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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
June 29, 2004
CONTINENTAL AIRLINES, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-10323 74-2099724
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1600 Smith Street, Dept. HQSEO, Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
(713) 324-2950
(Registrant's telephone number, including area code)
Item 7. Financial Statements and Exhibits.
(c) Exhibits. The Exhibit Index is hereby incorporated by reference. The
documents listed on the Exhibit Index are filed as Exhibits with reference to
the Registration Statement on Form S-3 (Registration No. 333-67886) of
Continental Airlines, Inc. The Registration Statement and the final Prospectus
Supplement, dated June 18, 2004, to the Prospectus, dated August 23, 2001,
relate to the offering of Continental Airlines, Inc.'s Pass Through
Certificates, Series 2004-ERJ1.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, Continental
Airlines, Inc. has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONTINENTAL AIRLINES, INC.
July 7, 2004 By /s/ GERALD LADERMAN
------------------------------------
Gerald Laderman
Senior Vice President - Finance and
Treasurer
EXHIBIT INDEX
1.1 Underwriting Agreement, dated June 18, 2004, among
Citigroup Global Markets Inc. and Morgan Stanley & Co.
Incorporated, as Underwriters, WestLB AG, New York Branch,
as Depositary, Embraer-Empresa Brasileira de Aeronautica
S.A. and Continental Airlines, Inc.
4.1 Trust Supplement No. 2004-ERJ1, dated as of June 29, 2004,
between Wilmington Trust Company, as Trustee, and
Continental Airlines, Inc. to Pass Through Trust Agreement,
dated as of September 25, 1997
4.2 Revolving Credit Agreement (2004-ERJ1), dated as of June
29, 2004, between Wilmington Trust Company, as
Subordination Agent, as Borrower, and WestLB AG, New York
Branch, as Liquidity Provider
4.3 Revolving Credit Agreement (2004-ERJ1), dated as of June
29, 2004, between Wilmington Trust Company, as
Subordination Agent, as Borrower, and Citicorp North
America, Inc., as Liquidity Provider
4.4 Guarantee, dated June 29, 2004, by Citicorp, relating to
the Revolving Credit Agreement (2004-ERJ1), dated as of
June 29, 2004, between Wilmington Trust Company, as
Subordination Agent, as Borrower, and Citicorp North
America, Inc., as Liquidity Provider
4.5 Intercreditor Agreement, dated as of June 29, 2004, among
Wilmington Trust Company, as Trustee, WestLB AG, New York
Branch, and Citicorp North America, Inc., as Liquidity
Providers, and Wilmington Trust Company, as Subordination
Agent and Trustee
4.6 Deposit Agreement, dated as of June 29, 2004, between Wells
Fargo Bank Northwest, National Association, as Escrow
Agent, and WestLB AG, New York Branch, as Depositary
4.7 Escrow and Paying Agent Agreement, dated as of June 29,
2004, among Wells Fargo Bank Northwest, National
Association, as Escrow Agent, Citigroup Global Markets Inc.
and Morgan Stanley & Co. Incorporated, as Underwriters,
Wilmington Trust Company, as Trustee, and Wilmington Trust
Company, as Paying Agent
4.8 Note Purchase Agreement, dated as of June 29, 2004, among
Continental Airlines, Inc., Wilmington Trust Company, as
Trustee, Subordination Agent and Paying Agent, and Wells
Fargo Bank Northwest, National Association, as Escrow Agent
4.9 Form of Participation Agreement (Participation Agreement
among Continental Airlines, Inc., as Lessee, [__________],
as Owner Participant, Wells Fargo Bank Northwest, National
Association, as Owner Trustee and Lessor, Wilmington Trust
Company, as Mortgagee, Subordination Agent and Trustee, and
Embraer-Empresa Brasileira de Aeronautica S.A.) (Exhibit A
to Note Purchase Agreement)
4.10 Form of Lease (Lease between Wells Fargo Bank Northwest,
National Association, as Owner Trustee and Lessor, and
Continental Airlines, Inc., as Lessee) (Exhibit B to Note
Purchase Agreement)
4.11 Form of Indenture (Trust Indenture and Mortgage between
Wells Fargo Bank Northwest, National Association, as Owner
Trustee, and Wilmington Trust Company, as Mortgagee)
(Exhibit C to Note Purchase Agreement)
4.12 Form of Trust Agreement ([Amended and Restated] Trust
Agreement between [__________], as Owner Participant, and
Wells Fargo Bank Northwest, National Association, as Owner
Trustee) (Exhibit E to Note Purchase Agreement)
4.13 9.558% Continental Airlines Pass Through Certificate,
Series 2004-ERJ1, Certificate No. 1
23.1 Consent of Aviation Specialists Group, Inc., dated June 14,
2004
23.2 Consent of AvSolutions, Inc., dated June 14, 2004
23.3 Consent of BK Associates, Inc., dated June 14, 2004
23.4 Consent of Aviation Specialists Group, Inc., dated June 17,
2004
23.5 Consent of AvSolutions, Inc., dated June 17, 2004
23.6 Consent of BK Associates, Inc., dated June 17, 2004
EXECUTION VERSION
CONTINENTAL AIRLINES, INC.
Pass Through Certificates, Series 2004-ERJ1
UNDERWRITING AGREEMENT
June 18, 2004
Citigroup Global Markets Inc.
Morgan Stanley & Co. Incorporated
c/o Citigroup Global Markets Inc.
388 Greenwich Street
New York, New York 10013
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
At the request of Embraer - Empresa Brasileira de Aeronautica S.A.,
a Brazilian corporation ("EMBRAER"), Continental Airlines, Inc., a Delaware
corporation (the "COMPANY"), proposes that Wilmington Trust Company, as trustee
under the Class A Trust (as defined below) (the "TRUSTEE"), issue and sell to
the underwriters named in Schedule II hereto (the "UNDERWRITERS") its pass
through certificates in the aggregate principal amount and with the interest
rate and final maturity date set forth on Schedule I hereto (the "OFFERED
CERTIFICATES") on the terms and conditions stated herein.
The Offered Certificates will be issued pursuant to a Pass Through
Trust Agreement, dated as of September 25, 1997 (the "BASIC AGREEMENT"), between
the Company and the Trustee, as supplemented with respect to the issuance of the
Offered Certificates by a Pass Through Trust Supplement to be dated as of the
Closing Date (as defined below) (the "TRUST SUPPLEMENT"), between the Company
and the Trustee (the Basic Agreement as supplemented by such Trust Supplement
being referred to herein as the "PASS THROUGH TRUST AGREEMENT"). The Trust
Supplement is related to the creation and administration of the 2004-ERJ1 Pass
Through Trust (the "CLASS A TRUST"). As used herein, unless the context
otherwise requires, the term "you" shall mean, collectively, Citigroup Global
Markets Inc. ("CITIGROUP") and Morgan Stanley & Co. Incorporated.
The cash proceeds of the offering of Offered Certificates by the
Class A Trust, to the extent not used to purchase Equipment Notes (as defined in
the Note Purchase Agreement (as defined below)) on the Closing Date, will be
paid to Wells Fargo Bank Northwest, National Association, as escrow agent (the
"ESCROW AGENT"), under an Escrow and Paying Agent Agreement among the Escrow
Agent, the Underwriters, the Trustee and Wilmington Trust Company, as paying
agent (the "PAYING AGENT"), for the benefit of the holders of the Offered
Certificates (the "ESCROW AGREEMENT"). The Escrow Agent will deposit such cash
proceeds (each, a "DEPOSIT") with WestLB AG, acting through its New York Branch
(the "DEPOSITARY"), in accordance with a Deposit Agreement relating to the Class
A Trust (the "DEPOSIT AGREEMENT"), and, subject to the fulfillment of certain
conditions, will withdraw Deposits upon request to allow the Trustee to purchase
Equipment Notes from time to time pursuant to a Note Purchase Agreement to be
dated as of the Closing Date (the "NOTE PURCHASE AGREEMENT") among the Company,
Wilmington Trust Company, as Trustee of the Class A Trust, as Subordination
Agent (as hereinafter defined) and as Paying Agent, and the Escrow Agent. The
Escrow Agent will issue receipts to be attached to each related Offered
Certificate ("ESCROW RECEIPTS") representing each holder's fractional undivided
interest in amounts deposited with such Escrow Agent with respect to the Offered
Certificates and will pay to such holders through the Paying Agent interest
accrued on the Deposits and received by such Paying Agent pursuant to the
Deposit Agreement at a rate per annum equal to the interest rate applicable to
the Offered Certificates.
Certain amounts of interest payable on the Offered Certificates will
be entitled to the benefits of separate liquidity facilities. WestLB AG, acting
through its New York Branch ("WESTLB"), and Citicorp North America, Inc. ("CNAI"
and, together with WestLB, the "LIQUIDITY PROVIDERS") will each enter into a
revolving credit agreement with respect to the Class A Trust (each, a Liquidity
Facility) to be dated as of the Closing Date for the benefit of the holders of
the Offered Certificates issued by such Class A Trust. The obligations of CNAI
under its Liquidity Facility will be guaranteed by Citicorp (the "LIQUIDITY
PROVIDER GUARANTOR"). The Liquidity Providers and the holders of the Offered
Certificates will be entitled to the benefits of an Intercreditor Agreement to
be dated as of the Closing Date (the "INTERCREDITOR AGREEMENT") among the
Trustee, Wilmington Trust Company, as subordination agent and trustee thereunder
(the "SUBORDINATION AGENT"), and the Liquidity Providers.
The Company has filed with the Securities and Exchange Commission
(the "COMMISSION") a shelf registration statement on Form S-3 (File No.
333-67886) relating to pass through certificates (such registration statement
(including the respective exhibits thereto and the respective documents filed by
the Company with the Commission pursuant to the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "EXCHANGE Act"), that are incorporated by reference therein),
as amended at the date hereof, being herein referred to as the "REGISTRATION
STATEMENT") and the offering thereof from time to time in accordance with Rule
415 of the Securities Act of 1933, as amended, and the rules and regulations of
the Commission thereunder (collectively, the "SECURITIES ACT"). The Registration
Statement has been declared effective by the Commission. A final prospectus
supplement reflecting the terms of the Offered Certificates, the terms of the
offering thereof and other matters relating to the Offered Certificates, as
further specified in Section 4(d) hereof, will be prepared and filed together
with the Basic Prospectus referred to below pursuant to Rule 424 under the
Securities Act (such prospectus supplement, in the form first filed on or after
the date hereof pursuant to Rule 424, being herein referred to as the
"PROSPECTUS SUPPLEMENT" and any such prospectus supplement in the form or forms
filed prior to the filing of the Prospectus Supplement being herein referred to
as a "PRELIMINARY PROSPECTUS SUPPLEMENT"). The Basic Prospectus included in the
Registration Statement (the "BASIC PROSPECTUS") and relating to all offerings of
pass through certificates under the Registration Statement, as supplemented by
the Preliminary Prospectus Supplement or the Prospectus Supplement, as the case
may be, and, in either case, including the documents incorporated by reference
therein, is herein called, the "PRELIMINARY PROSPECTUS" or the "PROSPECTUS", as
applicable, except that, if the Basic Prospectus is amended or supplemented on
or prior to the date of the Preliminary Prospectus Supplement or the date on
which the Prospectus Supplement is first filed pursuant to Rule 424, the terms
"PRELIMINARY PROSPECTUS" and "PROSPECTUS" shall refer to the Basic Prospectus as
so amended or supplemented and as supplemented by the Preliminary Prospectus
Supplement or the Prospectus Supplement, as applicable. Any reference herein to
the terms "AMENDMENT" or "SUPPLEMENT" with respect to the Prospectus or any
Preliminary Prospectus shall be deemed to refer to and include any documents
filed with the Commission under the Exchange Act after the date the Prospectus
is filed with the Commission, or the date of such Preliminary Prospectus, as the
case may be, and incorporated therein by reference pursuant to Item 12 of Form
S-3 under the Securities Act.
Capitalized terms not otherwise defined in this Underwriting
Agreement (the "AGREEMENT") shall have the meanings specified therefor in the
Pass Through Trust Agreement, in the Note Purchase Agreement or in the
Intercreditor Agreement; PROVIDED that, as used in this Agreement, the term
"OPERATIVE AGREEMENTS" shall mean the Deposit Agreement, the Escrow Agreement,
the Intercreditor Agreement, the Liquidity Facilities, the Guarantee Agreement,
the Pass Through Trust Agreement and the Financing Agreements (as defined in the
Note Purchase Agreement).
1. REPRESENTATIONS AND WARRANTIES. (a) The Company represents and
warrants to, and agrees with each Underwriter that:
(i) The Company meets the requirements for use of Form S-3 under the
Securities Act; the Registration Statement has become effective; and, on
the original effective date of the Registration Statement, the
Registration Statement complied in all material respects with the
requirements of the Securities Act. On the original effective date of the
Registration Statement, the Registration Statement did not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading, and on the date hereof and on the Closing Date, the
Prospectus, as amended and supplemented, if the Company shall have
furnished any amendment or supplement thereto, does not and will not
include an untrue statement of a material fact and does not and will not
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The preceding sentence does not apply to (x) statements in or
omissions from the Registration Statement, the Preliminary Prospectus or
the Prospectus based upon (A) written information furnished to the Company
by any Underwriter expressly for use therein ("UNDERWRITER INFORMATION"),
(B) the Embraer Information (as defined in Annex I) or (C) the Depositary
Information (as hereinafter defined) or (y) statements or omissions in
that part of each Registration Statement which shall constitute the
Statement of Eligibility of the Trustee under the Trust Indenture Act of
1939, as amended (the "TRUST INDENTURE ACT"), on Form T-1.
(ii) The documents incorporated by reference in the Prospectus
pursuant to Item 12 of Form S-3 under the Securities Act, at the time they
were or hereafter, during the period mentioned in Section 4(a) hereof, are
filed with the Commission, complied or will comply, as the case may be, in
all material respects with the requirements of the Exchange Act.
(iii) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own, lease and operate its property and
to conduct its business as described in the Prospectus; and the Company is
duly qualified to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on the
condition (financial or otherwise), business, properties or results of
operations of the Company and its consolidated subsidiaries taken as a
whole (a "CONTINENTAL MATERIAL ADVERSE EFFECT").
(iv) Each of Continental Micronesia, Inc. and Air Micronesia Inc.
