenture Estate to
enable the Loan Trustee to make such payments in accordance with
the terms of Section 2.03 and Article III of the Trust Indenture,
and each holder hereof, by its acceptance of this Equipment Note,
agrees that it will look solely to the income and proceeds from
the Trust Indenture Estate to the extent available for
distribution to the holder hereof as above provided and that none
of the Owner Participant, the Owner Trustee and the Loan Trustee
is personally liable or liable in any manner extending to any
assets other than the Trust Indenture Estate to the holder hereof
for any amounts payable or any liability under this Equipment
Note or, except as provided in the Trust Indenture or in the
Participation Agreement, for any liability under the Trust
Indenture or the Participation Agreement; provided, however, that
nothing herein contained shall limit, restrict or impair the
right of the Loan Trustee, subject always to the terms and
2
provisions of the Trust Indenture, to accelerate the maturity of
this Equipment Note upon occurrence of an Event of Default under
the Trust Indenture in accordance with Section 4.04(b) of the
Trust Indenture, to bring suit and obtain a judgment against the
Owner Trustee on this Equipment Note for purposes of realizing
upon the Trust Indenture Estate and to exercise all rights and
remedies provided under the Trust Indenture or otherwise realize
upon the Trust Indenture Estate.
There shall be maintained an Equipment Note Register
for the purpose of registering transfers and exchanges of
Equipment Notes at the Corporate Trust Office of the Loan Trustee
or at the office of any successor in the manner provided in
Section 2.07 of the Trust Indenture.
The Original Amount and interest and other amounts due
hereunder shall be payable in Dollars in immediately available
funds at the Corporate Trust Office of the Loan Trustee, or as
otherwise provided in the Trust Indenture. Each such payment
shall be made on the date such payment is due and without any
presentment or surrender of this Equipment Note, except that in
the case of any final payment with respect to this Equipment
Note, the Equipment Note shall be surrendered promptly thereafter
by the Loan Trustee to the Owner Trustee for cancellation.
The holder hereof, by its acceptance of this Equipment
Note, agrees that, except as provided in the Trust Indenture,
each payment received by it hereunder shall be applied, first, to
the payment of accrued interest on this Equipment Note (as well
as any interest on any overdue Original Amount, any overdue
Make-Whole Amount, if any, or, to the extent permitted by Law,
any overdue interest and other amounts hereunder) to the date of
such payment, second, to the payment of the Original Amount of
this Equipment Note then due, third, to the payment of Make-Whole
Amount, if any, and any other amount due hereunder or under the
Trust Indenture, and fourth, the balance, if any, remaining
thereafter, to the payment of installments of the Original Amount
of this Equipment Note remaining unpaid in the inverse order of
their normal maturity.
This Equipment Note is one of the Equipment Notes
referred to in the Trust Indenture which have been or are to be
issued by the Owner Trustee pursuant to the terms of the Trust
Indenture. The Trust Indenture Estate is held by the Loan Trustee
as security, in part, for the Equipment Notes. The provisions of
this Equipment Note are subject to the Trust Indenture. Reference
is hereby made to the Trust Indenture for a complete statement of
the rights and obligations of the holder of, and the nature and
extent of the security for, this Equipment Note and the rights
and obligations of the holders of, and the nature and extent of
the security for, any other Equipment Notes executed and
delivered under the Trust Indenture, as well as for a
3
statement of the terms and conditions of the Trust created by the
Trust Indenture, to all of which terms and conditions in the
Trust Indenture each holder hereof agrees by its acceptance of
this Equipment Note.
As provided in the Trust Indenture and subject to
certain limitations therein set forth, this Equipment Note is
exchangeable for a like aggregate Original Amount of Equipment
Notes of different authorized denominations, as requested by the
holder surrendering the same.
Prior to due presentment for registration of transfer
of this Equipment Note, the Owner Trustee and the Loan Trustee
shall treat the person in whose name this Equipment Note is
registered as the owner hereof for all purposes, whether or not
this Equipment Note be overdue, and neither of the Owner Trustee
nor the Loan Trustee shall be affected by notice to the contrary.
This Equipment Note is subject to redemption as
provided in Sections 2.10, 2.11 and 2.12 of the Trust Indenture
but not otherwise. This Equipment Note is also subject to
exchange and to purchase by the Owner Participant or the Owner
Trustee as provided in Section 2.14 of the Trust Indenture but
not otherwise.
Unless the certificate of authentication hereon has
been executed by or on behalf of the Loan Trustee by manual
signature, this Equipment Note shall not be entitled to any
benefit under the Trust Indenture or be valid or obligatory for
any purpose.
THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
IN WITNESS WHEREOF, the Owner Trustee has caused this
Equipment Note to be executed in its corporate name by its
officer thereunto duly authorized on the date hereof.
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Owner Trustee
By_______________________________
Name:
Title:
4
LOAN TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the
within-mentioned Trust Indenture.
WILMINGTON TRUST COMPANY, as
Loan Trustee
By______________________________
Name:
Title:
SCHEDULE I
EQUIPMENT NOTE AMORTIZATION
Percentage of
Original Amount
Payment Date to Be Paid
7/2/96 0.000000000
10/2/96 0.000000000
1/2/97 2.288854820
4/2/97 0.000000000
7/2/97 0.000000000
10/2/97 0.000000000
1/2/98 3.355668483
4/2/98 0.000000000
7/2/98 0.000000000
10/2/98 0.000000000
1/2/99 1.332764708
4/2/99 0.000000000
7/2/99 0.000000000
10/2/99 0.000000000
1/2/00 3.103814797
4/2/00 0.000000000
7/2/00 0.000000000
10/2/00 0.000000000
1/2/01 7.551698576
4/2/01 0.000000000
7/2/01 0.000000000
10/2/01 5.680939732
1/2/02 0.000000000
4/2/02 0.000000000
7/2/02 0.000000000
10/2/02 5.911761471
1/2/03 0.000000000
4/2/03 0.000000000
7/2/03 0.000000000
10/2/03 0.000000000
1/2/04 4.943320205
4/2/04 0.000000000
7/2/04 0.000000000
10/2/04 0.000000000
1/2/05 4.907084774
4/2/05 0.000000000
7/2/05 0.000000000
10/2/05 0.000000000
1/2/06 4.570253575
4/2/06 0.000000000
7/2/06 0.000000000
10/2/06 0.000000000
1/2/07 7.235032997
4/2/07 0.000000000
7/2/07 0.000000000
10/2/07 0.000000000
1/2/08 1.617990209
4/2/08 0.000000000
7/2/08 0.000000000
10/2/08 0.000000000
1/2/09 8.737854460
4/2/09 0.000000000
7/2/09 0.000000000
10/2/09 0.000000000
1/2/10 8.072392864
4/2/10 0.000000000
7/2/10 0.000000000
10/2/10 0.000000000
1/2/11 12.804929885
4/2/11 0.000000000
7/2/11 0.000000000
10/2/11 0.000000000
1/2/12 14.618215295
4/2/12 0.000000000
7/2/12 0.000000000
10/2/12 0.000000000
1/2/13 3.277423150
Exhibit 4.27
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO
THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT
NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND
SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH
REGISTRATIONS IS AVAILABLE.
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
AS OWNER TRUSTEE UNDER TRUST AGREEMENT 114
DATED AS OF JULY 1, 1995.
SERIES B LIMITED RECOURSE EQUIPMENT NOTE DUE JANUARY 2, 2013
ISSUED IN CONNECTION WITH THE BOEING MODEL 757-200 AIRCRAFT
BEARING UNITED STATES REGISTRATION NUMBER N12114.
No. B-1 Date: May 20, 1996
$ 7,747,500
INTEREST RATE MATURITY DATE
8.56% January 2, 2013
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not
in its individual capacity but solely as Owner Trustee (herein in
such capacity called the "Owner Trustee") under that certain
Trust Agreement 114, dated as of July 1, 1995, between the Owner
Participant named therein and First Security Bank of Utah,
National Association (herein as such Trust Agreement may be
supplemented or amended from time to time called the "Trust
Agreement"), hereby promises to pay to the Wilmington Trust
Company, as Subordination Agent under the Intercreditor
Agreement, or the registered assignee thereof, the principal sum
of $7,747,500 (the "Original Amount"), together with interest on
the amount of the Original Amount remaining unpaid from time to
time (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) from the date hereof until paid in full at
a rate per annum equal to the Debt Rate. The Original Amount of
this Equipment Note shall be payable in installments on the dates
set forth in Schedule I hereto equal to the corresponding
percentage of the Original Amount of this Equipment Note set
forth in Schedule I hereto. Accrued but unpaid interest shall be
due and payable in quarterly installments commencing on July 2,
1996, and thereafter on October 2, January 2, April 2 and July 2
of each year, to and including January 2, 2013. Notwithstanding
the foregoing, the final payment made on this Equipment Note
shall be in an amount sufficient to discharge in full the unpaid
Original Amount and all accrued and unpaid interest on, and any
other amounts due under, this Equipment Note. Notwithstanding
anything to the contrary contained herein, if any date on which a
payment under this Equipment Note becomes due and payable is not
a Business Day, then such payment shall not be made on such
scheduled date but shall be made on the next succeeding Business
Day and if such payment is made on such next succeeding Business
Day, no interest shall accrue on the amount of such payment
during such extension.
For purposes hereof, the term "Trust Indenture" means
the Amended and Restated Trust Indenture and Mortgage 114, dated
as of May 20, 1996, between the Owner Trustee and Wilmington
Trust Company (the "Loan Trustee"), as the same may be amended or
supplemented from time to time. All other capitalized terms used
in this Equipment Note and not defined herein shall have the
respective meanings assigned in the Trust Indenture.
This Equipment Note shall bear interest, payable on
demand, at the Payment Due Rate (calculated on the basis of a
year of 360 days comprised of twelve 30-day months) on any
overdue Original Amount, any overdue Make-Whole Amount, if any,
and (to the extent permitted by applicable Law) any overdue
interest and any other amounts payable hereunder which are
overdue, in each case for the period the same is overdue. Amounts
shall be overdue if not paid when due (whether at stated
maturity, by acceleration or otherwise).
The interest rate borne by this Equipment Note shall
be subject to adjustments to the extent, and under the
circumstances, specified by the Registration Rights Agreement.
All payments of Original Amount, interest, Make-Whole
Amount, if any, and other amounts, if any, to be made by the
Owner Trustee hereunder and under the Trust Indenture or the
Participation Agreement shall be payable only from the income and
proceeds from the Trust Estate to the extent included in the
Trust Indenture Estate and only to the extent that the Owner
Trustee shall have sufficient income or proceeds from the Trust
Estate to the extent included in the Trust Indenture Estate to
enable the Loan Trustee to make such payments in accordance with
the terms of Section 2.03 and Article III of the Trust Indenture,
and each holder hereof, by its acceptance of this Equipment Note,
agrees that it will look solely to the income and proceeds from
the Trust Indenture Estate to the extent available for
distribution to the holder hereof as above provided and that none
of the Owner Participant, the Owner Trustee and the Loan Trustee
is personally liable or liable in any manner extending to any
assets other than the Trust Indenture Estate to the holder hereof
for any amounts payable or any liability under this Equipment
Note or, except as provided in the Trust Indenture or in the
Participation Agreement, for any liability under the Trust
Indenture or the Participation Agreement; provided, however, that
nothing herein contained shall limit, restrict or impair the
right of the Loan Trustee, subject always to the terms and
provisions of the Trust Indenture, to accelerate the maturity of
2
this Equipment Note upon occurrence of an Event of Default under
the Trust Indenture in accordance with Section 4.04(b) of the
Trust Indenture, to bring suit and obtain a judgment against the
Owner Trustee on this Equipment Note for purposes of realizing
upon the Trust Indenture Estate and to exercise all rights and
remedies provided under the Trust Indenture or otherwise realize
upon the Trust Indenture Estate.
There shall be maintained an Equipment Note Register
for the purpose of registering transfers and exchanges of
Equipment Notes at the Corporate Trust Office of the Loan Trustee
or at the office of any successor in the manner provided in
Section 2.07 of the Trust Indenture.
The Original Amount and interest and other amounts due
hereunder shall be payable in Dollars in immediately available
funds at the Corporate Trust Office of the Loan Trustee, or as
otherwise provided in the Trust Indenture. Each such payment
shall be made on the date such payment is due and without any
presentment or surrender of this Equipment Note, except that in
the case of any final payment with respect to this Equipment
Note, the Equipment Note shall be surrendered promptly thereafter
by the Loan Trustee to the Owner Trustee for cancellation.
The holder hereof, by its acceptance of this Equipment
Note, agrees that, except as provided in the Trust Indenture,
each payment received by it hereunder shall be applied, first, to
the payment of accrued interest on this Equipment Note (as well
as any interest on any overdue Original Amount, any overdue
Make-Whole Amount, if any, or, to the extent permitted by Law,
any overdue interest and other amounts hereunder) to the date of
such payment, second, to the payment of the Original Amount of
this Equipment Note then due, third, to the payment of Make-Whole
Amount, if any, and any other amount due hereunder or under the
Trust Indenture, and fourth, the balance, if any, remaining
thereafter, to the payment of installments of the Original Amount
of this Equipment Note remaining unpaid in the inverse order of
their normal maturity.
This Equipment Note is one of the Equipment Notes
referred to in the Trust Indenture which have been or are to be
issued by the Owner Trustee pursuant to the terms of the Trust
Indenture. The Trust Indenture Estate is held by the Loan Trustee
as security, in part, for the Equipment Notes. The provisions of
this Equipment Note are subject to the Trust Indenture. Reference
is hereby made to the Trust Indenture for a complete statement of
the rights and obligations of the holder of, and the nature and
extent of the security for, this Equipment Note and the rights
and obligations of the holders of, and the nature and extent of
the security for, any other Equipment Notes executed and
delivered under the Trust Indenture, as well as for a statement
of the terms and conditions of the Trust created by the
3
Trust Indenture, to all of which terms and conditions in the
Trust Indenture each holder hereof agrees by its acceptance of
this Equipment Note.
As provided in the Trust Indenture and subject to
certain limitations therein set forth, this Equipment Note is
exchangeable for a like aggregate Original Amount of Equipment
Notes of different authorized denominations, as requested by the
holder surrendering the same.
Prior to due presentment for registration of transfer
of this Equipment Note, the Owner Trustee and the Loan Trustee
shall treat the person in whose name this Equipment Note is
registered as the owner hereof for all purposes, whether or not
this Equipment Note be overdue, and neither of the Owner Trustee
nor the Loan Trustee shall be affected by notice to the contrary.
This Equipment Note is subject to redemption as
provided in Sections 2.10, 2.11 and 2.12 of the Trust Indenture
but not otherwise. This Equipment Note is also subject to
exchange and to purchase by the Owner Participant or the Owner
Trustee as provided in Section 2.14 of the Trust Indenture but
not otherwise.
The indebtedness evidenced by this Equipment Note is,
to the extent and in the manner provided in the Trust Indenture,
subordinate and subject in right of payment to the prior payment
in full of the Secured Obligations (as defined in the Trust
Indenture) in respect of Series A Equipment Notes and this
Equipment Note is issued subject to such provisions. The Note
Holder of this Equipment Note, by accepting the same, (a) agrees
to and shall be bound by such provisions, (b) authorizes and
directs the Loan Trustee on his behalf to take such action as may
be necessary or appropriate to effectuate the subordination as
provided in the Trust Indenture and (c) appoints the Loan Trustee
his attorney-in-fact for such purpose.
Unless the certificate of authentication hereon has
been executed by or on behalf of the Loan Trustee by manual
signature, this Equipment Note shall not be entitled to any
benefit under the Trust Indenture or be valid or obligatory for
any purpose.
THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
IN WITNESS WHEREOF, the Owner Trustee has caused this
Equipment Note to be executed in its corporate name by its
officer thereunto duly authorized on the date hereof.
4
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Owner Trustee
By_______________________________
Name:
Title:
5
LOAN TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the
within-mentioned Trust Indenture.
WILMINGTON TRUST COMPANY, as
Loan Trustee
By______________________________
Name:
Title:
SCHEDULE I
EQUIPMENT NOTE AMORTIZATION
Percentage of
Original Amount
Payment Date to Be Paid
7/2/96 0.000000000
10/2/96 0.000000000
1/2/97 2.288854856
4/2/97 0.000000000
7/2/97 0.000000000
10/2/97 0.000000000
1/2/98 3.355668538
4/2/98 0.000000000
7/2/98 0.000000000
10/2/98 0.000000000
1/2/99 1.332764634
4/2/99 0.000000000
7/2/99 0.000000000
10/2/99 0.000000000
1/2/00 3.103814779
4/2/00 0.000000000
7/2/00 0.000000000
10/2/00 0.000000000
1/2/01 7.551698612
4/2/01 0.000000000
7/2/01 0.000000000
10/2/01 5.680939787
1/2/02 0.000000000
4/2/02 0.000000000
7/2/02 0.000000000
10/2/02 5.911761471
1/2/03 0.000000000
4/2/03 0.000000000
7/2/03 0.000000000
10/2/03 0.000000000
1/2/04 4.943320168
4/2/04 0.000000000
7/2/04 0.000000000
10/2/04 0.000000000
1/2/05 4.907034737
4/2/05 0.000000000
7/2/05 0.000000000
10/2/05 0.000000000
1/2/06 4.570253630
4/2/06 0.000000000
7/2/06 0.000000000
10/2/06 0.000000000
1/2/07 7.225032978
4/2/07 0.000000000
7/2/07 0.000000000
10/2/07 0.000000000
1/2/08 1.617990190
4/2/08 0.000000000
7/2/08 0.000000000
10/2/08 0.000000000
1/2/09 8.737854405
4/2/09 0.000000000
7/2/09 0.000000000
10/2/09 0.000000000
1/2/10 8.072392901
4/2/10 0.000000000
7/2/10 0.000000000
10/2/10 0.000000000
1/2/11 12.304929848
4/2/11 0.000000000
7/2/11 0.000000000
10/2/11 0.000000000
1/2/12 14.618215295
4/2/12 0.000000000
7/2/12 0.000000000
10/2/12 0.000000000
1/2/13 3.277423169
Exhibit 4.28
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO
THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT
NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND
SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH
REGISTRATIONS IS AVAILABLE.
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
AS OWNER TRUSTEE UNDER TRUST AGREEMENT 114
DATED AS OF JULY 1, 1995.
SERIES C LIMITED RECOURSE EQUIPMENT NOTE DUE JANUARY 2, 2013
ISSUED IN CONNECTION WITH THE BOEING MODEL 757-200 AIRCRAFT
BEARING UNITED STATES REGISTRATION NUMBER N12114.
No. C-1 Date: May 20, 1996
$ 7,747,500
INTEREST RATE MATURITY DATE
10.22% January 2, 2013
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not
in its individual capacity but solely as Owner Trustee (herein in
such capacity called the "Owner Trustee") under that certain
Trust Agreement 114, dated as of July 1, 1995, between the Owner
Participant named therein and First Security Bank of Utah,
National Association (herein as such Trust Agreement may be
supplemented or amended from time to time called the "Trust
Agreement"), hereby promises to pay to the Wilmington Trust
Company, as Subordination Agent under the Intercreditor
Agreement, or the registered assignee thereof, the principal sum
of $7,747,500 (the "Original Amount"), together with interest on
the amount of the Original Amount remaining unpaid from time to
time (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) from the date hereof until paid in full at
a rate per annum equal to the Debt Rate. The Original Amount of
this Equipment Note shall be payable in installments on the dates
set forth in Schedule I hereto equal to the corresponding
percentage of the Original Amount of this Equipment Note set
forth in Schedule I hereto. Accrued but unpaid interest shall be
due and payable in quarterly installments commencing on July 2,
1996, and thereafter on October 2, January 2, April 2 and July 2
of each year, to and including January 2, 2013. Notwithstanding
the foregoing, the final payment made on this Equipment Note
shall be in an amount sufficient to discharge in full the unpaid
Original Amount and all accrued and unpaid interest on, and any
other amounts due under, this Equipment Note. Notwithstanding
anything to the contrary contained herein, if any date on which a
payment under this Equipment Note becomes due and payable is not
a Business Day, then such payment shall not be made on such
scheduled date but shall be made on the next succeeding Business
Day and if such payment is made on such next succeeding Business
Day, no interest shall accrue on the amount of such payment
during such extension.
For purposes hereof, the term "Trust Indenture" means
the Amended and Restated Trust Indenture and Mortgage 114, dated
as of May 20, 1996, between the Owner Trustee and Wilmington
Trust Company (the "Loan Trustee"), as the same may be amended or
supplemented from time to time. All other capitalized terms used
in this Equipment Note and not defined herein shall have the
respective meanings assigned in the Trust Indenture.
This Equipment Note shall bear interest, payable on
demand, at the Payment Due Rate (calculated on the basis of a
year of 360 days comprised of twelve 30-day months) on any
overdue Original Amount, any overdue Make-Whole Amount, if any,
and (to the extent permitted by applicable Law) any overdue
interest and any other amounts payable hereunder which are
overdue, in each case for the period the same is overdue. Amounts
shall be overdue if not paid when due (whether at stated
maturity, by acceleration or otherwise).
The interest rate borne by this Equipment Note shall
be subject to adjustments to the extent, and under the
circumstances, specified by the Registration Rights Agreement.
All payments of Original Amount, interest, Make-Whole
Amount, if any, and other amounts, if any, to be made by the
Owner Trustee hereunder and under the Trust Indenture or the
Participation Agreement shall be payable only from the income and
proceeds from the Trust Estate to the extent included in the
Trust Indenture Estate and only to the extent that the Owner
Trustee shall have sufficient income or proceeds from the Trust
Estate to the extent included in the Trust Indenture Estate to
enable the Loan Trustee to make such payments in accordance with
the terms of Section 2.03 and Article III of the Trust Indenture,
and each holder hereof, by its acceptance of this Equipment Note,
agrees that it will look solely to the income and proceeds from
the Trust Indenture Estate to the extent available for
distribution to the holder hereof as above provided and that none
of the Owner Participant, the Owner Trustee and the Loan Trustee
is personally liable or liable in any manner extending to any
assets other than the Trust Indenture Estate to the holder hereof
for any amounts payable or any liability under this Equipment
Note or, except as provided in the Trust Indenture or in the
Participation Agreement, for any liability under the Trust
Indenture or the Participation Agreement; provided, however, that
nothing herein contained shall limit, restrict or impair the
right of the Loan Trustee, subject always to the terms and
provisions of the Trust Indenture, to accelerate the maturity of
2
this Equipment Note upon occurrence of an Event of Default under
the Trust Indenture in accordance with Section 4.04(b) of the
Trust Indenture, to bring suit and obtain a judgment against the
Owner Trustee on this Equipment Note for purposes of realizing
upon the Trust Indenture Estate and to exercise all rights and
remedies provided under the Trust Indenture or otherwise realize
upon the Trust Indenture Estate.
There shall be maintained an Equipment Note Register
for the purpose of registering transfers and exchanges of
Equipment Notes at the Corporate Trust Office of the Loan Trustee
or at the office of any successor in the manner provided in
Section 2.07 of the Trust Indenture.
The Original Amount and interest and other amounts due
hereunder shall be payable in Dollars in immediately available
funds at the Corporate Trust Office of the Loan Trustee, or as
otherwise provided in the Trust Indenture. Each such payment
shall be made on the date such payment is due and without any
presentment or surrender of this Equipment Note, except that in
the case of any final payment with respect to this Equipment
Note, the Equipment Note shall be surrendered promptly thereafter
by the Loan Trustee to the Owner Trustee for cancellation.
The holder hereof, by its acceptance of this Equipment
Note, agrees that, except as provided in the Trust Indenture,
each payment received by it hereunder shall be applied, first, to
the payment of accrued interest on this Equipment Note (as well
as any interest on any overdue Original Amount, any overdue
Make-Whole Amount, if any, or, to the extent permitted by Law,
any overdue interest and other amounts hereunder) to the date of
such payment, second, to the payment of the Original Amount of
this Equipment Note then due, third, to the payment of Make-Whole
Amount, if any, and any other amount due hereunder or under the
Trust Indenture, and fourth, the balance, if any, remaining
thereafter, to the payment of installments of the Original Amount
of this Equipment Note remaining unpaid in the inverse order of
their normal maturity.
This Equipment Note is one of the Equipment Notes
referred to in the Trust Indenture which have been or are to be
issued by the Owner Trustee pursuant to the terms of the Trust
Indenture. The Trust Indenture Estate is held by the Loan Trustee
as security, in part, for the Equipment Notes. The provisions of
this Equipment Note are subject to the Trust Indenture. Reference
is hereby made to the Trust Indenture for a complete statement of
the rights and obligations of the holder of, and the nature and
extent of the security for, this Equipment Note and the rights
and obligations of the holders of, and the nature and extent of
the security for, any other Equipment Notes executed and
delivered under the Trust Indenture, as well as for a statement
of the terms and conditions of the Trust created by the
3
Trust Indenture, to all of which terms and conditions in the
Trust Indenture each holder hereof agrees by its acceptance of
this Equipment Note.
As provided in the Trust Indenture and subject to
certain limitations therein set forth, this Equipment Note is
exchangeable for a like aggregate Original Amount of Equipment
Notes of different authorized denominations, as requested by the
holder surrendering the same.
Prior to due presentment for registration of transfer
of this Equipment Note, the Owner Trustee and the Loan Trustee
shall treat the person in whose name this Equipment Note is
registered as the owner hereof for all purposes, whether or not
this Equipment Note be overdue, and neither of the Owner Trustee
nor the Loan Trustee shall be affected by notice to the contrary.
This Equipment Note is subject to redemption as
provided in Sections 2.10, 2.11 and 2.12 of the Trust Indenture
but not otherwise. This Equipment Note is also subject to
exchange and to purchase by the Owner Participant or the Owner
Trustee as provided in Section 2.14 of the Trust Indenture but
not otherwise.
The indebtedness evidenced by this Equipment Note is,
to the extent and in the manner provided in the Trust Indenture,
subordinate and subject in right of payment to the prior payment
in full of the Secured Obligations (as defined in the Trust
Indenture) in respect of Series A and Series B Equipment Notes
and this Equipment Note is issued subject to such provisions. The
Note Holder of this Equipment Note, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b) authorizes
and directs the Loan Trustee on his behalf to take such action as
may be necessary or appropriate to effectuate the subordination
as provided in the Trust Indenture and (c) appoints the Loan
Trustee his attorney-in-fact for such purpose.
Unless the certificate of authentication hereon has
been executed by or on behalf of the Loan Trustee by manual
signature, this Equipment Note shall not be entitled to any
benefit under the Trust Indenture or be valid or obligatory for
any purpose.
THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
IN WITNESS WHEREOF, the Owner Trustee has caused this
Equipment Note to be executed in its corporate name by its
officer thereunto duly authorized on the date hereof.
4
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Owner Trustee
By_______________________________
Name:
Title:
5
LOAN TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the
within-mentioned Trust Indenture.
WILMINGTON TRUST COMPANY, as
Loan Trustee
By______________________________
Name:
Title:
SCHEDULE I
EQUIPMENT NOTE AMORTIZATION
Percentage of
Original Amount
Payment Date to Be Paid
7/2/96 0.000000000
10/2/96 0.000000000
1/2/97 2.288854856
4/2/97 0.000000000
7/2/97 0.000000000
10/2/97 0.000000000
1/2/98 3.355668538
4/2/98 0.000000000
7/2/98 0.000000000
10/2/98 0.000000000
1/2/99 1.332764634
4/2/99 0.000000000
7/2/99 0.000000000
102/99 0.000000000
1/2/00 3.103814779
4/2/00 0.000000000
7/2/00 0.000000000
10/2/00 0.000000000
1/2/01 7.551698612
4/2/01 0.000000000
7/2/01 0.000000000
10/2/01 5.680939787
1/2/02 0.000000000
4/2/02 0.000000000
7/2/02 0.000000000
10/2/02 5.911761471
1/2/03 0.000000000
4/2/03 0.000000000
7/2/03 0.000000000
10/2/03 0.000000000
1/2/04 4.943320168
4/2/04 0.000000000
7/2/04 0.000000000
10/2/04 0.000000000
1/2/05 4.907084737
4/2/05 0.000000000
7/2/05 0.000000000
10/2/05 0.000000000
1/2/06 4.570253630
4/2/06 0.000000000
7/2/06 0.000000000
10/2/06 0.000000000
1/2/07 7.225032978
4/2/07 0.000000000
7/2/07 0.000000000
10/2/07 0.000000000
1/2/08 1.617990190
4/2/08 0.000000000
7/2/08 0.000000000
10/2/08 0.000000000
1/2/09 8.737854405
4/2/09 0.000000000
7/2/09 0.000000000
10/2/09 0.000000000
1/2/10 8.072392901
4/2/10 0.000000000
7/2/10 0.000000000
10/2/10 0.000000000
1/2/11 12.804929848
4/2/11 0.000000000
7/2/11 0.000000000
10/2/11 0.000000000
1/2/12 14.618215295
4/2/12 0.000000000
7/2/12 0.000000000
10/2/12 0.000000000
1/2/13 3.277423169
Exhibit 4.29
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO
THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT
NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND
SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH
REGISTRATIONS IS AVAILABLE.
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION,
AS OWNER TRUSTEE UNDER TRUST AGREEMENT 114
DATED AS OF JULY 1, 1995.
SERIES D LIMITED RECOURSE EQUIPMENT NOTE DUE JANUARY 2, 2008
ISSUED IN CONNECTION WITH THE BOEING MODEL 757-200 AIRCRAFT
BEARING UNITED STATES REGISTRATION NUMBER N12114.
No. D-1 Date: May 20, 1996
$ 4,080,350
INTEREST RATE MATURITY DATE
11.50% January 2, 2008
FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, not
in its individual capacity but solely as Owner Trustee (herein in
such capacity called the "Owner Trustee") under that certain
Trust Agreement 114, dated as of July 1, 1995, between the Owner
Participant named therein and First Security Bank of Utah,
National Association (herein as such Trust Agreement may be
supplemented or amended from time to time called the "Trust
Agreement"), hereby promises to pay to the Wilmington Trust
Company, as Subordination Agent under the Intercreditor
Agreement, or the registered assignee thereof, the principal sum
of $4,080,350 (the "Original Amount"), together with interest on
the amount of the Original Amount remaining unpaid from time to
time (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) from the date hereof until paid in full at
a rate per annum equal to the Debt Rate. The Original Amount of
this Equipment Note shall be payable in installments on the dates
set forth in Schedule I hereto equal to the corresponding
percentage of the Original Amount of this Equipment Note set
forth in Schedule I hereto. Accrued but unpaid interest shall be
due and payable in quarterly installments commencing on July 2,
1996, and thereafter on October 2, January 2, April 2 and July 2
of each year, to and including January 2, 2008. Notwithstanding
the foregoing, the final payment made on this Equipment Note
shall be in an amount sufficient to discharge in full the unpaid
Original Amount and all accrued and unpaid interest on, and any
other amounts due under, this Equipment Note. Notwithstanding
anything to the contrary contained herein, if any date on which a
payment under this Equipment Note becomes due and payable is not
a Business Day, then such payment shall not be made on such
scheduled date but shall be made on the next succeeding Business
Day and if such payment is made on such next succeeding Business
Day, no interest shall accrue on the amount of such payment
during such extension.