(together, the "SUBSIDIARIES") has been duly incorporated and is an
existing corporation in good standing under the laws of the jurisdiction
of its incorporation, with corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus; and each Subsidiary is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions in which
its ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to be so qualified would not
have a Continental Material Adverse Effect; all of the issued and
outstanding capital stock of each Subsidiary has been duly authorized and
validly issued and is fully paid and nonassessable; and, except as
described in the Prospectus, each Subsidiary's capital stock owned by the
Company, directly or through subsidiaries, is owned free from liens,
encumbrances and defects.
(v) Except as described in the Prospectus, the Company is not in
default in the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which it is a party or by
which it may be bound or to which any of its properties may be subject,
except for such defaults that would not have a Continental Material
Adverse Effect. The execution, delivery and performance of this Agreement
and the Operative Agreements to which the Company is or will be a party
and the consummation of the transactions contemplated herein and therein
have been duly authorized by all necessary corporate action of the Company
and will not result in any breach of any of the terms, conditions or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance (other than any lien, charge
or encumbrance created under any Operative Agreement) upon any property or
assets of the Company pursuant to any indenture, loan agreement, contract,
mortgage, note, lease or other instrument to which the Company is a party
or by which the Company may be bound or to which any of the property or
assets of the Company is subject, which breach, default, lien, charge or
encumbrance, individually or in the aggregate, would have a Continental
Material Adverse Effect, nor will any such execution, delivery or
performance result in any violation of the provisions of the charter or
by-laws of the Company or any statute, any rule, regulation or order of
any governmental agency or body or any court having jurisdiction over the
Company.
(vi) No consent, approval, authorization, or order of, or filing
with, any governmental agency or body or any court is required for the
valid authorization, execution and delivery by the Company of this
Agreement and the Operative Agreements to which it is or will be a party
and for the consummation of the transactions contemplated herein and
therein, except (x) such as may be required under the Securities Act, the
Trust Indenture Act, the securities or "blue sky" or similar laws of the
various states and of foreign jurisdictions or rules and regulations of
the National Association of Securities Dealers, Inc., and (y) filings or
recordings with the Federal Aviation Administration (the "FAA") and under
the UCC or other laws in effect in any applicable jurisdiction governing
the perfection of security interests, which filings or recordings referred
to in this clause (y), with respect to any particular set of Financing
Agreements, shall have been made, or duly presented for filing or
recordation, or shall be in the process of being duly filed or filed for
recordation, on or prior to the applicable "Closing Date", as defined in
such Financing Agreements (the "FUNDING DATE").
(vii) This Agreement has been duly executed and delivered by the
Company and the Operative Agreements to which the Company will be a party
will be duly executed and delivered by the Company on or prior to the
Closing Date or the applicable Funding Date, as the case may be.
(viii) The Operative Agreements to which the Company is or will be a
party, when duly executed and delivered by the Company, assuming that such
Operative Agreements have been duly authorized, executed and delivered by,
and constitute the legal, valid and binding obligations of, each other
party thereto, will constitute valid and binding obligations of the
Company enforceable in accordance with their terms, except (w) as
enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally, (x) as enforcement thereof
is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law), (y) that
the enforceability of the Leases may also be limited by applicable laws
which may affect the remedies provided therein but which do not affect the
validity of the Leases or make such remedies inadequate for the practical
realization of the benefits intended to be provided thereby and (z) with
respect to indemnification and contribution provisions, as enforcement
thereof may be limited by applicable law. The Basic Agreement as executed
is substantially in the form filed as an exhibit to the Company's current
report on Form 8-K dated September 25, 1997 and has been duly qualified
under the Trust Indenture Act.
(ix) The consolidated financial statements of the Company
incorporated by reference in the Prospectus, together with the related
notes thereto, present fairly in all material respects the financial
position of the Company and its consolidated subsidiaries at the dates
indicated and the consolidated results of operations and cash flows of the
Company and its consolidated subsidiaries for the periods specified. Such
financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis throughout
the periods involved, except as otherwise stated therein and except that
unaudited financial statements do not have all required footnotes. The
financial statement schedules, if any, incorporated by reference in the
Prospectus present the information required to be stated therein.
(x) The Company is a "citizen of the United States" within the
meaning of Section 40102(a)(15) of Title 49 of the United States Code, as
amended, and holds an air carrier operating certificate issued pursuant to
Chapter 447 of Title 49 of the United States Code, as amended, for
aircraft capable of carrying 10 or more individuals or 6,000 pounds or
more of cargo. All of the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid
and non-assessable.
(xi) Except as disclosed in the Prospectus, the Company and the
Subsidiaries have good and marketable title to all real properties and all
other properties and assets owned by them, in each case free from liens,
encumbrances and defects except where the failure to have such title would
not have a Continental Material Adverse Effect; and except as disclosed in
the Prospectus, the Company and the Subsidiaries hold any leased real or
personal property under valid and enforceable leases with no exceptions
that would have a Continental Material Adverse Effect.
(xii) Except as disclosed in the Prospectus, there is no action,
suit or proceeding before or by any governmental agency or body or court,
domestic or foreign, now pending or, to the knowledge of the Company,
threatened against the Company or any of its subsidiaries or any of their
respective properties that individually (or in the aggregate in the case
of any class of related lawsuits), could reasonably be expected to result
in a Continental Material Adverse Effect or that could reasonably be
expected to materially and adversely affect the consummation of the
transactions contemplated by this Agreement or the Operative Agreements.
(xiii) Except as disclosed in the Prospectus, no labor dispute with
the employees of the Company or any subsidiary exists or, to the knowledge
of the Company, is imminent that could reasonably be expected to have a
Continental Material Adverse Effect.
(xiv) Each of the Company and the Subsidiaries has all necessary
consents, authorizations, approvals, orders, certificates and permits of
and from, and has made all declarations and filings with, all federal,
state, local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals, to own, lease, license
and use its properties and assets and to conduct its business in the
manner described in the Prospectus, except to the extent that the failure
to so obtain, declare or file would not have a Continental Material
Adverse Effect.
(xv) Except as disclosed in the Prospectus, (x) neither the Company
nor any of the Subsidiaries is in violation of any statute, rule,
regulation, decision or order of any governmental agency or body or any
court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances (collectively, "ENVIRONMENTAL LAWS"), owns
or operates any real property contaminated with any substance that is
subject to any environmental laws, or is subject to any claim relating to
any environmental laws, which violation, contamination, liability or claim
individually or in the aggregate is reasonably expected to have a
Continental Material Adverse Effect, and (y) the Company is not aware of
any pending investigation which might lead to such a claim that is
reasonably expected to have a Continental Material Adverse Effect.
(xvi) The accountants that examined and issued an auditors' report
with respect to the consolidated financial statements of the Company and
the financial statement schedules of the Company, if any, included or
incorporated by reference in the Registration Statement are independent
public accountants within the meaning of the Securities Act.
(xvii) The Company is not an "investment company", or an entity
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended (the "INVESTMENT COMPANY ACT"),
required to register under the Investment Company Act.
(xviii) No Appraiser is an affiliate of the Company or, to the
knowledge of the Company, has a substantial interest, direct or indirect,
in the Company. To the knowledge of the Company, none of the officers and
directors of any of such Appraisers is connected with the Company or any
of its affiliates as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
(xix) The Company (A) makes and keeps books, records and accounts,
which, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the material assets of the Company and
its consolidated subsidiaries and (B) maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (1)
transactions are executed in accordance with management's general or
specific authorization; (2) transactions are recorded as necessary: (x) to
permit preparation of financial statements in conformity with generally
accepted accounting principles or any other criteria applicable to such
statements and (y) to maintain accountability for assets; (3) access to
material assets is permitted only in accordance with management's general
or specific authorization; and (4) the recorded accountability for
material assets is compared with the existing material assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(b) The Depositary represents and warrants to, and agrees with, each
Underwriter and the Company that:
(i) The information pertaining to the Depositary set forth under the
caption "Description of the Deposit Agreement -- Depositary" (the
"DEPOSITARY INFORMATION") in the Prospectus, as amended and supplemented,
if the Company shall have furnished any amendment or supplement thereto,
does not, and will not as of the Closing Date, contain any untrue
statement of a material fact.
(ii) The Depositary is duly organized and validly existing as a
joint stock company ("Aktiengesellschaft") under the laws of the Federal
Republic of Germany and is duly qualified to conduct banking business in
the State of New York through its New York branch, with corporate power
and authority to own, lease and operate its property, to conduct its
business as described in the Depositary Information and to enter into and
perform its obligations under this Agreement and the Deposit Agreement.
(iii) No consent, approval, authorization, or order of, or filing
with any governmental agency or body or any court is required for the
valid authorization, execution and delivery by the Depositary of this
Agreement and the Deposit Agreement and for the consummation of the
transactions contemplated herein and therein, except such as may have been
obtained.
(iv) The execution and delivery by the Depositary of this Agreement
and the Deposit Agreement and the consummation of the transactions
contemplated herein and therein have been duly authorized by the
Depositary and will not violate any law, governmental rule or regulation
or any of its organizational documents or any order, writ, injunction or
decree of any court or governmental agency against it or the provisions of
any indenture, loan agreement, contract or other instrument to which it is
a party or is bound.
(v) This Agreement has been duly executed and delivered by the
Depositary, and the Deposit Agreement will be duly executed and delivered
by the Depositary on or prior to the Closing Date.
(vi) The Deposit Agreement, when duly executed and delivered by the
Depositary, assuming that such Deposit Agreement has been duly authorized,
executed and delivered by, and constitutes the legal, valid and binding
obligations of, the Escrow Agent, will constitute the legal, valid and
binding obligations of the Depositary enforceable in accordance with its
terms, except (x) as enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws now or
hereinafter in effect relating to creditors' rights generally and (y) as
enforcement thereof is subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law).
(c) Embraer represents and warrants to, and agrees with, each
Underwriter and the Company that:
(i) (x) As of the date hereof, the Registration Statement does not
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, (y) as of its date, the Preliminary
Prospectus did not include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein not misleading and (z) on the date hereof and
on the Closing Date, the Prospectus, as amended and supplemented, if the
Company shall have furnished any amendment or supplement thereto, does not
and will not include an untrue statement of a material fact and does not
and will not omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. The preceding sentence does not apply to
statements in or omissions from the Registration Statement, the
Preliminary Prospectus or the Prospectus based upon (A) Continental
Information (as defined in Annex I), (B) Underwriter Information or (C)
the Depositary Information.
(ii) Each of Embraer and Refine, Inc. ("REFINE") has been duly
organized and is a corporation validly existing in good standing under the
laws of its jurisdiction of incorporation or organization, with corporate
power and authority to own, lease and operate its properties, conduct its
business as currently conducted and perform its obligations under this
Agreement and under the Operative Agreements to which it is or will be a
party.
(iii) No consent, approval, authorization, or order of, or filing
with any governmental agency or body or any court is required for the
valid authorization, execution and delivery by Embraer of this Agreement
or by Embraer or Refine of the Operative Agreements to which either
Embraer or Refine is or will be a party and for the performance of their
respective obligations hereunder and thereunder, as applicable, except
such as may have been obtained.
(iv) The execution and delivery by Embraer of this Agreement and by
Embraer and Refine of the Operative Agreements to which either Embraer or
Refine is or will be a party and the performance of their respective
obligations hereunder and thereunder have been duly authorized by Embraer
and Refine, as applicable, and will not violate (w) any law, governmental
rule or regulation, (x) any of their respective organizational documents,
(y) any order, writ, injunction or decree of any court or governmental
agency against either Embraer or Refine, as applicable, or (z) except to
the extent that any such violation would not have a material adverse
effect on the condition (financial or otherwise), business, properties or
results of operations of Embraer and its consolidated subsidiaries taken
as a whole or Refine, as applicable, the provisions of any indenture, loan
agreement, contract or other instrument to which either Embraer or Refine
is a party or is bound.
(v) This Agreement has been duly executed and delivered by Embraer.
(vi) (1) The Operative Agreements to which Embraer is or will be a
party, when duly executed and delivered by Embraer, assuming that such
Operative Agreements have been duly authorized, executed and delivered by,
and constitute the legal, valid and binding obligations of, each other
party thereto, will constitute valid and binding obligations of Embraer
enforceable in accordance with their terms and (2) the Operative
Agreements to which Refine is or will be a party, when duly executed and
delivered by Refine, assuming that such Operative Agreements have been
duly authorized, executed and delivered by, and constitute the legal,
valid and binding obligations of, each other party thereto, will
constitute valid and binding obligations of Refine enforceable in
accordance with their terms, except, in the case of both (1) and (2), (x)
as enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, (y) as
enforcement thereof is subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law)
and (z) with respect to indemnification and contribution provisions, as
enforcement thereof may be limited by applicable law.
(vii) On or prior to the Closing Date, the issuance of the Offered
Certificates will be duly authorized by the Trustee. When duly executed,
authenticated, issued and delivered in the manner provided for in the Pass
Through Trust Agreement and sold and paid for as provided in this
Agreement, the Offered Certificates will be legally and validly issued and
will be entitled to the benefits of the Pass Through Trust Agreement; and
when executed, authenticated, issued and delivered in the manner provided
for in the Escrow Agreement, the Escrow Receipts will be legally and
validly issued and will be entitled to the benefits of the Escrow
Agreement.
(viii) The Class A Trust is not an "investment company", or an
entity "controlled" by an "investment company", within the meaning of the
Investment Company Act, required to register under the Investment Company
Act; and after giving effect to the offering and sale of the Offered
Certificates and the application of the proceeds thereof as described in
the Prospectus, the Class A Trust will not be, nor will the escrow
arrangement contemplated by the Escrow Agreement result in the creation
of, an "investment company", or an entity "controlled" by an "investment
company", as defined in the Investment Company Act, in each case required
to register under the Investment Company Act.
(ix) The Offered Certificates, this Agreement and the Operative
Agreements will conform in all material respects to the descriptions
thereof contained in the Prospectus (other than, in the case of the
Financing Agreements, as described in the Prospectus).
(x) The information provided by Embraer to each of Aviation
Specialists Group, Inc. ("ASG"), AvSolutions ("AVS") and BK Associates
(together with ASG and AVS, the "APPRAISERS") for use by the Appraisers in
preparation of their respective reports relating to the Aircraft each
dated as of June 11, 2004, taken as a whole with respect to each such
report, did not contain an untrue statement of material fact or omit to
state a material fact necessary to make such information not misleading.
(d) The parties agree that any certificate signed by a duly
authorized officer of the Company and delivered to an Underwriter, or to counsel
for the Underwriters, on the Closing Date and in connection with this Agreement
or the offering of the Offered Certificates, shall be deemed a representation
and warranty by (and only by) the Company to the Underwriters as to the matters
covered thereby.