For purposes hereof, the term "Trust Indenture" means
the Amended and Restated Trust Indenture and Mortgage 114, dated
as of May 20, 1996, between the Owner Trustee and Wilmington
Trust Company (the "Loan Trustee"), as the same may be amended or
supplemented from time to time. All other capitalized terms used
in this Equipment Note and not defined herein shall have the
respective meanings assigned in the Trust Indenture.
This Equipment Note shall bear interest, payable on
demand, at the Payment Due Rate (calculated on the basis of a
year of 360 days comprised of twelve 30-day months) on any
overdue Original Amount, any overdue Make-Whole Amount, if any,
and (to the extent permitted by applicable Law) any overdue
interest and any other amounts payable hereunder which are
overdue, in each case for the period the same is overdue. Amounts
shall be overdue if not paid when due (whether at stated
maturity, by acceleration or otherwise).
The interest rate borne by this Equipment Note shall
be subject to adjustments to the extent, and under the
circumstances, specified by the Registration Rights Agreement.
All payments of Original Amount, interest, Make-Whole
Amount, if any, and other amounts, if any, to be made by the
Owner Trustee hereunder and under the Trust Indenture or the
Participation Agreement shall be payable only from the income and
proceeds from the Trust Estate to the extent included in the
Trust Indenture Estate and only to the extent that the Owner
Trustee shall have sufficient income or proceeds from the Trust
Estate to the extent included in the Trust Indenture Estate to
enable the Loan Trustee to make such payments in accordance with
the terms of Section 2.03 and Article III of the Trust Indenture,
and each holder hereof, by its acceptance of this Equipment Note,
agrees that it will look solely to the income and proceeds from
the Trust Indenture Estate to the extent available for
distribution to the holder hereof as above provided and that none
of the Owner Participant, the Owner Trustee and the Loan Trustee
is personally liable or liable in any manner extending to any
assets other than the Trust Indenture Estate to the holder hereof
for any amounts payable or any liability under this Equipment
Note or, except as provided in the Trust Indenture or in the
Participation Agreement, for any liability under the Trust
Indenture or the Participation Agreement; provided, however, that
nothing herein contained shall limit, restrict or impair the
right of the Loan Trustee, subject always to the terms and
2
provisions of the Trust Indenture, to accelerate the maturity of
this Equipment Note upon occurrence of an Event of Default under
the Trust Indenture in accordance with Section 4.04(b) of the
Trust Indenture, to bring suit and obtain a judgment against the
Owner Trustee on this Equipment Note for purposes of realizing
upon the Trust Indenture Estate and to exercise all rights and
remedies provided under the Trust Indenture or otherwise realize
upon the Trust Indenture Estate.
There shall be maintained an Equipment Note Register
for the purpose of registering transfers and exchanges of
Equipment Notes at the Corporate Trust Office of the Loan Trustee
or at the office of any successor in the manner provided in
Section 2.07 of the Trust Indenture.
The Original Amount and interest and other amounts due
hereunder shall be payable in Dollars in immediately available
funds at the Corporate Trust Office of the Loan Trustee, or as
otherwise provided in the Trust Indenture. Each such payment
shall be made on the date such payment is due and without any
presentment or surrender of this Equipment Note, except that in
the case of any final payment with respect to this Equipment
Note, the Equipment Note shall be surrendered promptly thereafter
by the Loan Trustee to the Owner Trustee for cancellation.
The holder hereof, by its acceptance of this Equipment
Note, agrees that, except as provided in the Trust Indenture,
each payment received by it hereunder shall be applied, first, to
the payment of accrued interest on this Equipment Note (as well
as any interest on any overdue Original Amount, any overdue
Make-Whole Amount, if any, or, to the extent permitted by Law,
any overdue interest and other amounts hereunder) to the date of
such payment, second, to the payment of the Original Amount of
this Equipment Note then due, third, to the payment of Make-Whole
Amount, if any, and any other amount due hereunder or under the
Trust Indenture, and fourth, the balance, if any, remaining
thereafter, to the payment of installments of the Original Amount
of this Equipment Note remaining unpaid in the inverse order of
their normal maturity.
This Equipment Note is one of the Equipment Notes
referred to in the Trust Indenture which have been or are to be
issued by the Owner Trustee pursuant to the terms of the Trust
Indenture. The Trust Indenture Estate is held by the Loan Trustee
as security, in part, for the Equipment Notes. The provisions of
this Equipment Note are subject to the Trust Indenture. Reference
is hereby made to the Trust Indenture for a complete statement of
the rights and obligations of the holder of, and the nature and
extent of the security for, this Equipment Note and the rights
and obligations of the holders of, and the nature and extent of
the security for, any other Equipment Notes executed and
delivered under the Trust Indenture, as well as for a
3
statement of the terms and conditions of the Trust created by the
Trust Indenture, to all of which terms and conditions in the
Trust Indenture each holder hereof agrees by its acceptance of
this Equipment Note.
As provided in the Trust Indenture and subject to
certain limitations therein set forth, this Equipment Note is
exchangeable for a like aggregate Original Amount of Equipment
Notes of different authorized denominations, as requested by the
holder surrendering the same.
Prior to due presentment for registration of transfer
of this Equipment Note, the Owner Trustee and the Loan Trustee
shall treat the person in whose name this Equipment Note is
registered as the owner hereof for all purposes, whether or not
this Equipment Note be overdue, and neither of the Owner Trustee
nor the Loan Trustee shall be affected by notice to the contrary.
This Equipment Note is subject to redemption as
provided in Sections 2.10, 2.11 and 2.12 of the Trust Indenture
but not otherwise. This Equipment Note is also subject to
exchange and to purchase by the Owner Participant or the Owner
Trustee as provided in Section 2.14 of the Trust Indenture but
not otherwise.
The indebtedness evidenced by this Equipment Note is,
to the extent and in the manner provided in the Trust Indenture,
subordinate and subject in right of payment to the prior payment
in full of the Secured Obligations (as defined in the Trust
Indenture) in respect of Series A, Series B and Series C
Equipment Notes and this Equipment Note is issued subject to such
provisions. The Note Holder of this Equipment Note, by accepting
the same, (a) agrees to and shall be bound by such provisions,
(b) authorizes and directs the Loan Trustee on his behalf to take
such action as may be necessary or appropriate to effectuate the
subordination as provided in the Trust Indenture and (c) appoints
the Loan Trustee his attorney-in-fact for such purpose.
Unless the certificate of authentication hereon has
been executed by or on behalf of the Loan Trustee by manual
signature, this Equipment Note shall not be entitled to any
benefit under the Trust Indenture or be valid or obligatory for
any purpose.
THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
IN WITNESS WHEREOF, the Owner Trustee has caused this
Equipment Note to be executed in its corporate name by its
officer thereunto duly authorized on the date hereof.
4
FIRST SECURITY BANK OF UTAH, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Owner Trustee
By_______________________________
Name:
Title:
5
LOAN TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the
within-mentioned Trust Indenture.
WILMINGTON TRUST COMPANY, as
Loan Trustee
By______________________________
Name:
Title:
SCHEDULE I
EQUIPMENT NOTE AMORTIZATION
Percentage of
Original Amount
Payment Date to Be Paid
7/2/96 0.000000000
10/2/96 0.000000000
1/2/97 0.000000000
4/2/97 0.000000000
7/2/97 0.000000000
10/2/97 0.000000000
1/2/98 0.000000000
4/2/98 0.000000000
7/2/98 0.000000000
10/2/98 0.000000000
1/2/99 0.000000000
4/2/99 23.202771331
7/2/99 0.000000000
10/2/99 0.000000000
1/2/00 31.080302180
4/2/00 0.000000000
7/2/00 0.000000000
10/2/00 0.000000000
1/2/01 0.000000000
4/2/01 0.000000000
7/2/01 0.000000000
10/2/01 0.000000000
1/2/02 0.000000000
4/2/02 0.000000000
7/2/02 0.000000000
10/2/02 0.000000000
1/2/03 0.000000000
4/2/03 0.000000000
7/2/03 0.000000000
10/2/03 0.000000000
1/2/04 0.000000000
4/2/04 0.000000000
7/2/04 0.000000000
10/2/04 0.000000000
1/2/05 0.000000000
4/2/05 0.000000000
7/2/05 0.000000000
10/2/05 0.000000000.
1/2/06 0.000000000
4/2/06 0.000000000
7/2/06 0.000000000
10/2/06 0.000000000
1/2/07 0.000000000
4/2/07 0.000000000
7/2/07 0.000000000
10/2/07 0.000000000
1/2/08 43.716926489
[Letterhead of Cleary, Gottlieb, Steen & Hamilton]
Writer's Direct Dial: (212) 225-2420
September 17, 1996
Continental Airlines, Inc.
2929 Allen Parkway
Houston, Texas 77019
Re: Continental Airlines, Inc. - Registration Statement
on Form S-4
---------------------------------------------------
Ladies and Gentlemen:
We have acted as your counsel in connection with the
above-referenced Registration Statement on Form S-4 (the
"Registration Statement") filed today with the Securities and
Exchange Commission pursuant to the Securities Act of 1933, as
amended (the "Act"), in respect of the Pass Through Certificates,
Series 1996-2 (the "New Certificates"), to be offered in exchange
for all outstanding Pass Through Certificates, Series 1996-2 (the
"Old Certificates"). Each of the New Certificates represents a
fractional undivided interest in one of the four Continental
Airlines 1996-2 Pass Through Trusts (the "Trusts") formed
pursuant to four separate pass through trust agreements (the
"Pass Through Trust Agreements") between Continental Airlines,
Inc. (the "Company") and Wilmington Trust Company, as pass
through trustee (the "Trustee") under each Trust.
We have participated in the preparation of the
Registration Statement and have reviewed originals or copies
certified or otherwise identified to our satisfaction of such
documents and records of the Company and such other instruments
and other certificates of public officials, officers and
representatives of the Company and such other persons, and we
have made such investigations of law, as we have deemed
appropriate as a basis for the opinions expressed below.
Based on the foregoing, and subject to the further
assumptions and qualifications set forth below, it is our opinion
that when the New Certificates, in the forms filed as exhibits to
the Registration Statement, have been duly executed and
authenticated in accordance with the Pass Through Trust
Agreements, and duly issued and delivered by the Trusts in
exchange for an equal principal amount of Old Certificates
pursuant to the terms of the Registration Rights Agreement filed
as an exhibit to the Registration Statement, the New Certificates
will be legal, valid, binding and enforceable obligations of the
applicable Trust, entitled to the benefits of the applicable Pass
Through Trust Agreement, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally
and to general principles of equity.
The foregoing opinion is limited to the law of the
State of New York.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the reference to
this firm under the heading "Legal Matters" in the Prospectus
included in the Registration Statement. In giving such consent,
we do not thereby admit that we are "experts" within the meaning
of the Act or the rules and regulations of the Securities and
Exchange Commission issued thereunder with respect to any part of
the Registration Statement, including this exhibit.
Very truly yours,
CLEARY, GOTTLIEB, STEEN & HAMILTON
By /s/ Stephen H. Shalen
_________________________________
Stephen H. Shalen, a partner
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" in the Registration Statement (Form S-4) and related
Prospectus of Continental Airlines, Inc. for the registration
of Pass Through Certificates, Series 1996-2, totaling $171,749,000
and to the incorporation by reference therein of our reports dated
February 12, 1996, with respect to the consolidated financial
statements and schedules of Continental Airlines, Inc. and
Continental Airlines Holdings, Inc. included in its Annual
Report (Form 10-K) for the year ended December 31, 1995,
filed with the Securities and Exchange Commission.
Ernst & Young LLP
Houston, Texas
September 12, 1996
[Letterhead of AIRCRAFT INFORMATION SERVICES, INC.]
September 17, 1996
Continental Airlines, Inc.
2929 Allen Parkway, Suite 2010
Houston, TX 77019
Re: Registration Statement on Form S-4
of Continental Airlines, Inc.
Ladies and Gentlemen:
We consent to the reference to our name in the text under the
heading "Prospectus Summary-Equipment Notes and the Aircraft,"
"Risk Factors-Risk Factors Relating to the Certificates of
Offering-Appraisals and Realizable Value of Aircraft" and
"Description of the Aircraft and the Appraisals" of the above
captioned Registration Statement and to the summary contained in
the text under such headings of the report prepared by us with
respect to the Aircraft referred to therein.
Sincerely,
AIRCRAFT INFORMATION SERVICES, INC.
/s/ Fred E. Bearden
- -------------------------------
Fred E. Bearden
President
BK Associates, Inc.
1295 Northern Boulevard
Manhasset, New York 11030
(516) 365-6272 Fax (516) 365-6287
September , 1996
CONTINENTAL AIRLINES, INC.
2929 Allen Parkway, Suite 2010
Houston, TX 77019
Re: Registration Statement on Form S-4 of Continental Airlines,
Inc.
Ladies & Gentlemen:
We consent to the reference to our name in the text under the
heading "Prospectus Summary - Equipment Notes and the Aircraft",
"Risk Factors - Risk Factors Relating to the Certificates and the
Offering - Appraisals and Realizable Value of Aircraft" and
"Description of the Aircraft and the Appraisals" of the above-
captioned Registration Statement and to the summary contained in
the text under such headings of the reports prepared by us with
respect to the Aircraft referred to therein.
Sincerely,
BK ASSOCIATES, INC.
/s/ John F. Keitz
-------------------------------
John F. Keitz
Vice President
ISTAT Senior Certified Appraiser
JFK/kf
EXHIBIT 23.5
[LETTERHEAD OF MORTEN BEYER AND ASSOCIATES]
September __, 1996
Continental Airlines, Inc.
2929 Allen Parkway
Suite 2010
Houston, TX 77019
Re: Registration Statement on Form S-4 of Continental Airlines,
Inc.
Ladies and Gentlemen:
We consent to the reference to our name in the text under
the heading "Prospectus Summary - Equipment Notes and the
Aircraft," "Risk Factors -- Risk Factors Relating to the
Certificates and the Offering -- Appraisals and Realizable Value
of Aircraft" and "Description of the Aircraft and the Appraisals"
of the above-captioned Registration Statement and to the summary
contained in the text under such headings of the reports prepared
by us with respect to the Aircraft referred to therein.
Sincerely,
/s/ Clinton B. McCutcheon
-------------------------
Clinton B. McCutcheon
Executive Vice President
Writer's Direct Dial: (212) 225-2360
September 17, 1996
Continental Airlines, Inc.
2929 Allen Parkway
Houston, Texas 77019
Re: Registration Statement on Form S-4 (File No. 333- )
------------------------------------------------------
Ladies and Gentlemen:
We hereby consent to the reference to this firm in the
above-referenced Registration Statement and the related
prospectus under the headings "Risk Factors--Certain Tax Matters"
and "Legal Matters", without admitting that we are "experts"
within the meaning of the Act or the rules and regulations of the
Securities and Exchange Commission issued thereunder with respect
to any part of the Registration Statement, including this
Exhibit.
Very truly yours,
CLEARY, GOTTLIEB, STEEN & HAMILTON
By________________________________
Dana L. Trier, a Partner
POWER OF ATTORNEY
The undersigned director of Continental Airlines, Inc., a
Delaware corporation (the "Company"), does hereby constitute and
appoint Lawrence W. Kellner, Jeffery A. Smisek and Scott R.
Peterson, or any of them, as the undersigned's true and lawful
attorneys-in-fact and agents to do any and all things in the
undersigned's name and behalf in the undersigned's capacity as a
director of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as
a director that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act
of 1933, as amended, and any rules, regulations or requirements
of the Securities and Exchange Commission in connection with that
certain Registration Statement on Form S-4 relating to the
Continental Airlines Pass Through Certificates, Series 1996-2
(the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in
the capacity as a director of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ Gordon M. Bethune
------------------------------
Printed Name: Gordon M. Bethune
Dated and effective as of September 9, 1996
POWER OF ATTORNEY
The undersigned director of Continental Airlines, Inc., a
Delaware corporation (the "Company"), does hereby constitute and
appoint Lawrence W. Kellner, Jeffery A. Smisek and Scott R.
Peterson, or any of them, as the undersigned's true and lawful
attorneys-in-fact and agents to do any and all things in the
undersigned's name and behalf in the undersigned's capacity as a
director of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as
a director that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act
of 1933, as amended, and any rules, regulations or requirements
of the Securities and Exchange Commission in connection with that
certain Registration Statement on Form S-4 relating to the
Continental Airlines Pass Through Certificates, Series 1996-2
(the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in
the capacity as a director of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ Michael P. Bonds
------------------------------
Printed Name: Michael P. Bonds
Dated and effective as of September 9, 1996
POWER OF ATTORNEY
The undersigned director of Continental Airlines, Inc., a
Delaware corporation (the "Company"), does hereby constitute and
appoint Lawrence W. Kellner, Jeffery A. Smisek and Scott R.
Peterson, or any of them, as the undersigned's true and lawful
attorneys-in-fact and agents to do any and all things in the
undersigned's name and behalf in the undersigned's capacity as a
director of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as
a director that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act
of 1933, as amended, and any rules, regulations or requirements
of the Securities and Exchange Commission in connection with that
certain Registration Statement on Form S-4 relating to the
Continental Airlines Pass Through Certificates, Series 1996-2
(the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in
the capacity as a director of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ Thomas J. Barrack, Jr.
------------------------------
Printed Name: Thomas J. Barrack, Jr.
Dated and effective as of September 9, 1996
POWER OF ATTORNEY
The undersigned director of Continental Airlines, Inc., a
Delaware corporation (the "Company"), does hereby constitute and
appoint Lawrence W. Kellner, Jeffery A. Smisek and Scott R.
Peterson, or any of them, as the undersigned's true and lawful
attorneys-in-fact and agents to do any and all things in the
undersigned's name and behalf in the undersigned's capacity as a
director of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as
a director that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act
of 1933, as amended, and any rules, regulations or requirements
of the Securities and Exchange Commission in connection with that
certain Registration Statement on Form S-4 relating to the
Continental Airlines Pass Through Certificates, Series 1996-2
(the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in
the capacity as a director of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ David Bonderman
------------------------------
Printed Name: David Bonderman
Dated and effective as of September 9, 1996
POWER OF ATTORNEY
The undersigned director of Continental Airlines, Inc., a
Delaware corporation (the "Company"), does hereby constitute and
appoint Lawrence W. Kellner, Jeffery A. Smisek and Scott R.
Peterson, or any of them, as the undersigned's true and lawful
attorneys-in-fact and agents to do any and all things in the
undersigned's name and behalf in the undersigned's capacity as a
director of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as
a director that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act
of 1933, as amended, and any rules, regulations or requirements
of the Securities and Exchange Commission in connection with that
certain Registration Statement on Form S-4 relating to the
Continental Airlines Pass Through Certificates, Series 1996-2
(the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in
the capacity as a director of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ Gregory D. Brenneman
------------------------------
Printed Name: Gregory D. Brenneman
Dated and effective as of September 9, 1996
POWER OF ATTORNEY
The undersigned director of Continental Airlines, Inc., a
Delaware corporation (the "Company"), does hereby constitute and
appoint Lawrence W. Kellner, Jeffery A. Smisek and Scott R.
Peterson, or any of them, as the undersigned's true and lawful
attorneys-in-fact and agents to do any and all things in the
undersigned's name and behalf in the undersigned's capacity as a
director of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as
a director that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act
of 1933, as amended, and any rules, regulations or requirements
of the Securities and Exchange Commission in connection with that
certain Registration Statement on Form S-4 relating to the
Continental Airlines Pass Through Certificates, Series 1996-2
(the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in
the capacity as a director of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ Patrick Foley
------------------------------
Printed Name: Patrick Foley
Dated and effective as of September 9, 1996
POWER OF ATTORNEY
The undersigned director of Continental Airlines, Inc., a
Delaware corporation (the "Company"), does hereby constitute and
appoint Lawrence W. Kellner, Jeffery A. Smisek and Scott R.
Peterson, or any of them, as the undersigned's true and lawful
attorneys-in-fact and agents to do any and all things in the
undersigned's name and behalf in the undersigned's capacity as a
director of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as
a director that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act
of 1933, as amended, and any rules, regulations or requirements
of the Securities and Exchange Commission in connection with that
certain Registration Statement on Form S-4 relating to the
Continental Airlines Pass Through Certificates, Series 1996-2
(the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in
the capacity as a director of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ Douglas H. McCorkindale
------------------------------
Printed Name: Douglas H. McCorkindale
Dated and effective as of September 9, 1996
POWER OF ATTORNEY
The undersigned director of Continental Airlines, Inc., a
Delaware corporation (the "Company"), does hereby constitute and
appoint Lawrence W. Kellner, Jeffery A. Smisek and Scott R.
Peterson, or any of them, as the undersigned's true and lawful
attorneys-in-fact and agents to do any and all things in the
undersigned's name and behalf in the undersigned's capacity as a
director of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as
a director that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act
of 1933, as amended, and any rules, regulations or requirements
of the Securities and Exchange Commission in connection with that
certain Registration Statement on Form S-4 relating to the
Continental Airlines Pass Through Certificates, Series 1996-2
(the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in
the capacity as a director of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ George G. C. Parker
------------------------------
Printed Name: George G. C. Parker
Dated and effective as of September 9, 1996
POWER OF ATTORNEY
The undersigned director of Continental Airlines, Inc., a
Delaware corporation (the "Company"), does hereby constitute and
appoint Lawrence W. Kellner, Jeffery A. Smisek and Scott R.
Peterson, or any of them, as the undersigned's true and lawful
attorneys-in-fact and agents to do any and all things in the
undersigned's name and behalf in the undersigned's capacity as a
director of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as
a director that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act
of 1933, as amended, and any rules, regulations or requirements
of the Securities and Exchange Commission in connection with that
certain Registration Statement on Form S-4 relating to the
Continental Airlines Pass Through Certificates, Series 1996-2
(the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in
the capacity as a director of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ Richard W. Pogue
------------------------------
Printed Name: Richard W. Pogue
Dated and effective as of September 9, 1996
POWER OF ATTORNEY
The undersigned director of Continental Airlines, Inc., a
Delaware corporation (the "Company"), does hereby constitute and
appoint Lawrence W. Kellner, Jeffery A. Smisek and Scott R.
Peterson, or any of them, as the undersigned's true and lawful
attorneys-in-fact and agents to do any and all things in the
undersigned's name and behalf in the undersigned's capacity as a
director of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as
a director that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act
of 1933, as amended, and any rules, regulations or requirements
of the Securities and Exchange Commission in connection with that
certain Registration Statement on Form S-4 relating to the
Continental Airlines Pass Through Certificates, Series 1996-2
(the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in
the capacity as a director of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ William S. Price, III
------------------------------
Printed Name: William S. Price, III
Dated and effective as of September 9, 1996
POWER OF ATTORNEY
The undersigned director of Continental Airlines, Inc., a
Delaware corporation (the "Company"), does hereby constitute and
appoint Lawrence W. Kellner, Jeffery A. Smisek and Scott R.
Peterson, or any of them, as the undersigned's true and lawful
attorneys-in-fact and agents to do any and all things in the
undersigned's name and behalf in the undersigned's capacity as a
director of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as
a director that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act
of 1933, as amended, and any rules, regulations or requirements
of the Securities and Exchange Commission in connection with that
certain Registration Statement on Form S-4 relating to the
Continental Airlines Pass Through Certificates, Series 1996-2
(the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in
the capacity as a director of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ Donald L. Sturm
------------------------------
Printed Name: Donald L. Sturm
Dated and effective as of September 9, 1996
POWER OF ATTORNEY
The undersigned director of Continental Airlines, Inc., a
Delaware corporation (the "Company"), does hereby constitute and
appoint Lawrence W. Kellner, Jeffery A. Smisek and Scott R.
Peterson, or any of them, as the undersigned's true and lawful
attorneys-in-fact and agents to do any and all things in the
undersigned's name and behalf in the undersigned's capacity as a
director of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as
a director that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act
of 1933, as amended, and any rules, regulations or requirements
of the Securities and Exchange Commission in connection with that
certain Registration Statement on Form S-4 relating to the
Continental Airlines Pass Through Certificates, Series 1996-2
(the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in
the capacity as a director of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ Karen Hastie Williams
------------------------------
Printed Name: Karen Hastie Williams
Dated and effective as of September 9, 1996
POWER OF ATTORNEY
The undersigned director of Continental Airlines, Inc., a
Delaware corporation (the "Company"), does hereby constitute and
appoint Lawrence W. Kellner, Jeffery A. Smisek and Scott R.
Peterson, or any of them, as the undersigned's true and lawful
attorneys-in-fact and agents to do any and all things in the
undersigned's name and behalf in the undersigned's capacity as a
director of the Company, and to execute any and all instruments
for the undersigned and in the undersigned's name and capacity as
a director that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act
of 1933, as amended, and any rules, regulations or requirements
of the Securities and Exchange Commission in connection with that
certain Registration Statement on Form S-4 relating to the
Continental Airlines Pass Through Certificates, Series 1996-2
(the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in
the capacity as a director of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ Charles A. Yamarone
------------------------------
Printed Name: Charles A. Yamarone
Dated and effective as of September 9, 1996
POWER OF ATTORNEY
The undersigned officer of Continental Airlines, Inc., a
Delaware corporation (the "Company"), does hereby constitute and
appoint Jeffery A. Smisek and Scott R. Peterson, or either of
them, as the undersigned's true and lawful attorneys-in-fact and
agents to do any and all things in the undersigned's name and
behalf in the undersigned's capacity as an officer of the
Company, and to execute any and all instruments for the
undersigned and in the undersigned's name and capacity as an
officer that such person or persons may deem necessary or
advisable to enable the Company to comply with the Securities Act
of 1933, as amended, and any rules, regulations or requirements
of the Securities and Exchange Commission in connection with that
certain Registration Statement on Form S-4 relating to the
Continental Airlines Pass Through Certificates, Series 1996-2
(the "Registration Statement"), including specifically, but not
limited to, power and authority to sign for the undersigned in
the capacity as an officer of the Company the Registration
Statement, and any and all amendments thereto, including
post-effective amendments, and the undersigned does hereby ratify
and confirm all that such person or persons shall do or cause to
be done by virtue hereof.
/s/ Lawrence W. Kellner
------------------------------
Printed Name: Lawrence W. Kellner
Dated and effective as of September 9, 1996
=================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2) [ X ]
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer
identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Asst. Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
CONTINENTAL AIRLINES, INC.
(Exact name of obligors as specified in Trust Agreements)
Delaware 74-2099724
(State of organization) (I.R.S. employer
identification no.)
2929 Allen Parkway, Suite 2010
Houston, Texas 77019
(Address of principal executive offices) (Zip Code)
1996-2A Pass Through Certificates
(Title of the indenture securities)
=================================================================
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust
powers.
The trustee is authorized to exercise corporate trust
powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee,
describe each affiliation:
Based upon an examination of the books and
records of the trustee and upon information furnished
by the obligor, the obligor is not an affiliate of
the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this
Statement of Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company,
which includes the certificate of authority of
Wilmington Trust Company to commence business and the
authorization of Wilmington Trust Company to exercise
corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of
1939, the trustee, Wilmington Trust Company, a corporation
organized and existing under the laws of Delaware, has duly
caused this Statement of Eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 17th day of September,
1996.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ Patricia A. Evans By: /s/ Emmett R. Harmon
----------------------- --------------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
2
EXHIBIT A
AMENDED CHARTER
Wilmington Trust Company
Wilmington, Delaware
As existing on May 9, 1987
Amended Charter
or
Act of Incorporation
of
Wilmington Trust Company
Wilmington Trust Company, originally incorporated by an
Act of the General Assembly of the State of Delaware, entitled
"An Act to Incorporate the Delaware Guarantee and Trust Company",
approved March 2, A.D. 1901, and the name of which company was
changed to "Wilmington Trust Company" by an amendment filed in
the Office of the Secretary of State on March 18, A.D. 1903, and
the Charter or Act of Incorporation of which company has been
from time to time amended and changed by merger agreements
pursuant to the corporation law for state banks and trust
companies of the State of Delaware, does hereby alter and amend
its Charter or Act of Incorporation so that the same as so
altered and amended shall in its entirety read as follows:
First: - The name of this corporation is Wilmington Trust
Company.
Second: - The location of its principal office in the
State of Delaware is at Rodney Square North, in the City
of Wilmington, County of New Castle; the name of its
resident agent is Wilmington Trust Company whose address
is Rodney Square North, in said City. In addition to such
principal office, the said corporation maintains and
operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County,
Delaware, at Claymont, New Castle County, Delaware, at
Greenville, New Castle County Delaware, and at Milford
Cross Roads, New Castle County, Delaware, and shall be
empowered to open, maintain and operate branch offices at
Ninth and Shipley Streets, 418 Delaware Avenue, 2120
Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other
branch offices or places of business as may be authorized
from time to time by the agency or agencies of the
government of the State of Delaware empowered to confer
such authority.
Third: - (a) The nature of the business and the objects
and purposes proposed to be transacted, promoted or
carried on by this Corporation are to do any or all of the
things herein mentioned as fully and to the same extent as
natural persons might or could do and in any part of the
world, viz.:
(1) To sue and be sued, complain and defend in any
Court of law or equity and to make and use a common
seal, and alter the seal at pleasure, to hold,
purchase, convey, mortgage or otherwise deal in real
and personal estate and property, and to appoint such
officers and agents as the business of the Corporation
shall require, to make by-laws not inconsistent with the
Constitution or laws of the United States or of this State,
to discount bills, notes or other evidences of debt, to
receive deposits of money, or securities for money,
to buy gold and silver bullion and foreign coins, to
buy and sell bills of exchange, and generally to use,
exercise and enjoy all the powers, rights, privileges
and franchises incident to a corporation which are
proper or necessary for the transaction of the
business of the Corporation hereby created.
(2) To insure titles to real and personal property,
or any estate or interests therein, and to guarantee
the holder of such property, real or personal,
against any claim or claims, adverse to his interest
therein, and to prepare and give certificates of
title for any lands or premises in the State of
Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in
the receipt, collection, custody, investment and
management of funds, and the purchase, sale,
management and disposal of property of all
descriptions, and to prepare and execute all papers
which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal
papers of every description, and to carry on the
business of conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money,
jewelry, plate, deeds, bonds and any and all other
personal property of every sort and kind, from
executors, administrators, guardians, public
officers, courts, receivers, assignees, trustees, and
from all fiduciaries, and from all other persons and
individuals, and from all corporations whether state,
municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such
property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or
other obligations of any corporation, association,
state or municipality, and may receive and manage any
sinking fund therefor on such terms as may be agreed
upon between the two parties, and in like manner may
act as Treasurer of any corporation or municipality.
(7) To act as Trustee under any deed of trust,
mortgage, bond or other instrument issued by any
state, municipality, body politic, corporation,
association or person, either alone or in conjunction
2
with any other person or persons, corporation or
corporations.
(8) To guarantee the validity, performance or effect
of any contract or agreement, and the fidelity of
persons holding places of responsibility or trust; to
become surety for any person, or persons, for the
faithful performance of any trust, office, duty,
contract or agreement, either by itself or in
conjunction with any other person, or persons,
corporation, or corporations, or in like manner
become surety upon any bond, recognizance,
obligation, judgment, suit, order, or decree to be
entered in any court of record within the State of
Delaware or elsewhere, or which may now or hereafter
be required by any law, judge, officer or court in
the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee,
assignee in bankruptcy, executor, administrator,
guardian, bailee, or in any other trust capacity in
the receiving, holding, managing, and disposing of
any and all estates and property, real, personal or
mixed, and to be appointed as such trustee, trustee
in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian or
bailee by any persons, corporations, court, officer,
or authority, in the State of Delaware or elsewhere;
and whenever this Corporation is so appointed by any
person, corporation, court, officer or authority such
trustee, trustee in bankruptcy, receiver, assignee,
assignee in bankruptcy, executor, administrator,
guardian, bailee, or in any other trust capacity, it
shall not be required to give bond with surety, but
its capital stock shall be taken and held as security
for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and
the exercise of any of its powers hereby given, or
for the performance of any of the duties which it may
undertake or be called upon to perform, or for the
assumption of any responsibility the said Corporation
may be entitled to receive a proper compensation.
(11) To purchase, receive, hold and own bonds,
mortgages, debentures, shares of capital stock, and
other securities, obligations, contracts and
evidences of indebtedness, of any private, public or
municipal corporation within and without the State of
Delaware, or of the Government of the United States,
or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of interest,
dividends and income upon and from any of the bonds,
mortgages, debentures, notes, shares of capital
3
stock, securities, obligations, contracts, evidences
of indebtedness and other property held and owned by
it, and to exercise in respect of all such bonds,
mortgages, debentures, notes, shares of capital
stock, securities, obligations, contracts, evidences
of indebtedness and other property, any and all the
rights, powers and privileges of individual owners
thereof, including the right to vote thereon; to
invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner
as it may think fit and proper, and from time to time
to vary or realize such investments; to issue bonds
and secure the same by pledges or deeds of trust or
mortgages of or upon the whole or any part of the
property held or owned by the Corporation, and to
sell and pledge such bonds, as and when the Board of
Directors shall determine, and in the promotion of
its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold,
sell, assign, transfer, pledge, mortgage and convey
real and personal property of any name and nature and
any estate or interest therein.
(b) In furtherance of, and not in limitation, of the
powers conferred by the laws of the State of Delaware, it
is hereby expressly provided that the said Corporation
shall also have the following powers:
(1) To do any or all of the things herein set forth,
to the same extent as natural persons might or could
do, and in any part of the world.
(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of
the assets and liabilities of any person, firm,
association or corporation, and to pay for the same
in cash, stock of this Corporation, bonds or
otherwise; to hold or in any manner to dispose of the
whole or any part of the property so purchased; to
conduct in any lawful manner the whole or any part of
any business so acquired, and to exercise all the
powers necessary or convenient in and about the
conduct and management of such business.
(3) To take, hold, own, deal in, mortgage or
otherwise lien, and to lease, sell, exchange,
transfer, or in any manner whatever dispose of
property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out
contracts of every kind with any person, firm,
association or corporation, and, without limit as to
amount, to draw, make, accept, endorse, discount,
execute and issue promissory notes, drafts, bills of
exchange, warrants, bonds, debentures, and other
negotiable or transferable instruments.
4
(5) To have one or more offices, to carry on all or
any of its operations and businesses, without
restriction to the same extent as natural persons
might or could do, to purchase or otherwise acquire,
to hold, own, to mortgage, sell, convey or otherwise
dispose of, real and personal property, of every
class and description, in any State, District,
Territory or Colony of the United States, and in any
foreign country or place.
(6) It is the intention that the objects, purposes
and powers specified and clauses contained in this
paragraph shall (except where otherwise expressed in
said paragraph) be nowise limited or restricted by
reference to or inference from the terms of any other
clause of this or any other paragraph in this
charter, but that the objects, purposes and powers
specified in each of the clauses of this paragraph
shall be regarded as independent objects, purposes
and powers.
Fourth: - (a) The total number of shares of all classes of
stock which the Corporation shall have authority to issue is
forty-one million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred
stock, par value $10.00 per share (hereinafter
referred to as "Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common
Stock, par value $1.00 per share (hereinafter
referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to
time in one or more series as may from time to time be
determined by the Board of Directors each of said series
to be distinctly designated. All shares of any one series
of Preferred Stock shall be alike in every particular,
except that there may be different dates from which
dividends, if any, thereon shall be cumulative, if made
cumulative. The voting powers and the preferences and
relative, participating, optional and other special rights
of each such series, and the qualifications, limitations
or restrictions thereof, if any, may differ from those of
any and all other series at any time outstanding; and,
subject to the provisions of subparagraph 1 of Paragraph
(c) of this Article Fourth, the Board of Directors of the
Corporation is hereby expressly granted authority to fix
by resolution or resolutions adopted prior to the issuance
of any shares of a particular series of Preferred Stock,
the voting powers and the designations, preferences and
relative, optional and other special rights, and the
qualifications, limitations and restrictions of such
series, including, but without limiting the generality
5
of the foregoing, the following:
(1) The distinctive designation of, and the number of
shares of Preferred Stock which shall constitute such
series, which number may be increased (except where
otherwise provided by the Board of Directors) or
decreased (but not below the number of shares thereof
then outstanding) from time to time by like action of
the Board of Directors;
(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred
Stock of such series shall be paid, the extent of the
preference or relation, if any, of such dividends to
the dividends payable on any other class or classes,
or series of the same or other class of stock and
whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred
Stock of such series to convert the same into or
exchange the same for, shares of any other class or
classes or of any series of the same or any other
class or classes of stock of the Corporation and the
terms and conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series
shall be subject to redemption, and the redemption
price or prices and the time or times at which, and
the terms and conditions on which, Preferred Stock of
such series may be redeemed.
(5) The rights, if any, of the holders of Preferred
Stock of such series upon the voluntary or
involuntary liquidation, merger, consolidation,
distribution or sale of assets, dissolution or
winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or
purchase account, if any, to be provided for the
Preferred Stock of such series; and
(7) The voting powers, if any, of the holders of such
series of Preferred Stock which may, without limiting
the generality of the foregoing include the right,
voting as a series or by itself or together with
other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more
directors of the Corporation if there shall have been
a default in the payment of dividends on any one or
more series of Preferred Stock or under such
circumstances and on such conditions as the Board of
Directors may determine.
(c) (1) After the requirements with respect to preferential
6
dividends on the Preferred Stock (fixed in accordance with
the provisions of section (b) of this Article Fourth), if
any, shall have been met and after the Corporation shall
have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or
redemption or purchase accounts (fixed in accordance with
the provisions of section (b) of this Article Fourth), and
subject further to any conditions which may be fixed in
accordance with the provisions of section (b) of this
Article Fourth, then and not otherwise the holders of
Common Stock shall be entitled to receive such dividends
as may be declared from time to time by the Board of
Directors.
(2) After distribution in full of the preferential
amount, if any, (fixed in accordance with the
provisions of section (b) of this Article Fourth), to
be distributed to the holders of Preferred Stock in
the event of voluntary or involuntary liquidation,
distribution or sale of assets, dissolution or
winding-up, of the Corporation, the holders of the
Common Stock shall be entitled to receive all of the
remaining assets of the Corporation, tangible and
intangible, of whatever kind available for
distribution to stockholders ratably in proportion to
the number of shares of Common Stock held by them
respectively.
(3) Except as may otherwise be required by law or by
the provisions of such resolution or resolutions as
may be adopted by the Board of Directors pursuant to
section (b) of this Article Fourth, each holder of
Common Stock shall have one vote in respect of each
share of Common Stock held on all matters voted upon
by the stockholders.
(d) No holder of any of the shares of any class or series
of stock or of options, warrants or other rights to
purchase shares of any class or series of stock or of
other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued
stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase
of the authorized capital stock of the Corporation of any
class or series, or bonds, certificates of indebtedness,
debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or
series, or carrying any right to purchase stock of any
class or series, but any such unissued stock, additional
authorized issue of shares of any class or series of stock
or securities convertible into or exchangeable for stock,
or carrying any right to purchase stock, may be issued and
disposed of pursuant to resolution of the Board of
Directors to such persons, firms, corporations or
associations, whether such holders or others, and upon
such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
7
(e) The relative powers, preferences and rights of each
series of Preferred Stock in relation to the relative
powers, preferences and rights of each other series of
Preferred Stock shall, in each case, be as fixed from time
to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in
section (b) of this Article Fourth and the consent, by
class or series vote or otherwise, of the holders of such
of the series of Preferred Stock as are from time to time
outstanding shall not be required for the issuance by the
Board of Directors of any other series of Preferred Stock
whether or not the powers, preferences and rights of such
other series shall be fixed by the Board of Directors as
senior to, or on a parity with, the powers, preferences
and rights of such outstanding series, or any of them;
provided, however, that the Board of Directors may provide
in the resolution or resolutions as to any series of
Preferred Stock adopted pursuant to section (b) of this
Article Fourth that the consent of the holders of a
majority (or such greater proportion as shall be therein
fixed) of the outstanding shares of such series voting
thereon shall be required for the issuance of any or all
other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of
any series of Preferred Stock may be issued from time to
time as the Board of Directors of the Corporation shall
determine and on such terms and for such consideration as
shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time
as the Board of Directors of the Corporation shall
determine and on such terms and for such consideration as
shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of
Preferred Stock may, without a class or series vote, be
increased or decreased from time to time by the
affirmative vote of the holders of a majority of the stock
of the Corporation entitled to vote thereon.
Fifth: - (a) The business and affairs of the Corporation
shall be conducted and managed by a Board of Directors.
The number of directors constituting the entire Board
shall be not less than five nor more than twenty-five as
fixed from time to time by vote of a majority of the whole
Board, provided, however, that the number of directors
shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that
the number of directors constituting the whole Board shall
be twenty-four until otherwise fixed by a majority of the
whole Board.
(b) The Board of Directors shall be divided into three
classes, as nearly equal in number as the then total number
8
of directors constituting the whole Board permits, with the
term of office of one class expiring each year. At the
annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term
expiring at the next succeeding annual meeting, directors
of the second class shall be elected to hold office for a
term expiring at the second succeeding annual meeting and
directors of the third class shall be elected to hold
office for a term expiring at the third succeeding annual
meeting. Any vacancies in the Board of Directors for any
reason, and any newly created directorships resulting from
any increase in the directors, may be filled by the Board
of Directors, acting by a majority of the directors then
in office, although less than a quorum, and any directors
so chosen shall hold office until the next annual election
of directors. At such election, the stockholders shall
elect a successor to such director to hold office until
the next election of the class for which such director
shall have been chosen and until his successor shall be
elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent
director.
(c) Notwithstanding any other provisions of this Charter
or Act of Incorporation or the By-Laws of the Corporation
(and notwithstanding the fact that some lesser percentage
may be specified by law, this Charter or Act of
Incorporation or the By-Laws of the Corporation), any
director or the entire Board of Directors of the
Corporation may be removed at any time without cause, but
only by the affirmative vote of the holders of two-thirds
or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of
directors (considered for this purpose as one class) cast
at a meeting of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made
by the Board of Directors or by any stockholder entitled
to vote for the election of directors. Such nominations
shall be made by notice in writing, delivered or mailed by
first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor
more than 50 days prior to any meeting of the stockholders
called for the election of directors; provided, however,
that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or
mailed, as prescribed, to the Secretary of the Corporation
not later than the close of the seventh day following the
day on which notice of the meeting was mailed to
stockholders. Notice of nominations which are proposed by
the Board of Directors shall be given by the Chairman on
behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i)
the name, age, business address and, if known, residence
9
address of each nominee proposed in such notice, (ii) the
principal occupation or employment of such nominee and (iii)
the number of shares of stock of the Corporation which are
beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant,
determine and declare to the meeting that a nomination was
not made in accordance with the foregoing procedure, and
if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken
at any annual or special meeting of stockholders of the
Corporation may be taken without a meeting, and the power
of stockholders to consent in writing, without a meeting,
to the taking of any action is specifically denied.
Sixth: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from
time to time find necessary or proper.
Seventh: - The Corporation hereby created is hereby given
the same powers, rights and privileges as may be conferred
upon corporations organized under the Act entitled "An Act
Providing a General Corporation Law", approved March 10,
1899, as from time to time amended.
Eighth: - This Act shall be deemed and taken to be a private
Act.
Ninth: - This Corporation is to have perpetual existence.
Tenth: - The Board of Directors, by resolution passed by a
majority of the whole Board, may designate any of their
number to constitute an Executive Committee, which
Committee, to the extent provided in said resolution, or
in the By-Laws of the Company, shall have and may exercise
all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation,
and shall have power to authorize the seal of the
Corporation to be affixed to all papers which may require
it.
Eleventh: - The private property of the stockholders shall not
be liable for the payment of corporate debts to any extent
whatever.
Twelfth: - The Corporation may transact business in any part of
the world.
Thirteenth: - The Board of Directors of the Corporation is
expressly authorized to make, alter or repeal the By-Laws of
the Corporation by a vote of the majority of the entire Board.
10
The stockholders may make, alter or repeal any By-Law
whether or not adopted by them, provided however, that any
such additional By-Laws, alterations or repeal may be
adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital
stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one
class).
Fourteenth: - Meetings of the Directors may be held
outside of the State of Delaware at such places as may be
from time to time designated by the Board, and the
Directors may keep the books of the Company outside of the
State of Delaware at such places as may be from time to
time designated by them.
Fifteenth: - (a) In addition to any affirmative vote required
by law, and except as otherwise expressly provided in sections
(b) and (c) of this Article Fifteenth:
(A) any merger or consolidation of the Corporation or
any Subsidiary (as hereinafter defined) with or into
(i) any Interested Stockholder (as hereinafter
defined) or (ii) any other corporation (whether or
not itself an Interested Stockholder), which, after
such merger or consolidation, would be an Affiliate
(as hereinafter defined) of an Interested
Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or
a series of related transactions) to or with any
Interested Stockholder or any Affiliate of any
Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate
fair market value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or
any Subsidiary (in one transaction or a series of
related transactions) of any securities of the
Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested
Stockholder in exchange for cash, securities or other
property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation, or
(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any similar
transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate
11
share of the outstanding shares of any class of
equity or convertible securities of the Corporation
or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder, or any Affiliate
of any Interested Stockholder,
shall require the affirmative vote of the holders of at least
two-thirds of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of
directors, considered for the purpose of this Article Fifteenth
as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required,
or that some lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.
(2) The term "business combination" as used in this
Article Fifteenth shall mean any transaction which
is referred to any one or more of clauses (A)
through (E) of paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article
Fifteenth shall not be applicable to any particular
business combination and such business combination
shall require only such affirmative vote as is
required by law and any other provisions of the
Charter or Act of Incorporation of By-Laws if such
business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article Fifteenth:
(1) A "person" shall mean any individual firm, corporation
or other entity.
(2) "Interested Stockholder" shall mean, in respect of any
business combination, any person (other than the
Corporation or any Subsidiary) who or which as of the
record date for the determination of stockholders entitled
to notice of and to vote on such business combination, or
immediately prior to the consummation of any such
transaction:
(A) is the beneficial owner, directly or indirectly, of
more than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any
time within two years prior thereto was the
beneficial owner, directly or indirectly, of not less
than 10% of the then outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in
any share of capital stock of the Corporation which
were at any time within two years prior thereto
beneficially owned by any Interested Stockholder, and
12
such assignment or succession shall have occurred in the
course of a transaction or series of transactions not
involving a public offering within the meaning of the
Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting
Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own,
directly or indirectly, or
(B) which such person or any of its Affiliates or
Associates has (i) the right to acquire (whether such
right is exercisable immediately or only after the
passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or
options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or
understanding, or
(C) which are beneficially owned, directly or
indirectly, by any other person with which such first
mentioned person or any of its Affiliates or
Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding,
voting or disposing of any shares of capital stock of
the Corporation.
(4) The outstanding Voting Shares shall include shares
deemed owned through application of paragraph (3) above
but shall not include any other Voting Shares which may be
issuable pursuant to any agreement, or upon exercise of
conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective
meanings given those terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of
1934, as in effect on December 31, 1981.
(6) "Subsidiary" shall mean any corporation of which a
majority of any class of equity security (as defined in
Rule 3a11-1 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect in December
31, 1981) is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of
the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary"
shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly,
by the Corporation.
(d) majority of the directors shall have the power and
duty to determine for the purposes of this Article
13
Fifteenth on the basis of information known to them,
(1) the number of Voting Shares beneficially owned by
any person (2) whether a person is an Affiliate or
Associate of another, (3) whether a person has an
agreement, arrangement or understanding with another
as to the matters referred to in paragraph (3) of
section (c), or (4) whether the assets subject to any
business combination or the consideration received
for the issuance or transfer of securities by the
Corporation, or any Subsidiary has an aggregate fair
market value of $1,00,000 or more.
(e) Nothing contained in this Article Fifteenth shall
be construed to relieve any Interested Stockholder
from any fiduciary obligation imposed by law.
Sixteenth: Notwithstanding any other provision of this
Charter or Act of Incorporation or the By-Laws of the
Corporation (and in addition to any other vote that may be
required by law, this Charter or Act of Incorporation by
the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital
stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one
class) shall be required to amend, alter or repeal any
provision of Articles Fifth, Thirteenth, Fifteenth or
Sixteenth of this Charter or Act of Incorporation.
Seventeenth: (a) a Director of this Corporation shall not
be liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a
Director, except to the extent such exemption from
liability or limitation thereof is not permitted under the
Delaware General Corporation Laws as the same exists or
may hereafter be amended.
(b) Any repeal or modification of the foregoing
paragraph shall not adversely affect any right or
protection of a Director of the Corporation existing
hereunder with respect to any act or omission
occurring prior to the time of such repeal or
modification."
14
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
As existing on February 21, 1991
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
Stockholders' Meetings
Section 1. The Annual Meeting of Stockholders shall be
held on the third Thursday in April each year at the principal
office at the Company or at such other date, time, or place as
may be designated by resolution by the Board of Directors.
Section 2. Special meetings of all stockholders may be
called at any time by the Board of Directors, the Chairman of the
Board or the President.
Section 3. Notice of all meetings of the stockholders
shall be given by mailing to each stockholder at least ten (10
days before said meeting, at his last known address, a written or
printed notice fixing the time and place of such meeting.
Section 4. A majority in the amount of the capital stock
of the Company issued and outstanding on the record date, as
herein determined, shall constitute a quorum at all meetings of
stockholders for the transaction of any business, but the holders
of a small number of shares may adjourn, from time to time,
without further notice, until a quorum is secured. At each annual
or special meeting of stockholders, each stockholder shall be
entitled to one vote, either in person or by proxy, for each
shares of stock registered in the stockholder's name on the books
of the Company on the record date for any such meeting as
determined herein.
ARTICLE II
Directors
Section 1. The number and classification of the Board of
Directors shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of
seventy-two (72) years shall be nominated for election to the
Board of Directors of the Company, provided, however, that this
limitation shall not apply to any person who was serving as
director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold
office for three years or until their successors are elected and
qualified.
Section 4. The affairs and business of the Company shall
be managed and conducted by the Board of Directors.
Section 5. Regular meetings of the Board of Directors
shall be held on the third Thursday of each month at the
principal office of the Company, or at such other place and time
as may be designated by the Board of Directors, the Chairman of
the Board, or the President.
Section 6. Special meetings of the Board of Directors may
be called at any time by the Chairman of the Board of Directors
or by the President, and shall be called upon the written request
of a majority of the directors.
Section 7. A majority of the directors elected and
qualified shall be necessary to constitute a quorum for the
transaction of business at any meeting of the Board of Directors.
Section 8. Written notice shall be sent by mail to each
director of any special meeting of the Board of Directors, and of
any change in the time or place of any regular meeting, stating
the time and place of such meeting, which shall be mailed not
less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation,
removal, inability to act, or disqualification of any director,
the Board of Directors, although less than a quorum, shall have
the right to elect the successor who shall hold office for the
remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have
been duly elected and qualified.
Section 10. The Board of Directors at its first meeting
after its election by the stockholders shall appoint an Executive
Committee, a Trust Committee, an Audit Committee and a
Compensation Committee, and shall elect from its own members a
Chairman of the Board of Directors and a President who may be the
same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person,
may appoint at any time such other committees and elect or
appoint such other officers as it may deem advisable. The Board
of Directors may also elect at such meeting one or more Associate
Directors.
Section 11. The Board of Directors may at any time remove,
with or without cause, any member of any Committee appointed by
it or any associate director or officer elected by it and may
appoint or elect his successor.
Section 12. The Board of Directors may designate an
officer to be in charge of such of the departments or division of
the Company as it may deem advisable.
ARTICLE III
Committees
Section I. Executive Committee
(A) The Executive Committee shall be composed of
not more than nine members who shall be selected by the Board of
Directors from its own members and who shall hold office during
the pleasure of the Board.
2
(B) The Executive Committee shall have all the
powers of the Board of Directors when it is not in session to
transact all business for and in behalf of the Company that may
be brought before it.
(C) The Executive Committee shall meet at the
principal office of the Company or elsewhere in its discretion at
least once a week in each week the Board is not regularly
scheduled to meet. A majority of its members shall be necessary
to constitute a quorum for the transaction of business. Special
meetings of the Executive Committee may be held at any time when
a quorum is present.
(D) Minutes of each meeting of the Executive
Committee shall be kept and submitted to the Board of Directors
at its next meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the
Company, and shall direct the disposal of the same, in accordance
with such rules and regulations as the Board of Directors from
time to time make.
(F) In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the
affairs and business of the Company by its directors and officers
as contemplated by these By-Laws any two available members of the
Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company
in accordance with the provisions of Article III of these
By-Laws; and if less than three members of the Trust Committee is
constituted immediately prior to such disaster shall be available
for the transaction of its business, such Executive Committee
shall also be empowered to exercise all of the powers reserved to
the Trust Committee under Article III Section 2 hereof. In the
event of the unavailability, at such time, of a minimum of two
members of such Executive Committee, any three available
directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Company
in accordance with the foregoing provisions of this Section. This
By-Law shall be subject to implementation by Resolutions of the
Board of Directors presently existing or hereafter passed from
time to time for that purpose, and any provisions of these
By-Laws(other than this Section) and any resolutions which are
contrary to the provisions of this Section or to the provisions
of any such implementary Resolutions shall be suspended during
such a disaster period until it shall be determined by any
interim Executive Committee acting under this section that it
shall be to the advantage of the Company to resume the conduct
and management of its affairs and business under all of the other
provisions of these By-Laws.
3
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not
more than thirteen members who shall be selected by the Board of
Directors, a majority of whom shall be members of the Board of
Directors and who shall hold office during the pleasure of the
Board.
(B) The Trust Committee shall have general
supervision over the Trust Department and the investment of trust
funds, in all matters, however, being subject to the approval of
the Board of Directors.
(C) The Trust Committee shall meet at the
principal office of the Company or elsewhere in its discretion at
least once a month. A majority of its members shall be necessary
to constitute a quorum for the transaction of business. Special
meetings of the Trust Committee may be held at any time when a
quorum is present.
(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to
appoint Committees and/or designate officers or employees of the
Company to whom supervision over the investment of trust funds
may be delegated when the Trust Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its
own members, none of whom shall be an officer of the Company, and
shall hold office at the pleasure of the Board.
(B) The Audit Committee shall have general
supervision over the Audit Division in all matters however
subject to the approval of the Board of Directors; it shall
consider all matters brought to its attention by the officer in
charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such
independent auditor employed for that purpose, and make such
recommendations to the Board of Directors with respect thereto or
with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper
for the transaction of its business, and a majority of its
Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed
of not more than five (5) members who shall be selected by the
4
Board of Directors from its own members who are not officers of
the Company and who shall hold office during the pleasure of the
Board.
(B) The Compensation Committee shall in general
advise upon all matters of policy concerning the Company brought
to its attention by the management and from time to time review
the management of the Company, major organizational matters,
including salaries and employee benefits and specifically shall
administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee,
the Chairman of the Board of Directors, or the President of the
Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to
serve during the pleasure of the Board.
(B) An associate director shall be entitled to
attend all directors meetings and participate in the discussion
of all matters brought to the Board, with the exception that he
would have no right to vote. An associate director will be
eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active
directors.
Section 6. Absence or Disqualification of Any Member of a
Committee
(A) In the absence or disqualification of any
member of any Committee created under Article III of the By-Laws
of this Company, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member
of the Board of Directors to act at the meeting in the place of
any such absence or disqualified member.
ARTICLE IV
Officers
Section 1. The Chairman of the Board of Directors shall
preside at all meetings of the Board and shall have such further
authority and powers and shall perform such duties as the Board
of Directors may from time to time confer and direct. He shall
also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of
the Company.
Section 2. The President shall have the powers and duties
pertaining to the office of the President conferred or imposed upon
5
him by statute or assigned to him by the Board of Directors in
the absence of the Chairman of the Board the President shall have
the powers and duties of the Chairman of the Board.
Section 3. The Chairman of the Board of Directors or the
President as designated by the Board of Directors, shall carry
into effect all legal directions of the Executive Committee and
of the Board of Directors, and shall at all times exercise
general supervision over the interest, affairs and operations of
the Company and perform all duties incident to his office.
Section 4. There may be one or more Vice Presidents,
however denominated by the Board of Directors, who may at any
time perform all the duties of the Chairman of the Board of
Directors and/or the President and such other powers and duties
as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or
the President and by the officer in charge of the department or
division to which they are assigned.
Section 5. The Secretary shall attend to the giving of
notice of meetings of the stockholders and the Board of
Directors, as well as the Committees thereof, to the keeping of
accurate minutes of all such meetings and to recording the same
in the minute books of the Company. In addition to the other
notice requirements of these By-Laws and as may be practicable
under the circumstances, all such notices shall be in writing and
mailed well in advance of the scheduled date of any other
meeting. He shall have custody of the corporate seal and shall
affix the same to any documents requiring such corporate seal and
to attest the same.
Section 6. The Treasurer shall have general supervision
over all assets and liabilities of the Company. He shall be
custodian of and responsible for all monies, funds and valuables
of the Company and for the keeping of proper records of the
evidence of property or indebtedness and of all the transactions
of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of
Directors at each regular meeting of the condition of the
Company, and perform such other duties as may be assigned to him
from time to time by the Board of Directors of the Executive
Committee.
Section 7. There may be a Controller who shall exercise
general supervision over the internal operations of the Company,
including accounting, and shall render to the Board of Directors
at appropriate times a report relating to the general condition
and internal operations of the Company.
There may be one or more subordinate accounting or
controller officers however denominated, who may perform the
duties of the Controller and such duties as may be prescribed by
the Controller.
Section 8. The officer designated by the Board of Directors to
6
be in charge of the Audit Division of the Company with such title
as the Board of Directors shall prescribe, shall report to and be
directly responsible only to the Board of Directors.
There shall be an Auditor and there may be one or more
Audit Officers, however denominated, who may perform all the
duties of the Auditor and such duties as may be prescribed by the
officer in charge of the Audit Division.
Section 9. There may be one or more officers, subordinate
in rank to all Vice Presidents with such functional titles as
shall be determined from time to time by the Board of Directors,
who shall ex officio hold the office Assistant Secretary of this
Company and who may perform such duties as may be prescribed by
the officer in charge of the department or division to whom they
are assigned.
Section 10. The powers and duties of all other officers of
the Company shall be those usually pertaining to their respective
offices, subject to the direction of the Board of Directors, the
Executive Committee, Chairman of the Board of Directors or the
President and the officer in charge of the department or division
to which they are assigned.
ARTICLE V
Stock and Stock Certificates
Section 1. Shares of stock shall be transferrable on the
books of the Company and a transfer book shall be kept in which
all transfers of stock shall be recorded.
Section 2. Certificate of stock shall bear the signature
of the President or any Vice President, however denominated by
the Board of Directors and countersigned by the Secretary or
Treasurer or an Assistant Secretary, and the seal of the
corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only
upon the books of the Company by the holder thereof or his
attorney, upon surrender of the certificate properly endorsed.
Any certificate of stock surrendered to the Company shall be
cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate
certificates of stock shall be issued only upon giving such
security as may be satisfactory to the Board of Directors or the
Executive Committee.
Section 3. The Board of Directors of the Company is
authorized to fix in advance a record date for the determination
of the stockholders entitled to notice of, and to vote at, any
meeting of stockholders and any adjournment thereof, or entitled
to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change,
conversion or exchange of capital stock, or in connection with
obtaining the consent of stockholders for any purpose, which
7
record date shall not be more than 60 nor less than 10 days
proceeding the date of any meeting of stockholdersor the
date for the payment of any dividend, or the date for the
allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, or a date in
connection with obtaining such consent.
ARTICLE VI
Seal
Section 1. The corporate seal of the Company shall be in
the following form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner circle
the words "Wilmington, Delaware."
ARTICLE VII
Fiscal Year
Section 1. The fiscal year of the Company shall be the
calendar year.
ARTICLE VIII
Execution of Instruments of the Company
Section 1. The Chairman of the Board, the President or any
Vice President, however denominated by the Board of Directors,
shall have full power and authority to enter into, make, sign,
execute, acknowledge and/or deliver and the Secretary or any
Assistant Secretary shall have full power and authority to attest
and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds,
notes, mortgages and all other instruments incident to the
business of this Company or in acting as executor, administrator,
guardian, trustee, agent or in any other fiduciary or
representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in
the State of Delaware, or elsewhere, without any specific
authority, ratification, approval or confirmation by the Board of
Directors or the Executive Committee, and any and all such
instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the
Executive Committee.
ARTICLE IX
Compensation of Directors and Members of Committees
Section 1. Directors and associate directors of the Company,
other than salaried officers of the Company, shall be paid such
8
reasonable honoraria or fees for attending meetings of the Board
of Directors as the Board of Directors may from time to time
determine. Directors and associate directors who serve as members
of committees, other than salaried employees of the Company,
shall be paid such reasonable honoraria or fees for services as
members of committees as the Board of Directors shall from time
to time determine and directors and associate directors may be
employed by the Company for such special services as the Board of
Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may
be determined by the Board of Directors.
ARTICLE X
Indemnification
Section 1. (A) The Corporation shall indemnify and hold
harmless, to the fullest extent permitted by applicable law as it
presently exists or may hereafter be amended, any person who was
or is made or is threatened to be made a party or is otherwise
involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "proceeding") by
reason of the fact that he, or a person for whom he is the legal
representative, is or was a director, officer, employee or agent
of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee, fiduciary or agent
of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect
to employee benefit plans, against all liability and loss
suffered and expenses reasonably incurred by such person. The
Corporation shall indemnify a person in connection with a
proceeding initiated by such person only if the proceeding was
authorized by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses
incurred in defending any proceeding in advance of its final
disposition, provided, however, that the payment of expenses
incurred by a Director officer in his capacity as a Director or
officer in advance of the final disposition of the proceeding
shall be made only upon receipt of an undertaking by the Director
or officer to repay all amounts advanced if it should be
ultimately determined that the Director or officer is not
entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety
days after a written claim therefor has been received by the
Corporation the claimant may file suit to recover the unpaid
amount of such claim and, if successful in whole or in part,
shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden
of proving that the claimant was not entitled to the requested
indemnification of payment of expenses under applicable law.
9
(D) The rights conferred on any person by this
Article X shall not be exclusive of any other rights which such
person may have or hereafter acquire under any statute, provision
of the Charter or Act of Incorporation, these By-Laws, agreement,
vote of stockholders or disinterested Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right
or protection hereunder of any person in respect of any act or
omission occurring prior to the time of such repeal or
modification.
ARTICLE XI
Amendments to the By-Laws
Section 1. These By-Laws may be altered, amended or
repealed, in whole or in part, and any new By-Law or By-Laws
adopted at any regular or special meeting of the Board of
Directors by a vote of the majority of all the members of the
Board of Directors then in office.