2. PURCHASE, SALE AND DELIVERY OF OFFERED CERTIFICATES. (a) On the
basis of the representations, warranties and agreements herein contained, but
subject to the terms and the conditions herein set forth, the Company agrees to
cause the Trustee to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Trustee, at a purchase price of
100% of the principal amount thereof, the aggregate principal amount of Offered
Certificates set forth opposite the name of such Underwriter in Schedule II.
Concurrently with the issuance of the Offered Certificates, the Escrow Agent
shall issue and deliver to the Trustee the Escrow Receipts in accordance with
the terms of the Escrow Agreement, which Escrow Receipts shall be attached to
the related Offered Certificates.
(b) The Company is advised by you that the Underwriters propose to
make a public offering of the Offered Certificates as set forth in the
Prospectus Supplement as soon after this Agreement has been entered into as in
your judgment is advisable. The Company is further advised by you that the
Offered Certificates are to be offered to the public initially at 100% of their
principal amount -- the public offering price -- plus accrued interest, if any,
and to certain dealers selected by the Underwriters at concessions not in excess
of the concessions set forth in the Prospectus, and that the Underwriters may
allow, and such dealers may reallow, concessions not in excess of the
concessions set forth in the Prospectus to certain other dealers.
(c) As underwriting commission and other compensation to the
Underwriters for their respective commitments and obligations hereunder in
respect of the Offered Certificates, including their respective undertakings to
distribute the Offered Certificates, Embraer will pay to Citigroup for the
accounts of the Underwriters the amount set forth in Schedule III hereto, which
amount shall be allocated among the Underwriters in the manner determined by
you. Such payment will be made on the Closing Date simultaneously with the
issuance and sale of the Offered Certificates (with attached Escrow Receipts) to
the Underwriters. Payment of such compensation shall be made by Federal funds
check or by wire transfer of immediately available funds.
(d) Delivery of and payment for the Offered Certificates (with
attached Escrow Receipts) shall be made at the offices of Hughes Hubbard & Reed
LLP at One Battery Park Plaza, New York, New York 10004 at 10:00 A.M. on June
29, 2004 or such other date, time and place as may be agreed upon by the Company
and you (such date and time of delivery and payment for the Offered Certificates
(with attached Escrow Receipts) being herein called the "CLOSING DATE").
Delivery of the Offered Certificates (with attached Escrow Receipts) issued by
the Class A Trust shall be made to Citigroup's account at The Depository Trust
Company ("DTC") for the respective accounts of the several Underwriters against
payment by the Underwriters of the purchase price thereof. Payment for the
Offered Certificates issued by the Class A Trust and the related Escrow Receipts
attached thereto shall be made by the Underwriters by wire transfer of
immediately available funds to the accounts and in the manner specified in the
Escrow Agreement (PROVIDED, that if the Company notifies you that a Funding Date
is occurring on the Closing Date, a portion of such payment in the amount
specified by the Company shall be paid to the accounts and in the manner
specified in the related Participation Agreement). The Offered Certificates
(with attached Escrow Receipts) issued by the Class A Trust shall be in the form
of one or more fully registered global Offered Certificates, and shall be
deposited with the Trustee as custodian for DTC and registered in the name of
Cede & Co.
(e) The Company agrees to have the Offered Certificates (with
attached Escrow Receipts) available for inspection and checking by you in New
York, New York not later than 1:00 P.M. on the business day prior to the Closing
Date.
(f) It is understood that each Underwriter has authorized Citigroup,
on its behalf and for its account, to accept delivery of, receipt for, and make
payment of the purchase price for, the Offered Certificates (with attached
Escrow Receipts) that it has agreed to purchase. Citigroup, individually and not
as a representative, may (but shall not be obligated to) make payment of the
purchase price for the Offered Certificates to be purchased by any Underwriter
whose check or checks shall not have been received by the Closing Date.
3. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations
of the Underwriters to purchase and pay for the Offered Certificates pursuant to
this Agreement are subject to the following conditions:
(a) On the Closing Date, no stop order suspending the effectiveness
of the Registration Statement shall have been issued under the Securities
Act and no proceedings therefor shall have been instituted or threatened
by the Commission.
(b) On the Closing Date, you shall have received an opinion of
Hughes Hubbard & Reed LLP, as counsel for the Company, dated the Closing
Date, in form and substance reasonably satisfactory to you and
substantially to the effect set forth in Exhibit A hereto.
(c) On the Closing Date, you shall have received an opinion of the
General Counsel of the Company, dated the Closing Date, in form and
substance reasonably satisfactory to you and substantially to the effect
set forth in Exhibit B hereto.
(d) On the Closing Date, you shall have received an opinion of
Richards, Layton & Finger, P.A., counsel for Wilmington Trust Company,
individually and as Trustee, Subordination Agent and Paying Agent, dated
the Closing Date, in form and substance reasonably satisfactory to you and
substantially to the effect set forth in Exhibit C hereto.
(e) On the Closing Date, you shall have received an opinion of Ray,
Quinney & Nebeker, counsel for the Escrow Agent, dated the Closing Date,
in form and substance reasonably satisfactory to you and substantially to
the effect set forth in Exhibit D hereto.
(f) On the Closing Date, you shall have received an opinion of
in-house counsel for WestLB, as a Liquidity Provider, dated the Closing
Date, in form and substance reasonably satisfactory to you and
substantially to the effect set forth in Exhibit E hereto.
(g) On the Closing Date, you shall have received an opinion of
in-house counsel for CNAI, as a Liquidity Provider, and Citicorp, as the
Liquidity Provider Guarantor, dated the Closing Date, in form and
substance reasonably satisfactory to you and substantially to the effect
set forth in Exhibit F hereto.
(h) On the Closing Date, you shall have received an opinion of
Milbank, Tweed, Hadley & McCloy LLP, special New York counsel to WestLB,
as a Liquidity Provider, dated the Closing Date, in form and substance
reasonably satisfactory to you and substantially to the effect set forth
in Exhibit G hereto.
(i) On the Closing Date, you shall have received an opinion of
Milbank, Tweed, Hadley & McCloy LLP, special New York counsel to CNAI, as
a Liquidity Provider, and Citicorp, as the Liquidity Provider Guarantor,
dated the Closing Date, in form and substance reasonably satisfactory to
you and substantially to the effect set forth in Exhibit H hereto.
(j) On the Closing Date, you shall have received an opinion of
in-house counsel for WestLB, as the Depositary, dated the Closing Date, in
form and substance reasonably satisfactory to you and substantially to the
effect set forth in Exhibit I hereto.
(k) On the Closing Date, you shall have received an opinion of
Milbank, Tweed, Hadley & McCloy LLP, special New York counsel for the
Depositary, dated the Closing Date, in form and substance reasonably
satisfactory to you and substantially to the effect set forth in Exhibit J
hereto.
(l) On the Closing Date, you shall have received an opinion of
Katten Muchin Zavis Rosenman, special New York counsel for Embraer, dated
the Closing Date, in form and substance reasonably satisfactory to you and
substantially to the effect set forth in Exhibit K hereto.
(m) On the Closing Date, you shall have received an opinion of
Carlos Rocha Villela, Esq., Brazilian in-house counsel for Embraer, dated
the Closing Date, in form and substance reasonably satisfactory to you and
substantially to the effect set forth in Exhibit L hereto.
(n) On the Closing Date, you shall have received an opinion of
Milbank, Tweed, Hadley & McCloy LLP, counsel for the Underwriters, dated
as of the Closing Date, with respect to the issuance and sale of the
Offered Certificates, the Registration Statement, the Prospectus and other
related matters as the Underwriters may reasonably require.
(o) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred any change, or any development or event
involving a prospective change, in the condition (financial or other),
business, properties or results of operations of the Company and its
subsidiaries considered as one enterprise that, in your judgment, is
material and adverse and that makes it, in your judgment, impracticable to
proceed with the completion of the public offering of the Offered
Certificates on the terms and in the manner contemplated by the
Prospectus.
(p) You shall have received on the Closing Date a certificate, dated
the Closing Date and signed by the President or any Vice President of the
Company, to the effect that the representations and warranties of the
Company contained in this Agreement are true and correct as of the Closing
Date as if made on the Closing Date (except to the extent that they relate
solely to an earlier date, in which case they shall be true and accurate
as of such earlier date), that the Company has performed all its
obligations to be performed hereunder on or prior to the Closing Date and
that, subsequent to the execution and delivery of this Agreement, there
shall not have occurred any material adverse change, or any development or
event involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of the
Company and its subsidiaries considered as one enterprise, except as set
forth in or contemplated by the Prospectus.
(q) You shall have received from Ernst & Young LLP a letter, dated
the date hereof, in form and substance satisfactory to you.
(r) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, there shall not have been any downgrading in
the rating accorded any of the Company's securities (except for any pass
through certificates) by any "nationally recognized statistical rating
organization", as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act, or any public announcement that any such
organization has under surveillance or review, in each case for possible
change, its ratings of any such securities other than pass through
certificates (other than an announcement with positive implications of a
possible upgrading, and no implication of a possible downgrading, of such
rating).
(s) Each of the Appraisers shall have furnished to the Underwriters
a letter from such Appraiser, addressed to the Company and dated the
Closing Date, confirming that such Appraiser and each of its directors and
officers (i) is not an affiliate of the Company or any of its affiliates,
(ii) does not have any substantial interest, direct or indirect, in the
Company or any of its affiliates and (iii) is not connected with the
Company or any of its affiliates as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar
functions.
(t) At the Closing Date, each of the Operative Agreements (other
than the Financing Agreements) shall have been duly executed and delivered
by each of the parties thereto; and the representations and warranties of
the Company contained in each of such executed Operative Agreements shall
be true and correct as of the Closing Date (except to the extent that they
relate solely to an earlier date, in which case they shall be true and
correct as of such earlier date) and the Underwriters shall have received
a certificate of the President or a Vice President of the Company, dated
as of the Closing Date, to such effect.
(u) On the Closing Date, the Offered Certificates shall be rated (x)
not lower than "BBB-" by Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc., and (y) not lower than "Ba2" by Moody's
Investors Service, Inc.
(v) On the Closing Date, the representations and warranties of the
Depositary contained in this Agreement shall be true and correct as if
made on the Closing Date (except to the extent that they relate solely to
an earlier date, in which case they shall be true and correct as of such
earlier date).
(w) You shall have received from Ernst & Young LLP a letter, dated
the Closing Date, which meets the requirements of subsection (q) of this
Section, except that the specified date referred to in such subsection
will be a date not more than three business days prior to the Closing Date
for the purposes of this subsection.
(x) You shall have received on the Closing Date a certificate, dated
the Closing Date and signed by the President or any Vice President of
Embraer, to the effect that the representations and warranties of Embraer
contained in this Agreement are true and correct as of the Closing Date as
if made on the Closing Date (except to the extent that they relate solely
to an earlier date, in which case they shall be true and accurate as of
such earlier date) and that Embraer has performed all its obligations to
be performed hereunder on or prior to the Closing Date.
The Company or Embraer, as applicable, will furnish the Underwriters
with such conformed copies of such opinions, certificates, letters and documents
as the Underwriters reasonably request.
4. CERTAIN COVENANTS OF THE COMPANY. The Company covenants with each
Underwriter as follows:
(a) During the period described in the following sentence of this
Section 4(a), the Company shall advise you promptly of any proposal to
amend or supplement the Registration Statement or the Prospectus (except
by documents filed under the Exchange Act) and will not effect such
amendment or supplement (except by documents filed under the Exchange Act)
without the consent of each Underwriter, which consent will not be
unreasonably withheld. If, at any time after the public offering of the
Offered Certificates as the Prospectus is required by law to be delivered
in connection with sales of the Offered Certificates by an Underwriter or
a dealer, any event shall occur as a result of which it is necessary to
amend the Registration Statement or amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading in any
material respect, or if it is necessary to amend the Registration
Statement or amend or supplement the Prospectus to comply with law, the
Company shall prepare and furnish, at Embraer's expense, to the
Underwriters and to the dealers (whose names and addresses the
Underwriters will furnish to the Company) to which Offered Certificates
may have been sold by the Underwriters and to any other dealers upon
request, either amendments or supplements to the Prospectus so that the
statements in the Prospectus as so amended or supplemented will not, in
the light of the circumstances when the Prospectus is delivered to a
purchaser, be misleading in any material respect or amendments or
supplements to the Registration Statement or the Prospectus so that the
Registration Statement or the Prospectus, as so amended or supplemented,
will comply with law and cause such amendments or supplements to be filed
promptly with the Commission.
(b) During the period mentioned in paragraph (a) above, the Company
shall notify each Underwriter immediately of (i) the effectiveness of any
amendment to the Registration Statement, (ii) the transmittal to the
Commission for filing of any supplement to the Prospectus or any document
that would as a result thereof be incorporated by reference in the
Prospectus, (iii) the receipt of any comments from the Commission with
respect to the Registration Statement, the Prospectus or the Prospectus
Supplement, (iv) any request by the Commission to the Company for any
amendment to the Registration Statement or any supplement to the
Prospectus or for additional information relating thereto or to any
document incorporated by reference in the Prospectus and (v) receipt by
the Company of any notice of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement, the
suspension of the qualification of the Offered Certificates for offering
or sale in any jurisdiction, or the institution or threatening of any
proceeding for any of such purposes; and the Company agrees to use every
reasonable effort to prevent the issuance of any such stop order and, if
any such order is issued, to obtain the lifting thereof at the earliest
possible moment and the Company shall (subject to the proviso to Section
4(e)) endeavor, in cooperation with the Underwriters, to prevent the
issuance of any such stop order suspending such qualification and, if any
such order is issued, to obtain the lifting thereof at the earliest
possible moment.
(c) During the period mentioned in paragraph (a) above, the Company
will furnish to each of the Underwriters as many conformed copies of the
Registration Statement (as originally filed) and all amendments and
supplements to such documents (excluding all exhibits and documents filed
therewith or incorporated by reference therein) and as many conformed
copies of all consents and certificates of experts, in each case as soon
as available and in such quantities as each of the Underwriters reasonably
requests.