10
EXHIBIT C
Section 321(b) Consent
Pursuant to Section 321(b) of the Trust Indenture Act of
1939, Wilmington Trust Company hereby consents that reports of
examinations by Federal, State, Territorial or District
authorities may be furnished by such authorities to the
Securities Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: September 17, 1996 By: /s/ Emmett R. Harmon
-----------------------
Name: Emmett R. Harmon
Title: Vice President
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings
banks with state publication requirements. It has not been
approved by any state banking authorities. Refer to your
appropriate state banking authorities for your state publication
requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- --------------------------------- ------------------
Name of Bank City
in the State of DELAWARE , at the close of business
------------
on June 30, 1996.
ASSETS
Thousands
of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances
and currency and coins...............................197,600
Interest-bearing balances................................ 0
Held-to-maturity securities............................... 495,691
Available-for-sale securities...............................851,207
Federal funds sold...........................................15,000
Securities purchased under agreements to resell............. 44,000
Loans and lease financing receivables:
Loans and leases, net
of unearned income.......................3,483,407
LESS: Allowance for
loan and lease losses.......................48,992
LESS: Allocated
transfer risk reserve......................... 0
Loans and leases,
net of unearned income,
allowance, and reserve...................3,434,415
Assets held in trading accounts...................................0
Premises and fixed assets (including capitalized leases).....80,629
Other real estate owned...................................... 6,713
Investments in unconsolidated subsidiaries and associated
companies...................................................... 127
Customers' liability to this bank on acceptances outstanding......0
Intangible assets.............................................4,164
Other assets................................................111,722
Total assets..............................................5,241,268
CONTINUED ON NEXT PAGE
2
LIABILITIES
Deposits:
In domestic offices.......................................3,389,271
Noninterest-bearing........................731,169
Interest-bearing.........................2,658,102
Federal funds purchased..................................... 69,265
Securities sold under agreements to repurchase............. 200,471
Demand notes issued to the U.S. Treasury.....................74,421
Trading liabilities...............................................0
Other borrowed money:.......................................///////
With original maturity
of one year or less........................962,500
With original maturity
of more than one year.......................28,000
Mortgage indebtedness and obligations under capitalized leases....0
Bank's liability on acceptances executed and outstanding..........0
Subordinated notes and debentures.................................0
Other liabilities............................................97,430
Total liabilities.........................................4,821,358
Limited-life preferred stock and related surplus..................0
EQUITY CAPITAL
Perpetual preferred stock and related surplus.....................0
Common Stock....................................................500
Surplus......................................................62,115
Undivided profits and capital reserves......................359,327
Net unrealized holding gains (losses) on available-for-sale
securities................................................. (2,032)
Total equity capital........................................419,910
Total liabilities, limited-life preferred stock,
and equity capital........................................5,241,268
3
=================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2) [ X ]
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer
identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Asst. Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
CONTINENTAL AIRLINES, INC.
(Exact name of obligors as specified in Trust Agreements)
Delaware 74-2099724
(State of organization) (I.R.S. employer
identification no.)
2929 Allen Parkway, Suite 2010
Houston, Texas 77019
(Address of principal executive offices) (Zip Code)
1996-2B Pass Through Certificates
(Title of the indenture securities)
=================================================================
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust
powers.
The trustee is authorized to exercise corporate trust
powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee,
describe each affiliation:
Based upon an examination of the books and
records of the trustee and upon information furnished
by the obligor, the obligor is not an affiliate of
the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this
Statement of Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company,
which includes the certificate of authority of
Wilmington Trust Company to commence business and the
authorization of Wilmington Trust Company to exercise
corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of
1939, the trustee, Wilmington Trust Company, a corporation
organized and existing under the laws of Delaware, has duly
caused this Statement of Eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 17th day of September,
1996.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ Patricia A. Evans By: /s/ Emmett R. Harmon
----------------------- --------------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
2
EXHIBIT A
AMENDED CHARTER
Wilmington Trust Company
Wilmington, Delaware
As existing on May 9, 1987
Amended Charter
or
Act of Incorporation
of
Wilmington Trust Company
Wilmington Trust Company, originally incorporated by an
Act of the General Assembly of the State of Delaware, entitled
"An Act to Incorporate the Delaware Guarantee and Trust Company",
approved March 2, A.D. 1901, and the name of which company was
changed to "Wilmington Trust Company" by an amendment filed in
the Office of the Secretary of State on March 18, A.D. 1903, and
the Charter or Act of Incorporation of which company has been
from time to time amended and changed by merger agreements
pursuant to the corporation law for state banks and trust
companies of the State of Delaware, does hereby alter and amend
its Charter or Act of Incorporation so that the same as so
altered and amended shall in its entirety read as follows:
First: - The name of this corporation is Wilmington Trust
Company.
Second: - The location of its principal office in the
State of Delaware is at Rodney Square North, in the City
of Wilmington, County of New Castle; the name of its
resident agent is Wilmington Trust Company whose address
is Rodney Square North, in said City. In addition to such
principal office, the said corporation maintains and
operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County,
Delaware, at Claymont, New Castle County, Delaware, at
Greenville, New Castle County Delaware, and at Milford
Cross Roads, New Castle County, Delaware, and shall be
empowered to open, maintain and operate branch offices at
Ninth and Shipley Streets, 418 Delaware Avenue, 2120
Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other
branch offices or places of business as may be authorized
from time to time by the agency or agencies of the
government of the State of Delaware empowered to confer
such authority.
Third: - (a) The nature of the business and the objects
and purposes proposed to be transacted, promoted or
carried on by this Corporation are to do any or all of the
things herein mentioned as fully and to the same extent as
natural persons might or could do and in any part of the
world, viz.:
(1) To sue and be sued, complain and defend in any
Court of law or equity and to make and use a common
seal, and alter the seal at pleasure, to hold,
purchase, convey, mortgage or otherwise deal in real
and personal estate and property, and to appoint such
officers and agents as the business of the Corporation
shall require, to make by-laws not inconsistent with the
Constitution or laws of the United States or of this State,
to discount bills, notes or other evidences of debt, to
receive deposits of money, or securities for money,
to buy gold and silver bullion and foreign coins, to
buy and sell bills of exchange, and generally to use,
exercise and enjoy all the powers, rights, privileges
and franchises incident to a corporation which are
proper or necessary for the transaction of the
business of the Corporation hereby created.
(2) To insure titles to real and personal property,
or any estate or interests therein, and to guarantee
the holder of such property, real or personal,
against any claim or claims, adverse to his interest
therein, and to prepare and give certificates of
title for any lands or premises in the State of
Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in
the receipt, collection, custody, investment and
management of funds, and the purchase, sale,
management and disposal of property of all
descriptions, and to prepare and execute all papers
which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal
papers of every description, and to carry on the
business of conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money,
jewelry, plate, deeds, bonds and any and all other
personal property of every sort and kind, from
executors, administrators, guardians, public
officers, courts, receivers, assignees, trustees, and
from all fiduciaries, and from all other persons and
individuals, and from all corporations whether state,
municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such
property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or
other obligations of any corporation, association,
state or municipality, and may receive and manage any
sinking fund therefor on such terms as may be agreed
upon between the two parties, and in like manner may
act as Treasurer of any corporation or municipality.
(7) To act as Trustee under any deed of trust,
mortgage, bond or other instrument issued by any
state, municipality, body politic, corporation,
association or person, either alone or in conjunction
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with any other person or persons, corporation or
corporations.
(8) To guarantee the validity, performance or effect
of any contract or agreement, and the fidelity of
persons holding places of responsibility or trust; to
become surety for any person, or persons, for the
faithful performance of any trust, office, duty,
contract or agreement, either by itself or in
conjunction with any other person, or persons,
corporation, or corporations, or in like manner
become surety upon any bond, recognizance,
obligation, judgment, suit, order, or decree to be
entered in any court of record within the State of
Delaware or elsewhere, or which may now or hereafter
be required by any law, judge, officer or court in
the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee,
assignee in bankruptcy, executor, administrator,
guardian, bailee, or in any other trust capacity in
the receiving, holding, managing, and disposing of
any and all estates and property, real, personal or
mixed, and to be appointed as such trustee, trustee
in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian or
bailee by any persons, corporations, court, officer,
or authority, in the State of Delaware or elsewhere;
and whenever this Corporation is so appointed by any
person, corporation, court, officer or authority such
trustee, trustee in bankruptcy, receiver, assignee,
assignee in bankruptcy, executor, administrator,
guardian, bailee, or in any other trust capacity, it
shall not be required to give bond with surety, but
its capital stock shall be taken and held as security
for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and
the exercise of any of its powers hereby given, or
for the performance of any of the duties which it may
undertake or be called upon to perform, or for the
assumption of any responsibility the said Corporation
may be entitled to receive a proper compensation.
(11) To purchase, receive, hold and own bonds,
mortgages, debentures, shares of capital stock, and
other securities, obligations, contracts and
evidences of indebtedness, of any private, public or
municipal corporation within and without the State of
Delaware, or of the Government of the United States,
or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of interest,
dividends and income upon and from any of the bonds,
mortgages, debentures, notes, shares of capital
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stock, securities, obligations, contracts, evidences
of indebtedness and other property held and owned by
it, and to exercise in respect of all such bonds,
mortgages, debentures, notes, shares of capital
stock, securities, obligations, contracts, evidences
of indebtedness and other property, any and all the
rights, powers and privileges of individual owners
thereof, including the right to vote thereon; to
invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner
as it may think fit and proper, and from time to time
to vary or realize such investments; to issue bonds
and secure the same by pledges or deeds of trust or
mortgages of or upon the whole or any part of the
property held or owned by the Corporation, and to
sell and pledge such bonds, as and when the Board of
Directors shall determine, and in the promotion of
its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold,
sell, assign, transfer, pledge, mortgage and convey
real and personal property of any name and nature and
any estate or interest therein.
(b) In furtherance of, and not in limitation, of the
powers conferred by the laws of the State of Delaware, it
is hereby expressly provided that the said Corporation
shall also have the following powers:
(1) To do any or all of the things herein set forth,
to the same extent as natural persons might or could
do, and in any part of the world.
(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of
the assets and liabilities of any person, firm,
association or corporation, and to pay for the same
in cash, stock of this Corporation, bonds or
otherwise; to hold or in any manner to dispose of the
whole or any part of the property so purchased; to
conduct in any lawful manner the whole or any part of
any business so acquired, and to exercise all the
powers necessary or convenient in and about the
conduct and management of such business.
(3) To take, hold, own, deal in, mortgage or
otherwise lien, and to lease, sell, exchange,
transfer, or in any manner whatever dispose of
property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out
contracts of every kind with any person, firm,
association or corporation, and, without limit as to
amount, to draw, make, accept, endorse, discount,
execute and issue promissory notes, drafts, bills of
exchange, warrants, bonds, debentures, and other
negotiable or transferable instruments.
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(5) To have one or more offices, to carry on all or
any of its operations and businesses, without
restriction to the same extent as natural persons
might or could do, to purchase or otherwise acquire,
to hold, own, to mortgage, sell, convey or otherwise
dispose of, real and personal property, of every
class and description, in any State, District,
Territory or Colony of the United States, and in any
foreign country or place.
(6) It is the intention that the objects, purposes
and powers specified and clauses contained in this
paragraph shall (except where otherwise expressed in
said paragraph) be nowise limited or restricted by
reference to or inference from the terms of any other
clause of this or any other paragraph in this
charter, but that the objects, purposes and powers
specified in each of the clauses of this paragraph
shall be regarded as independent objects, purposes
and powers.
Fourth: - (a) The total number of shares of all classes of
stock which the Corporation shall have authority to issue is
forty-one million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred
stock, par value $10.00 per share (hereinafter
referred to as "Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common
Stock, par value $1.00 per share (hereinafter
referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to
time in one or more series as may from time to time be
determined by the Board of Directors each of said series
to be distinctly designated. All shares of any one series
of Preferred Stock shall be alike in every particular,
except that there may be different dates from which
dividends, if any, thereon shall be cumulative, if made
cumulative. The voting powers and the preferences and
relative, participating, optional and other special rights
of each such series, and the qualifications, limitations
or restrictions thereof, if any, may differ from those of
any and all other series at any time outstanding; and,
subject to the provisions of subparagraph 1 of Paragraph
(c) of this Article Fourth, the Board of Directors of the
Corporation is hereby expressly granted authority to fix
by resolution or resolutions adopted prior to the issuance
of any shares of a particular series of Preferred Stock,
the voting powers and the designations, preferences and
relative, optional and other special rights, and the
qualifications, limitations and restrictions of such
series, including, but without limiting the generality
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of the foregoing, the following:
(1) The distinctive designation of, and the number of
shares of Preferred Stock which shall constitute such
series, which number may be increased (except where
otherwise provided by the Board of Directors) or
decreased (but not below the number of shares thereof
then outstanding) from time to time by like action of
the Board of Directors;
(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred
Stock of such series shall be paid, the extent of the
preference or relation, if any, of such dividends to
the dividends payable on any other class or classes,
or series of the same or other class of stock and
whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred
Stock of such series to convert the same into or
exchange the same for, shares of any other class or
classes or of any series of the same or any other
class or classes of stock of the Corporation and the
terms and conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series
shall be subject to redemption, and the redemption
price or prices and the time or times at which, and
the terms and conditions on which, Preferred Stock of
such series may be redeemed.
(5) The rights, if any, of the holders of Preferred
Stock of such series upon the voluntary or
involuntary liquidation, merger, consolidation,
distribution or sale of assets, dissolution or
winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or
purchase account, if any, to be provided for the
Preferred Stock of such series; and
(7) The voting powers, if any, of the holders of such
series of Preferred Stock which may, without limiting
the generality of the foregoing include the right,
voting as a series or by itself or together with
other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more
directors of the Corporation if there shall have been
a default in the payment of dividends on any one or
more series of Preferred Stock or under such
circumstances and on such conditions as the Board of
Directors may determine.
(c) (1) After the requirements with respect to preferential
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dividends on the Preferred Stock (fixed in accordance with
the provisions of section (b) of this Article Fourth), if
any, shall have been met and after the Corporation shall
have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or
redemption or purchase accounts (fixed in accordance with
the provisions of section (b) of this Article Fourth), and
subject further to any conditions which may be fixed in
accordance with the provisions of section (b) of this
Article Fourth, then and not otherwise the holders of
Common Stock shall be entitled to receive such dividends
as may be declared from time to time by the Board of
Directors.
(2) After distribution in full of the preferential
amount, if any, (fixed in accordance with the
provisions of section (b) of this Article Fourth), to
be distributed to the holders of Preferred Stock in
the event of voluntary or involuntary liquidation,
distribution or sale of assets, dissolution or
winding-up, of the Corporation, the holders of the
Common Stock shall be entitled to receive all of the
remaining assets of the Corporation, tangible and
intangible, of whatever kind available for
distribution to stockholders ratably in proportion to
the number of shares of Common Stock held by them
respectively.
(3) Except as may otherwise be required by law or by
the provisions of such resolution or resolutions as
may be adopted by the Board of Directors pursuant to
section (b) of this Article Fourth, each holder of
Common Stock shall have one vote in respect of each
share of Common Stock held on all matters voted upon
by the stockholders.
(d) No holder of any of the shares of any class or series
of stock or of options, warrants or other rights to
purchase shares of any class or series of stock or of
other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued
stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase
of the authorized capital stock of the Corporation of any
class or series, or bonds, certificates of indebtedness,
debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or
series, or carrying any right to purchase stock of any
class or series, but any such unissued stock, additional
authorized issue of shares of any class or series of stock
or securities convertible into or exchangeable for stock,
or carrying any right to purchase stock, may be issued and
disposed of pursuant to resolution of the Board of
Directors to such persons, firms, corporations or
associations, whether such holders or others, and upon
such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
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(e) The relative powers, preferences and rights of each
series of Preferred Stock in relation to the relative
powers, preferences and rights of each other series of
Preferred Stock shall, in each case, be as fixed from time
to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in
section (b) of this Article Fourth and the consent, by
class or series vote or otherwise, of the holders of such
of the series of Preferred Stock as are from time to time
outstanding shall not be required for the issuance by the
Board of Directors of any other series of Preferred Stock
whether or not the powers, preferences and rights of such
other series shall be fixed by the Board of Directors as
senior to, or on a parity with, the powers, preferences
and rights of such outstanding series, or any of them;
provided, however, that the Board of Directors may provide
in the resolution or resolutions as to any series of
Preferred Stock adopted pursuant to section (b) of this
Article Fourth that the consent of the holders of a
majority (or such greater proportion as shall be therein
fixed) of the outstanding shares of such series voting
thereon shall be required for the issuance of any or all
other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of
any series of Preferred Stock may be issued from time to
time as the Board of Directors of the Corporation shall
determine and on such terms and for such consideration as
shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time
as the Board of Directors of the Corporation shall
determine and on such terms and for such consideration as
shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of
Preferred Stock may, without a class or series vote, be
increased or decreased from time to time by the
affirmative vote of the holders of a majority of the stock
of the Corporation entitled to vote thereon.
Fifth: - (a) The business and affairs of the Corporation
shall be conducted and managed by a Board of Directors.
The number of directors constituting the entire Board
shall be not less than five nor more than twenty-five as
fixed from time to time by vote of a majority of the whole
Board, provided, however, that the number of directors
shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that
the number of directors constituting the whole Board shall
be twenty-four until otherwise fixed by a majority of the
whole Board.
(b) The Board of Directors shall be divided into three
classes, as nearly equal in number as the then total number
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of directors constituting the whole Board permits, with the
term of office of one class expiring each year. At the
annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term
expiring at the next succeeding annual meeting, directors
of the second class shall be elected to hold office for a
term expiring at the second succeeding annual meeting and
directors of the third class shall be elected to hold
office for a term expiring at the third succeeding annual
meeting. Any vacancies in the Board of Directors for any
reason, and any newly created directorships resulting from
any increase in the directors, may be filled by the Board
of Directors, acting by a majority of the directors then
in office, although less than a quorum, and any directors
so chosen shall hold office until the next annual election
of directors. At such election, the stockholders shall
elect a successor to such director to hold office until
the next election of the class for which such director
shall have been chosen and until his successor shall be
elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent
director.
(c) Notwithstanding any other provisions of this Charter
or Act of Incorporation or the By-Laws of the Corporation
(and notwithstanding the fact that some lesser percentage
may be specified by law, this Charter or Act of
Incorporation or the By-Laws of the Corporation), any
director or the entire Board of Directors of the
Corporation may be removed at any time without cause, but
only by the affirmative vote of the holders of two-thirds
or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of
directors (considered for this purpose as one class) cast
at a meeting of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made
by the Board of Directors or by any stockholder entitled
to vote for the election of directors. Such nominations
shall be made by notice in writing, delivered or mailed by
first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor
more than 50 days prior to any meeting of the stockholders
called for the election of directors; provided, however,
that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or
mailed, as prescribed, to the Secretary of the Corporation
not later than the close of the seventh day following the
day on which notice of the meeting was mailed to
stockholders. Notice of nominations which are proposed by
the Board of Directors shall be given by the Chairman on
behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i)
the name, age, business address and, if known, residence
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address of each nominee proposed in such notice, (ii) the
principal occupation or employment of such nominee and (iii)
the number of shares of stock of the Corporation which are
beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant,
determine and declare to the meeting that a nomination was
not made in accordance with the foregoing procedure, and
if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken
at any annual or special meeting of stockholders of the
Corporation may be taken without a meeting, and the power
of stockholders to consent in writing, without a meeting,
to the taking of any action is specifically denied.
Sixth: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from
time to time find necessary or proper.
Seventh: - The Corporation hereby created is hereby given
the same powers, rights and privileges as may be conferred
upon corporations organized under the Act entitled "An Act
Providing a General Corporation Law", approved March 10,
1899, as from time to time amended.
Eighth: - This Act shall be deemed and taken to be a private
Act.
Ninth: - This Corporation is to have perpetual existence.
Tenth: - The Board of Directors, by resolution passed by a
majority of the whole Board, may designate any of their
number to constitute an Executive Committee, which
Committee, to the extent provided in said resolution, or
in the By-Laws of the Company, shall have and may exercise
all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation,
and shall have power to authorize the seal of the
Corporation to be affixed to all papers which may require
it.
Eleventh: - The private property of the stockholders shall not
be liable for the payment of corporate debts to any extent
whatever.
Twelfth: - The Corporation may transact business in any part of
the world.
Thirteenth: - The Board of Directors of the Corporation is
expressly authorized to make, alter or repeal the By-Laws of
the Corporation by a vote of the majority of the entire Board.
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The stockholders may make, alter or repeal any By-Law
whether or not adopted by them, provided however, that any
such additional By-Laws, alterations or repeal may be
adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital
stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one
class).
Fourteenth: - Meetings of the Directors may be held
outside of the State of Delaware at such places as may be
from time to time designated by the Board, and the
Directors may keep the books of the Company outside of the
State of Delaware at such places as may be from time to
time designated by them.
Fifteenth: - (a) In addition to any affirmative vote required
by law, and except as otherwise expressly provided in sections
(b) and (c) of this Article Fifteenth:
(A) any merger or consolidation of the Corporation or
any Subsidiary (as hereinafter defined) with or into
(i) any Interested Stockholder (as hereinafter
defined) or (ii) any other corporation (whether or
not itself an Interested Stockholder), which, after
such merger or consolidation, would be an Affiliate
(as hereinafter defined) of an Interested
Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or
a series of related transactions) to or with any
Interested Stockholder or any Affiliate of any
Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate
fair market value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or
any Subsidiary (in one transaction or a series of
related transactions) of any securities of the
Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested
Stockholder in exchange for cash, securities or other
property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation, or
(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any similar
transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate
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share of the outstanding shares of any class of
equity or convertible securities of the Corporation
or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder, or any Affiliate
of any Interested Stockholder,
shall require the affirmative vote of the holders of at least
two-thirds of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of
directors, considered for the purpose of this Article Fifteenth
as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required,
or that some lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.
(2) The term "business combination" as used in this
Article Fifteenth shall mean any transaction which
is referred to any one or more of clauses (A)
through (E) of paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article
Fifteenth shall not be applicable to any particular
business combination and such business combination
shall require only such affirmative vote as is
required by law and any other provisions of the
Charter or Act of Incorporation of By-Laws if such
business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article Fifteenth:
(1) A "person" shall mean any individual firm, corporation
or other entity.
(2) "Interested Stockholder" shall mean, in respect of any
business combination, any person (other than the
Corporation or any Subsidiary) who or which as of the
record date for the determination of stockholders entitled
to notice of and to vote on such business combination, or
immediately prior to the consummation of any such
transaction:
(A) is the beneficial owner, directly or indirectly, of
more than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any
time within two years prior thereto was the
beneficial owner, directly or indirectly, of not less
than 10% of the then outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in
any share of capital stock of the Corporation which
were at any time within two years prior thereto
beneficially owned by any Interested Stockholder, and
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such assignment or succession shall have occurred in the
course of a transaction or series of transactions not
involving a public offering within the meaning of the
Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting
Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own,
directly or indirectly, or
(B) which such person or any of its Affiliates or
Associates has (i) the right to acquire (whether such
right is exercisable immediately or only after the
passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or
options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or
understanding, or
(C) which are beneficially owned, directly or
indirectly, by any other person with which such first
mentioned person or any of its Affiliates or
Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding,
voting or disposing of any shares of capital stock of
the Corporation.
(4) The outstanding Voting Shares shall include shares
deemed owned through application of paragraph (3) above
but shall not include any other Voting Shares which may be
issuable pursuant to any agreement, or upon exercise of
conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective
meanings given those terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of
1934, as in effect on December 31, 1981.
(6) "Subsidiary" shall mean any corporation of which a
majority of any class of equity security (as defined in
Rule 3a11-1 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect in December
31, 1981) is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of
the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary"
shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly,
by the Corporation.
(d) majority of the directors shall have the power and
duty to determine for the purposes of this Article
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Fifteenth on the basis of information known to them,
(1) the number of Voting Shares beneficially owned by
any person (2) whether a person is an Affiliate or
Associate of another, (3) whether a person has an
agreement, arrangement or understanding with another
as to the matters referred to in paragraph (3) of
section (c), or (4) whether the assets subject to any
business combination or the consideration received
for the issuance or transfer of securities by the
Corporation, or any Subsidiary has an aggregate fair
market value of $1,00,000 or more.
(e) Nothing contained in this Article Fifteenth shall
be construed to relieve any Interested Stockholder
from any fiduciary obligation imposed by law.
Sixteenth: Notwithstanding any other provision of this
Charter or Act of Incorporation or the By-Laws of the
Corporation (and in addition to any other vote that may be
required by law, this Charter or Act of Incorporation by
the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital
stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one
class) shall be required to amend, alter or repeal any
provision of Articles Fifth, Thirteenth, Fifteenth or
Sixteenth of this Charter or Act of Incorporation.
Seventeenth: (a) a Director of this Corporation shall not
be liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a
Director, except to the extent such exemption from
liability or limitation thereof is not permitted under the
Delaware General Corporation Laws as the same exists or
may hereafter be amended.
(b) Any repeal or modification of the foregoing
paragraph shall not adversely affect any right or
protection of a Director of the Corporation existing
hereunder with respect to any act or omission
occurring prior to the time of such repeal or
modification."
14
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
As existing on February 21, 1991
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
Stockholders' Meetings
Section 1. The Annual Meeting of Stockholders shall be
held on the third Thursday in April each year at the principal
office at the Company or at such other date, time, or place as
may be designated by resolution by the Board of Directors.
Section 2. Special meetings of all stockholders may be
called at any time by the Board of Directors, the Chairman of the
Board or the President.
Section 3. Notice of all meetings of the stockholders
shall be given by mailing to each stockholder at least ten (10
days before said meeting, at his last known address, a written or
printed notice fixing the time and place of such meeting.
Section 4. A majority in the amount of the capital stock
of the Company issued and outstanding on the record date, as
herein determined, shall constitute a quorum at all meetings of
stockholders for the transaction of any business, but the holders
of a small number of shares may adjourn, from time to time,
without further notice, until a quorum is secured. At each annual
or special meeting of stockholders, each stockholder shall be
entitled to one vote, either in person or by proxy, for each
shares of stock registered in the stockholder's name on the books
of the Company on the record date for any such meeting as
determined herein.
ARTICLE II
Directors
Section 1. The number and classification of the Board of
Directors shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of
seventy-two (72) years shall be nominated for election to the
Board of Directors of the Company, provided, however, that this
limitation shall not apply to any person who was serving as
director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold
office for three years or until their successors are elected and
qualified.
Section 4. The affairs and business of the Company shall
be managed and conducted by the Board of Directors.
Section 5. Regular meetings of the Board of Directors
shall be held on the third Thursday of each month at the
principal office of the Company, or at such other place and time
as may be designated by the Board of Directors, the Chairman of
the Board, or the President.
Section 6. Special meetings of the Board of Directors may
be called at any time by the Chairman of the Board of Directors
or by the President, and shall be called upon the written request
of a majority of the directors.
Section 7. A majority of the directors elected and
qualified shall be necessary to constitute a quorum for the
transaction of business at any meeting of the Board of Directors.
Section 8. Written notice shall be sent by mail to each
director of any special meeting of the Board of Directors, and of
any change in the time or place of any regular meeting, stating
the time and place of such meeting, which shall be mailed not
less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation,
removal, inability to act, or disqualification of any director,
the Board of Directors, although less than a quorum, shall have
the right to elect the successor who shall hold office for the
remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have
been duly elected and qualified.
Section 10. The Board of Directors at its first meeting
after its election by the stockholders shall appoint an Executive
Committee, a Trust Committee, an Audit Committee and a
Compensation Committee, and shall elect from its own members a
Chairman of the Board of Directors and a President who may be the
same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person,
may appoint at any time such other committees and elect or
appoint such other officers as it may deem advisable. The Board
of Directors may also elect at such meeting one or more Associate
Directors.
Section 11. The Board of Directors may at any time remove,
with or without cause, any member of any Committee appointed by
it or any associate director or officer elected by it and may
appoint or elect his successor.
Section 12. The Board of Directors may designate an
officer to be in charge of such of the departments or division of
the Company as it may deem advisable.
ARTICLE III
Committees
Section I. Executive Committee
(A) The Executive Committee shall be composed of
not more than nine members who shall be selected by the Board of
Directors from its own members and who shall hold office during
the pleasure of the Board.
2
(B) The Executive Committee shall have all the
powers of the Board of Directors when it is not in session to
transact all business for and in behalf of the Company that may
be brought before it.
(C) The Executive Committee shall meet at the
principal office of the Company or elsewhere in its discretion at
least once a week in each week the Board is not regularly
scheduled to meet. A majority of its members shall be necessary
to constitute a quorum for the transaction of business. Special
meetings of the Executive Committee may be held at any time when
a quorum is present.
(D) Minutes of each meeting of the Executive
Committee shall be kept and submitted to the Board of Directors
at its next meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the
Company, and shall direct the disposal of the same, in accordance
with such rules and regulations as the Board of Directors from
time to time make.
(F) In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the
affairs and business of the Company by its directors and officers
as contemplated by these By-Laws any two available members of the
Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company
in accordance with the provisions of Article III of these
By-Laws; and if less than three members of the Trust Committee is
constituted immediately prior to such disaster shall be available
for the transaction of its business, such Executive Committee
shall also be empowered to exercise all of the powers reserved to
the Trust Committee under Article III Section 2 hereof. In the
event of the unavailability, at such time, of a minimum of two
members of such Executive Committee, any three available
directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Company
in accordance with the foregoing provisions of this Section. This
By-Law shall be subject to implementation by Resolutions of the
Board of Directors presently existing or hereafter passed from
time to time for that purpose, and any provisions of these
By-Laws(other than this Section) and any resolutions which are
contrary to the provisions of this Section or to the provisions
of any such implementary Resolutions shall be suspended during
such a disaster period until it shall be determined by any
interim Executive Committee acting under this section that it
shall be to the advantage of the Company to resume the conduct
and management of its affairs and business under all of the other
provisions of these By-Laws.
3
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not
more than thirteen members who shall be selected by the Board of
Directors, a majority of whom shall be members of the Board of
Directors and who shall hold office during the pleasure of the
Board.
(B) The Trust Committee shall have general
supervision over the Trust Department and the investment of trust
funds, in all matters, however, being subject to the approval of
the Board of Directors.
(C) The Trust Committee shall meet at the
principal office of the Company or elsewhere in its discretion at
least once a month. A majority of its members shall be necessary
to constitute a quorum for the transaction of business. Special
meetings of the Trust Committee may be held at any time when a
quorum is present.
(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to
appoint Committees and/or designate officers or employees of the
Company to whom supervision over the investment of trust funds
may be delegated when the Trust Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its
own members, none of whom shall be an officer of the Company, and
shall hold office at the pleasure of the Board.
(B) The Audit Committee shall have general
supervision over the Audit Division in all matters however
subject to the approval of the Board of Directors; it shall
consider all matters brought to its attention by the officer in
charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such
independent auditor employed for that purpose, and make such
recommendations to the Board of Directors with respect thereto or
with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper
for the transaction of its business, and a majority of its
Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed
of not more than five (5) members who shall be selected by the
4
Board of Directors from its own members who are not officers of
the Company and who shall hold office during the pleasure of the
Board.