(d) Promptly following the execution of this Agreement, the Company
will prepare a Prospectus Supplement that complies with the Securities Act
and that sets forth the principal amount of the Offered Certificates and
their terms (including, without limitation, terms of the Escrow Receipts
attached to the Offered Certificates) not otherwise specified in the
Preliminary Prospectus Supplement or the Basic Prospectus included in the
Registration Statement, the name of each Underwriter and the principal
amount of the Offered Certificates that each severally has agreed to
purchase, the name of each Underwriter, if any, acting as representative
of the Underwriters in connection with the offering, the price at which
the Offered Certificates are to be purchased by the Underwriters from the
Trustee, any initial public offering price, any selling concession and
reallowance and any delayed delivery arrangements, and such other
information as you and the Company deem appropriate in connection with the
offering of the Offered Certificates. The Company will timely transmit
copies of the Prospectus Supplement to the Commission for filing pursuant
to Rule 424 under the Securities Act.
(e) The Company shall, in cooperation with the Underwriters,
endeavor to arrange for the qualification of the Offered Certificates for
offer and sale under the applicable securities or "blue sky" laws of such
jurisdictions in the United States as you reasonably designate and will
endeavor to maintain such qualifications in effect so long as required for
the distribution of the Offered Certificates; PROVIDED that the Company
shall not be required to (i) qualify as a foreign corporation or as a
dealer in securities, (ii) file a general consent to service of process or
(iii) subject itself to taxation in any such jurisdiction.
(f) During the period of ten years after the Closing Date, the
Company will promptly furnish to each of the Underwriters, upon request,
copies of all Annual Reports on Form 10-K and any definitive proxy
statement of the Company filed with the Commission; PROVIDED THAT
providing a website address at which such Annual Reports and any such
definitive proxy statements may be accessed will satisfy this clause (f).
(g) Between the date of this Agreement and the Closing Date, the
Company shall not, without the prior written consent of the Underwriters,
offer, sell, or enter into any agreement to sell (as public debt
securities registered under the Securities Act (other than the Offered
Certificates) or as debt securities which may be resold in a transaction
exempt from the registration requirements of the Securities Act in
reliance on Rule 144A thereunder and which are marketed through the use of
a disclosure document containing substantially the same information as a
prospectus for similar debt securities registered under the Securities
Act), any equipment notes, pass through certificates, equipment trust
certificates or equipment purchase certificates secured by aircraft owned
or leased by the Company (or rights relating thereto).
5. INDEMNIFICATION AND CONTRIBUTION. (a) The Company and Embraer
agree that the Company or Embraer, as set forth in provisos (ii) and (iii)
below, will indemnify and hold harmless each Underwriter, and each Person, if
any, who controls such Underwriter within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act from and against any and
all losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred by any Underwriter or any such
controlling person in connection with defending or investigating any such action
or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
the Preliminary Prospectus or the 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 required to
be stated therein or necessary to make the statements therein 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 Depositary Information or Underwriter Information; PROVIDED, HOWEVER, that
(i) the foregoing indemnity agreement with respect to the Preliminary Prospectus
shall not inure to the benefit of any Underwriter from whom the person asserting
any such losses, claims, damages or liabilities purchased the Offered
Certificates, or to the benefit of any person controlling such Underwriter, if a
copy of the 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 Underwriter to such person, if required by law so to have
been delivered, at or prior to the written confirmation of the sale of such
Offered Certificates to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such losses, claims,
damages or liabilities unless such failure to deliver the Prospectus was a
result of noncompliance by the Company with its delivery requirements set forth
in Section 4(a), (ii) the Company shall be obligated under this Section 5 only
with respect to the Continental Information and then only to the extent that a
court of competent jurisdiction makes a Final Determination that such losses,
claims, damages or liabilities arise out of or are caused by an untrue statement
of a material fact contained in or omission of a material fact from the
Continental Information (such Final Determination, an "ADVERSE FINAL
DETERMINATION"), and (iii) Embraer shall be obligated under this Section 5 to
the extent that the Company is not obligated pursuant to the foregoing clause
(ii). "FINAL DETERMINATION" shall mean a determination which has not been stayed
or reversed and which has become final and non-appealable in accordance with
applicable law.
The provisions of this Section 5 shall not affect any agreements
between the Company, Embraer or any of their respective affiliates for the
sharing of, or otherwise allocating, costs and expenses.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless each of Embraer and the Company, each of their respective
directors, each of the officers of the Company who signed the Registration
Statement and each person, if any, who controls the Company or Embraer, as the
case may be, within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, to the same extent as the foregoing indemnity
from each of the Company and Embraer to such Underwriter but only with reference
to the Underwriter Information provided by such Underwriter and without giving
effect to the proviso in Section 5(a).
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or (b) above, such
person (the "INDEMNIFIED PARTY") shall promptly notify the person against whom
such indemnity may be sought (the "INDEMNIFYING PARTY"), and, if such proceeding
involves any Continental Information, the Company, in writing. The indemnifying
party, upon request of the indemnified party, shall, and the indemnifying party,
or, if such proceeding involves any Continental Information, the Company, may
elect (any election by the Company to supersede any election by Embraer) to,
retain counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party (or the Company as the
case may be) may designate in such proceeding and the indemnifying party (or, if
the Company elects to designate counsel, Embraer) shall pay the fees and
disbursements of such counsel related to such proceeding (provided that if the
Company has elected to designate counsel in such proceeding and there is an
Adverse Final Determination in such proceeding, then the Company shall reimburse
Embraer for such fees and expenses of such counsel theretofore paid by it in the
same proportion as the Company is responsible for any judgment in such
proceeding pursuant to Section 5(a)). In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel, (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them, or
(iii) the indemnifying party shall have failed to retain counsel as required by
the prior sentence to represent the indemnified party within a reasonable amount
of time. It is understood that the indemnifying party shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable
for the fees and expenses of more than one separate firm (in addition to any
local counsel) for all such indemnified parties and that all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall be designated
in writing by you in the case of parties indemnified pursuant to paragraph (a)
above and by the Company after consultation with Embraer 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 in accordance
with such request prior to the date of such settlement, unless such fees and
expenses are being disputed in good faith. The indemnifying party (or, if such
proceeding concerns Continental Information, the Company) at any time may,
subject to the last sentence of this Section 5(c), settle or compromise any
proceeding described in this paragraph at the expense of the indemnifying party
(provided that the Company may not so effect any such settlement or compromise
unless either (x) Embraer has consented thereto, which consent shall not be
unreasonably withheld or delayed or (y) the Company agrees in its discretion
that such settlement or compromise shall be at its expense). For the avoidance
of doubt, the parties acknowledge and agree that, unless and until (and then
only to the extent that) there is an Adverse Final Determination with respect to
any proceeding described in this paragraph, the "indemnifying party" with
respect to such proceeding (to the extent that such proceeding involves
Continental Information and indemnification is otherwise available under Section
5(a)) shall be Embraer and not the Company, notwithstanding the Company's rights
to designate counsel, and effect a settlement or compromise, with respect to
such proceeding. No indemnifying party shall (and, if such proceeding concerns
Continental Information, the Company shall not), without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement (i) includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding and (ii) does not include a statement as to, or an admission of,
fault, culpability or a failure to act by or on behalf of an indemnified party.
(d) To the extent the indemnification provided for in paragraph (a)
or (b) of this Section 5 is required to be made but is unavailable to an
indemnified party or insufficient in respect of any losses, claims, damages or
liabilities, then the applicable indemnifying party under such paragraph, in
lieu of indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company or Embraer, as the case
may be, on the one hand, and the Underwriters, on the other hand, from the
offering of such Offered Certificates or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company or Embraer, as the case may be,
on the one hand and the Underwriters on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by Embraer on the one hand and the Underwriters on
the other hand in connection with the offering of such Offered Certificates
shall be deemed to be in the same respective proportions as the proceeds from
the offering of such Offered Certificates received by the Class A Trust (before
deducting expenses) less total underwriting discounts and commissions received
by the Underwriters, and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth on the cover of the
Prospectus, bear to the aggregate public offering price of such Offered
Certificates (it being acknowledged that the Company shall be deemed for
purposes of this paragraph to have received no benefits from the offering). The
relative fault of the Company or Embraer, as the case may be, on the one hand
and of the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
Continental Information, in the case of the Company, other information supplied
by the Company or Embraer, as the case may be, in the case of Embraer, or
Underwriter Information, in the case of the Underwriters, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters' respective obligations to
contribute pursuant to this Section 5(d) are several in proportion to the
respective principal amount of Offered Certificates they have purchased
hereunder, and not joint.
(e) The Company, Embraer and the Underwriters agree that it would
not be just or equitable if contribution pursuant to this Section 5 were
determined by PRO RATA allocation (even if the Underwriters were treated as one
entity for such purpose) 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 Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Offered
Certificates underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages that such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The indemnity and contribution provisions contained in this
Section 5 and the representations and warranties of the Company and Embraer
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of any Underwriter or any person controlling any Underwriter or
by or on behalf of either the Company or Embraer, their respective officers or
directors or any person controlling the Company or Embraer, and (iii) acceptance
of and payment for any of the Offered Certificates. 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.
6. DEFAULT OF UNDERWRITERS. If any Underwriter defaults in its
obligations to purchase Offered Certificates hereunder and the aggregate
principal amount of the Offered Certificates that such defaulting Underwriter
agreed but failed to purchase does not exceed 10% of the total principal amount
of the Offered Certificates, Citigroup may make arrangements satisfactory to the
Company for the purchase of such Offered Certificates by other persons,
including the non-defaulting Underwriter, but if no such arrangements are made
by the Closing Date, the non-defaulting Underwriter shall be obligated to
purchase the Offered Certificates that such defaulting Underwriter agreed but
failed to purchase. If any Underwriter so defaults and the aggregate principal
amount of the Offered Certificates with respect to which such default occurs
exceeds 10% of the total principal amount of the Offered Certificates and
arrangements satisfactory to Citigroup and the Company for purchase of such
Offered Certificates by other persons are not made within 36 hours after such
default, this Agreement will terminate without liability on the part of the
non-defaulting Underwriter, Embraer or the Company, except as provided in
Section 5. As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. Nothing herein will relieve a
defaulting Underwriter from liability for its default.
7. SURVIVAL OF CERTAIN REPRESENTATIONS AND OBLIGATIONS. The
respective indemnities, agreements, representations, warranties and other
statements of the Company, Embraer or their respective officers and of the
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any termination of this Agreement, any
investigation, or statement as to the results thereof, made by or on behalf of
any Underwriter, the Company, Embraer or any of their respective
representatives, officers or directors or any controlling person and will
survive delivery of and payment for the Offered Certificates. If for any reason
the purchase of the Offered Certificates by the Underwriters is not consummated,
Embraer shall remain responsible for the expenses to be paid or reimbursed by it
pursuant to Section 9 and the respective obligations of the Company, Embraer and
the Underwriters pursuant to Section 5 shall remain in effect. If the purchase
of the Offered Certificates by the Underwriters is not consummated for any
reason other than solely because of the occurrence of the termination of the
Agreement pursuant to Section 6 or 8, Embraer will reimburse the Underwriters
for all out-of-pocket expenses (including reasonable fees and disbursements of
counsel) reasonably incurred by them in connection with the offering of such
Offered Certificates and comply with its obligations under Section 9.
8. TERMINATION. This Agreement shall be subject to termination by
notice given by you to the Company and Embraer, if (a) after the execution and
delivery of this Agreement and prior to the Closing Date (i) trading generally
shall have been materially suspended or materially limited on or by, as the case
may be, any of the New York Stock Exchange, the American Stock Exchange or the
National Association of Securities Dealers, Inc., (ii) trading of any securities
of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities, (iv) there shall have occurred any attack on, outbreak or
escalation of hostilities or act of terrorism involving, the United States, or
any change in financial markets or any calamity or crisis that, in each case, in
your judgment, is material and adverse or (v) any major disruption of
settlements of securities or clearance services in the United States that would
materially impair settlement and clearance with respect to the Offered
Certificates and (b) in the case of any of the events specified in clauses
(a)(i) through (v), such event singly or together with any other such event
makes it, in your judgment, impracticable to market the Offered Certificates on
the terms and in the manner contemplated in the Prospectus.
9. PAYMENT OF EXPENSES. As among Embraer, the Company and the
Underwriters, Embraer shall pay all expenses incidental to the performance of
the Company's and Embraer's obligations under this Agreement, including the
following:
(i) expenses incurred in connection with (A) qualifying the Offered
Certificates for offer and sale under the applicable securities or "blue
sky" laws of such jurisdictions in the United States as you reasonably
designate (including filing fees and fees and disbursements of counsel for
the Underwriters in connection therewith), (B) endeavoring to maintain
such qualifications in effect so long as required for the distribution of
such Offered Certificates, (C) the review (if any) of the offering of the
Offered Certificates by the National Association of Securities Dealers,
Inc., (D) the determination of the eligibility of the Offered Certificates
for investment under the laws of such jurisdictions as the Underwriters
may designate and (E) the preparation and distribution of any blue sky or
legal investment memorandum by Underwriters' counsel;
(ii) expenses incurred in connection with the preparation and
distribution to the Underwriters and the dealers (whose names and
addresses the Underwriters will furnish to the Company) to which Offered
Certificates may have been sold by the Underwriters on their behalf and to
any other dealers upon request, either of (A) amendments to the
Registration Statement or amendments or supplements to the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not materially misleading
or (B) amendments or supplements to the Registration Statement or the
Prospectus so that the Registration Statement or the Prospectus, as so
amended or supplemented, will comply with law and the expenses incurred in
connection with causing such amendments or supplements to be filed
promptly with the Commission, all as set forth in Section 4(a) hereof;
(iii) the expenses incurred in connection with the preparation,
printing and filing of the Registration Statement (including financial
statements and exhibits), as originally filed and as amended, of the
Preliminary Prospectus and the Prospectus and any amendments thereof and
supplements thereto, and the cost of furnishing copies thereof to the
Underwriters;
(iv) expenses incurred in connection with the preparation, printing
and distribution of this Agreement, the Offered Certificates and the
Operative Agreements;
(v) expenses incurred in connection with the delivery of the Offered
Certificates to the Underwriters;
(vi) reasonable fees and disbursements of the counsel and
accountants for the Company;
(vii) to the extent Embraer is so required under any Operative
Agreement to which it is a party, the fees and expenses of the Loan
Trustees, the Subordination Agent, the Paying Agent, the Trustee, the
Escrow Agent, the Depositary, the Liquidity Providers and the reasonable
fees and disbursements of their respective counsel;
(viii) fees charged by rating agencies for rating the Offered
Certificates (including annual surveillance fees related to the Offered
Certificates as long as they are outstanding);
(ix) reasonable fees and disbursements of counsel for the
Underwriters;
(x) all fees and expenses relating to appraisals of the Aircraft;
and
(xi) all other reasonable out-of-pocket expenses incurred by the
Underwriters in connection with the transactions contemplated by this
Agreement; and
(xii) except as otherwise provided in the foregoing clauses (i)
through (xi), all other expenses incidental to the performance of the
Company's obligations under this Agreement, other than pursuant to Section
5.
The provisions of this Section 9 shall not affect any agreements
between the Company, Embraer and any of their respective affiliates for the
sharing of, or otherwise allocating, costs and expenses.
10. NOTICES. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or sent by facsimile
transmission and confirmed to the Underwriters, c/o Citigroup Global Markets
Inc., 390 Greenwich Street, 4th Floor, New York, New York 10013, Attention: Greg
Lee, facsimile number (212) 723-8677 and c/o Morgan Stanley & Co. Incorporated,
1585 Broadway, New York, NY 10036, Attention: Equipment Finance Group, facsimile
number (212) 761-0786, if sent to the Company, will be mailed, delivered or sent
by facsimile transmission and confirmed to it at 1600 Smith Street, HQSEO,
Houston, TX 77002, Attention: Treasurer and General Counsel, facsimile number
(713) 324-2447, and if sent to Embraer, will be mailed, delivered or sent by
facsimile transmission and confirmed to it at Av. Brigadeiro Faria Lima, 2170,
12227-901 Sao Jose dos Campos, S.P., Brazil, Attention: Senior Vice President
Sales Financing & Asset Management, facsimile number +55-12-3927-2815, with a
copy to Katten Muchin Zavis Rosenman, 1025 Thomas Jefferson Street, N.W., Suite
700, Washington, D.C. 20007, Attention: Timothy J. Lynes, facsimile number (202)
298-7570; PROVIDED, HOWEVER, that any notice to an Underwriter pursuant to
Section 5 will be sent by facsimile transmission or delivered and confirmed to
such Underwriter.
11. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
controlling persons referred to in Section 5, and no other person will have any
right or obligation hereunder.
12. REPRESENTATION OF UNDERWRITERS. Citigroup may act for the
several Underwriters in connection with this purchase, and any action under this
Agreement taken by Citigroup will be binding upon all the Underwriters.
13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK OTHER THAN ANY
LAW WHICH WOULD REQUIRE THE APPLICATION OF A LAW OF A DIFFERENT JURISDICTION.
15. SUBMISSION TO JURISDICTION; VENUE; APPOINTMENT OF AGENT.
(a) Each party hereto hereby irrevocably agrees, accepts and submits
itself to the non-exclusive jurisdiction of the courts of the State of New York
in the City and County of New York and of the United States for the Southern
District of New York, in connection with any legal action, suit or proceeding
with respect to any matter relating to or arising out of or in connection with
this Agreement. Each of the parties to this Agreement agrees that a final action
in any such suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other lawful manner.
(b) Each party hereto hereby irrevocably waives, to the fullest
extent permitted by applicable law, and agrees not to assert, by stay of motion,
as a defense, or otherwise, in any legal action or proceeding brought hereunder
in any of the above-named courts, that such action or proceeding is brought in
an inconvenient forum, or that venue for the action or proceeding is improper.
(c) To the fullest extent permitted by applicable law, each party
hereto hereby waives its respective rights to a jury trial or any claim or cause
of action in any court in any jurisdiction based upon or arising out of or
relating to this Agreement.
(d) Embraer hereby irrevocably designates and appoints Corporation
Services Company, 1177 Avenue of the Americas, 17th Floor, New York, NY 10036
(the "PROCESS AGENT"), as the authorized agent of Embraer upon whom process may
be served in any such suit or proceeding, it being understood that the
designation and appointment of the Process Agent as such authorized agent shall
become effective immediately without any further action on the part of Embraer.
Embraer represents to the Underwriters and the Company that it has notified the
Process Agent of such designation and appointment and that the Process Agent has
accepted the same in writing. Embraer hereby irrevocably authorizes and directs
the Process Agent to accept such service. Embraer further agrees that service of
process upon the Process Agent and written notice of said service to Embraer
mailed by first-class mail or delivered to the Process Agent, shall be deemed in
every respect effective service of process upon Embraer in any such suit or
proceeding. Nothing herein shall affect the right of the Underwriters or the
Company, or any person controlling the Underwriters or the Company, to serve
process in any other manner permitted by law.
16. SOVEREIGN IMMUNITY. Each party hereto hereby irrevocably agrees
that, to the extent that it or any of its assets now has or may hereafter
acquire any right of immunity as against any other party hereto or its
respective successors and assigns, whether characterized as sovereign immunity
or otherwise, from any legal proceedings, whether in the United States of
America or elsewhere, arising out of this Agreement or the subject matter hereof
or any of the transactions contemplated hereby brought by any of the parties
hereto or their successors or assigns, including, without limitation, immunity
from service of process, immunity from jurisdiction or judgment of any court or
tribunal, immunity from execution of a judgment, and immunity of any of its
assets from attachment in aid of execution upon a judgment, it hereby expressly
and irrevocably waives and agrees not to assert any such immunity and such
waiver shall be irrevocable and not subject to withdrawal in any jurisdiction,
including, without limitation, under the United States Foreign Sovereign
Immunities Act of 1976.
17. CURRENCY INDEMNITY. In the event of a judgment, order or award
being rendered by any court or tribunal for the payment of any amounts owing to
any party hereto (the "PAYEE") under this Agreement or for the payment of
damages in respect of a judgment or order of another court or tribunal for the
payment of such amount or damages, such judgment, order or award being expressed
in a currency (the "JUDGMENT CURRENCY") other than United States dollars (the
"AGREED CURRENCY"), each party hereto obligated to pay such amounts owing (each,
a "PAYOR") agrees, to the fullest extent permitted by applicable law, (a) that
its obligations in respect of any such amounts owing shall be discharged only to
the extent that on the business day following the Payee's receipt of any sum
adjudged in the Judgment Currency the Payee may in accordance with the normal
banking procedures purchase the Agreed Currency with the Judgment Currency and
(b) to indemnify and hold harmless the Payee against any deficiency in terms of
the Agreed Currency in the amounts actually received by the Payee following any
such purchase (after deduction of any premiums and costs of exchange payable in
connection with the purchase of, or conversion into, the Agreed Currency). The
indemnity set forth in the preceding sentence shall (notwithstanding any
judgment referred to in the preceding sentence) constitute an obligation of each
Payor separate and independent from its other obligations hereunder and shall
apply irrespective of any indulgence granted by the Payee.
If the foregoing is in accordance with the Underwriters'
understanding of our agreement, kindly sign and return to the Company one of the
counterparts hereof, whereupon it will become a binding agreement among the
Underwriters, the Depositary, Embraer and the Company in accordance with its
terms.
Very truly yours,
CONTINENTAL AIRLINES, INC.
By:
-----------------------------------
Name:
Title:
EMBRAER - EMPRESA BRASILEIRA DE
AERONAUTICA S.A.
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
The foregoing Underwriting Agreement
is hereby confirmed and accepted
as of the date first above written
By: CITIGROUP GLOBAL MARKETS INC.
By:
---------------------------------
Name:
Title:
By: MORGAN STANLEY & CO. INCORPORATED
By:
---------------------------------
Name:
Title:
WESTLB AG,
acting through its New York Branch,
as Depositary
By:
-------------------------------
Name:
Title:
By:
-------------------------------
Name:
Title:
SCHEDULE I
(Pass Through Certificates, Series 2004-ERJ1)
CONTINENTAL AIRLINES, INC.
Pass Through Aggregate Final
Certificate Principal Maturity
Designation Amount Interest Rate Date
----------- ---------- ------------- ------------
2004-ERJ1 $173,629,000 9.558% March 1, 2021
SCHEDULE II
----------------------------------------------
| UNDERWRITERS | 2004-ERJ1 |
| ------------------------------|---------------|
| Citigroup Global Markets Inc. | $86,815,000 |
| 388 Greenwich Street | |
| New York, NY 10013 | |
| ------------------------------|---------------|
| Morgan Stanley & Co. | $86,814,000 |
| Incorporated | |
| 1585 Broadway | |
| New York, NY 10036 | |
----------------------------------------------
SCHEDULE III
CONTINENTAL AIRLINES, INC.
Underwriting commission
and other compensation: $2,187,725.40
Closing date, time and location: June 29, 2004
10:00 A.M.,
New York time
Hughes Hubbard & Reed LLP
One Battery Park Plaza
New York, New York 10004
ANNEX I
For purposes of the Underwriting Agreement, "CONTINENTAL
INFORMATION" shall consist of the following information:
(i) with respect to the Basic Prospectus, all information included
therein and all documents deemed to be incorporated by reference therein
(and exhibits to such documents if so incorporated), but excluding the
Basic Agreement and any documents filed with the Commission subsequent to
the Closing Date in connection with the transactions contemplated by this
Agreement;
(ii) with respect to the Registration Statement, all information
included therein and all documents deemed to be incorporated by reference
therein (and exhibits to such documents if so incorporated), but excluding
the Basic Agreement and any documents filed with the Commission subsequent
to the Closing Date in connection with the transactions contemplated by
this Agreement; and
(iii) with respect to the Preliminary Prospectus Supplement and the
Prospectus Supplement, the statements set forth in the following sections:
(a) "Summary Financial and Operating Data";
(b) "Risk Factors--Risk Factors Relating to the Company" and
"Risk Factors--Risk Factors Relating to the Airline Industry";
(c) "The Company"; and
(d) "Incorporation of Certain Documents by Reference", and all
documents deemed to be incorporated by reference in the Preliminary
Prospectus Supplement or Prospectus Supplement, as the case may be,
as specified in "Incorporation of Certain Documents by Reference"
(and exhibits to such documents if so incorporated), but excluding
the Basic Agreement and any documents filed with the Commission
subsequent to the Closing Date in connection with the transactions
contemplated by this Agreement.
For purposes of the Underwriting Agreement, "EMBRAER INFORMATION"
shall consist of all of the information in the Registration Statement, the Basic
Prospectus, the Preliminary Prospectus Supplement and the Prospectus Supplement
other than the Continental Information.
TRUST SUPPLEMENT No. 2004-ERJ1
Dated as of June 29, 2004
between
WILMINGTON TRUST COMPANY,
as Trustee,
and
CONTINENTAL AIRLINES, INC.
to
PASS THROUGH TRUST AGREEMENT
Dated as of September 25, 1997
$173,629,000
Continental Airlines Pass Through Trust 2004-ERJ1
9.558% Continental Airlines
Pass Through Certificates,
Series 2004-ERJ1
This Trust Supplement No. 2004-ERJ1, dated as of June 29, 2004
(herein called the "TRUST SUPPLEMENT"), between Continental Airlines, Inc., a
Delaware corporation (the "COMPANY"), and Wilmington Trust Company (the
"TRUSTEE"), to the Pass Through Trust Agreement, dated as of September 25, 1997,
between the Company and the Trustee (the "BASIC AGREEMENT").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Basic Agreement, unlimited as to the aggregate
principal amount of Certificates (unless otherwise specified herein, capitalized
terms used herein without definition having the respective meanings specified in
the Basic Agreement) which may be issued thereunder, has heretofore been
executed and delivered;
WHEREAS, the Company wishes to lease certain Aircraft from the
relevant Owner Trustees;
WHEREAS, in the case of each Aircraft, the related Owner Trustee,
acting on behalf of the related Owner Participant, will issue pursuant to an
Indenture, on a non-recourse basis, one series of Equipment Notes in order to
finance the debt portion of the purchase price of such Aircraft;
WHEREAS, the Trustee hereby declares the creation of this
Continental Airlines Pass Through Trust 2004-ERJ1 (the "APPLICABLE TRUST") for
the benefit of the Applicable Certificateholders, and the initial Applicable
Certificateholders as the grantors of the Applicable Trust, by their respective
acceptances of the Applicable Certificates, join in the creation of the
Applicable Trust with the Trustee;
WHEREAS, all Certificates to be issued by the Applicable Trust will
evidence fractional undivided interests in the Applicable Trust and will convey
no rights, benefits or interests in respect of any property other than the Trust
Property except for those Certificates to which an Escrow Receipt has been
affixed;
WHEREAS, the Escrow Agent and the Underwriters have
contemporaneously herewith entered into an Escrow Agreement with the Escrow
Paying Agent pursuant to which the Underwriters have delivered to the Escrow
Agent the proceeds from the sale of the Applicable Certificates, to the extent
not used to purchase Equipment Notes on the Issuance Date, and have irrevocably
instructed the Escrow Agent to withdraw and pay funds from such proceeds upon
request and proper certification by the Trustee to purchase Equipment Notes as
the Aircraft are financed under the NPA (as hereinafter defined) from time to
time prior to the Delivery Period Termination Date;
WHEREAS, the Escrow Agent on behalf of the Applicable
Certificateholders has contemporaneously herewith entered into a Deposit
Agreement with the Depositary under which the Deposits referred to therein will
be made and from which it will withdraw funds to allow the Trustee to purchase
Equipment Notes from time to time prior to the Delivery Period Termination Date;
WHEREAS, pursuant to the terms and conditions of the Basic Agreement
as supplemented by this Trust Supplement (the "AGREEMENT") and the NPA, upon the
financing of an Aircraft, the Trustee on behalf of the Applicable Trust, using
funds withdrawn under the Escrow Agreement (or, if financed on the Issuance
Date, using a portion of the proceeds of the sale of the Applicable
Certificates), shall purchase one or more Equipment Notes having the same
interest rate as, and final maturity date not later than the final Regular
Distribution Date of, the Applicable Certificates issued hereunder and shall
hold such Equipment Notes in trust for the benefit of the Applicable
Certificateholders;
WHEREAS, all of the conditions and requirements necessary to make
this Trust Supplement, when duly executed and delivered, a valid, binding and
legal instrument in accordance with its terms and for the purposes herein
expressed, have been done, performed and fulfilled, and the execution and
delivery of this Trust Supplement in the form and with the terms hereof have
been in all respects duly authorized; and
WHEREAS, this Trust Supplement is subject to the provisions of the
Trust Indenture Act of 1939, as amended, and shall, to the extent applicable, be
governed by such provisions.