(B) The Compensation Committee shall in general
advise upon all matters of policy concerning the Company brought
to its attention by the management and from time to time review
the management of the Company, major organizational matters,
including salaries and employee benefits and specifically shall
administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee,
the Chairman of the Board of Directors, or the President of the
Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to
serve during the pleasure of the Board.
(B) An associate director shall be entitled to
attend all directors meetings and participate in the discussion
of all matters brought to the Board, with the exception that he
would have no right to vote. An associate director will be
eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active
directors.
Section 6. Absence or Disqualification of Any Member of a
Committee
(A) In the absence or disqualification of any
member of any Committee created under Article III of the By-Laws
of this Company, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member
of the Board of Directors to act at the meeting in the place of
any such absence or disqualified member.
ARTICLE IV
Officers
Section 1. The Chairman of the Board of Directors shall
preside at all meetings of the Board and shall have such further
authority and powers and shall perform such duties as the Board
of Directors may from time to time confer and direct. He shall
also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of
the Company.
Section 2. The President shall have the powers and duties
pertaining to the office of the President conferred or imposed upon
5
him by statute or assigned to him by the Board of Directors in
the absence of the Chairman of the Board the President shall have
the powers and duties of the Chairman of the Board.
Section 3. The Chairman of the Board of Directors or the
President as designated by the Board of Directors, shall carry
into effect all legal directions of the Executive Committee and
of the Board of Directors, and shall at all times exercise
general supervision over the interest, affairs and operations of
the Company and perform all duties incident to his office.
Section 4. There may be one or more Vice Presidents,
however denominated by the Board of Directors, who may at any
time perform all the duties of the Chairman of the Board of
Directors and/or the President and such other powers and duties
as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or
the President and by the officer in charge of the department or
division to which they are assigned.
Section 5. The Secretary shall attend to the giving of
notice of meetings of the stockholders and the Board of
Directors, as well as the Committees thereof, to the keeping of
accurate minutes of all such meetings and to recording the same
in the minute books of the Company. In addition to the other
notice requirements of these By-Laws and as may be practicable
under the circumstances, all such notices shall be in writing and
mailed well in advance of the scheduled date of any other
meeting. He shall have custody of the corporate seal and shall
affix the same to any documents requiring such corporate seal and
to attest the same.
Section 6. The Treasurer shall have general supervision
over all assets and liabilities of the Company. He shall be
custodian of and responsible for all monies, funds and valuables
of the Company and for the keeping of proper records of the
evidence of property or indebtedness and of all the transactions
of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of
Directors at each regular meeting of the condition of the
Company, and perform such other duties as may be assigned to him
from time to time by the Board of Directors of the Executive
Committee.
Section 7. There may be a Controller who shall exercise
general supervision over the internal operations of the Company,
including accounting, and shall render to the Board of Directors
at appropriate times a report relating to the general condition
and internal operations of the Company.
There may be one or more subordinate accounting or
controller officers however denominated, who may perform the
duties of the Controller and such duties as may be prescribed by
the Controller.
Section 8. The officer designated by the Board of Directors to
6
be in charge of the Audit Division of the Company with such title
as the Board of Directors shall prescribe, shall report to and be
directly responsible only to the Board of Directors.
There shall be an Auditor and there may be one or more
Audit Officers, however denominated, who may perform all the
duties of the Auditor and such duties as may be prescribed by the
officer in charge of the Audit Division.
Section 9. There may be one or more officers, subordinate
in rank to all Vice Presidents with such functional titles as
shall be determined from time to time by the Board of Directors,
who shall ex officio hold the office Assistant Secretary of this
Company and who may perform such duties as may be prescribed by
the officer in charge of the department or division to whom they
are assigned.
Section 10. The powers and duties of all other officers of
the Company shall be those usually pertaining to their respective
offices, subject to the direction of the Board of Directors, the
Executive Committee, Chairman of the Board of Directors or the
President and the officer in charge of the department or division
to which they are assigned.
ARTICLE V
Stock and Stock Certificates
Section 1. Shares of stock shall be transferrable on the
books of the Company and a transfer book shall be kept in which
all transfers of stock shall be recorded.
Section 2. Certificate of stock shall bear the signature
of the President or any Vice President, however denominated by
the Board of Directors and countersigned by the Secretary or
Treasurer or an Assistant Secretary, and the seal of the
corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only
upon the books of the Company by the holder thereof or his
attorney, upon surrender of the certificate properly endorsed.
Any certificate of stock surrendered to the Company shall be
cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate
certificates of stock shall be issued only upon giving such
security as may be satisfactory to the Board of Directors or the
Executive Committee.
Section 3. The Board of Directors of the Company is
authorized to fix in advance a record date for the determination
of the stockholders entitled to notice of, and to vote at, any
meeting of stockholders and any adjournment thereof, or entitled
to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change,
conversion or exchange of capital stock, or in connection with
obtaining the consent of stockholders for any purpose, which
7
record date shall not be more than 60 nor less than 10 days
proceeding the date of any meeting of stockholdersor the
date for the payment of any dividend, or the date for the
allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, or a date in
connection with obtaining such consent.
ARTICLE VI
Seal
Section 1. The corporate seal of the Company shall be in
the following form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner circle
the words "Wilmington, Delaware."
ARTICLE VII
Fiscal Year
Section 1. The fiscal year of the Company shall be the
calendar year.
ARTICLE VIII
Execution of Instruments of the Company
Section 1. The Chairman of the Board, the President or any
Vice President, however denominated by the Board of Directors,
shall have full power and authority to enter into, make, sign,
execute, acknowledge and/or deliver and the Secretary or any
Assistant Secretary shall have full power and authority to attest
and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds,
notes, mortgages and all other instruments incident to the
business of this Company or in acting as executor, administrator,
guardian, trustee, agent or in any other fiduciary or
representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in
the State of Delaware, or elsewhere, without any specific
authority, ratification, approval or confirmation by the Board of
Directors or the Executive Committee, and any and all such
instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the
Executive Committee.
ARTICLE IX
Compensation of Directors and Members of Committees
Section 1. Directors and associate directors of the Company,
other than salaried officers of the Company, shall be paid such
8
reasonable honoraria or fees for attending meetings of the Board
of Directors as the Board of Directors may from time to time
determine. Directors and associate directors who serve as members
of committees, other than salaried employees of the Company,
shall be paid such reasonable honoraria or fees for services as
members of committees as the Board of Directors shall from time
to time determine and directors and associate directors may be
employed by the Company for such special services as the Board of
Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may
be determined by the Board of Directors.
ARTICLE X
Indemnification
Section 1. (A) The Corporation shall indemnify and hold
harmless, to the fullest extent permitted by applicable law as it
presently exists or may hereafter be amended, any person who was
or is made or is threatened to be made a party or is otherwise
involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "proceeding") by
reason of the fact that he, or a person for whom he is the legal
representative, is or was a director, officer, employee or agent
of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee, fiduciary or agent
of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect
to employee benefit plans, against all liability and loss
suffered and expenses reasonably incurred by such person. The
Corporation shall indemnify a person in connection with a
proceeding initiated by such person only if the proceeding was
authorized by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses
incurred in defending any proceeding in advance of its final
disposition, provided, however, that the payment of expenses
incurred by a Director officer in his capacity as a Director or
officer in advance of the final disposition of the proceeding
shall be made only upon receipt of an undertaking by the Director
or officer to repay all amounts advanced if it should be
ultimately determined that the Director or officer is not
entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety
days after a written claim therefor has been received by the
Corporation the claimant may file suit to recover the unpaid
amount of such claim and, if successful in whole or in part,
shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden
of proving that the claimant was not entitled to the requested
indemnification of payment of expenses under applicable law.
9
(D) The rights conferred on any person by this
Article X shall not be exclusive of any other rights which such
person may have or hereafter acquire under any statute, provision
of the Charter or Act of Incorporation, these By-Laws, agreement,
vote of stockholders or disinterested Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right
or protection hereunder of any person in respect of any act or
omission occurring prior to the time of such repeal or
modification.
ARTICLE XI
Amendments to the By-Laws
Section 1. These By-Laws may be altered, amended or
repealed, in whole or in part, and any new By-Law or By-Laws
adopted at any regular or special meeting of the Board of
Directors by a vote of the majority of all the members of the
Board of Directors then in office.
10
EXHIBIT C
Section 321(b) Consent
Pursuant to Section 321(b) of the Trust Indenture Act of
1939, Wilmington Trust Company hereby consents that reports of
examinations by Federal, State, Territorial or District
authorities may be furnished by such authorities to the
Securities Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: September 17, 1996 By: /s/ Emmett R. Harmon
-----------------------
Name: Emmett R. Harmon
Title: Vice President
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings
banks with state publication requirements. It has not been
approved by any state banking authorities. Refer to your
appropriate state banking authorities for your state publication
requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- --------------------------------- ------------------
Name of Bank City
in the State of DELAWARE , at the close of business
------------
on June 30, 1996.
ASSETS
Thousands
of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances
and currency and coins...............................197,600
Interest-bearing balances................................ 0
Held-to-maturity securities............................... 495,691
Available-for-sale securities...............................851,207
Federal funds sold...........................................15,000
Securities purchased under agreements to resell............. 44,000
Loans and lease financing receivables:
Loans and leases, net
of unearned income.......................3,483,407
LESS: Allowance for
loan and lease losses.......................48,992
LESS: Allocated
transfer risk reserve......................... 0
Loans and leases,
net of unearned income,
allowance, and reserve...................3,434,415
Assets held in trading accounts...................................0
Premises and fixed assets (including capitalized leases).....80,629
Other real estate owned...................................... 6,713
Investments in unconsolidated subsidiaries and associated
companies...................................................... 127
Customers' liability to this bank on acceptances outstanding......0
Intangible assets.............................................4,164
Other assets................................................111,722
Total assets..............................................5,241,268
CONTINUED ON NEXT PAGE
2
LIABILITIES
Deposits:
In domestic offices.......................................3,389,271
Noninterest-bearing........................731,169
Interest-bearing.........................2,658,102
Federal funds purchased..................................... 69,265
Securities sold under agreements to repurchase............. 200,471
Demand notes issued to the U.S. Treasury.....................74,421
Trading liabilities...............................................0
Other borrowed money:.......................................///////
With original maturity
of one year or less........................962,500
With original maturity
of more than one year.......................28,000
Mortgage indebtedness and obligations under capitalized leases....0
Bank's liability on acceptances executed and outstanding..........0
Subordinated notes and debentures.................................0
Other liabilities............................................97,430
Total liabilities.........................................4,821,358
Limited-life preferred stock and related surplus..................0
EQUITY CAPITAL
Perpetual preferred stock and related surplus.....................0
Common Stock....................................................500
Surplus......................................................62,115
Undivided profits and capital reserves......................359,327
Net unrealized holding gains (losses) on available-for-sale
securities................................................. (2,032)
Total equity capital........................................419,910
Total liabilities, limited-life preferred stock,
and equity capital........................................5,241,268
3
=================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2) [ X ]
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer
identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Asst. Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
CONTINENTAL AIRLINES, INC.
(Exact name of obligors as specified in Trust Agreements)
Delaware 74-2099724
(State of organization) (I.R.S. employer
identification no.)
2929 Allen Parkway, Suite 2010
Houston, Texas 77019
(Address of principal executive offices) (Zip Code)
1996-2C Pass Through Certificates
(Title of the indenture securities)
=================================================================
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust
powers.
The trustee is authorized to exercise corporate trust
powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee,
describe each affiliation:
Based upon an examination of the books and
records of the trustee and upon information furnished
by the obligor, the obligor is not an affiliate of
the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this
Statement of Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company,
which includes the certificate of authority of
Wilmington Trust Company to commence business and the
authorization of Wilmington Trust Company to exercise
corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of
1939, the trustee, Wilmington Trust Company, a corporation
organized and existing under the laws of Delaware, has duly
caused this Statement of Eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 17th day of September,
1996.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ Patricia A. Evans By: /s/ Emmett R. Harmon
----------------------- --------------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
2
EXHIBIT A
AMENDED CHARTER
Wilmington Trust Company
Wilmington, Delaware
As existing on May 9, 1987
Amended Charter
or
Act of Incorporation
of
Wilmington Trust Company
Wilmington Trust Company, originally incorporated by an
Act of the General Assembly of the State of Delaware, entitled
"An Act to Incorporate the Delaware Guarantee and Trust Company",
approved March 2, A.D. 1901, and the name of which company was
changed to "Wilmington Trust Company" by an amendment filed in
the Office of the Secretary of State on March 18, A.D. 1903, and
the Charter or Act of Incorporation of which company has been
from time to time amended and changed by merger agreements
pursuant to the corporation law for state banks and trust
companies of the State of Delaware, does hereby alter and amend
its Charter or Act of Incorporation so that the same as so
altered and amended shall in its entirety read as follows:
First: - The name of this corporation is Wilmington Trust
Company.
Second: - The location of its principal office in the
State of Delaware is at Rodney Square North, in the City
of Wilmington, County of New Castle; the name of its
resident agent is Wilmington Trust Company whose address
is Rodney Square North, in said City. In addition to such
principal office, the said corporation maintains and
operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County,
Delaware, at Claymont, New Castle County, Delaware, at
Greenville, New Castle County Delaware, and at Milford
Cross Roads, New Castle County, Delaware, and shall be
empowered to open, maintain and operate branch offices at
Ninth and Shipley Streets, 418 Delaware Avenue, 2120
Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other
branch offices or places of business as may be authorized
from time to time by the agency or agencies of the
government of the State of Delaware empowered to confer
such authority.
Third: - (a) The nature of the business and the objects
and purposes proposed to be transacted, promoted or
carried on by this Corporation are to do any or all of the
things herein mentioned as fully and to the same extent as
natural persons might or could do and in any part of the
world, viz.:
(1) To sue and be sued, complain and defend in any
Court of law or equity and to make and use a common
seal, and alter the seal at pleasure, to hold,
purchase, convey, mortgage or otherwise deal in real
and personal estate and property, and to appoint such
officers and agents as the business of the Corporation
shall require, to make by-laws not inconsistent with the
Constitution or laws of the United States or of this State,
to discount bills, notes or other evidences of debt, to
receive deposits of money, or securities for money,
to buy gold and silver bullion and foreign coins, to
buy and sell bills of exchange, and generally to use,
exercise and enjoy all the powers, rights, privileges
and franchises incident to a corporation which are
proper or necessary for the transaction of the
business of the Corporation hereby created.
(2) To insure titles to real and personal property,
or any estate or interests therein, and to guarantee
the holder of such property, real or personal,
against any claim or claims, adverse to his interest
therein, and to prepare and give certificates of
title for any lands or premises in the State of
Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in
the receipt, collection, custody, investment and
management of funds, and the purchase, sale,
management and disposal of property of all
descriptions, and to prepare and execute all papers
which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal
papers of every description, and to carry on the
business of conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money,
jewelry, plate, deeds, bonds and any and all other
personal property of every sort and kind, from
executors, administrators, guardians, public
officers, courts, receivers, assignees, trustees, and
from all fiduciaries, and from all other persons and
individuals, and from all corporations whether state,
municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such
property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or
other obligations of any corporation, association,
state or municipality, and may receive and manage any
sinking fund therefor on such terms as may be agreed
upon between the two parties, and in like manner may
act as Treasurer of any corporation or municipality.
(7) To act as Trustee under any deed of trust,
mortgage, bond or other instrument issued by any
state, municipality, body politic, corporation,
association or person, either alone or in conjunction
2
with any other person or persons, corporation or
corporations.
(8) To guarantee the validity, performance or effect
of any contract or agreement, and the fidelity of
persons holding places of responsibility or trust; to
become surety for any person, or persons, for the
faithful performance of any trust, office, duty,
contract or agreement, either by itself or in
conjunction with any other person, or persons,
corporation, or corporations, or in like manner
become surety upon any bond, recognizance,
obligation, judgment, suit, order, or decree to be
entered in any court of record within the State of
Delaware or elsewhere, or which may now or hereafter
be required by any law, judge, officer or court in
the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee,
assignee in bankruptcy, executor, administrator,
guardian, bailee, or in any other trust capacity in
the receiving, holding, managing, and disposing of
any and all estates and property, real, personal or
mixed, and to be appointed as such trustee, trustee
in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian or
bailee by any persons, corporations, court, officer,
or authority, in the State of Delaware or elsewhere;
and whenever this Corporation is so appointed by any
person, corporation, court, officer or authority such
trustee, trustee in bankruptcy, receiver, assignee,
assignee in bankruptcy, executor, administrator,
guardian, bailee, or in any other trust capacity, it
shall not be required to give bond with surety, but
its capital stock shall be taken and held as security
for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and
the exercise of any of its powers hereby given, or
for the performance of any of the duties which it may
undertake or be called upon to perform, or for the
assumption of any responsibility the said Corporation
may be entitled to receive a proper compensation.
(11) To purchase, receive, hold and own bonds,
mortgages, debentures, shares of capital stock, and
other securities, obligations, contracts and
evidences of indebtedness, of any private, public or
municipal corporation within and without the State of
Delaware, or of the Government of the United States,
or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of interest,
dividends and income upon and from any of the bonds,
mortgages, debentures, notes, shares of capital
3
stock, securities, obligations, contracts, evidences
of indebtedness and other property held and owned by
it, and to exercise in respect of all such bonds,
mortgages, debentures, notes, shares of capital
stock, securities, obligations, contracts, evidences
of indebtedness and other property, any and all the
rights, powers and privileges of individual owners
thereof, including the right to vote thereon; to
invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner
as it may think fit and proper, and from time to time
to vary or realize such investments; to issue bonds
and secure the same by pledges or deeds of trust or
mortgages of or upon the whole or any part of the
property held or owned by the Corporation, and to
sell and pledge such bonds, as and when the Board of
Directors shall determine, and in the promotion of
its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold,
sell, assign, transfer, pledge, mortgage and convey
real and personal property of any name and nature and
any estate or interest therein.
(b) In furtherance of, and not in limitation, of the
powers conferred by the laws of the State of Delaware, it
is hereby expressly provided that the said Corporation
shall also have the following powers:
(1) To do any or all of the things herein set forth,
to the same extent as natural persons might or could
do, and in any part of the world.
(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of
the assets and liabilities of any person, firm,
association or corporation, and to pay for the same
in cash, stock of this Corporation, bonds or
otherwise; to hold or in any manner to dispose of the
whole or any part of the property so purchased; to
conduct in any lawful manner the whole or any part of
any business so acquired, and to exercise all the
powers necessary or convenient in and about the
conduct and management of such business.
(3) To take, hold, own, deal in, mortgage or
otherwise lien, and to lease, sell, exchange,
transfer, or in any manner whatever dispose of
property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out
contracts of every kind with any person, firm,
association or corporation, and, without limit as to
amount, to draw, make, accept, endorse, discount,
execute and issue promissory notes, drafts, bills of
exchange, warrants, bonds, debentures, and other
negotiable or transferable instruments.
4
(5) To have one or more offices, to carry on all or
any of its operations and businesses, without
restriction to the same extent as natural persons
might or could do, to purchase or otherwise acquire,
to hold, own, to mortgage, sell, convey or otherwise
dispose of, real and personal property, of every
class and description, in any State, District,
Territory or Colony of the United States, and in any
foreign country or place.
(6) It is the intention that the objects, purposes
and powers specified and clauses contained in this
paragraph shall (except where otherwise expressed in
said paragraph) be nowise limited or restricted by
reference to or inference from the terms of any other
clause of this or any other paragraph in this
charter, but that the objects, purposes and powers
specified in each of the clauses of this paragraph
shall be regarded as independent objects, purposes
and powers.
Fourth: - (a) The total number of shares of all classes of
stock which the Corporation shall have authority to issue is
forty-one million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred
stock, par value $10.00 per share (hereinafter
referred to as "Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common
Stock, par value $1.00 per share (hereinafter
referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to
time in one or more series as may from time to time be
determined by the Board of Directors each of said series
to be distinctly designated. All shares of any one series
of Preferred Stock shall be alike in every particular,
except that there may be different dates from which
dividends, if any, thereon shall be cumulative, if made
cumulative. The voting powers and the preferences and
relative, participating, optional and other special rights
of each such series, and the qualifications, limitations
or restrictions thereof, if any, may differ from those of
any and all other series at any time outstanding; and,
subject to the provisions of subparagraph 1 of Paragraph
(c) of this Article Fourth, the Board of Directors of the
Corporation is hereby expressly granted authority to fix
by resolution or resolutions adopted prior to the issuance
of any shares of a particular series of Preferred Stock,
the voting powers and the designations, preferences and
relative, optional and other special rights, and the
qualifications, limitations and restrictions of such
series, including, but without limiting the generality
5
of the foregoing, the following:
(1) The distinctive designation of, and the number of
shares of Preferred Stock which shall constitute such
series, which number may be increased (except where
otherwise provided by the Board of Directors) or
decreased (but not below the number of shares thereof
then outstanding) from time to time by like action of
the Board of Directors;
(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred
Stock of such series shall be paid, the extent of the
preference or relation, if any, of such dividends to
the dividends payable on any other class or classes,
or series of the same or other class of stock and
whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred
Stock of such series to convert the same into or
exchange the same for, shares of any other class or
classes or of any series of the same or any other
class or classes of stock of the Corporation and the
terms and conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series
shall be subject to redemption, and the redemption
price or prices and the time or times at which, and
the terms and conditions on which, Preferred Stock of
such series may be redeemed.
(5) The rights, if any, of the holders of Preferred
Stock of such series upon the voluntary or
involuntary liquidation, merger, consolidation,
distribution or sale of assets, dissolution or
winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or
purchase account, if any, to be provided for the
Preferred Stock of such series; and
(7) The voting powers, if any, of the holders of such
series of Preferred Stock which may, without limiting
the generality of the foregoing include the right,
voting as a series or by itself or together with
other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more
directors of the Corporation if there shall have been
a default in the payment of dividends on any one or
more series of Preferred Stock or under such
circumstances and on such conditions as the Board of
Directors may determine.
(c) (1) After the requirements with respect to preferential
6
dividends on the Preferred Stock (fixed in accordance with
the provisions of section (b) of this Article Fourth), if
any, shall have been met and after the Corporation shall
have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or
redemption or purchase accounts (fixed in accordance with
the provisions of section (b) of this Article Fourth), and
subject further to any conditions which may be fixed in
accordance with the provisions of section (b) of this
Article Fourth, then and not otherwise the holders of
Common Stock shall be entitled to receive such dividends
as may be declared from time to time by the Board of
Directors.
(2) After distribution in full of the preferential
amount, if any, (fixed in accordance with the
provisions of section (b) of this Article Fourth), to
be distributed to the holders of Preferred Stock in
the event of voluntary or involuntary liquidation,
distribution or sale of assets, dissolution or
winding-up, of the Corporation, the holders of the
Common Stock shall be entitled to receive all of the
remaining assets of the Corporation, tangible and
intangible, of whatever kind available for
distribution to stockholders ratably in proportion to
the number of shares of Common Stock held by them
respectively.
(3) Except as may otherwise be required by law or by
the provisions of such resolution or resolutions as
may be adopted by the Board of Directors pursuant to
section (b) of this Article Fourth, each holder of
Common Stock shall have one vote in respect of each
share of Common Stock held on all matters voted upon
by the stockholders.
(d) No holder of any of the shares of any class or series
of stock or of options, warrants or other rights to
purchase shares of any class or series of stock or of
other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued
stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase
of the authorized capital stock of the Corporation of any
class or series, or bonds, certificates of indebtedness,
debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or
series, or carrying any right to purchase stock of any
class or series, but any such unissued stock, additional
authorized issue of shares of any class or series of stock
or securities convertible into or exchangeable for stock,
or carrying any right to purchase stock, may be issued and
disposed of pursuant to resolution of the Board of
Directors to such persons, firms, corporations or
associations, whether such holders or others, and upon
such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
7
(e) The relative powers, preferences and rights of each
series of Preferred Stock in relation to the relative
powers, preferences and rights of each other series of
Preferred Stock shall, in each case, be as fixed from time
to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in
section (b) of this Article Fourth and the consent, by
class or series vote or otherwise, of the holders of such
of the series of Preferred Stock as are from time to time
outstanding shall not be required for the issuance by the
Board of Directors of any other series of Preferred Stock
whether or not the powers, preferences and rights of such
other series shall be fixed by the Board of Directors as
senior to, or on a parity with, the powers, preferences
and rights of such outstanding series, or any of them;
provided, however, that the Board of Directors may provide
in the resolution or resolutions as to any series of
Preferred Stock adopted pursuant to section (b) of this
Article Fourth that the consent of the holders of a
majority (or such greater proportion as shall be therein
fixed) of the outstanding shares of such series voting
thereon shall be required for the issuance of any or all
other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of
any series of Preferred Stock may be issued from time to
time as the Board of Directors of the Corporation shall
determine and on such terms and for such consideration as
shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time
as the Board of Directors of the Corporation shall
determine and on such terms and for such consideration as
shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of
Preferred Stock may, without a class or series vote, be
increased or decreased from time to time by the
affirmative vote of the holders of a majority of the stock
of the Corporation entitled to vote thereon.
Fifth: - (a) The business and affairs of the Corporation
shall be conducted and managed by a Board of Directors.
The number of directors constituting the entire Board
shall be not less than five nor more than twenty-five as
fixed from time to time by vote of a majority of the whole
Board, provided, however, that the number of directors
shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that
the number of directors constituting the whole Board shall
be twenty-four until otherwise fixed by a majority of the
whole Board.
(b) The Board of Directors shall be divided into three
classes, as nearly equal in number as the then total number
8
of directors constituting the whole Board permits, with the
term of office of one class expiring each year. At the
annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term
expiring at the next succeeding annual meeting, directors
of the second class shall be elected to hold office for a
term expiring at the second succeeding annual meeting and
directors of the third class shall be elected to hold
office for a term expiring at the third succeeding annual
meeting. Any vacancies in the Board of Directors for any
reason, and any newly created directorships resulting from
any increase in the directors, may be filled by the Board
of Directors, acting by a majority of the directors then
in office, although less than a quorum, and any directors
so chosen shall hold office until the next annual election
of directors. At such election, the stockholders shall
elect a successor to such director to hold office until
the next election of the class for which such director
shall have been chosen and until his successor shall be
elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent
director.
(c) Notwithstanding any other provisions of this Charter
or Act of Incorporation or the By-Laws of the Corporation
(and notwithstanding the fact that some lesser percentage
may be specified by law, this Charter or Act of
Incorporation or the By-Laws of the Corporation), any
director or the entire Board of Directors of the
Corporation may be removed at any time without cause, but
only by the affirmative vote of the holders of two-thirds
or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of
directors (considered for this purpose as one class) cast
at a meeting of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made
by the Board of Directors or by any stockholder entitled
to vote for the election of directors. Such nominations
shall be made by notice in writing, delivered or mailed by
first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor
more than 50 days prior to any meeting of the stockholders
called for the election of directors; provided, however,
that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or
mailed, as prescribed, to the Secretary of the Corporation
not later than the close of the seventh day following the
day on which notice of the meeting was mailed to
stockholders. Notice of nominations which are proposed by
the Board of Directors shall be given by the Chairman on
behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i)
the name, age, business address and, if known, residence
9
address of each nominee proposed in such notice, (ii) the
principal occupation or employment of such nominee and (iii)
the number of shares of stock of the Corporation which are
beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant,
determine and declare to the meeting that a nomination was
not made in accordance with the foregoing procedure, and
if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken
at any annual or special meeting of stockholders of the
Corporation may be taken without a meeting, and the power
of stockholders to consent in writing, without a meeting,
to the taking of any action is specifically denied.
Sixth: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from
time to time find necessary or proper.
Seventh: - The Corporation hereby created is hereby given
the same powers, rights and privileges as may be conferred
upon corporations organized under the Act entitled "An Act
Providing a General Corporation Law", approved March 10,
1899, as from time to time amended.
Eighth: - This Act shall be deemed and taken to be a private
Act.
Ninth: - This Corporation is to have perpetual existence.
Tenth: - The Board of Directors, by resolution passed by a
majority of the whole Board, may designate any of their
number to constitute an Executive Committee, which
Committee, to the extent provided in said resolution, or
in the By-Laws of the Company, shall have and may exercise
all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation,
and shall have power to authorize the seal of the
Corporation to be affixed to all papers which may require
it.
Eleventh: - The private property of the stockholders shall not
be liable for the payment of corporate debts to any extent
whatever.
Twelfth: - The Corporation may transact business in any part of
the world.
Thirteenth: - The Board of Directors of the Corporation is
expressly authorized to make, alter or repeal the By-Laws of
the Corporation by a vote of the majority of the entire Board.
10
The stockholders may make, alter or repeal any By-Law
whether or not adopted by them, provided however, that any
such additional By-Laws, alterations or repeal may be
adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital
stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one
class).
Fourteenth: - Meetings of the Directors may be held
outside of the State of Delaware at such places as may be
from time to time designated by the Board, and the
Directors may keep the books of the Company outside of the
State of Delaware at such places as may be from time to
time designated by them.
Fifteenth: - (a) In addition to any affirmative vote required
by law, and except as otherwise expressly provided in sections
(b) and (c) of this Article Fifteenth:
(A) any merger or consolidation of the Corporation or
any Subsidiary (as hereinafter defined) with or into
(i) any Interested Stockholder (as hereinafter
defined) or (ii) any other corporation (whether or
not itself an Interested Stockholder), which, after
such merger or consolidation, would be an Affiliate
(as hereinafter defined) of an Interested
Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or
a series of related transactions) to or with any
Interested Stockholder or any Affiliate of any
Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate
fair market value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or
any Subsidiary (in one transaction or a series of
related transactions) of any securities of the
Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested
Stockholder in exchange for cash, securities or other
property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation, or
(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any similar
transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate
11
share of the outstanding shares of any class of
equity or convertible securities of the Corporation
or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder, or any Affiliate
of any Interested Stockholder,
shall require the affirmative vote of the holders of at least
two-thirds of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of
directors, considered for the purpose of this Article Fifteenth
as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required,
or that some lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.
(2) The term "business combination" as used in this
Article Fifteenth shall mean any transaction which
is referred to any one or more of clauses (A)
through (E) of paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article
Fifteenth shall not be applicable to any particular
business combination and such business combination
shall require only such affirmative vote as is
required by law and any other provisions of the
Charter or Act of Incorporation of By-Laws if such
business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article Fifteenth:
(1) A "person" shall mean any individual firm, corporation
or other entity.
(2) "Interested Stockholder" shall mean, in respect of any
business combination, any person (other than the
Corporation or any Subsidiary) who or which as of the
record date for the determination of stockholders entitled
to notice of and to vote on such business combination, or
immediately prior to the consummation of any such
transaction:
(A) is the beneficial owner, directly or indirectly, of
more than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any
time within two years prior thereto was the
beneficial owner, directly or indirectly, of not less
than 10% of the then outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in
any share of capital stock of the Corporation which
were at any time within two years prior thereto
beneficially owned by any Interested Stockholder, and
12
such assignment or succession shall have occurred in the
course of a transaction or series of transactions not
involving a public offering within the meaning of the
Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting
Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own,
directly or indirectly, or
(B) which such person or any of its Affiliates or
Associates has (i) the right to acquire (whether such
right is exercisable immediately or only after the
passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or
options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or
understanding, or
(C) which are beneficially owned, directly or
indirectly, by any other person with which such first
mentioned person or any of its Affiliates or
Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding,
voting or disposing of any shares of capital stock of
the Corporation.