NOW THEREFORE, in consideration of the premises herein, it is agreed
between the Company and the Trustee as follows:
ARTICLE I
THE CERTIFICATES
Section 1.01. THE CERTIFICATES. There is hereby created a series of
Certificates to be issued under the Agreement to be distinguished and known as
"9.558% Continental Airlines Pass Through Certificates, Series 2004-ERJ1"
(hereinafter defined as the "APPLICABLE CERTIFICATES"). Each Applicable
Certificate represents a fractional undivided interest in the Applicable Trust
created hereby. The Applicable Certificates shall be the only instruments
evidencing a fractional undivided interest in the Applicable Trust.
The terms and conditions applicable to the Applicable Certificates
are as follows:
(a) The aggregate principal amount of the Applicable Certificates
that shall be authenticated under the Agreement (except for Applicable
Certificates authenticated and delivered pursuant to Sections 3.03, 3.04,
3.05 and 3.06 of the Basic Agreement) is $173,629,000.
(b) The Regular Distribution Dates with respect to any payment of
Scheduled Payments means the 1st day of each month, commencing on August
1, 2004, until payment of all of the Scheduled Payments to be made under
the Equipment Notes has been made.
(c) The Special Distribution Dates with respect to the Applicable
Certificates means any Business Day on which a Special Payment is to be
distributed pursuant to the Agreement.
(d) At the Escrow Agent's request under the Escrow Agreement, the
Trustee shall affix the corresponding Escrow Receipt to each Applicable
Certificate. In any event, any transfer or exchange of any Applicable
Certificate shall also effect a transfer or exchange of the related Escrow
Receipt. Prior to the Final Withdrawal Date, no transfer or exchange of
any Applicable Certificate shall be permitted unless the corresponding
Escrow Receipt is attached thereto and also is so transferred or
exchanged. By acceptance of any Applicable Certificate to which an Escrow
Receipt is attached, each Holder of such an Applicable Certificate
acknowledges and accepts the restrictions on transfer of the Escrow
Receipt set forth herein and in the Escrow Agreement.
(e) (i) The Applicable Certificates shall be in the form attached
hereto as Exhibit A. Any Person acquiring or accepting an Applicable
Certificate or an interest therein will, by such acquisition or
acceptance, be deemed to represent and warrant to and for the benefit of
each Owner Participant and the Company that either (i) the assets of an
employee benefit plan subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or of a plan subject to
Section 4975 of the Internal Revenue Code of 1986, as amended (the
"CODE"), have not been used to purchase Applicable Certificates or an
interest therein or (ii) the purchase and holding of Applicable
Certificates or an interest therein is exempt from the prohibited
transaction restrictions of ERISA and the Code pursuant to one or more
prohibited transaction statutory or administrative exemptions.
(ii) The Applicable Certificates shall be Book-Entry Certificates
and shall be subject to the conditions set forth in the Letter of
Representations between the Company and the Clearing Agency attached
hereto as Exhibit B.
(f) The "Participation Agreements" as defined in this Trust
Supplement are the "Note Purchase Agreements" referred to in the Basic
Agreement.
(g) The Applicable Certificates are subject to the Intercreditor
Agreement, the Deposit Agreement and the Escrow Agreement.
(h) The Applicable Certificates are entitled to the benefits of the
Liquidity Facilities.
(i) The Responsible Party is the Company.
(j) The date referred to in clause (i) of the definition of the term
"PTC Event of Default" in the Basic Agreement is the Final Maturity Date.
(k) The "particular sections of the Note Purchase Agreement", for
purposes of clause (3) of Section 7.07 of the Basic Agreement, are Section
9.1 of each Participation Agreement.
(l) The Equipment Notes to be acquired and held in the Applicable
Trust, and the related Aircraft and Note Documents, are described in the
NPA.
ARTICLE II
DEFINITIONS
Section 2.01. DEFINITIONS. For all purposes of the Basic Agreement
as supplemented by this Trust Supplement, the following capitalized terms have
the following meanings (any term used herein which is defined in both this Trust
Supplement and the Basic Agreement shall have the meaning assigned thereto in
this Trust Supplement for purposes of the Basic Agreement as supplemented by
this Trust Supplement):
AGREEMENT: Has the meaning specified in the recitals hereto.
AIRCRAFT: Means each of the Aircraft (as defined in the NPA) or
Substitute Aircraft in respect of which a Participation Agreement is to be
or is, as the case may be, entered into in accordance with the NPA (or any
substitute aircraft, including engines therefor, leased to the Company and
securing one or more Equipment Notes).
AIRCRAFT PURCHASE AGREEMENT: Means the "Purchase Agreement" as
defined in the NPA.
APPLICABLE CERTIFICATE: Has the meaning specified in
Section 1.01 of this Trust Supplement.
APPLICABLE CERTIFICATEHOLDER: Means the Person in whose name
an Applicable Certificate is registered on the Register for the
Applicable Certificates.
APPLICABLE CLOSING DATE: Has the meaning specified in Section
5.01(b) of this Trust Supplement.
APPLICABLE PARTICIPATION AGREEMENT: Has the meaning specified
in Section 5.01(b) of this Trust Supplement.
APPLICABLE TRUST: Has the meaning specified in the recitals
hereto.
BASIC AGREEMENT: Has the meaning specified in the first
paragraph of this Trust Supplement.
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, Salt Lake City, Utah or, so long as any
Applicable 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.
COMPANY: Has the meaning specified in the first paragraph of
this Trust Supplement.
CONTROLLING PARTY: Has the meaning specified in the
Intercreditor Agreement.
CUT-OFF DATE: Means the earlier of (a) the Delivery Period
Termination Date and (b) the date on which a Triggering Event occurs.
DELIVERY NOTICE: Has the meaning specified in the NPA.
DELIVERY PERIOD TERMINATION DATE: Means the earlier of (a) December
31, 2004, or, if the Equipment Notes relating to all of the Aircraft (or
Substitute Aircraft in lieu thereof) have not been purchased by the
Trustee on or prior to such date due to any reason beyond the control of
the Company and not occasioned by the Company's fault or negligence, March
31, 2005 and (b) the date on which Equipment Notes issued with respect to
all of the Aircraft (or Substitute Aircraft in lieu thereof) have been
purchased by the Applicable Trust in accordance with the NPA.
DEPOSIT AGREEMENT: Means the Deposit Agreement dated as of June 29,
2004 relating to the Applicable Certificates between the Depositary and
the Escrow Agent, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
DEPOSITARY: Means WestLB AG, a joint stock company
("Aktiengesellschaft") organized under the laws of Germany, acting through
its New York Branch.
DEPOSITS: Has the meaning specified in the Deposit Agreement.
DISTRIBUTION DATE: Means any Regular Distribution Date or
Special Distribution Date as the context requires.
EMBRAER: Means Embraer-Empresa Brasileira de Aeronautica S.A.
ESCROW AGENT: Means, initially, Wells Fargo Bank Northwest, National
Association, and any replacement or successor therefor appointed in
accordance with the Escrow Agreement.
ESCROW AGREEMENT: Means the Escrow and Paying Agent Agreement dated
as of June 29, 2004 relating to the Applicable Certificates, among the
Escrow Agent, the Escrow Paying Agent, the Trustee and Underwriters, as
the same may be amended, supplemented or otherwise modified from time to
time in accordance with its terms.
ESCROW PAYING AGENT: Means the Person acting as paying agent under
the Escrow Agreement.
ESCROW RECEIPT: Means the receipt substantially in the form annexed
to the Escrow Agreement representing a fractional undivided interest in
the funds held in escrow thereunder.
FINAL MATURITY DATE: Means March 1, 2021.
FINAL WITHDRAWAL: Has the meaning specified in the Escrow
Agreement.
FINAL WITHDRAWAL DATE: Has the meaning specified in the Escrow
Agreement.
FINAL WITHDRAWAL NOTICE: Has the meaning specified in Section
5.02 of this Trust Supplement.
INDENTURE: Means each of the separate trust indentures and mortgages
relating to the Aircraft, each as specified or described in a Delivery
Notice delivered pursuant to the NPA or the related Participation
Agreement, in each case as the same may be amended, supplemented or
otherwise modified from time to time in accordance with its terms.
INTERCREDITOR AGREEMENT: Means the Intercreditor Agreement dated as
of June 29, 2004 among the Trustee, the Liquidity Providers and Wilmington
Trust Company, as Subordination Agent and as trustee thereunder, as
amended, supplemented or otherwise modified from time to time in
accordance with its terms.
INVESTORS: Means the Underwriters together with all subsequent
beneficial owners of the Applicable Certificates.
LIQUIDITY FACILITIES: Means, initially, (i) the Revolving Credit
Agreement dated as of June 29, 2004 relating to the Applicable
Certificates, between WestLB AG, New York Branch, and Wilmington Trust
Company, as Subordination Agent, as agent and trustee for the Applicable
Trust and (ii) the Revolving Credit Agreement dated as of June 29, 2004
relating to the Applicable Certificates, between Citicorp North America,
Inc. and Wilmington Trust Company, as Subordination Agent, as agent and
trustee for the Applicable Trust, and, from and after the replacement of
either such agreement pursuant to the Intercreditor Agreement, the
replacement liquidity facility therefor, in each case as amended,
supplemented or otherwise modified from time to time in accordance with
their respective terms.
LIQUIDITY PROVIDERS: Means, initially (i) WestLB AG, a joint stock
company ("Aktiengesellschaft") organized under the laws of Germany, acting
through its New York Branch, and (ii) Citicorp North America, Inc., a
Delaware corporation, and any replacements or successors therefor
appointed in accordance with the Intercreditor Agreement.
NOTE DOCUMENTS: Means the Equipment Notes with respect to the
Applicable Certificates and, with respect to any such Equipment Note, the
related Indenture, Participation Agreement and Lease.
NOTICE OF PURCHASE WITHDRAWAL: Has the meaning specified in the
Deposit Agreement.
NPA: Means the Note Purchase Agreement dated as of June 29, 2004
among the Trustee, the Company, the Escrow Agent, the Escrow Paying Agent
and the Subordination Agent, providing for, among other things, the
purchase of Equipment Notes by the Trustee on behalf of the Applicable
Trust, as the same may be amended, supplemented or otherwise modified from
time to time, in accordance with its terms.
PARTICIPATION AGREEMENT: Means each Participation Agreement entered
into or to be entered into, as the case may be, by the Trustee pursuant to
the NPA, as the same may be amended, supplemented or otherwise modified
from time to time in accordance with its terms.
POOL BALANCE: Means, as of any date, (i) the original aggregate face
amount of the Applicable Certificates less (ii) the aggregate amount of
all payments made in respect of such Applicable Certificates or in respect
of Deposits 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 any special distribution with respect to unused
Deposits, payment of principal of the Equipment Notes or payment with
respect to other Trust Property and the distribution thereof to be made on
that date.
POOL FACTOR: Means, as of any Distribution Date, the quotient
(rounded to the seventh decimal place) computed by dividing (i) the Pool
Balance by (ii) the original aggregate face amount of the Applicable
Certificates. The Pool Factor as of any Distribution Date shall be
computed after giving effect to any special distribution with respect to
unused Deposits, payment of principal of the Equipment Notes or payments
with respect to other Trust Property and the distribution thereof to be
made on that date.
PROSPECTUS SUPPLEMENT: Means the final Prospectus Supplement
dated June 18, 2004 relating to the offering of the Applicable
Certificates.
RATINGS CONFIRMATION: Has the meaning specified in the
Intercreditor Agreement.
SCHEDULED CLOSING DATE: Has the meaning specified in the NPA.
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).
SUBSTITUTE AIRCRAFT: Has the meaning specified in the NPA.
TRIGGERING EVENT: Has the meaning assigned to such term in the
Intercreditor Agreement.
TRUST PROPERTY: Means (i) subject to the Intercreditor Agreement,
the Equipment Notes held as the property of the Applicable Trust, all
monies at any time paid thereon and all monies due and to become due
thereunder, (ii) funds from time to time deposited in the Certificate
Account and the Special Payments Account and, subject to the Intercreditor
Agreement, any proceeds from the sale by the Trustee pursuant to Article
VI of the Basic Agreement of any Equipment Note and (iii) all rights of
the Applicable Trust and the Trustee, on behalf of the Applicable Trust,
under the Intercreditor Agreement, the Escrow Agreement, the NPA and the
Liquidity Facilities, including, without limitation, all rights to receive
certain payments thereunder, and all monies paid to the Trustee on behalf
of the Applicable Trust pursuant to the Intercreditor Agreement or the
Liquidity Facilities, PROVIDED that rights with respect to the Deposits or
under the Escrow Agreement, except for the right to direct withdrawals for
the purchase of Equipment Notes to be held herein, will not constitute
Trust Property.
TRUST SUPPLEMENT: Has the meaning specified in the first paragraph
of this trust supplement.
UNDERWRITERS: Means, collectively, Citigroup Global Markets
Inc. and Morgan Stanley & Co. Incorporated.
UNDERWRITING AGREEMENT: Means the Underwriting Agreement dated June
18, 2004 among the Underwriters, the Company, the Depositary and Embraer,
as the same may be amended, supplemented or otherwise modified from time
to time in accordance with its terms.
ARTICLE III
DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS
Section 3.01. STATEMENTS TO APPLICABLE CERTIFICATEHOLDERS. (a) On
each Distribution Date, the Trustee will include with each distribution to
Applicable Certificateholders of a Scheduled Payment or Special Payment, as the
case may be, a statement setting forth the information provided below (in the
case of a Special Payment, reflecting in part the information provided by the
Escrow Paying Agent under the Escrow Agreement). Such statement shall set forth
(per $1,000 face amount Applicable Certificate as to (ii), (iii), (iv) and (v)
below) the following information:
(i) the aggregate amount of funds distributed on such Distribution
Date under the Agreement and under the Escrow Agreement, indicating the
amount allocable to each source;
(ii) the amount of such distribution under the Agreement allocable
to principal and the amount allocable to premium, if any;
(iii) the amount of such distribution under the Agreement allocable
to interest;
(iv) the amount of such distribution under the Escrow Agreement
allocable to interest;
(v) the amount of such distribution under the Escrow Agreement
allocable to unused Deposits, if any; and
(vi) the Pool Balance and the Pool Factor.
With respect to the Applicable Certificates registered in the name
of a Clearing Agency, on the Record Date prior to each Distribution Date, the
Trustee will request from such Clearing Agency a securities position listing
setting forth the names of all Clearing Agency Participants reflected on such
Clearing Agency's books as holding interests in the Applicable Certificates on
such Record Date. On each Distribution Date, the Trustee will mail to each such
Clearing Agency Participant the statement described above and will make
available additional copies as requested by such Clearing Agency Participant for
forwarding to holders of interests in the Applicable Certificates.
(b) Within a reasonable period of time after the end of each
calendar year but not later than the latest date permitted by law, the Trustee
shall furnish to each Person who at any time during such calendar year was an
Applicable Certificateholder of record a statement containing the sum of the
amounts determined pursuant to clauses (a)(i), (a)(ii), (a)(iii), (a)(iv) and
(a)(v) above for such calendar year or, in the event such Person was an
Applicable Certificateholder of record during a portion of such calendar year,
for such portion of such calendar year, and such other items as are readily
available to the Trustee and which an Applicable Certificateholder shall
reasonably request as necessary for the purpose of such Applicable
Certificateholder's preparation of its federal income tax returns. Such
statement and such other items shall be prepared on the basis of information
supplied to the Trustee by the Clearing Agency Participants and shall be
delivered by the Trustee to such Clearing Agency Participants to be available
for forwarding by such Clearing Agency Participants to the holders of interests
in the Applicable Certificates in the manner described in Section 3.01(a) of
this Trust Supplement.
(c) Promptly following (i) the Delivery Period Termination Date, if
there has been any change in the information set forth in clauses (y) and (z)
below from that set forth in pages S-32 through S-36 of the Prospectus
Supplement, and (ii) the date of any early redemption or purchase of, or any
default in the payment of principal or interest in respect of, any of the
Equipment Notes held in the Applicable Trust, or any Final Withdrawal, the
Trustee shall furnish to Applicable Certificateholders of record on such date a
statement setting forth (x) the expected Pool Balances for each subsequent
Regular Distribution Date following the Delivery Period Termination Date, (y)
the related Pool Factors for such Regular Distribution Dates and (z) the
expected principal distribution schedule of the Equipment Notes, in the
aggregate, held as Trust Property at the date of such notice. With respect to
the Applicable Certificates registered in the name of a Clearing Agency, on the
Delivery Period Termination Date, the Trustee will request from such Clearing
Agency a securities position listing setting forth the names of all Clearing
Agency Participants reflected on such Clearing Agency's books as holding
interests in the Applicable Certificates on such date. The Trustee will mail to
each such Clearing Agency Participant the statement described above and will
make available additional copies as requested by such Clearing Agency
Participant for forwarding to holders of interests in the Applicable
Certificates.
(d) This Section 3.01 supersedes and replaces Section 4.03 of the
Basic Agreement, with respect to the Applicable Trust.
Section 3.02. SPECIAL PAYMENTS ACCOUNT. (a) The Trustee shall
establish and maintain on behalf of the Applicable Certificateholders a Special
Payments Account as one or more accounts, which shall be non-interest bearing
except as provided in Section 4.04 of the Basic Agreement. The Trustee shall
hold the Special Payments Account in trust for the benefit of the Applicable
Certificateholders and shall make or permit withdrawals therefrom only as
provided in the Agreement. On each day when one or more Special Payments are
made to the Trustee under the Intercreditor Agreement, the Trustee, upon receipt
thereof, shall immediately deposit the aggregate amount of such Special Payments
in the Special Payments Account.
(b) This Section 3.02 supersedes and replaces Section 4.01(b) of the
Basic Agreement in its entirety, with respect to the Applicable Trust.
Section 3.03. DISTRIBUTIONS FROM SPECIAL PAYMENTS ACCOUNT. (a) On
each Special Distribution Date with respect to any Special Payment or as soon
thereafter as the Trustee has confirmed receipt of any Special Payments due on
the Equipment Notes held (subject to the Intercreditor Agreement) in the
Applicable Trust or realized upon the sale of such Equipment Notes, the Trustee
shall distribute out of the Special Payments Account the entire amount of such
Special Payment deposited therein pursuant to Section 3.02(a) of this Trust
Supplement. There shall be so distributed to each Applicable Certificateholder
of record on the Record Date with respect to such Special Distribution Date
(other than as provided in Section 11.01 of the Basic Agreement concerning the
final distribution) by check mailed to such Applicable Certificateholder, at the
address appearing in the Register, such Applicable Certificateholder's pro rata
share (based on the Fractional Undivided Interest in the Applicable Trust held
by such Applicable Certificateholder) of the total amount in the Special
Payments Account on account of such Special Payment, except that, with respect
to Applicable Certificates registered on the Record Date in the name of a
Clearing Agency (or its nominee), such distribution shall be made by wire
transfer in immediately available funds to the account designated by such
Clearing Agency (or such nominee).
(b) The Trustee shall, at the expense of the Company, cause notice
of each Special Payment to be mailed to each Applicable Certificateholder at his
address as it appears in the Register. In the event of redemption or purchase of
Equipment Notes held in the Applicable Trust, such notice shall be mailed not
less than 15 days prior to the Special Distribution Date for the Special Payment
resulting from such redemption or purchase, which Special Distribution Date
shall be the date of such redemption or purchase. In the case of any other
Special Payments, such notice shall be mailed as soon as practicable after the
Trustee has confirmed that it has received funds for such Special Payment,
stating the Special Distribution Date for such Special Payment which shall occur
not less than 15 days after the date of such notice and as soon as practicable
thereafter. Notices mailed by the Trustee shall set forth:
(i) the Special Distribution Date and the Record Date therefor
(except as otherwise provided in Section 11.01 of the Basic Agreement),
(ii) the amount of the Special Payment for each $1,000 face amount
Applicable Certificate and the amount thereof constituting principal,
premium, if any, and interest,
(iii) the reason for the Special Payment, and
(iv) if the Special Distribution Date is the same date as a Regular
Distribution Date, the total amount to be received on such date for each
$1,000 face amount Applicable Certificate.
If the amount of premium, 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
canceled, the Trustee, as soon as possible after learning thereof, shall cause
notice thereof to be mailed to each Applicable Certificateholder at its address
as it appears on the Register.
(b) This Section 3.03 supersedes and replaces Section 4.02(b) and
Section 4.02(c) of the Basic Agreement in their entirety, with respect to the
Applicable Trust.
ARTICLE IV
DEFAULT
Section 4.01. AMENDMENT OF SECTION 6.05 OF THE BASIC AGREEMENT.
Section 6.05 of the Basic Agreement shall be amended, with respect to the
Applicable Trust, by deleting the phrase "and thereby annul any Direction given
by such Certificateholders or the Trustee to such Loan Trustee with respect
thereto," set forth in the first sentence thereof.
ARTICLE V
THE TRUSTEE
Section 5.01. DELIVERY OF DOCUMENTS; DELIVERY DATES. (a) The Trustee
is hereby directed (i) to execute and deliver the Intercreditor Agreement, the
Escrow Agreement and the NPA on or prior to the Issuance Date, each in the form
delivered to the Trustee by the Company, and (ii) subject to the respective
terms thereof, to perform its obligations thereunder. Upon request of the
Company and the satisfaction or waiver of the closing conditions specified in
the Underwriting Agreement, the Trustee shall execute, deliver, authenticate,
issue and sell Applicable Certificates in authorized denominations equaling in
the aggregate the amount set forth, with respect to the Applicable Trust, in
Schedule I to the Underwriting Agreement evidencing the entire ownership
interest in the Applicable Trust, which amount equals the maximum aggregate
principal amount of Equipment Notes which may be purchased by the Trustee
pursuant to the NPA. Except as provided in Sections 3.03, 3.04, 3.05 and 3.06 of
the Basic Agreement, the Trustee shall not execute, authenticate or deliver
Applicable Certificates in excess of the aggregate amount specified in this
paragraph. The provisions of this Section 5.01(a) supersede and replace the
first sentence of Section 3.02(a) of the Basic Agreement, with respect to the
Applicable Trust.
(b) On or after the Issuance Date, the Company may deliver from time
to time to the Trustee a Delivery Notice relating to one or more Equipment
Notes. After receipt of a Delivery Notice and in any case no later than one
Business Day prior to a Scheduled Closing Date as to which such Delivery Notice
relates (the "APPLICABLE CLOSING DATE"), the Trustee shall (as and when
specified in the Delivery Notice) instruct the Escrow Agent to provide a Notice
of Purchase Withdrawal to the Depositary requesting (A) the withdrawal of one or
more Deposits on the Applicable Closing Date in accordance with and to the
extent permitted by the terms of the Escrow Agreement and the Deposit Agreement
and (B) the payment of all, or a portion, of such Deposit or Deposits in an
amount equal in the aggregate to the purchase price of such Equipment Notes to
or on behalf of the Owner Trustee issuing such Equipment Notes, all as shall be
described in the Delivery Notice; PROVIDED that, if the Issuance Date is an
Applicable Closing Date, the Trustee shall not so instruct the Escrow Agent, and
the purchase price of such Equipment Notes shall be paid from a portion of the
proceeds of the sale of the Applicable Certificates. The Trustee shall (as and
when specified in such Delivery Notice), subject to the conditions set forth in
Section 2 of the NPA, enter into and perform its obligations under the
Participation Agreement specified in such Delivery Notice (the "APPLICABLE
PARTICIPATION AGREEMENT") and cause such certificates, documents and legal
opinions relating to the Trustee to be duly delivered as required by the
Applicable Participation Agreement. If at any time prior to the Applicable
Closing Date, the Trustee receives a notice of postponement pursuant to Section
1(e) or 1(f) of the NPA, then the Trustee shall give the Depositary (with a copy
to the Escrow Agent) a notice of cancellation of such Notice of Purchase
Withdrawal relating to such Deposit or Deposits on such Applicable Closing Date.
Upon satisfaction of the conditions specified in the NPA and the Applicable
Participation Agreement, the Trustee shall purchase the applicable Equipment
Notes with the proceeds of the withdrawals of one or more Deposits made on the
Applicable Closing Date in accordance with the terms of the Deposit Agreement
and the Escrow Agreement (or, if the Issuance Date is the Applicable Closing
Date with respect to such Applicable Participation Agreement, from a portion of
the proceeds of the sale of the Applicable Certificates; PROVIDED, that, if any
portion of such proceeds is not used to purchase Equipment Notes by 3:30 p.m.,
New York time, on such date, the Trustee (on behalf of the Investors) shall
immediately (but in no event later than 4:00 p.m., New York time, on such date)
deposit such unused proceeds with the Depositary (in Federal immediately
available funds by wire transfer) in accordance with the Deposit Agreement and
such deposit or deposits shall constitute a "Deposit" or "Deposits" (as defined
therein) for all purposes thereunder). The purchase price of such Equipment
Notes shall equal the principal amount of such Equipment Notes. Amounts
withdrawn from such Deposit or Deposits in excess of the purchase price of the
Equipment Notes or to the extent not applied on the Applicable Closing Date to
the purchase price of the Equipment Notes, shall be re-deposited by the Trustee
with the Depositary on the Applicable Closing Date in accordance with the terms
of the Deposit Agreement. The provisions of this Section 5.01(b) supersede and
replace the provisions of Section 2.02 of the Basic Agreement with respect to
the Applicable Trust, and all provisions of the Basic Agreement relating to
Postponed Notes and Section 2.02 of the Basic Agreement shall not apply to the
Applicable Trust.
(c) The Trustee acknowledges its acceptance of all right, title and
interest in and to the Trust Property to be acquired pursuant to Section 5.01(b)
of this Trust Supplement, the NPA and each Applicable Participation Agreement,
and declares that it holds and will hold such right, title and interest for the
benefit of all present and future Applicable Certificateholders, upon the trusts
set forth in the Agreement. By its acceptance of an Applicable Certificate, each
initial Applicable Certificateholder, as a grantor of the Applicable Trust,
joins with the Trustee in the creation of the Applicable Trust. The provisions
of this Section 5.01(c) supersede and replace the provisions of Section 2.03 of
the Basic Agreement, with respect to the Applicable Trust.
Section 5.02. WITHDRAWAL OF DEPOSITS. If any Deposits remain
outstanding on the Business Day next succeeding the Cut-off Date, the Trustee
shall give the Escrow Agent notice that the Trustee's obligation to purchase
Equipment Notes under the NPA has terminated and instruct the Escrow Agent to
provide a notice of Final Withdrawal to the Depositary substantially in the form
of Exhibit B to the Deposit Agreement (the "FINAL WITHDRAWAL NOTICE").
Section 5.03. THE TRUSTEE. (a) Subject to Section 5.04 of this Trust
Supplement and Section 7.15 of the Basic Agreement, the Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Trust Supplement, the Deposit Agreement, the NPA or the
Escrow Agreement or the due execution hereof or thereof by the Company or the
other parties thereto (other than the Trustee), or for or in respect of the
recitals and statements contained herein or therein, all of which recitals and
statements are made solely by the Company, except that the Trustee hereby
represents and warrants that each of this Trust Supplement, the Basic Agreement,
each Applicable Certificate, the Intercreditor Agreement, the NPA and the Escrow
Agreement has been executed and delivered by one of its officers who is duly
authorized to execute and deliver such document on its behalf.
(b) Except as herein otherwise provided and except during the
continuation of an Event of Default in respect of the Applicable Trust created
hereby, no duties, responsibilities or liabilities are assumed, or shall be
construed to be assumed, by the Trustee by reason of this Trust Supplement other
than as set forth in the Agreement, and this Trust Supplement is executed and
accepted on behalf of the Trustee, subject to all the terms and conditions set
forth in the Agreement, as fully to all intents as if the same were herein set
forth at length.
Section 5.04. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE. The
Trustee hereby represents and warrants that:
(a) the Trustee has full power, authority and legal right to
execute, deliver and perform this Trust Supplement, the Intercreditor
Agreement, the Escrow Agreement, the NPA and the Note Documents to which
it is or is to become a party and has taken all necessary action to
authorize the execution, delivery and performance by it of this Trust
Supplement, the Intercreditor Agreement, the Escrow Agreement, the NPA and
the Note Documents to which it is or is to become a party;
(b) the execution, delivery and performance by the Trustee of this
Trust Supplement, the Intercreditor Agreement, the Escrow Agreement, the
NPA and the Note Documents to which it is or is to become a party (i) will
not violate any provision of any United States federal law or the law of
the state of the United States where it is located governing the banking
and trust powers of the Trustee or any order, writ, judgment, or decree of
any court, arbitrator or governmental authority applicable to the Trustee
or any of its assets, (ii) will not violate any provision of the articles
of association or by-laws of the Trustee, and (iii) will not violate any
provision of, or constitute, with or without notice or lapse of time, a
default under, or result in the creation or imposition of any lien on any
properties included in the Trust Property pursuant to the provisions of
any mortgage, indenture, contract, agreement or other undertaking to which
it is a party, which violation, default or lien could reasonably be
expected to have an adverse effect on the Trustee's performance or ability
to perform its duties hereunder or thereunder or on the transactions
contemplated herein or therein;
(c) the execution, delivery and performance by the Trustee of this
Trust Supplement, the Intercreditor Agreement, the Escrow Agreement, the
NPA and the Note Documents to which it is or is to become a party will not
require the authorization, consent, or approval of, the giving of notice
to, the filing or registration with, or the taking of any other action in
respect of, any governmental authority or agency of the United States or
the state of the United States where it is located regulating the banking
and corporate trust activities of the Trustee; and
(d) this Trust Supplement, the Intercreditor Agreement, the Escrow
Agreement, the NPA and the Note Documents to which it is or is to become a
party have been, or will be, as applicable, duly executed and delivered by
the Trustee and constitute, or will constitute, as applicable, the legal,
valid and binding agreements of the Trustee, enforceable against it in
accordance with their respective terms; PROVIDED, HOWEVER, that
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and (ii) general principles of equity.