(4) The outstanding Voting Shares shall include shares
deemed owned through application of paragraph (3) above
but shall not include any other Voting Shares which may be
issuable pursuant to any agreement, or upon exercise of
conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective
meanings given those terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of
1934, as in effect on December 31, 1981.
(6) "Subsidiary" shall mean any corporation of which a
majority of any class of equity security (as defined in
Rule 3a11-1 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect in December
31, 1981) is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of
the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary"
shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly,
by the Corporation.
(d) majority of the directors shall have the power and
duty to determine for the purposes of this Article
13
Fifteenth on the basis of information known to them,
(1) the number of Voting Shares beneficially owned by
any person (2) whether a person is an Affiliate or
Associate of another, (3) whether a person has an
agreement, arrangement or understanding with another
as to the matters referred to in paragraph (3) of
section (c), or (4) whether the assets subject to any
business combination or the consideration received
for the issuance or transfer of securities by the
Corporation, or any Subsidiary has an aggregate fair
market value of $1,00,000 or more.
(e) Nothing contained in this Article Fifteenth shall
be construed to relieve any Interested Stockholder
from any fiduciary obligation imposed by law.
Sixteenth: Notwithstanding any other provision of this
Charter or Act of Incorporation or the By-Laws of the
Corporation (and in addition to any other vote that may be
required by law, this Charter or Act of Incorporation by
the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital
stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one
class) shall be required to amend, alter or repeal any
provision of Articles Fifth, Thirteenth, Fifteenth or
Sixteenth of this Charter or Act of Incorporation.
Seventeenth: (a) a Director of this Corporation shall not
be liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a
Director, except to the extent such exemption from
liability or limitation thereof is not permitted under the
Delaware General Corporation Laws as the same exists or
may hereafter be amended.
(b) Any repeal or modification of the foregoing
paragraph shall not adversely affect any right or
protection of a Director of the Corporation existing
hereunder with respect to any act or omission
occurring prior to the time of such repeal or
modification."
14
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
As existing on February 21, 1991
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
Stockholders' Meetings
Section 1. The Annual Meeting of Stockholders shall be
held on the third Thursday in April each year at the principal
office at the Company or at such other date, time, or place as
may be designated by resolution by the Board of Directors.
Section 2. Special meetings of all stockholders may be
called at any time by the Board of Directors, the Chairman of the
Board or the President.
Section 3. Notice of all meetings of the stockholders
shall be given by mailing to each stockholder at least ten (10
days before said meeting, at his last known address, a written or
printed notice fixing the time and place of such meeting.
Section 4. A majority in the amount of the capital stock
of the Company issued and outstanding on the record date, as
herein determined, shall constitute a quorum at all meetings of
stockholders for the transaction of any business, but the holders
of a small number of shares may adjourn, from time to time,
without further notice, until a quorum is secured. At each annual
or special meeting of stockholders, each stockholder shall be
entitled to one vote, either in person or by proxy, for each
shares of stock registered in the stockholder's name on the books
of the Company on the record date for any such meeting as
determined herein.
ARTICLE II
Directors
Section 1. The number and classification of the Board of
Directors shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of
seventy-two (72) years shall be nominated for election to the
Board of Directors of the Company, provided, however, that this
limitation shall not apply to any person who was serving as
director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold
office for three years or until their successors are elected and
qualified.
Section 4. The affairs and business of the Company shall
be managed and conducted by the Board of Directors.
Section 5. Regular meetings of the Board of Directors
shall be held on the third Thursday of each month at the
principal office of the Company, or at such other place and time
as may be designated by the Board of Directors, the Chairman of
the Board, or the President.
Section 6. Special meetings of the Board of Directors may
be called at any time by the Chairman of the Board of Directors
or by the President, and shall be called upon the written request
of a majority of the directors.
Section 7. A majority of the directors elected and
qualified shall be necessary to constitute a quorum for the
transaction of business at any meeting of the Board of Directors.
Section 8. Written notice shall be sent by mail to each
director of any special meeting of the Board of Directors, and of
any change in the time or place of any regular meeting, stating
the time and place of such meeting, which shall be mailed not
less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation,
removal, inability to act, or disqualification of any director,
the Board of Directors, although less than a quorum, shall have
the right to elect the successor who shall hold office for the
remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have
been duly elected and qualified.
Section 10. The Board of Directors at its first meeting
after its election by the stockholders shall appoint an Executive
Committee, a Trust Committee, an Audit Committee and a
Compensation Committee, and shall elect from its own members a
Chairman of the Board of Directors and a President who may be the
same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person,
may appoint at any time such other committees and elect or
appoint such other officers as it may deem advisable. The Board
of Directors may also elect at such meeting one or more Associate
Directors.
Section 11. The Board of Directors may at any time remove,
with or without cause, any member of any Committee appointed by
it or any associate director or officer elected by it and may
appoint or elect his successor.
Section 12. The Board of Directors may designate an
officer to be in charge of such of the departments or division of
the Company as it may deem advisable.
ARTICLE III
Committees
Section I. Executive Committee
(A) The Executive Committee shall be composed of
not more than nine members who shall be selected by the Board of
Directors from its own members and who shall hold office during
the pleasure of the Board.
2
(B) The Executive Committee shall have all the
powers of the Board of Directors when it is not in session to
transact all business for and in behalf of the Company that may
be brought before it.
(C) The Executive Committee shall meet at the
principal office of the Company or elsewhere in its discretion at
least once a week in each week the Board is not regularly
scheduled to meet. A majority of its members shall be necessary
to constitute a quorum for the transaction of business. Special
meetings of the Executive Committee may be held at any time when
a quorum is present.
(D) Minutes of each meeting of the Executive
Committee shall be kept and submitted to the Board of Directors
at its next meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the
Company, and shall direct the disposal of the same, in accordance
with such rules and regulations as the Board of Directors from
time to time make.
(F) In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the
affairs and business of the Company by its directors and officers
as contemplated by these By-Laws any two available members of the
Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company
in accordance with the provisions of Article III of these
By-Laws; and if less than three members of the Trust Committee is
constituted immediately prior to such disaster shall be available
for the transaction of its business, such Executive Committee
shall also be empowered to exercise all of the powers reserved to
the Trust Committee under Article III Section 2 hereof. In the
event of the unavailability, at such time, of a minimum of two
members of such Executive Committee, any three available
directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Company
in accordance with the foregoing provisions of this Section. This
By-Law shall be subject to implementation by Resolutions of the
Board of Directors presently existing or hereafter passed from
time to time for that purpose, and any provisions of these
By-Laws(other than this Section) and any resolutions which are
contrary to the provisions of this Section or to the provisions
of any such implementary Resolutions shall be suspended during
such a disaster period until it shall be determined by any
interim Executive Committee acting under this section that it
shall be to the advantage of the Company to resume the conduct
and management of its affairs and business under all of the other
provisions of these By-Laws.
3
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not
more than thirteen members who shall be selected by the Board of
Directors, a majority of whom shall be members of the Board of
Directors and who shall hold office during the pleasure of the
Board.
(B) The Trust Committee shall have general
supervision over the Trust Department and the investment of trust
funds, in all matters, however, being subject to the approval of
the Board of Directors.
(C) The Trust Committee shall meet at the
principal office of the Company or elsewhere in its discretion at
least once a month. A majority of its members shall be necessary
to constitute a quorum for the transaction of business. Special
meetings of the Trust Committee may be held at any time when a
quorum is present.
(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to
appoint Committees and/or designate officers or employees of the
Company to whom supervision over the investment of trust funds
may be delegated when the Trust Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its
own members, none of whom shall be an officer of the Company, and
shall hold office at the pleasure of the Board.
(B) The Audit Committee shall have general
supervision over the Audit Division in all matters however
subject to the approval of the Board of Directors; it shall
consider all matters brought to its attention by the officer in
charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such
independent auditor employed for that purpose, and make such
recommendations to the Board of Directors with respect thereto or
with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper
for the transaction of its business, and a majority of its
Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed
of not more than five (5) members who shall be selected by the
4
Board of Directors from its own members who are not officers of
the Company and who shall hold office during the pleasure of the
Board.
(B) The Compensation Committee shall in general
advise upon all matters of policy concerning the Company brought
to its attention by the management and from time to time review
the management of the Company, major organizational matters,
including salaries and employee benefits and specifically shall
administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee,
the Chairman of the Board of Directors, or the President of the
Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to
serve during the pleasure of the Board.
(B) An associate director shall be entitled to
attend all directors meetings and participate in the discussion
of all matters brought to the Board, with the exception that he
would have no right to vote. An associate director will be
eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active
directors.
Section 6. Absence or Disqualification of Any Member of a
Committee
(A) In the absence or disqualification of any
member of any Committee created under Article III of the By-Laws
of this Company, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member
of the Board of Directors to act at the meeting in the place of
any such absence or disqualified member.
ARTICLE IV
Officers
Section 1. The Chairman of the Board of Directors shall
preside at all meetings of the Board and shall have such further
authority and powers and shall perform such duties as the Board
of Directors may from time to time confer and direct. He shall
also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of
the Company.
Section 2. The President shall have the powers and duties
pertaining to the office of the President conferred or imposed upon
5
him by statute or assigned to him by the Board of Directors in
the absence of the Chairman of the Board the President shall have
the powers and duties of the Chairman of the Board.
Section 3. The Chairman of the Board of Directors or the
President as designated by the Board of Directors, shall carry
into effect all legal directions of the Executive Committee and
of the Board of Directors, and shall at all times exercise
general supervision over the interest, affairs and operations of
the Company and perform all duties incident to his office.
Section 4. There may be one or more Vice Presidents,
however denominated by the Board of Directors, who may at any
time perform all the duties of the Chairman of the Board of
Directors and/or the President and such other powers and duties
as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or
the President and by the officer in charge of the department or
division to which they are assigned.
Section 5. The Secretary shall attend to the giving of
notice of meetings of the stockholders and the Board of
Directors, as well as the Committees thereof, to the keeping of
accurate minutes of all such meetings and to recording the same
in the minute books of the Company. In addition to the other
notice requirements of these By-Laws and as may be practicable
under the circumstances, all such notices shall be in writing and
mailed well in advance of the scheduled date of any other
meeting. He shall have custody of the corporate seal and shall
affix the same to any documents requiring such corporate seal and
to attest the same.
Section 6. The Treasurer shall have general supervision
over all assets and liabilities of the Company. He shall be
custodian of and responsible for all monies, funds and valuables
of the Company and for the keeping of proper records of the
evidence of property or indebtedness and of all the transactions
of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of
Directors at each regular meeting of the condition of the
Company, and perform such other duties as may be assigned to him
from time to time by the Board of Directors of the Executive
Committee.
Section 7. There may be a Controller who shall exercise
general supervision over the internal operations of the Company,
including accounting, and shall render to the Board of Directors
at appropriate times a report relating to the general condition
and internal operations of the Company.
There may be one or more subordinate accounting or
controller officers however denominated, who may perform the
duties of the Controller and such duties as may be prescribed by
the Controller.
Section 8. The officer designated by the Board of Directors to
6
be in charge of the Audit Division of the Company with such title
as the Board of Directors shall prescribe, shall report to and be
directly responsible only to the Board of Directors.
There shall be an Auditor and there may be one or more
Audit Officers, however denominated, who may perform all the
duties of the Auditor and such duties as may be prescribed by the
officer in charge of the Audit Division.
Section 9. There may be one or more officers, subordinate
in rank to all Vice Presidents with such functional titles as
shall be determined from time to time by the Board of Directors,
who shall ex officio hold the office Assistant Secretary of this
Company and who may perform such duties as may be prescribed by
the officer in charge of the department or division to whom they
are assigned.
Section 10. The powers and duties of all other officers of
the Company shall be those usually pertaining to their respective
offices, subject to the direction of the Board of Directors, the
Executive Committee, Chairman of the Board of Directors or the
President and the officer in charge of the department or division
to which they are assigned.
ARTICLE V
Stock and Stock Certificates
Section 1. Shares of stock shall be transferrable on the
books of the Company and a transfer book shall be kept in which
all transfers of stock shall be recorded.
Section 2. Certificate of stock shall bear the signature
of the President or any Vice President, however denominated by
the Board of Directors and countersigned by the Secretary or
Treasurer or an Assistant Secretary, and the seal of the
corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only
upon the books of the Company by the holder thereof or his
attorney, upon surrender of the certificate properly endorsed.
Any certificate of stock surrendered to the Company shall be
cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate
certificates of stock shall be issued only upon giving such
security as may be satisfactory to the Board of Directors or the
Executive Committee.
Section 3. The Board of Directors of the Company is
authorized to fix in advance a record date for the determination
of the stockholders entitled to notice of, and to vote at, any
meeting of stockholders and any adjournment thereof, or entitled
to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change,
conversion or exchange of capital stock, or in connection with
obtaining the consent of stockholders for any purpose, which
7
record date shall not be more than 60 nor less than 10 days
proceeding the date of any meeting of stockholdersor the
date for the payment of any dividend, or the date for the
allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, or a date in
connection with obtaining such consent.
ARTICLE VI
Seal
Section 1. The corporate seal of the Company shall be in
the following form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner circle
the words "Wilmington, Delaware."
ARTICLE VII
Fiscal Year
Section 1. The fiscal year of the Company shall be the
calendar year.
ARTICLE VIII
Execution of Instruments of the Company
Section 1. The Chairman of the Board, the President or any
Vice President, however denominated by the Board of Directors,
shall have full power and authority to enter into, make, sign,
execute, acknowledge and/or deliver and the Secretary or any
Assistant Secretary shall have full power and authority to attest
and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds,
notes, mortgages and all other instruments incident to the
business of this Company or in acting as executor, administrator,
guardian, trustee, agent or in any other fiduciary or
representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in
the State of Delaware, or elsewhere, without any specific
authority, ratification, approval or confirmation by the Board of
Directors or the Executive Committee, and any and all such
instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the
Executive Committee.
ARTICLE IX
Compensation of Directors and Members of Committees
Section 1. Directors and associate directors of the Company,
other than salaried officers of the Company, shall be paid such
8
reasonable honoraria or fees for attending meetings of the Board
of Directors as the Board of Directors may from time to time
determine. Directors and associate directors who serve as members
of committees, other than salaried employees of the Company,
shall be paid such reasonable honoraria or fees for services as
members of committees as the Board of Directors shall from time
to time determine and directors and associate directors may be
employed by the Company for such special services as the Board of
Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may
be determined by the Board of Directors.
ARTICLE X
Indemnification
Section 1. (A) The Corporation shall indemnify and hold
harmless, to the fullest extent permitted by applicable law as it
presently exists or may hereafter be amended, any person who was
or is made or is threatened to be made a party or is otherwise
involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "proceeding") by
reason of the fact that he, or a person for whom he is the legal
representative, is or was a director, officer, employee or agent
of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee, fiduciary or agent
of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect
to employee benefit plans, against all liability and loss
suffered and expenses reasonably incurred by such person. The
Corporation shall indemnify a person in connection with a
proceeding initiated by such person only if the proceeding was
authorized by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses
incurred in defending any proceeding in advance of its final
disposition, provided, however, that the payment of expenses
incurred by a Director officer in his capacity as a Director or
officer in advance of the final disposition of the proceeding
shall be made only upon receipt of an undertaking by the Director
or officer to repay all amounts advanced if it should be
ultimately determined that the Director or officer is not
entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety
days after a written claim therefor has been received by the
Corporation the claimant may file suit to recover the unpaid
amount of such claim and, if successful in whole or in part,
shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden
of proving that the claimant was not entitled to the requested
indemnification of payment of expenses under applicable law.
9
(D) The rights conferred on any person by this
Article X shall not be exclusive of any other rights which such
person may have or hereafter acquire under any statute, provision
of the Charter or Act of Incorporation, these By-Laws, agreement,
vote of stockholders or disinterested Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right
or protection hereunder of any person in respect of any act or
omission occurring prior to the time of such repeal or
modification.
ARTICLE XI
Amendments to the By-Laws
Section 1. These By-Laws may be altered, amended or
repealed, in whole or in part, and any new By-Law or By-Laws
adopted at any regular or special meeting of the Board of
Directors by a vote of the majority of all the members of the
Board of Directors then in office.
10
EXHIBIT C
Section 321(b) Consent
Pursuant to Section 321(b) of the Trust Indenture Act of
1939, Wilmington Trust Company hereby consents that reports of
examinations by Federal, State, Territorial or District
authorities may be furnished by such authorities to the
Securities Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: September 17, 1996 By: /s/ Emmett R. Harmon
-----------------------
Name: Emmett R. Harmon
Title: Vice President
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings
banks with state publication requirements. It has not been
approved by any state banking authorities. Refer to your
appropriate state banking authorities for your state publication
requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- --------------------------------- ------------------
Name of Bank City
in the State of DELAWARE , at the close of business
------------
on June 30, 1996.
ASSETS
Thousands
of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances
and currency and coins...............................197,600
Interest-bearing balances................................ 0
Held-to-maturity securities............................... 495,691
Available-for-sale securities...............................851,207
Federal funds sold...........................................15,000
Securities purchased under agreements to resell............. 44,000
Loans and lease financing receivables:
Loans and leases, net
of unearned income.......................3,483,407
LESS: Allowance for
loan and lease losses.......................48,992
LESS: Allocated
transfer risk reserve......................... 0
Loans and leases,
net of unearned income,
allowance, and reserve...................3,434,415
Assets held in trading accounts...................................0
Premises and fixed assets (including capitalized leases).....80,629
Other real estate owned...................................... 6,713
Investments in unconsolidated subsidiaries and associated
companies...................................................... 127
Customers' liability to this bank on acceptances outstanding......0
Intangible assets.............................................4,164
Other assets................................................111,722
Total assets..............................................5,241,268
CONTINUED ON NEXT PAGE
2
LIABILITIES
Deposits:
In domestic offices.......................................3,389,271
Noninterest-bearing........................731,169
Interest-bearing.........................2,658,102
Federal funds purchased..................................... 69,265
Securities sold under agreements to repurchase............. 200,471
Demand notes issued to the U.S. Treasury.....................74,421
Trading liabilities...............................................0
Other borrowed money:.......................................///////
With original maturity
of one year or less........................962,500
With original maturity
of more than one year.......................28,000
Mortgage indebtedness and obligations under capitalized leases....0
Bank's liability on acceptances executed and outstanding..........0
Subordinated notes and debentures.................................0
Other liabilities............................................97,430
Total liabilities.........................................4,821,358
Limited-life preferred stock and related surplus..................0
EQUITY CAPITAL
Perpetual preferred stock and related surplus.....................0
Common Stock....................................................500
Surplus......................................................62,115
Undivided profits and capital reserves......................359,327
Net unrealized holding gains (losses) on available-for-sale
securities................................................. (2,032)
Total equity capital........................................419,910
Total liabilities, limited-life preferred stock,
and equity capital........................................5,241,268
3
=================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2) [ X ]
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer
identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Asst. Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
CONTINENTAL AIRLINES, INC.
(Exact name of obligors as specified in Trust Agreements)
Delaware 74-2099724
(State of organization) (I.R.S. employer
identification no.)
2929 Allen Parkway, Suite 2010
Houston, Texas 77019
(Address of principal executive offices) (Zip Code)
1996-2D Pass Through Certificates
(Title of the indenture securities)
=================================================================
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust
powers.
The trustee is authorized to exercise corporate trust
powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee,
describe each affiliation:
Based upon an examination of the books and
records of the trustee and upon information furnished
by the obligor, the obligor is not an affiliate of
the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this
Statement of Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company,
which includes the certificate of authority of
Wilmington Trust Company to commence business and the
authorization of Wilmington Trust Company to exercise
corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of
1939, the trustee, Wilmington Trust Company, a corporation
organized and existing under the laws of Delaware, has duly
caused this Statement of Eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in the City of
Wilmington and State of Delaware on the 17th day of September,
1996.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ Patricia A. Evans By: /s/ Emmett R. Harmon
----------------------- --------------------------
Assistant Secretary Name: Emmett R. Harmon
Title: Vice President
2
EXHIBIT A
AMENDED CHARTER
Wilmington Trust Company
Wilmington, Delaware
As existing on May 9, 1987
Amended Charter
or
Act of Incorporation
of
Wilmington Trust Company
Wilmington Trust Company, originally incorporated by an
Act of the General Assembly of the State of Delaware, entitled
"An Act to Incorporate the Delaware Guarantee and Trust Company",
approved March 2, A.D. 1901, and the name of which company was
changed to "Wilmington Trust Company" by an amendment filed in
the Office of the Secretary of State on March 18, A.D. 1903, and
the Charter or Act of Incorporation of which company has been
from time to time amended and changed by merger agreements
pursuant to the corporation law for state banks and trust
companies of the State of Delaware, does hereby alter and amend
its Charter or Act of Incorporation so that the same as so
altered and amended shall in its entirety read as follows:
First: - The name of this corporation is Wilmington Trust
Company.
Second: - The location of its principal office in the
State of Delaware is at Rodney Square North, in the City
of Wilmington, County of New Castle; the name of its
resident agent is Wilmington Trust Company whose address
is Rodney Square North, in said City. In addition to such
principal office, the said corporation maintains and
operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County,
Delaware, at Claymont, New Castle County, Delaware, at
Greenville, New Castle County Delaware, and at Milford
Cross Roads, New Castle County, Delaware, and shall be
empowered to open, maintain and operate branch offices at
Ninth and Shipley Streets, 418 Delaware Avenue, 2120
Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other
branch offices or places of business as may be authorized
from time to time by the agency or agencies of the
government of the State of Delaware empowered to confer
such authority.
Third: - (a) The nature of the business and the objects
and purposes proposed to be transacted, promoted or
carried on by this Corporation are to do any or all of the
things herein mentioned as fully and to the same extent as
natural persons might or could do and in any part of the
world, viz.:
(1) To sue and be sued, complain and defend in any
Court of law or equity and to make and use a common
seal, and alter the seal at pleasure, to hold,
purchase, convey, mortgage or otherwise deal in real
and personal estate and property, and to appoint such
officers and agents as the business of the Corporation
shall require, to make by-laws not inconsistent with the
Constitution or laws of the United States or of this State,
to discount bills, notes or other evidences of debt, to
receive deposits of money, or securities for money,
to buy gold and silver bullion and foreign coins, to
buy and sell bills of exchange, and generally to use,
exercise and enjoy all the powers, rights, privileges
and franchises incident to a corporation which are
proper or necessary for the transaction of the
business of the Corporation hereby created.
(2) To insure titles to real and personal property,
or any estate or interests therein, and to guarantee
the holder of such property, real or personal,
against any claim or claims, adverse to his interest
therein, and to prepare and give certificates of
title for any lands or premises in the State of
Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in
the receipt, collection, custody, investment and
management of funds, and the purchase, sale,
management and disposal of property of all
descriptions, and to prepare and execute all papers
which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal
papers of every description, and to carry on the
business of conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money,
jewelry, plate, deeds, bonds and any and all other
personal property of every sort and kind, from
executors, administrators, guardians, public
officers, courts, receivers, assignees, trustees, and
from all fiduciaries, and from all other persons and
individuals, and from all corporations whether state,
municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such
property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or
other obligations of any corporation, association,
state or municipality, and may receive and manage any
sinking fund therefor on such terms as may be agreed
upon between the two parties, and in like manner may
act as Treasurer of any corporation or municipality.
(7) To act as Trustee under any deed of trust,
mortgage, bond or other instrument issued by any
state, municipality, body politic, corporation,
association or person, either alone or in conjunction
2
with any other person or persons, corporation or
corporations.
(8) To guarantee the validity, performance or effect
of any contract or agreement, and the fidelity of
persons holding places of responsibility or trust; to
become surety for any person, or persons, for the
faithful performance of any trust, office, duty,
contract or agreement, either by itself or in
conjunction with any other person, or persons,
corporation, or corporations, or in like manner
become surety upon any bond, recognizance,
obligation, judgment, suit, order, or decree to be
entered in any court of record within the State of
Delaware or elsewhere, or which may now or hereafter
be required by any law, judge, officer or court in
the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee,
assignee in bankruptcy, executor, administrator,
guardian, bailee, or in any other trust capacity in
the receiving, holding, managing, and disposing of
any and all estates and property, real, personal or
mixed, and to be appointed as such trustee, trustee
in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian or
bailee by any persons, corporations, court, officer,
or authority, in the State of Delaware or elsewhere;
and whenever this Corporation is so appointed by any
person, corporation, court, officer or authority such
trustee, trustee in bankruptcy, receiver, assignee,
assignee in bankruptcy, executor, administrator,
guardian, bailee, or in any other trust capacity, it
shall not be required to give bond with surety, but
its capital stock shall be taken and held as security
for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and
the exercise of any of its powers hereby given, or
for the performance of any of the duties which it may
undertake or be called upon to perform, or for the
assumption of any responsibility the said Corporation
may be entitled to receive a proper compensation.
(11) To purchase, receive, hold and own bonds,
mortgages, debentures, shares of capital stock, and
other securities, obligations, contracts and
evidences of indebtedness, of any private, public or
municipal corporation within and without the State of
Delaware, or of the Government of the United States,
or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of interest,
dividends and income upon and from any of the bonds,
mortgages, debentures, notes, shares of capital
3
stock, securities, obligations, contracts, evidences
of indebtedness and other property held and owned by
it, and to exercise in respect of all such bonds,
mortgages, debentures, notes, shares of capital
stock, securities, obligations, contracts, evidences
of indebtedness and other property, any and all the
rights, powers and privileges of individual owners
thereof, including the right to vote thereon; to
invest and deal in and with any of the moneys of the
Corporation upon such securities and in such manner
as it may think fit and proper, and from time to time
to vary or realize such investments; to issue bonds
and secure the same by pledges or deeds of trust or
mortgages of or upon the whole or any part of the
property held or owned by the Corporation, and to
sell and pledge such bonds, as and when the Board of
Directors shall determine, and in the promotion of
its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold,
sell, assign, transfer, pledge, mortgage and convey
real and personal property of any name and nature and
any estate or interest therein.
(b) In furtherance of, and not in limitation, of the
powers conferred by the laws of the State of Delaware, it
is hereby expressly provided that the said Corporation
shall also have the following powers:
(1) To do any or all of the things herein set forth,
to the same extent as natural persons might or could
do, and in any part of the world.
(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of
the assets and liabilities of any person, firm,
association or corporation, and to pay for the same
in cash, stock of this Corporation, bonds or
otherwise; to hold or in any manner to dispose of the
whole or any part of the property so purchased; to
conduct in any lawful manner the whole or any part of
any business so acquired, and to exercise all the
powers necessary or convenient in and about the
conduct and management of such business.
(3) To take, hold, own, deal in, mortgage or
otherwise lien, and to lease, sell, exchange,
transfer, or in any manner whatever dispose of
property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out
contracts of every kind with any person, firm,
association or corporation, and, without limit as to
amount, to draw, make, accept, endorse, discount,
execute and issue promissory notes, drafts, bills of
exchange, warrants, bonds, debentures, and other
negotiable or transferable instruments.
4
(5) To have one or more offices, to carry on all or
any of its operations and businesses, without
restriction to the same extent as natural persons
might or could do, to purchase or otherwise acquire,
to hold, own, to mortgage, sell, convey or otherwise
dispose of, real and personal property, of every
class and description, in any State, District,
Territory or Colony of the United States, and in any
foreign country or place.
(6) It is the intention that the objects, purposes
and powers specified and clauses contained in this
paragraph shall (except where otherwise expressed in
said paragraph) be nowise limited or restricted by
reference to or inference from the terms of any other
clause of this or any other paragraph in this
charter, but that the objects, purposes and powers
specified in each of the clauses of this paragraph
shall be regarded as independent objects, purposes
and powers.
Fourth: - (a) The total number of shares of all classes of
stock which the Corporation shall have authority to issue is
forty-one million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred
stock, par value $10.00 per share (hereinafter
referred to as "Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common
Stock, par value $1.00 per share (hereinafter
referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to
time in one or more series as may from time to time be
determined by the Board of Directors each of said series
to be distinctly designated. All shares of any one series
of Preferred Stock shall be alike in every particular,
except that there may be different dates from which
dividends, if any, thereon shall be cumulative, if made
cumulative. The voting powers and the preferences and
relative, participating, optional and other special rights
of each such series, and the qualifications, limitations
or restrictions thereof, if any, may differ from those of
any and all other series at any time outstanding; and,
subject to the provisions of subparagraph 1 of Paragraph
(c) of this Article Fourth, the Board of Directors of the
Corporation is hereby expressly granted authority to fix
by resolution or resolutions adopted prior to the issuance
of any shares of a particular series of Preferred Stock,
the voting powers and the designations, preferences and
relative, optional and other special rights, and the
qualifications, limitations and restrictions of such
series, including, but without limiting the generality
5
of the foregoing, the following:
(1) The distinctive designation of, and the number of
shares of Preferred Stock which shall constitute such
series, which number may be increased (except where
otherwise provided by the Board of Directors) or
decreased (but not below the number of shares thereof
then outstanding) from time to time by like action of
the Board of Directors;
(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred
Stock of such series shall be paid, the extent of the
preference or relation, if any, of such dividends to
the dividends payable on any other class or classes,
or series of the same or other class of stock and
whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred
Stock of such series to convert the same into or
exchange the same for, shares of any other class or
classes or of any series of the same or any other
class or classes of stock of the Corporation and the
terms and conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series
shall be subject to redemption, and the redemption
price or prices and the time or times at which, and
the terms and conditions on which, Preferred Stock of
such series may be redeemed.
(5) The rights, if any, of the holders of Preferred
Stock of such series upon the voluntary or
involuntary liquidation, merger, consolidation,
distribution or sale of assets, dissolution or
winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or
purchase account, if any, to be provided for the
Preferred Stock of such series; and
(7) The voting powers, if any, of the holders of such
series of Preferred Stock which may, without limiting
the generality of the foregoing include the right,
voting as a series or by itself or together with
other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more
directors of the Corporation if there shall have been
a default in the payment of dividends on any one or
more series of Preferred Stock or under such
circumstances and on such conditions as the Board of
Directors may determine.
(c) (1) After the requirements with respect to preferential
6
dividends on the Preferred Stock (fixed in accordance with
the provisions of section (b) of this Article Fourth), if
any, shall have been met and after the Corporation shall
have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or
redemption or purchase accounts (fixed in accordance with
the provisions of section (b) of this Article Fourth), and
subject further to any conditions which may be fixed in
accordance with the provisions of section (b) of this
Article Fourth, then and not otherwise the holders of
Common Stock shall be entitled to receive such dividends
as may be declared from time to time by the Board of
Directors.
(2) After distribution in full of the preferential
amount, if any, (fixed in accordance with the
provisions of section (b) of this Article Fourth), to
be distributed to the holders of Preferred Stock in
the event of voluntary or involuntary liquidation,
distribution or sale of assets, dissolution or
winding-up, of the Corporation, the holders of the
Common Stock shall be entitled to receive all of the
remaining assets of the Corporation, tangible and
intangible, of whatever kind available for
distribution to stockholders ratably in proportion to
the number of shares of Common Stock held by them
respectively.
(3) Except as may otherwise be required by law or by
the provisions of such resolution or resolutions as
may be adopted by the Board of Directors pursuant to
section (b) of this Article Fourth, each holder of
Common Stock shall have one vote in respect of each
share of Common Stock held on all matters voted upon
by the stockholders.
(d) No holder of any of the shares of any class or series
of stock or of options, warrants or other rights to
purchase shares of any class or series of stock or of
other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued
stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase
of the authorized capital stock of the Corporation of any
class or series, or bonds, certificates of indebtedness,
debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or
series, or carrying any right to purchase stock of any
class or series, but any such unissued stock, additional
authorized issue of shares of any class or series of stock
or securities convertible into or exchangeable for stock,
or carrying any right to purchase stock, may be issued and
disposed of pursuant to resolution of the Board of
Directors to such persons, firms, corporations or
associations, whether such holders or others, and upon
such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
7
(e) The relative powers, preferences and rights of each
series of Preferred Stock in relation to the relative
powers, preferences and rights of each other series of
Preferred Stock shall, in each case, be as fixed from time
to time by the Board of Directors in the resolution or
resolutions adopted pursuant to authority granted in
section (b) of this Article Fourth and the consent, by
class or series vote or otherwise, of the holders of such
of the series of Preferred Stock as are from time to time
outstanding shall not be required for the issuance by the
Board of Directors of any other series of Preferred Stock
whether or not the powers, preferences and rights of such
other series shall be fixed by the Board of Directors as
senior to, or on a parity with, the powers, preferences
and rights of such outstanding series, or any of them;
provided, however, that the Board of Directors may provide
in the resolution or resolutions as to any series of
Preferred Stock adopted pursuant to section (b) of this
Article Fourth that the consent of the holders of a
majority (or such greater proportion as shall be therein
fixed) of the outstanding shares of such series voting
thereon shall be required for the issuance of any or all
other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of
any series of Preferred Stock may be issued from time to
time as the Board of Directors of the Corporation shall
determine and on such terms and for such consideration as
shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time
as the Board of Directors of the Corporation shall
determine and on such terms and for such consideration as
shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of
Preferred Stock may, without a class or series vote, be
increased or decreased from time to time by the
affirmative vote of the holders of a majority of the stock
of the Corporation entitled to vote thereon.
Fifth: - (a) The business and affairs of the Corporation
shall be conducted and managed by a Board of Directors.
The number of directors constituting the entire Board
shall be not less than five nor more than twenty-five as
fixed from time to time by vote of a majority of the whole
Board, provided, however, that the number of directors
shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that
the number of directors constituting the whole Board shall
be twenty-four until otherwise fixed by a majority of the
whole Board.
(b) The Board of Directors shall be divided into three
classes, as nearly equal in number as the then total number
8
of directors constituting the whole Board permits, with the
term of office of one class expiring each year. At the
annual meeting of stockholders in 1982, directors of the
first class shall be elected to hold office for a term
expiring at the next succeeding annual meeting, directors
of the second class shall be elected to hold office for a
term expiring at the second succeeding annual meeting and
directors of the third class shall be elected to hold
office for a term expiring at the third succeeding annual
meeting. Any vacancies in the Board of Directors for any
reason, and any newly created directorships resulting from
any increase in the directors, may be filled by the Board
of Directors, acting by a majority of the directors then
in office, although less than a quorum, and any directors
so chosen shall hold office until the next annual election
of directors. At such election, the stockholders shall
elect a successor to such director to hold office until
the next election of the class for which such director
shall have been chosen and until his successor shall be
elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent
director.
(c) Notwithstanding any other provisions of this Charter
or Act of Incorporation or the By-Laws of the Corporation
(and notwithstanding the fact that some lesser percentage
may be specified by law, this Charter or Act of
Incorporation or the By-Laws of the Corporation), any
director or the entire Board of Directors of the
Corporation may be removed at any time without cause, but
only by the affirmative vote of the holders of two-thirds
or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of
directors (considered for this purpose as one class) cast
at a meeting of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made
by the Board of Directors or by any stockholder entitled
to vote for the election of directors. Such nominations
shall be made by notice in writing, delivered or mailed by
first class United States mail, postage prepaid, to the
Secretary of the Corporation not less than 14 days nor
more than 50 days prior to any meeting of the stockholders
called for the election of directors; provided, however,
that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or
mailed, as prescribed, to the Secretary of the Corporation
not later than the close of the seventh day following the
day on which notice of the meeting was mailed to
stockholders. Notice of nominations which are proposed by
the Board of Directors shall be given by the Chairman on
behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i)
the name, age, business address and, if known, residence
9
address of each nominee proposed in such notice, (ii) the
principal occupation or employment of such nominee and (iii)
the number of shares of stock of the Corporation which are
beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant,
determine and declare to the meeting that a nomination was
not made in accordance with the foregoing procedure, and
if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken
at any annual or special meeting of stockholders of the
Corporation may be taken without a meeting, and the power
of stockholders to consent in writing, without a meeting,
to the taking of any action is specifically denied.
Sixth: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from
time to time find necessary or proper.
Seventh: - The Corporation hereby created is hereby given
the same powers, rights and privileges as may be conferred
upon corporations organized under the Act entitled "An Act
Providing a General Corporation Law", approved March 10,
1899, as from time to time amended.
Eighth: - This Act shall be deemed and taken to be a private
Act.
Ninth: - This Corporation is to have perpetual existence.
Tenth: - The Board of Directors, by resolution passed by a
majority of the whole Board, may designate any of their
number to constitute an Executive Committee, which
Committee, to the extent provided in said resolution, or
in the By-Laws of the Company, shall have and may exercise
all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation,
and shall have power to authorize the seal of the
Corporation to be affixed to all papers which may require
it.
Eleventh: - The private property of the stockholders shall not
be liable for the payment of corporate debts to any extent
whatever.
Twelfth: - The Corporation may transact business in any part of
the world.
Thirteenth: - The Board of Directors of the Corporation is
expressly authorized to make, alter or repeal the By-Laws of
the Corporation by a vote of the majority of the entire Board.
10
The stockholders may make, alter or repeal any By-Law
whether or not adopted by them, provided however, that any
such additional By-Laws, alterations or repeal may be
adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital
stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one
class).
Fourteenth: - Meetings of the Directors may be held
outside of the State of Delaware at such places as may be
from time to time designated by the Board, and the
Directors may keep the books of the Company outside of the
State of Delaware at such places as may be from time to
time designated by them.
Fifteenth: - (a) In addition to any affirmative vote required
by law, and except as otherwise expressly provided in sections
(b) and (c) of this Article Fifteenth:
(A) any merger or consolidation of the Corporation or
any Subsidiary (as hereinafter defined) with or into
(i) any Interested Stockholder (as hereinafter
defined) or (ii) any other corporation (whether or
not itself an Interested Stockholder), which, after
such merger or consolidation, would be an Affiliate
(as hereinafter defined) of an Interested
Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition (in one transaction or
a series of related transactions) to or with any
Interested Stockholder or any Affiliate of any
Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate
fair market value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or
any Subsidiary (in one transaction or a series of
related transactions) of any securities of the
Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested
Stockholder in exchange for cash, securities or other
property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation, or
(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any similar
transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate
11
share of the outstanding shares of any class of
equity or convertible securities of the Corporation
or any Subsidiary which is directly or indirectly
owned by any Interested Stockholder, or any Affiliate
of any Interested Stockholder,
shall require the affirmative vote of the holders of at least
two-thirds of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of
directors, considered for the purpose of this Article Fifteenth
as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required,
or that some lesser percentage may be specified, by law or in any
agreement with any national securities exchange or otherwise.
(2) The term "business combination" as used in this
Article Fifteenth shall mean any transaction which
is referred to any one or more of clauses (A)
through (E) of paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article
Fifteenth shall not be applicable to any particular
business combination and such business combination
shall require only such affirmative vote as is
required by law and any other provisions of the
Charter or Act of Incorporation of By-Laws if such
business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article Fifteenth:
(1) A "person" shall mean any individual firm, corporation
or other entity.
(2) "Interested Stockholder" shall mean, in respect of any
business combination, any person (other than the
Corporation or any Subsidiary) who or which as of the
record date for the determination of stockholders entitled
to notice of and to vote on such business combination, or
immediately prior to the consummation of any such
transaction:
(A) is the beneficial owner, directly or indirectly, of
more than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any
time within two years prior thereto was the
beneficial owner, directly or indirectly, of not less
than 10% of the then outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in
any share of capital stock of the Corporation which
were at any time within two years prior thereto
beneficially owned by any Interested Stockholder, and
12
such assignment or succession shall have occurred in the
course of a transaction or series of transactions not
involving a public offering within the meaning of the
Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting
Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own,
directly or indirectly, or
(B) which such person or any of its Affiliates or
Associates has (i) the right to acquire (whether such
right is exercisable immediately or only after the
passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or
options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or
understanding, or
(C) which are beneficially owned, directly or
indirectly, by any other person with which such first
mentioned person or any of its Affiliates or
Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding,
voting or disposing of any shares of capital stock of
the Corporation.
(4) The outstanding Voting Shares shall include shares
deemed owned through application of paragraph (3) above
but shall not include any other Voting Shares which may be
issuable pursuant to any agreement, or upon exercise of
conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective
meanings given those terms in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of
1934, as in effect on December 31, 1981.
(6) "Subsidiary" shall mean any corporation of which a
majority of any class of equity security (as defined in
Rule 3a11-1 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect in December
31, 1981) is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of
the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary"
shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly,
by the Corporation.
(d) majority of the directors shall have the power and
duty to determine for the purposes of this Article
13
Fifteenth on the basis of information known to them,
(1) the number of Voting Shares beneficially owned by
any person (2) whether a person is an Affiliate or
Associate of another, (3) whether a person has an
agreement, arrangement or understanding with another
as to the matters referred to in paragraph (3) of
section (c), or (4) whether the assets subject to any
business combination or the consideration received
for the issuance or transfer of securities by the
Corporation, or any Subsidiary has an aggregate fair
market value of $1,00,000 or more.
(e) Nothing contained in this Article Fifteenth shall
be construed to relieve any Interested Stockholder
from any fiduciary obligation imposed by law.
Sixteenth: Notwithstanding any other provision of this
Charter or Act of Incorporation or the By-Laws of the
Corporation (and in addition to any other vote that may be
required by law, this Charter or Act of Incorporation by
the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital
stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one
class) shall be required to amend, alter or repeal any
provision of Articles Fifth, Thirteenth, Fifteenth or
Sixteenth of this Charter or Act of Incorporation.
Seventeenth: (a) a Director of this Corporation shall not
be liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a
Director, except to the extent such exemption from
liability or limitation thereof is not permitted under the
Delaware General Corporation Laws as the same exists or
may hereafter be amended.
(b) Any repeal or modification of the foregoing
paragraph shall not adversely affect any right or
protection of a Director of the Corporation existing
hereunder with respect to any act or omission
occurring prior to the time of such repeal or
modification."
14
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
As existing on February 21, 1991
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
Stockholders' Meetings
Section 1. The Annual Meeting of Stockholders shall be
held on the third Thursday in April each year at the principal
office at the Company or at such other date, time, or place as
may be designated by resolution by the Board of Directors.
Section 2. Special meetings of all stockholders may be
called at any time by the Board of Directors, the Chairman of the
Board or the President.
Section 3. Notice of all meetings of the stockholders
shall be given by mailing to each stockholder at least ten (10
days before said meeting, at his last known address, a written or
printed notice fixing the time and place of such meeting.
Section 4. A majority in the amount of the capital stock
of the Company issued and outstanding on the record date, as
herein determined, shall constitute a quorum at all meetings of
stockholders for the transaction of any business, but the holders
of a small number of shares may adjourn, from time to time,
without further notice, until a quorum is secured. At each annual
or special meeting of stockholders, each stockholder shall be
entitled to one vote, either in person or by proxy, for each
shares of stock registered in the stockholder's name on the books
of the Company on the record date for any such meeting as
determined herein.
ARTICLE II
Directors
Section 1. The number and classification of the Board of
Directors shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of
seventy-two (72) years shall be nominated for election to the
Board of Directors of the Company, provided, however, that this
limitation shall not apply to any person who was serving as
director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold
office for three years or until their successors are elected and
qualified.
Section 4. The affairs and business of the Company shall
be managed and conducted by the Board of Directors.
Section 5. Regular meetings of the Board of Directors
shall be held on the third Thursday of each month at the
principal office of the Company, or at such other place and time
as may be designated by the Board of Directors, the Chairman of
the Board, or the President.
Section 6. Special meetings of the Board of Directors may
be called at any time by the Chairman of the Board of Directors
or by the President, and shall be called upon the written request
of a majority of the directors.
Section 7. A majority of the directors elected and
qualified shall be necessary to constitute a quorum for the
transaction of business at any meeting of the Board of Directors.
Section 8. Written notice shall be sent by mail to each
director of any special meeting of the Board of Directors, and of
any change in the time or place of any regular meeting, stating
the time and place of such meeting, which shall be mailed not
less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation,
removal, inability to act, or disqualification of any director,
the Board of Directors, although less than a quorum, shall have
the right to elect the successor who shall hold office for the
remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have
been duly elected and qualified.
Section 10. The Board of Directors at its first meeting
after its election by the stockholders shall appoint an Executive
Committee, a Trust Committee, an Audit Committee and a
Compensation Committee, and shall elect from its own members a
Chairman of the Board of Directors and a President who may be the
same person. The Board of Directors shall also elect at such
meeting a Secretary and a Treasurer, who may be the same person,
may appoint at any time such other committees and elect or
appoint such other officers as it may deem advisable. The Board
of Directors may also elect at such meeting one or more Associate
Directors.
Section 11. The Board of Directors may at any time remove,
with or without cause, any member of any Committee appointed by
it or any associate director or officer elected by it and may
appoint or elect his successor.
Section 12. The Board of Directors may designate an
officer to be in charge of such of the departments or division of
the Company as it may deem advisable.
ARTICLE III
Committees
Section I. Executive Committee
(A) The Executive Committee shall be composed of
not more than nine members who shall be selected by the Board of
Directors from its own members and who shall hold office during
the pleasure of the Board.
2
(B) The Executive Committee shall have all the
powers of the Board of Directors when it is not in session to
transact all business for and in behalf of the Company that may
be brought before it.
(C) The Executive Committee shall meet at the
principal office of the Company or elsewhere in its discretion at
least once a week in each week the Board is not regularly
scheduled to meet. A majority of its members shall be necessary
to constitute a quorum for the transaction of business. Special
meetings of the Executive Committee may be held at any time when
a quorum is present.
(D) Minutes of each meeting of the Executive
Committee shall be kept and submitted to the Board of Directors
at its next meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the
Company, and shall direct the disposal of the same, in accordance
with such rules and regulations as the Board of Directors from
time to time make.
(F) In the event of a state of disaster of
sufficient severity to prevent the conduct and management of the
affairs and business of the Company by its directors and officers
as contemplated by these By-Laws any two available members of the
Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company
in accordance with the provisions of Article III of these
By-Laws; and if less than three members of the Trust Committee is
constituted immediately prior to such disaster shall be available
for the transaction of its business, such Executive Committee
shall also be empowered to exercise all of the powers reserved to
the Trust Committee under Article III Section 2 hereof. In the
event of the unavailability, at such time, of a minimum of two
members of such Executive Committee, any three available
directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Company
in accordance with the foregoing provisions of this Section. This
By-Law shall be subject to implementation by Resolutions of the
Board of Directors presently existing or hereafter passed from
time to time for that purpose, and any provisions of these
By-Laws(other than this Section) and any resolutions which are
contrary to the provisions of this Section or to the provisions
of any such implementary Resolutions shall be suspended during
such a disaster period until it shall be determined by any
interim Executive Committee acting under this section that it
shall be to the advantage of the Company to resume the conduct
and management of its affairs and business under all of the other
provisions of these By-Laws.
3
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not
more than thirteen members who shall be selected by the Board of
Directors, a majority of whom shall be members of the Board of
Directors and who shall hold office during the pleasure of the
Board.
(B) The Trust Committee shall have general
supervision over the Trust Department and the investment of trust
funds, in all matters, however, being subject to the approval of
the Board of Directors.
(C) The Trust Committee shall meet at the
principal office of the Company or elsewhere in its discretion at
least once a month. A majority of its members shall be necessary
to constitute a quorum for the transaction of business. Special
meetings of the Trust Committee may be held at any time when a
quorum is present.
(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to
appoint Committees and/or designate officers or employees of the
Company to whom supervision over the investment of trust funds
may be delegated when the Trust Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its
own members, none of whom shall be an officer of the Company, and
shall hold office at the pleasure of the Board.
(B) The Audit Committee shall have general
supervision over the Audit Division in all matters however
subject to the approval of the Board of Directors; it shall
consider all matters brought to its attention by the officer in
charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such
independent auditor employed for that purpose, and make such
recommendations to the Board of Directors with respect thereto or
with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper
for the transaction of its business, and a majority of its
Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed
of not more than five (5) members who shall be selected by the
4
Board of Directors from its own members who are not officers of
the Company and who shall hold office during the pleasure of the
Board.
(B) The Compensation Committee shall in general
advise upon all matters of policy concerning the Company brought
to its attention by the management and from time to time review
the management of the Company, major organizational matters,
including salaries and employee benefits and specifically shall
administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee,
the Chairman of the Board of Directors, or the President of the
Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to
serve during the pleasure of the Board.
(B) An associate director shall be entitled to
attend all directors meetings and participate in the discussion
of all matters brought to the Board, with the exception that he
would have no right to vote. An associate director will be
eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active
directors.
Section 6. Absence or Disqualification of Any Member of a
Committee
(A) In the absence or disqualification of any
member of any Committee created under Article III of the By-Laws
of this Company, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member
of the Board of Directors to act at the meeting in the place of
any such absence or disqualified member.
ARTICLE IV
Officers
Section 1. The Chairman of the Board of Directors shall
preside at all meetings of the Board and shall have such further
authority and powers and shall perform such duties as the Board
of Directors may from time to time confer and direct. He shall
also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of
the Company.
Section 2. The President shall have the powers and duties
pertaining to the office of the President conferred or imposed upon
5
him by statute or assigned to him by the Board of Directors in
the absence of the Chairman of the Board the President shall have
the powers and duties of the Chairman of the Board.
Section 3. The Chairman of the Board of Directors or the
President as designated by the Board of Directors, shall carry
into effect all legal directions of the Executive Committee and
of the Board of Directors, and shall at all times exercise
general supervision over the interest, affairs and operations of
the Company and perform all duties incident to his office.
Section 4. There may be one or more Vice Presidents,
however denominated by the Board of Directors, who may at any
time perform all the duties of the Chairman of the Board of
Directors and/or the President and such other powers and duties
as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or
the President and by the officer in charge of the department or
division to which they are assigned.
Section 5. The Secretary shall attend to the giving of
notice of meetings of the stockholders and the Board of
Directors, as well as the Committees thereof, to the keeping of
accurate minutes of all such meetings and to recording the same
in the minute books of the Company. In addition to the other
notice requirements of these By-Laws and as may be practicable
under the circumstances, all such notices shall be in writing and
mailed well in advance of the scheduled date of any other
meeting. He shall have custody of the corporate seal and shall
affix the same to any documents requiring such corporate seal and
to attest the same.
Section 6. The Treasurer shall have general supervision
over all assets and liabilities of the Company. He shall be
custodian of and responsible for all monies, funds and valuables
of the Company and for the keeping of proper records of the
evidence of property or indebtedness and of all the transactions
of the Company. He shall have general supervision of the
expenditures of the Company and shall report to the Board of
Directors at each regular meeting of the condition of the
Company, and perform such other duties as may be assigned to him
from time to time by the Board of Directors of the Executive
Committee.
Section 7. There may be a Controller who shall exercise
general supervision over the internal operations of the Company,
including accounting, and shall render to the Board of Directors
at appropriate times a report relating to the general condition
and internal operations of the Company.
There may be one or more subordinate accounting or
controller officers however denominated, who may perform the
duties of the Controller and such duties as may be prescribed by
the Controller.
Section 8. The officer designated by the Board of Directors to
6
be in charge of the Audit Division of the Company with such title
as the Board of Directors shall prescribe, shall report to and be
directly responsible only to the Board of Directors.
There shall be an Auditor and there may be one or more
Audit Officers, however denominated, who may perform all the
duties of the Auditor and such duties as may be prescribed by the
officer in charge of the Audit Division.
Section 9. There may be one or more officers, subordinate
in rank to all Vice Presidents with such functional titles as
shall be determined from time to time by the Board of Directors,
who shall ex officio hold the office Assistant Secretary of this
Company and who may perform such duties as may be prescribed by
the officer in charge of the department or division to whom they
are assigned.
Section 10. The powers and duties of all other officers of
the Company shall be those usually pertaining to their respective
offices, subject to the direction of the Board of Directors, the
Executive Committee, Chairman of the Board of Directors or the
President and the officer in charge of the department or division
to which they are assigned.
ARTICLE V
Stock and Stock Certificates
Section 1. Shares of stock shall be transferrable on the
books of the Company and a transfer book shall be kept in which
all transfers of stock shall be recorded.
Section 2. Certificate of stock shall bear the signature
of the President or any Vice President, however denominated by
the Board of Directors and countersigned by the Secretary or
Treasurer or an Assistant Secretary, and the seal of the
corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only
upon the books of the Company by the holder thereof or his
attorney, upon surrender of the certificate properly endorsed.
Any certificate of stock surrendered to the Company shall be
cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate
certificates of stock shall be issued only upon giving such
security as may be satisfactory to the Board of Directors or the
Executive Committee.
Section 3. The Board of Directors of the Company is
authorized to fix in advance a record date for the determination
of the stockholders entitled to notice of, and to vote at, any
meeting of stockholders and any adjournment thereof, or entitled
to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change,
conversion or exchange of capital stock, or in connection with
obtaining the consent of stockholders for any purpose, which
7
record date shall not be more than 60 nor less than 10 days
proceeding the date of any meeting of stockholdersor the
date for the payment of any dividend, or the date for the
allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, or a date in
connection with obtaining such consent.
ARTICLE VI
Seal
Section 1. The corporate seal of the Company shall be in
the following form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner circle
the words "Wilmington, Delaware."
ARTICLE VII
Fiscal Year
Section 1. The fiscal year of the Company shall be the
calendar year.
ARTICLE VIII
Execution of Instruments of the Company
Section 1. The Chairman of the Board, the President or any
Vice President, however denominated by the Board of Directors,
shall have full power and authority to enter into, make, sign,
execute, acknowledge and/or deliver and the Secretary or any
Assistant Secretary shall have full power and authority to attest
and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds,
notes, mortgages and all other instruments incident to the
business of this Company or in acting as executor, administrator,
guardian, trustee, agent or in any other fiduciary or
representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in
the State of Delaware, or elsewhere, without any specific
authority, ratification, approval or confirmation by the Board of
Directors or the Executive Committee, and any and all such
instruments shall have the same force and validity as although
expressly authorized by the Board of Directors and/or the
Executive Committee.
ARTICLE IX
Compensation of Directors and Members of Committees
Section 1. Directors and associate directors of the Company,
other than salaried officers of the Company, shall be paid such
8
reasonable honoraria or fees for attending meetings of the Board
of Directors as the Board of Directors may from time to time
determine. Directors and associate directors who serve as members
of committees, other than salaried employees of the Company,
shall be paid such reasonable honoraria or fees for services as
members of committees as the Board of Directors shall from time
to time determine and directors and associate directors may be
employed by the Company for such special services as the Board of
Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may
be determined by the Board of Directors.
ARTICLE X
Indemnification
Section 1. (A) The Corporation shall indemnify and hold
harmless, to the fullest extent permitted by applicable law as it
presently exists or may hereafter be amended, any person who was
or is made or is threatened to be made a party or is otherwise
involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (a "proceeding") by
reason of the fact that he, or a person for whom he is the legal
representative, is or was a director, officer, employee or agent
of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee, fiduciary or agent
of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect
to employee benefit plans, against all liability and loss
suffered and expenses reasonably incurred by such person. The
Corporation shall indemnify a person in connection with a
proceeding initiated by such person only if the proceeding was
authorized by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses
incurred in defending any proceeding in advance of its final
disposition, provided, however, that the payment of expenses
incurred by a Director officer in his capacity as a Director or
officer in advance of the final disposition of the proceeding
shall be made only upon receipt of an undertaking by the Director
or officer to repay all amounts advanced if it should be
ultimately determined that the Director or officer is not
entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety
days after a written claim therefor has been received by the
Corporation the claimant may file suit to recover the unpaid
amount of such claim and, if successful in whole or in part,
shall be entitled to be paid the expense of prosecuting such
claim. In any such action the Corporation shall have the burden
of proving that the claimant was not entitled to the requested
indemnification of payment of expenses under applicable law.
9
(D) The rights conferred on any person by this
Article X shall not be exclusive of any other rights which such
person may have or hereafter acquire under any statute, provision
of the Charter or Act of Incorporation, these By-Laws, agreement,
vote of stockholders or disinterested Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right
or protection hereunder of any person in respect of any act or
omission occurring prior to the time of such repeal or
modification.
ARTICLE XI
Amendments to the By-Laws
Section 1. These By-Laws may be altered, amended or
repealed, in whole or in part, and any new By-Law or By-Laws
adopted at any regular or special meeting of the Board of
Directors by a vote of the majority of all the members of the
Board of Directors then in office.
10
EXHIBIT C
Section 321(b) Consent
Pursuant to Section 321(b) of the Trust Indenture Act of
1939, Wilmington Trust Company hereby consents that reports of
examinations by Federal, State, Territorial or District
authorities may be furnished by such authorities to the
Securities Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: September 17, 1996 By: /s/ Emmett R. Harmon
-----------------------
Name: Emmett R. Harmon
Title: Vice President
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings
banks with state publication requirements. It has not been
approved by any state banking authorities. Refer to your
appropriate state banking authorities for your state publication
requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- --------------------------------- ------------------
Name of Bank City
in the State of DELAWARE , at the close of business
------------
on June 30, 1996.
ASSETS
Thousands
of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances
and currency and coins...............................197,600
Interest-bearing balances................................ 0
Held-to-maturity securities............................... 495,691
Available-for-sale securities...............................851,207
Federal funds sold...........................................15,000
Securities purchased under agreements to resell............. 44,000
Loans and lease financing receivables:
Loans and leases, net
of unearned income.......................3,483,407
LESS: Allowance for
loan and lease losses.......................48,992
LESS: Allocated
transfer risk reserve......................... 0
Loans and leases,
net of unearned income,
allowance, and reserve...................3,434,415
Assets held in trading accounts...................................0
Premises and fixed assets (including capitalized leases).....80,629
Other real estate owned...................................... 6,713
Investments in unconsolidated subsidiaries and associated
companies...................................................... 127
Customers' liability to this bank on acceptances outstanding......0
Intangible assets.............................................4,164
Other assets................................................111,722
Total assets..............................................5,241,268
CONTINUED ON NEXT PAGE
2
LIABILITIES
Deposits:
In domestic offices.......................................3,389,271
Noninterest-bearing........................731,169
Interest-bearing.........................2,658,102
Federal funds purchased..................................... 69,265
Securities sold under agreements to repurchase............. 200,471
Demand notes issued to the U.S. Treasury.....................74,421
Trading liabilities...............................................0
Other borrowed money:.......................................///////
With original maturity
of one year or less........................962,500
With original maturity
of more than one year.......................28,000
Mortgage indebtedness and obligations under capitalized leases....0
Bank's liability on acceptances executed and outstanding..........0
Subordinated notes and debentures.................................0
Other liabilities............................................97,430
Total liabilities.........................................4,821,358
Limited-life preferred stock and related surplus..................0
EQUITY CAPITAL
Perpetual preferred stock and related surplus.....................0
Common Stock....................................................500
Surplus......................................................62,115
Undivided profits and capital reserves......................359,327
Net unrealized holding gains (losses) on available-for-sale
securities................................................. (2,032)
Total equity capital........................................419,910
Total liabilities, limited-life preferred stock,
and equity capital........................................5,241,268
3
LETTER OF TRANSMITTAL
Continental Airlines, Inc.
Offer to Exchange
Pass Through Certificates, Series 1996-2,
which have been Registered under the Securities Act of 1933, as amended,
for any and all Outstanding
Pass Through Certificates, Series 1996-2
Pursuant to the Prospectus, dated ______________, 1996.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON
, 1996, UNLESS EXTENDED (THE "EXPIRATION DATE"), TENDERS MAY BE
WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON
____________, 1996.
By Mail, Overnight Delivery: By Hand:
Wilmington Trust Company Wilmington Trust Company
1100 North Market Street 1105 North Market Street, 1st Floor
Wilmington, Delaware 19890-0001 Wilmington, Delaware 19890
Attention: Jill Rylee Attention: Corporate Trust Operations
Facsimile Transmission:
(302) 651-1079
Confirm by Telephone:
(302) 651-8869
Jill Rylee
Delivery of this instrument to an address other than
as set forth above, or transmission of instructions via facsimile
other than as set forth above, will not constitute a valid
delivery.
The undersigned acknowledges receipt of the
Prospectus, dated ______________(the "Prospectus"), of
Continental Airlines, Inc., a Delaware corporation (the
"Company"), and this Letter of Transmittal (this "Letter"), which
together constitute the offer (the "Exchange Offer") to exchange
an aggregate principal amount of up to $174,749,000 of Pass
Through Certificates, Series 1996-2 (the "New Certificates") for
an equal principal amount of the outstanding Pass Through
Certificates, Series 1996-2 (the "Old Certificates").
For each Old Certificate accepted for exchange, the
holder of such Old Certificate will receive a New Certificate
having a principal amount at maturity equal to that of the
surrendered Old Certificate. The New Certificates will accrue
interest at the applicable per annum rate for such Trust as set
forth on the cover page of the Prospectus, from the last date on
which interest was paid on the Old Certificates surrendered in
exchange therefor. Interest on the New Certificates is payable on
January 2, April 2, July 2 and October 2 of each year commencing
July 2, 1996, subject to the terms of the Intercreditor Agreement
(as defined in the Prospectus). In the event that neither the
consummation of the Exchange Offer nor the declaration by the
Commission of the Shelf Registration Statement to be effective
(each a "Registration Event") occurs on or prior to the 180th
calendar day after the Issue Date, the interest rate per annum
borne by the Equipment Notes and passed through to holders of Old
Certificates shall be increased by 0.50% from and including
January 2, 1997, but excluding the date on which a Registration
Event occurs. In the event that the Shelf Registration Statement
ceases to be effective at any time, during the period the Company
is required to keep such Shelf Registration Statement effective,
for more than 60 days, whether or not consecutive, during any
12-month period, the interest rate per annum borne by the
Equipment Notes shall be increased by 0.50% from the 61st day of
the applicable 12-month period such Shelf Registration Statement
ceases to be effective until such time as the Shelf Registration
Statement again becomes effective. The Company reserves the
right, at any time or from time to time, to extend the Exchange
Offer at its discretion, in which event the term "Expiration
Date" shall mean the latest time and date to which the Exchange
Offer is extended. The Company shall notify the holders of the
Old Certificates of any extension by means of a press
release or other public announcement prior to 9:00 A.M., New York
City time, on the next business day after the previously
scheduled Expiration Date.
This Letter is to be completed by a holder of Old
Certificates either if Old Certificates are to be forwarded
herewith or if a tender of Old Certificates, if available, is to
be made by book-entry transfer to the account maintained by the
Exchange Agent at The Depository Trust Company (the "Book-Entry
Transfer Facility") pursuant to the procedure set forth in "The
Exchange Offer" section of the Prospectus. Holders of Old
Certificates whose certificates are not immediately available, or
who are unable to deliver their certificates or confirmation of
the book-entry tender of their Old Certificates into the Exchange
Agent's account at the Book-Entry Transfer Facility (a
"Book-Entry Confirmation") and all other documents required by
this Letter to the Exchange Agent on or prior to the Expiration
Date, must tender their Old Certificates according to the
guaranteed delivery procedures set forth in "The Exchange
Offer--Guaranteed Delivery Procedures" section of the Prospectus.
See Instruction 1. Delivery of documents to the Book-Entry
Transfer Facility does not constitute delivery to the Exchange
Agent.
The undersigned has completed the appropriate boxes
below and signed this Letter to indicate the action the
undersigned desires to take with respect to the Exchange Offer.
List below the Old Certificates to which this Letter
relates. If the space provided below is inadequate, the
certificate numbers and principal amount of Old Certificates
should be listed on a separate signed schedule affixed hereto.
- -----------------------------------------------------------------------
DESCRIPTION OF OLD CERTIFICATES 1 2 3
- -----------------------------------------------------------------------
Aggregate
Name(s) and Address(es) of Certificate Principal Principal
Registered Holder(s) Number(s)* Amount of Amount
(Please fill in, if blank) Old Tendered*
Certificate(s)
- -----------------------------------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
Total
- -----------------------------------------------------------------------
* Need not be completed if Old Certificates are being tendered by
book-entry transfer.
** Unless otherwise indicated in this column, a holder will be
deemed to have tendered ALL of the Old Certificates represented
by the Old Certificates indicated in column 2. See Instruction 2.
Old Certificates tendered hereby must be in denominations of
principal amount of $1,000 and any integral multiple thereof. See
Instruction 1.
- -------------------------------------------------------------------
_ CHECK HERE IF TENDERED OLD CERTIFICATES ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE
EXCHANGE AGENT WITH THE BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution____________________________________
Account Number______________ Transaction Code Number ___________
_ CHECK HERE IF TENDERED OLD CERTIFICATES ARE BEING DELIVERED
PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO
THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)__________________________________
Window Ticket Number (if any)____________________________________
Date of Execution of Notice of Guaranteed Delivery_______________
Name of Institution which guaranteed delivery____________________
If Delivered by Book-Entry Transfer, Complete the Following:
Account Number____________ Transaction Code Number_______________
_ CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE
10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name:____________________________________________________________
Address:_________________________________________________________
_________________________________________________________________
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the
Exchange Offer, the undersigned hereby tenders to the Company the
aggregate principal amount of Old Certificates indicated above.
Subject to, and effective upon, the acceptance for exchange of
the Old Certificates tendered hereby, the undersigned hereby
sells, assigns and transfers to, or upon the order of, the
Company all right, title and interest in and to such Old
Certificates as are being tendered hereby.
The undersigned hereby represents and warrants that
the undersigned has full power and authority to tender, sell,
assign and transfer the Old Certificates tendered hereby and that
the Company will acquire good and unencumbered title thereto,
free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim when the same
are accepted by the Company. The undersigned hereby further
represents that any New Certificates acquired in exchange for Old
Certificates tendered hereby will have been acquired in the
ordinary course of business of the person receiving such New
Certificates, whether or not such person is the undersigned, that
neither the holder of such Old Certificates nor any such other
person is engaged in, or intends to engage in a distribution of
such New Certificates, or has an arrangement or understanding
with any person to participate in the distribution of such New
Certificates, and that neither the holder of such Old
Certificates nor any such other person is an "affiliate," as
defined in Rule 405 under the Securities Act of 1933, as amended
(the "Securities Act"), of the Company.
The undersigned also acknowledges that this Exchange
Offer is being made based upon the Company's understanding of an
interpretation by the staff of the Securities and Exchange
Commission (the "Commission") as set forth in no-action letters
issued to third parties, including Exxon Capital Holdings
Corporation, SEC No-Action Letter (available April 13, 1989) (the
"Exxon Capital Letter"), Morgan Stanley & Co. Incorporated, SEC
No-Action Letter (available June 5, 1991) (the "Morgan Stanley
Letter") and Shearman & Sterling, SEC No-Action Letter (available
July 2, 1993) (the "Shearman & Sterling Letter"), that the New
Certificates issued in exchange for the Old Certificates pursuant
to the Exchange Offer may be offered for resale, resold and
otherwise transferred by holders thereof (other than a
broker-dealer who acquires such New Certificates directly from
the Company for resale pursuant to Rule 144A under the Securities
Act or any other available exemption under the Securities Act or
any such holder that is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act), without compliance
with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Certificates are acquired
in the ordinary course of such holders' business and such holders
are not engaged in, and do not intend to engage in, a
distribution of such New Certificates and have no arrangement
with any person to participate in the distribution of such New
Certificates. If a holder of Old Certificates is engaged in or
intends to engage in a distribution of the New Certificates or
has any arrangement or understanding with respect to the
distribution of the New Certificates to be acquired pursuant to
the Exchange Offer, such holder could not rely on the applicable
interpretations of the staff of the Commission and must comply
with the registration and prospectus delivery requirements of the
Securities Act in connection with any secondary resale
transaction. If the undersigned is a broker-dealer that will
receive New Certificates for its own account in exchange for Old
Certificates, it represents that the Old Certificates to be
exchanged for the New Certificates were acquired by it as a
result of market-making activities or other trading activities
and acknowledges that it will deliver a prospectus in connection
with any resale of such New Certificates; however, by so
acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
The undersigned will, upon request, execute and
deliver any additional documents deemed by the Company to be
necessary or desirable to complete the sale, assignment and
transfer of the Old Certificates tendered hereby. All authority
conferred or agreed to be conferred in this Letter and every
obligation of the undersigned hereunder shall be binding upon the
successors, assigns, heirs, executors, administrators, trustees
in bankruptcy and legal representatives of the undersigned and
shall not be affected by, and shall survive, the death or
incapacity of the undersigned. This tender may be withdrawn only
in accordance with the procedures set forth in "The Exchange
Offer--Withdrawal of Tenders" section of the Prospectus.
Unless otherwise indicated herein in the box entitled
"Special Issuance Instructions" below, please deliver the New
Certificates (and, if applicable, substitute certificates
representing Old Certificates for any Old Certificates not
exchanged) in the name of the undersigned or, in the case of a
book-entry delivery of Old Certificates, please credit the
account indicated above maintained at the Book-Entry Transfer
Facility. Similarly, unless otherwise indicated under the box
entitled "Special Delivery Instructions" below, please send the
New Certificates (and, if applicable, substitute certificates
representing Old Certificates for any Old Certificates not
exchanged) to the undersigned at the address shown above in the
box entitled "Description of Old Certificates."
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED
"DESCRIPTION OF OLD NOTES" ABOVE AND SIGNING THIS LETTER, WILL BE
DEEMED TO HAVE TENDERED THE OLD CERTIFICATES AS SET FORTH IN SUCH
BOX ABOVE.
- ------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if certificates
for Old Certificates not exchanged and/or
New Certificates are to be issued in the
name of and sent to someone other than
the person(s) whose signature(s) appear(s)
on this Letter above, or if Old Certificates
delivered by book-entry transfer which are
not accepted for exchange are to be returned
by credit to an account maintained at the
Book-Entry Transfer Facility other than
the account indicated above.
Issue New Certificates and/or Old Certificates
to:
Name(s):...........................
(Please Type or Print)
...................................
(Please Type or Print)
Address:...........................
...................................
(Including Zip Code)
(Complete accompanying Substitute
Form W-9)
Credit unexchanged Old Certificates
delivered by book-entry transfer
to the Book-Entry Transfer Facility
account set forth below.
- ------------------------------------
(Book-Entry Transfer Facility
Account Number, if applicable)
- ------------------------------------
- -------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if certificates
for Old Certificates not exchanged and/or
New Certificates are to be sent to someone
other than the person(s) whose signature(s)
appear(s) at an address other than shown in
the box entitled "Description of Old Certificates"
on this Letter above.
Mail New Certificates and/or Old Certificates to:
Name(s):...........................
(Please Type or Print)
...................................
(Please Type or Print)
Address:...........................
...................................
(Including Zip Code)
- -------------------------------------
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE
CERTIFICATES FOR OLD CERTIFICATES OR A BOOK-ENTRY CONFIRMATION
AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED
DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00
P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE.
- ----------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(Complete accompanying Substitute Form W-9)
Dated:........................................................, 1996
..............................................................x
..............................................................x
(Signature(s) of Owner) (Date)
Area Code and Telephone Number:...........................
If a holder is tendering any Old Certificates, this Letter
must be signed by the registered holder(s) as the name(s)
appear(s) on the certificate(s) for the Old Certificates or by
any person(s) authorized to become registered holder(s) by
endorsements and documents transmitted herewith. If signature is
by a trustee, executor, administrator, guardian, officer or other
person acting in a fiduciary or representative capacity, please
set forth full title. See Instruction 3.
Name(s):..................................................
..........................................................
(Please Type or Print)
Capacity:.................................................
Address:..................................................
..........................................................
(Including Zip Code)
SIGNATURE GUARANTEE
(if required by Instruction 3)
Signature(s) Guaranteed by
an Eligible Institution:..................................
(Authorized Signature)
..........................................................
(Title)
..........................................................
(Name and Firm)
Dated:........................................................, 1996
- ----------------------------------------------------------------------
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer to Exchange
Pass Through Certificates, Series 1996-2, which have
been registered under the Securities Act of 1933, as amended, for
any and all Outstanding Pass Through Certificates, Series 1996-2
Continental Airlines, Inc.
1. Delivery of this Letter and Old Certificates; Guaranteed
Delivery Procedures.
This Letter is to be completed by holders of Old
Certificates either if certificates are to be forwarded herewith
or if tenders are to be made pursuant to the procedures for
delivery by book-entry transfer set forth in "The Exchange Offer
- -- Book-Entry Transfer" section of the Prospectus. Certificates
for all physically tendered Old Certificates, or Book-Entry
Confirmation, as the case may be, as well as a properly completed
and duly executed Letter of Transmittal (or facsimile thereof)
and any other documents required by this Letter, must be received
by the Exchange Agent at the address set forth herein on or prior
to the Expiration Date, or the tendering holder must comply with
the guaranteed delivery procedures set forth below. Old
Certificates tendered hereby must be in denominations of
principal amount of maturity of $1,000 and any integral multiple
thereof.
Holders of Old Certificates whose certificates for Old
Certificates are not immediately available or who cannot deliver
their certificates and all other required documents to the
Exchange Agent on or prior to the Expiration Date, or who cannot
complete the procedure for book-entry transfer on a timely basis,
may tender their Old Certificates pursuant to the guaranteed
delivery procedures set forth in "The Exchange Offer--Guaranteed
Delivery Procedures" section of the Prospectus. Pursuant to such
procedures, (i) such tender must be made through an Eligible
Institution (as defined below), (ii) prior to the Expiration
Date, the Exchange Agent must receive from such Eligible
Institution a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by
facsimile transmission, mail or hand delivery), setting forth the
name and address of the holder of Old Certificates and the amount
of Old Certificates tendered, stating that the tender is being
made thereby and guaranteeing that within three New York Stock
Exchange ("NYSE") trading days after the date of execution of the
Notice of Guaranteed Delivery, the certificates for all
physically tendered Old Certificates, or a Book-Entry
Confirmation, as the case may be, and any other documents
required by this letter will be deposited by the Eligible
Institution with the Exchange Agent, and (iii) the certificates
for all physically tendered Old Certificates, in proper form for
transfer, or Book-Entry Confirmation, as the case may be, and all
other documents required by this Letter, are received by the
Exchange Agent within three NYSE trading days after the date of
execution of the Notice of Guaranteed Delivery.
The method of delivery of this Letter, the Old
Certificates and all other required documents is at the election
and risk of the tendering holders, but the delivery will be
deemed made only when actually received or confirmed by the
Exchange Agent. If Old Certificates are sent by mail, it is
suggested that the mailing be made sufficiently in advance of the
Expiration Date to permit delivery to the Exchange Agent prior to
5:00 p.m., New York City time, on the Expiration Date.
See "The Exchange Offer" section of the Prospectus.
2. Partial Tenders (not applicable to holders of Old Certificates
who tender by book-entry transfer).
If less than all of the Old Certificates evidenced by
a submitted certificate are to be tendered, the tendering
holder(s) should fill in the aggregate principal amount of Old
Certificates to be tendered in the box above entitled
"Description of Old Certificates--Principal Amount Tendered." A
reissued certificate representing the balance of nontendered Old
Certificates will be sent to such tendering holder, unless
otherwise provided in the appropriate box on this Letter,
promptly after the Expiration Date. All of the Old Certificates
delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated.
3. Signatures of this Letter; Bond Powers and Endorsements;
Guarantee of Signatures.
If this Letter is signed by the registered holder of
the Old Certificates tendered hereby, the signature must
correspond exactly with the name as written on the face of the
certificates without any change whatsoever.
If any tendered Old Certificates are owned of record
by two or more joint owners, all such owners must sign this
Letter.
If any tendered Old Certificates are registered in
different names on several certificates, it will be necessary to
complete, sign and submit as many separate copies of this Letter
as there are different registrations of certificates.
When this Letter is signed by the registered holder of
the Old Certificates specified herein and tendered hereby, no
endorsements of certificates or separate bond powers are
required. If, however, the New Certificates are to be issued, or
any untendered Old Certificates are to be reissued, to a person
other than the registered holder, then endorsements of any
certificates transmitted hereby or separate bond powers are
required. Signatures on such certificates must be guaranteed by
an Eligible Institution.
If this Letter is signed by a person other than the
registered holder of any certificates specified herein, such
certificates must be endorsed or accompanied by appropriate bond
powers, in either case signed exactly as the name of the
registered holder appears on the certificates and the signatures
on such certificates must be guaranteed by an Eligible
Institution.
If this Letter or any certificates or bond powers are
signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper
evidence satisfactory to the Company of their authority to so act
must be submitted.
Endorsements on certificates for Old Certificates or
signatures on bond powers required by this Instruction 3 must be
guaranteed by a firm which is a member of a registered national
securities exchange or a member of the National Association of
Securities Dealers, Inc., by a commercial bank or trust company
having an office or correspondent in the United States or by an
"eligible guarantor" institution within the meaning of Rule
17Ad-15 under the Securities Exchange Act of 1934 (an "Eligible
Institution").
Signatures on this Letter need not be guaranteed by an
Eligible Institution, provided the Old Certificates are tendered:
(i) by a registered holder of Old Certificates (which term, for
purposes of the Exchange Offer, includes any participant in the
Book-Entry Transfer Facility system whose name appears on a
security position listing as the holder of such Old Certificates)
tendered who has not completed the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on this Letter,
or (ii) for the account of an Eligible Institution.
4. Special Issuance and Delivery Instructions.
Tendering holders of Old Certificates should indicate
in the applicable box the name and address to which New
Certificates issued pursuant to the Exchange Offer and/or
substitute certificates evidencing Old Certificates not exchanged
are to be issued or sent, if different from the name or address
of the person signing this Letter. In the case of issuance in a
different name, the employer identification or social security
number of the person named must also be indicated. A holder of
Old Certificates tendering Old Certificates by book-entry
transfer may request that Old Certificates not exchanged be
credited to such account maintained at the Book-Entry Transfer
Facility as such holder of Old Certificates may designate hereon.
If no such instructions are given, such Old Certificates not
exchanged will be returned to the name or address of the person
signing this Letter.
5. Tax Identification Number.
Federal income tax law generally requires that a
tendering holder whose Old Certificates are accepted for exchange
must provide the Company (as payor) with such Holder's correct
Taxpayer Identification Number ("TIN") on Substitute Form W-9
below, which, in the case of a tendering holder who is an
individual, is his or her social security number. If the Company
is not provided with the current TIN or an adequate basis for an
exemption, such tendering holder may be subject to a $50 penalty
imposed by the Internal Revenue Service. In addition, delivery of
New Certificates to such tendering holder may be subject to
backup withholding in an amount equal to 31% of all reportable
payments made after the exchange. If withholding results in an
overpayment of taxes, a refund may be obtained.
Exempt holders of Old Certificates (including, among
others, all corporations and certain foreign individuals) are not
subject to these backup withholding and reporting requirements.
See the enclosed Guidelines of Certification of Taxpayer
Identification Number on Substitute Form W-9 (the "W-9
Guidelines") for additional instructions.
To prevent backup withholding, each tendering holder
of Old Certificates must provide its correct TIN by completing
the "Substitute Form W-9" set forth below, certifying that the
TIN provided is correct (or that such holder is awaiting a TIN)
and that (i) the holder is exempt from backup withholding, (ii)
the holder has not been notified by the Internal Revenue Service
that such holder is subject to a backup withholding as a result
of a failure to report all interest or dividends or (iii) the
Internal Revenue Service has notified the holder that such holder
is no longer subject to backup withholding. If the tendering
holder of Old Certificates is a nonresident alien or foreign
entity not subject to backup withholding, such holder must give
the Company a completed Form W-8, Certificate of Foreign Status.
These forms may be obtained from the Exchange Agent. If the Old
Certificates are in more than one name or are not in the name of
the actual owner, such holder should consult the W-9 Guidelines
for information on which TIN to report. If such holder does not
have a TIN, such holder should consult the W-9 Guidelines for
instructions on applying for a TIN, check the box in Part 2 of
the Substitute Form W-9 and write "applied for" in lieu of its
TIN. Note: checking this box and writing "applied for" on the
form means that such holder has already applied for a TIN or that
such holder intends to apply for one in the near future. If such
holder does not provide its TIN to the Company within 60 days,
backup withholding will begin and continue until such holder
furnishes its TIN to the Company.
6. Transfer Taxes.
The Company will pay all transfer taxes, if any,
applicable to the transfer of Old Certificates to it or its order
pursuant to the Exchange Offer. If, however, New Certificates
and/or substitute Old Certificates not exchanged are to be
delivered to, or are to be registered or issued in the name of,
any person other than the registered holder of the Old
Certificates tendered hereby, or if tendered Old Certificates are
registered in the name of any person other than the person
signing this Letter, or if a transfer tax is imposed for any
reason other than the transfer of Old Certificates to the Company
or its order pursuant to the Exchange Offer, the amount of any
such transfer taxes (whether imposed on the registered holder or
any other persons) will be payable by the tendering holder. If
satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted herewith, the amount of such transfer
taxes will be billed directly to such tendering holder.
Except as provided in this Instruction 6, it is not
necessary for transfer tax stamps to be affixed to the Old
Certificates specified in this Letter.
7. Waiver of Conditions.
The Company reserves the absolute right to waive
satisfaction of any or all conditions enumerated in the
Prospectus.
8. No Conditional Tenders.
No alternative, conditional, irregular or contingent
tenders will be accepted. All tendering holders of Old
Certificates, by execution of this Letter, shall waive any right
to receive notice of the acceptance of their Old Certificates for
exchange.
Neither the Company, the Exchange Agent nor any other
person is obligated to give notice of any defect or irregularity
with respect to any tender of Old Certificates nor shall any of
them incur any liability for failure to give any such notice.
9. Mutilated, Lost, Stolen or Destroyed Old Certificates.
Any holder whose Old Certificates have been mutilated,
lost, stolen or destroyed should contact the Exchange Agent at
the address indicated above for further instructions.
10. Requests for Assistance or Additional Copies.
Questions relating to the procedure for tendering, as
well as requests for additional copies of the Prospectus and this
Letter, may be directed to the Exchange Agent, at the address and
telephone number indicated above.
TO BE COMPLETED BY ALL TENDERING HOLDERS
(See Instruction 5)
PAYOR'S NAME: CONTINENTAL AIRLINES, INC.
- ---------------------------------------------------------------------------
SUBSTITUTE Part 1 -- PLEASE PROVIDE YOUR
Form W-9 TIN IN THE BOX AT RIGHT AND TIN:__________________________
CERTIFY BY SIGNING AND (Social Security Number or
DATING BELOW. Employer Identification
Number)
----------------------------------------------------------
Department of Part 2 -- TIN Applied For __
the Treasury
--------------------------------------------------------
Internal Revenue CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY
Service THAT:
Payor's Request (1) the number shown on this form is my correct
For Taxpayer Taxpayer Identification Number Payor's Request
Identification For (or I am waiting for a number to be issued to me).
Number ("TIN") (2) I am not subject to backup withholding either because:
and Certification (a) I am exempt from Identification Numberbackup
withholding, or (b) I have not been notified by
the Internal Revenue Service ("TIN") and (the
"IRS") that I am subject to backup withholding as a
result of a failure to report Certification all interest
or dividends, or (c) the IRS has notified me that I am
no longer subject to backup witholding, and
(3) any other information provided on this form is true
and correct.
SIGNATURE............................. DATE...............
- -------------------------------------------------------------------------
You must cross out item (2) of the above certification if you
have been notified by the IRS that you are subject to
backup withholding because of underreporting of interest or
dividends on your tax return and you have not been notified by
the IRS that you are no longer subject to backup withholding.
- -----------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 2 OF SUBSTITUTE FORM W-9
- -----------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer
identification number has not been issued to me, and either (a) I
have mailed or delivered an application to receive a taxpayer
identification number to the appropriate Internal Revenue Service
Center or Social Security Administration Office or (b) I intend
to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification
number by the time of the exchange, 31 percent of all reportable
payments made to me thereafter will be withheld until I provide a
number.
- ------------------------------------------------------------------------------
Signature Date
- ------------------------------------------------------------------------------
NOTICE OF GUARANTEED DELIVERY FOR
CONTINENTAL AIRLINES, INC.
This form or one substantially equivalent hereto must
be used to accept the Exchange Offer of Continental Airlines,
Inc. (the "Company") made pursuant to the Prospectus,
dated_____________, 1996 (the "Prospectus"), and the enclosed
Letter of Transmittal (the "Letter of Transmittal") if
certificates for Old Certificates are not immediately available
or if the procedure for book-entry transfer cannot be completed
on a timely basis or time will not permit all required documents
to reach the Company prior to 5:00 P.M., New York City time, on
the Expiration Date of the Exchange Offer. Such form may be
delivered or transmitted by facsimile transmission, mail or hand
delivery to Wilmington Trust Company (the "Exchange Agent") as
set forth below. In addition, in order to utilize the guaranteed
delivery procedure to tender Old Certificates pursuant to the
Exchange Offer, a completed, signed and dated Letter of
Transmittal (or facsimile thereof) must also be received by the
Exchange Agent prior to 5:00 P.M., New York City time, on the
Expiration Date. Capitalized terms not defined herein are defined
in the Prospectus.
Delivery to: Wilmington Trust Company, Exchange Agent
By Mail, Overnight Delivery: By Hand:
Wilmington Trust Company Wilmington Trust Company
1100 North Market Street 1105 North Market Street,
Wilmington, 1st Floor
Delaware 19890-0001 Wilmington, Delaware 19890
Attention: Jill Rylee Attention: Corporate Trust
Operations
Facsimile Transmission:
(302) 651-1079
Confirm by Telephone:
(302) 651-8869
Jill Rylee
Delivery of this instrument to an address other than as
set forth above, or transmission of instructions via facsimile
other than as set forth above, will not constitute a valid
delivery.
Ladies and Gentlemen:
Upon the terms and conditions set forth in the
Prospectus and the accompanying Letter of Transmittal, the
undersigned hereby tenders to the Company the principal amount of
Old Certificates set forth below, pursuant to the guaranteed
delivery procedure described in "The Exchange Offer -- Guaranteed
Delivery Procedures" section of the Prospectus.
Principal Amount of Old Name(s) of Record Holders(s):
Certificates Tendered:
$________________________________
________________________________
Certificate Nos. (if
available):
________________________________
Address(es):
________________________________
________________________________
________________________________
________________________________
If Old Certificates will be Area Code and Telephone
delivered by book-entry Number(s):
transfer to The Depositary
Trust Company, provide account
number.
________________________________
Signature(s):
Account
Number________________________
________________________________
________________________________
THE ACCOMPANYING GUARANTEE MUST BE COMPLETED.
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a firm that is a member firm of a registered
national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company
having an office correspondent in the United States or any
"eligible guarantor" institution within the meaning of Rule 17Ad-
15 of the Exchange Act of 1934, as amended, hereby (a)
guarantees to deliver to the Exchange Agent, at one of its
addresses set forth above, the certificates representing all
tendered Old Certificates, in proper form for transfer, or a
Book-Entry Confirmation, together with a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, and any other documents
required by the Letter of Transmittal within three New York Stock
Exchange, Inc. trading days after the date of execution of this
Notice of Guaranteed Delivery.
Name of Firm:___________________ ______________________________
(Authorized Signature)
Address:________________________
________________________________
Area Code and
Telephone
Number:_________________________
Title:________________________
Name:_________________________
Date:_________________________
CONTINENTAL AIRLINES, INC.
Offer to Exchange
Pass Through Certificates, Series 1996-2,
which have been registered under the Securities Act of 1933, as amended,
for any and all Outstanding
Pass Through Certificates, Series 1996-2
To: Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Upon and subject to the terms and conditions set forth
in the Prospectus, dated __________, 1996 (the "Prospectus"), and
the enclosed Letter of Transmittal (the "Letter of Transmittal"),
an offer to exchange (the "Exchange Offer") the registered Pass
Through Certificates, Series 1996-2 (the "New Certificates") for
any and all outstanding Pass Through Certificates, Series 1996-2
(the "Old Certificates") (CUSIP Nos. 210805AD9, 210805AF4,
210805AH0, 210805AK3) is being made pursuant to such Prospectus.
The Exchange Offer is being made in order to satisfy certain
obligations of Continental Airlines, Inc. (the "Company")
contained in the Registration Rights Agreement dated as of May
20, 1996, between the Company and the Initial Purchasers.
We are requesting that you contact your clients for
whom you hold Old Certificates regarding the Exchange Offer. For
your information and for forwarding to your clients for whom you
hold Old Certificates registered in your name or in the name of
your nominee, or who hold Old Certificates registered in their
own names, we are enclosing the following documents:
1. Prospectus dated _____________, 1996;
2. The Letter of Transmittal for your use and for the
information of your clients;
3. A Notice of Guaranteed Delivery to be used to
accept the Exchange Offer if certificates for Old Certificates
are not immediately available or time will not permit all
required documents to reach the Exchange Agent prior to the
Expiration Date (as defined below) or if the procedure for
book-entry transfer cannot be completed on a timely basis; and
4. A form of letter which may be sent to your clients
for whose account you hold Old Certificates registered in your
name or the name of your nominee, with space provided for
obtaining such clients' instructions with regard to the Exchange
Offer.
Your prompt action is requested. The Exchange Offer
will expire at 5:00 p.m., New York City time, on _______________,
1996
(the "Expiration Date") (30 calendar days following the
commencement of the Exchange Offer), unless extended by the
Company. The Old Certificates tendered pursuant to the Exchange
Offer may be withdrawn at any time before the Expiration Date.
To participate in the Exchange Offer, a duly executed
and properly completed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees and any other
required documents, should be sent to the Exchange Agent and
certificates representing the Old Certificates should be
delivered to the Exchange Agent, all in accordance with the
instructions set forth in the Letter of Transmittal and the
Prospectus.
If holders of Old Certificates wish to tender, but it
is impracticable for them to forward their certificates for Old
Certificates prior to the expiration of the Exchange Offer or to
comply with the book-entry transfer procedures on a timely basis,
a tender may be effected by following the guaranteed delivery
procedures described in the Prospectus under "The Exchange Offer
- -- Guaranteed Delivery Procedures."
Additional copies of the enclosed material may be
obtained from Wilmington Trust Company, the Exchange Agent, at
1100 North Market Street, Wilmington, Delaware 19890-0001,
Attention: Jill Rylee, phone (302) 651-8869 and facsimile (302)
651-1079.
CONTINENTAL AIRLINES, INC.
CONTINENTAL AIRLINES, INC.
Offer to Exchange
Pass Through Certificates, Series 1996-2,
which have been registered under the Securities Act of 1933, as amended,
for any and all Outstanding
Pass Through Certificates, Series 1996-2
To Our Clients:
Enclosed for your consideration is a Prospectus of
Continental Airlines, Inc., a Delaware corporation (the "Company"
or "Continental"), dated ___________, 1996 (the "Prospectus"),
and the enclosed Letter of Transmittal (the "Letter of
Transmittal") relating to the offer to exchange (the "Exchange
Offer") of registered Pass Through Certificates, Series 1996-2
(the "New Certificates") for any and all outstanding Pass Through
Certificates, Series 1996-2 (the "Old Certificates") (CUSIP Nos.
210805AD9, 210805AF4, 210805AH0, 210805AK3), upon the terms and
subject to the conditions described in the Prospectus. The
Exchange Offer is being made in order to satisfy certain
obligations of Continental contained in the Registration Rights
Agreement dated as of May 20, 1996, between the Company and the
Initial Purchasers.
This material is being forwarded to you as the
beneficial owner of the Old Certificates carried by us in your
account but not registered in your name. A tender of such Old
Certificates may only be made by us as the holder of record and
pursuant to your instructions.
Accordingly, we request instructions as to whether you
wish us to tender on your behalf the Old Certificates held by us
for your account, pursuant to the terms and conditions set forth
in the enclosed Prospectus and Letter of Transmittal.
Your instructions should be forwarded to us as
promptly as possible in order to permit us to tender the Old
Certificates on your behalf in accordance with the provisions of
the Exchange Offer. The Exchange Offer will expire at 5:00 p.m.,
New York City time, on _______________, 1996 (the "Expiration
Date") (30 calendar days following the commencement of the
Exchange Offer), unless extended by the Company. Any Old
Certificates tendered pursuant to the Exchange Offer may be
withdrawn at any time before 5:00 p.m., New York City time on the
Expiration Date.
Your attention is directed to the following:
1. The Exchange Offer is for any and all Old Certificates.
2. The Exchange Offer is subject to certain conditions
set forth in the Prospectus in the section captioned "The
Exchange Offer -- Conditions."
3. Any transfer taxes incident to the transfer of Old
Certificates from the holder to the Company will be paid by the
Company, except as otherwise provided in the Instructions in the
Letter of Transmittal.
4. The Exchange Offer expires at 5:00 p.m., New York
City time, on the Expiration Date unless extended by the Company.
If you wish to have us tender your Old Certificates, please so
instruct us by completing, executing and returning to us the
instruction form set forth below. The Letter of Transmittal is
furnished to you for information only and may not be used
directly by you to tender Old Certificates.
Instructions with Respect to the Exchange Offer
The undersigned acknowledge(s) receipt of your letter
enclosing the Prospectus, dated _____________, 1996, of
Continental Airlines, Inc., a Delaware corporation, and the
related specimen Letter of Transmittal.
- ----------------------------------------------------------------------
This will instruct you to tender the number of Old
Certificates indicated below held by you for the account of the
undersigned, pursuant to the terms and conditions set forth in
the Prospectus and the related Letter of Transmittal. (Check
one).
Box 1 [ ] Please tender my Old Certificates held by you
for my account. If I do not wish to tender all of the
Old Certificates held by you for my account, I have
identified on a signed schedule attached hereto the
number of Old Certificates that I do not wish
tendered.
Box 2 [ ] Please do not tender any Old Certificates held
by you for my account.
- ----------------------------------------------------------------------
Date____________________, 1996 _______________________________
Signature(s)
_______________________________
_______________________________
Please print name(s) here
_______________________________
Area Code and Telephone No.
Unless a specific contrary instruction is given in the
space provided, your signature(s) hereon shall constitute an
instruction to us to tender all Old Certificates.