Section 5.05. TRUSTEE LIENS. The Trustee in its individual capacity
agrees, in addition to the agreements contained in Section 7.17 of the Basic
Agreement, that it will at its own cost and expense promptly take any action as
may be necessary to duly discharge and satisfy in full any Trustee's Liens on or
with respect to the Trust Property which is attributable to the Trustee in its
individual capacity and which is unrelated to the transactions contemplated by
the Intercreditor Agreement or the NPA.
ARTICLE VI
ADDITIONAL AMENDMENT; SUPPLEMENTAL AGREEMENTS
Section 6.01. AMENDMENT OF SECTION 5.02 OF THE BASIC Agreement.
Section 5.02 of the Basic Agreement shall be amended, with respect to the
Applicable Trust, by (i) replacing the phrase "of the Note Documents and of this
Agreement" set forth in paragraph (b) thereof with the phrase "of the Note
Documents, of the NPA and of this Agreement" and (ii) replacing the phrase "of
this Agreement and any Note Document" set forth in the last paragraph of Section
5.02 with the phrase "of this Agreement, the NPA and any Note Document".
Section 6.02. SUPPLEMENTAL AGREEMENTS WITHOUT CONSENT OF APPLICABLE
CERTIFICATEHOLDERS. Without limitation of Section 9.01 of the Basic Agreement,
under the terms of, and subject to the limitations contained in, Section 9.01 of
the Basic Agreement, the Company may (but will not be required to), and the
Trustee (subject to Section 9.03 of the Basic Agreement) shall, at the Company's
request, at any time and from time to time, enter into one or more agreements
supplemental to the Escrow Agreement, the NPA or the Deposit Agreement, for any
of the purposes set forth in clauses (1) through (9) of such Section 9.01, and
(without limitation of the foregoing or Section 9.01 of the Basic Agreement) (a)
clauses (2) and (3) of such Section 9.01 shall also be deemed to include the
Company's obligations under (in the case of clause (2)), and the Company's
rights and powers conferred by (in the case of clause (3)), the NPA, and (b)
references in clauses (4), (6) and (7) of such Section 9.01 to "any
Intercreditor Agreement or any Liquidity Facility" shall also be deemed to refer
to "the Intercreditor Agreement, the Liquidity Facilities, the Escrow Agreement,
the NPA or the Deposit Agreement".
Section 6.03. SUPPLEMENTAL AGREEMENTS WITH CONSENT OF APPLICABLE
CERTIFICATEHOLDERS. Without limitation of Section 9.02 of the Basic Agreement,
the provisions of Section 9.02 of the Basic Agreement shall apply to agreements
or amendments for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Escrow Agreement, the Deposit
Agreement or the NPA or modifying in any manner the rights and obligations of
the Applicable Certificateholders under the Escrow Agreement, the Deposit
Agreement or the NPA; provided that the provisions of Section 9.02(1) of the
Basic Agreement shall be deemed to include reductions in any manner of, or delay
in the timing of, any receipt by the Applicable Certificateholders of payments
upon the Deposits.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01. BASIC AGREEMENT RATIFIED. Except and so far as herein
expressly provided, all of the provisions, terms and conditions of the Basic
Agreement are in all respects ratified and confirmed; and the Basic Agreement
and this Trust Supplement shall be taken, read and construed as one and the same
instrument. All replacements of provisions of, and other modifications of the
Basic Agreement set forth in this Trust Supplement are solely with respect to
the Applicable Trust.
SECTION 7.02. GOVERNING LAW. THE AGREEMENT AND THE APPLICABLE
CERTIFICATES HAVE BEEN DELIVERED IN THE STATE OF NEW YORK AND SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS. THIS SECTION 7.02 SUPERSEDES AND REPLACES SECTION
12.05 OF THE BASIC AGREEMENT, WITH RESPECT TO THE APPLICABLE TRUST.
Section 7.03. EXECUTION IN COUNTERPARTS. This Trust Supplement may
be executed in any number of counterparts, each of which shall be an original,
but such counterparts shall together constitute but one and the same instrument.
Section 7.04. INTENTION OF PARTIES. The parties hereto intend that
the Applicable Trust be classified for U.S. federal income tax purposes as a
grantor trust under Subpart E, Part I of Subchapter J of the Internal Revenue
Code of 1986, as amended, and not as a trust or association taxable as a
corporation or as a partnership. Each Applicable Certificateholder and Investor,
by its acceptance of its Applicable Certificate or a beneficial interest
therein, agrees to treat the Applicable Trust as a grantor trust for all U.S.
federal, state and local income tax purposes. The powers granted and obligations
undertaken pursuant to the Agreement shall be so construed so as to further such
intent.
IN WITNESS WHEREOF, the Company and the Trustee have caused this
Trust Supplement to be duly executed by their respective officers thereto duly
authorized, as of the day and year first written above.
CONTINENTAL AIRLINES, INC.
By:
-----------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as Trustee
By:
-----------------------------------------
Name:
Title:
EXHIBIT A
FORM OF CERTIFICATE
Certificate
No.____
[Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to Issuer or its agent for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch the registered owner hereof,
Cede & Co., has an interest herein.]*
CONTINENTAL AIRLINES PASS THROUGH TRUST 2004-ERJ1
9.558% Continental Airlines Pass Through Certificate, Series 2004-ERJ1
Issuance Date: June 29, 2004
Final Maturity Date: March 1, 2021
Evidencing A Fractional Undivided Interest In The Continental Airlines
Pass Through Trust 2004-ERJ1, The Property Of Which Shall Include
Certain Equipment Notes Each Secured By An Aircraft Leased To
Continental Airlines, Inc.
$[_____________] Fractional Undivided Interest
representing 0.000575940655% of the Trust per $1,000 face amount
THIS CERTIFIES THAT __________, for value received, is the
registered owner of a $___________ (___________________________________________
DOLLARS) Fractional Undivided Interest in the Continental Airlines Pass Through
Trust 2004-ERJ1 (the "TRUST") created by Wilmington Trust Company, as trustee
(the "TRUSTEE"), pursuant to a Pass Through Trust Agreement, dated as of
September 25, 1997 (the "BASIC AGREEMENT"), between the Trustee and Continental
Airlines, Inc., a Delaware corporation (the "COMPANY"), as supplemented by Trust
- ----------------
* This legend to appear on Book-Entry Certificates to be deposited with the
Depository Trust Company.
Supplement No. 2004-ERJ1 thereto, dated as of June 29, 2004 (the "TRUST
SUPPLEMENT" and, together with the Basic Agreement, the "AGREEMENT"), between
the Trustee and the Company, a summary of certain of the pertinent provisions of
which is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the
Agreement. This Certificate is one of the duly authorized Certificates
designated as "9.558% Continental Airlines Pass Through Certificates, Series
2004-ERJ1"(herein called the "CERTIFICATES"). This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement. By
virtue of its acceptance hereof, the holder of this Certificate (the
"CERTIFICATEHOLDER" and, together with all other holders of Certificates issued
by the Trust, the "CERTIFICATEHOLDERS") assents to and agrees to be bound by the
provisions of the Agreement and the Intercreditor Agreement. The property of the
Trust includes 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 an Aircraft leased to the Company.
The Certificates represent Fractional Undivided Interests in the
Trust and the Trust Property and have no rights, benefits or interest in respect
of any other separate trust established pursuant to the terms of the Basic
Agreement for any other series of certificates issued pursuant thereto.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from funds then available to the Trustee, there will be
distributed on the 1st day of each month (a "REGULAR DISTRIBUTION DATE")
commencing August 1, 2004, 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.
Distributions on this Certificate will be made by the Trustee by
check mailed to the Person entitled thereto, without presentation or surrender
of this Certificate or the making of any notation hereon, except that with
respect to Certificates registered on the Record Date in the name of a Clearing
Agency (or its nominee), such distribution shall be made by wire transfer.
Except as otherwise provided in the Agreement and notwithstanding the above, the
final distribution on this Certificate will be made after notice mailed by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency of the Trustee specified
in such notice.
The Certificates do not represent a direct obligation of, or an
obligation guaranteed by, or an interest in, the Company or the Trustee or any
affiliate thereof. The Certificates are limited in right of payment, all as more
specifically set forth on the face hereof and in the Agreement. All payments or
distributions made to Certificateholders under the Agreement shall be made only
from the Trust Property and only to the extent that the Trustee shall have
sufficient income or proceeds from the Trust Property to make such payments in
accordance with the terms of the Agreement. Each Certificateholder of this
Certificate, by its acceptance hereof, agrees that it will look solely to the
income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the Agreement and reference is made to
the Agreement for information with respect to the interests, rights, benefits,
obligations, privileges, and duties evidenced hereby. A copy of the Agreement
may be examined during normal business hours at the principal office of the
Trustee, and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any time
by the Company and the Trustee with the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust. Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the Register
upon surrender of this Certificate for registration of transfer at the offices
or agencies maintained by the Trustee in its capacity as Registrar, or by any
successor Registrar, duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Registrar, duly executed by
the Certificateholder hereof or such Certificateholder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate Fractional Undivided Interest in the
Trust will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $1,000 Fractional Undivided Interest
and integral multiples thereof except that one Certificate may be issued in a
different denomination. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
Fractional Undivided Interest in the Trust, as requested by the
Certificateholder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee shall require payment of a sum sufficient to cover
any tax or governmental charge payable in connection therewith.
Each Certificateholder and Investor, by its acceptance of this
Certificate or a beneficial interest herein, agrees to treat the Trust as a
grantor trust for all U.S. federal, state and local income tax purposes.
The Trustee, the Registrar, and any agent of the Trustee or the
Registrar may treat the person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Trustee, the Registrar, nor
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and
the Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be distributed to them pursuant to
the Agreement and the disposition of all property held as part of the Trust
Property.
Any Person acquiring or accepting this Certificate or an interest
herein will, by such acquisition or acceptance, be deemed to have represented
and warranted to and for the benefit of each Owner Participant and the Company
that either: (i) the assets of an employee benefit plan subject to Title I of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or of
a plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended
(the "CODE"), have not been used to purchase this Certificate or an interest
herein or (ii) the purchase and holding of this Certificate or an interest
herein are exempt from the prohibited transaction restrictions of ERISA and the
Code pursuant to one or more prohibited transaction statutory or administrative
exemptions.
THE AGREEMENT AND THIS CERTIFICATE HAVE BEEN DELIVERED IN THE STATE
OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
CONTINENTAL AIRLINES PASS THROUGH TRUST
2004-ERJ1
By: WILMINGTON TRUST COMPANY,
as Trustee
By:
-----------------------------------------
Name:
Title:
FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Agreement.
WILMINGTON TRUST COMPANY,
as Trustee
By:
-----------------------------------------
Name:
Title:
EXHIBIT B
[DTC Letter of Representations]
-----------------------------------------------------------------
REVOLVING CREDIT AGREEMENT(2004-ERJ1)
Dated as of June 29, 2004
between
WILMINGTON TRUST COMPANY,
as Subordination Agent, as agent and trustee for the
Continental Airlines Pass Through Trust 2004-ERJ1,
as Borrower
and
WESTLB AG, NEW YORK BRANCH,
as Liquidity Provider
-----------------------------------------------------------------
Continental Airlines Pass Through Trust 2004-ERJ1
Continental Airlines 9.558% Pass Through Certificates,
Series 2004-ERJ1
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.......................................................1
Section 1.01 Certain Defined Terms....................................1
ARTICLE II AMOUNT AND TERMS OF THE COMMITMENT...............................7
Section 2.01 The Advances.............................................7
Section 2.02 Making the Advances......................................7
Section 2.03 Fees.....................................................10
Section 2.04 Reductions or Termination of the Maximum Commitment......10
Section 2.05 Repayments of Interest Advances or the Final Advance.....10
Section 2.06 Repayments of Provider Advances..........................11
Section 2.07. Payments to the Liquidity Provider Under the
Intercreditor Agreement..................................12
Section 2.08 Book Entries.............................................12
Section 2.09 Payments from Available Funds Only.......................12
Section 2.10 WestLB Early Termination Notice; WestLB Early
Termination Advance......................................12
ARTICLE III OBLIGATIONS OF THE BORROWER.....................................13
Section 3.01 Increased Costs..........................................13
Section 3.02 Capital Adequacy.........................................14
Section 3.03 Payments Free of Deductions..............................14
Section 3.04 Payments.................................................15
Section 3.05 Computations.............................................16
Section 3.06 Payment on Non-Business Days.............................16
Section 3.07 Interest.................................................16
Section 3.08 Replacement of Borrower..................................17
Section 3.09 Funding Loss Indemnification.............................17
Section 3.10 Illegality...............................................18
Section 3.11 Mitigation...............................................18
ARTICLE IV CONDITIONS PRECEDENT.............................................18
Section 4.01 Conditions Precedent to Effectiveness of Section 2.01....18
Section 4.02 Conditions Precedent to Borrowing........................20
ARTICLE V COVENANTS.........................................................20
Section 5.01 Affirmative Covenants of the Borrower....................20
Section 5.02 Negative Covenants of the Borrower.......................21
ARTICLE VI LIQUIDITY EVENTS OF DEFAULT......................................21
Section 6.01 Liquidity Events of Default..............................21
i
ARTICLE VII MISCELLANEOUS...................................................21
Section 7.01 Amendments, Etc..........................................21
Section 7.02 Notices, Etc.............................................22
Section 7.03 No Waiver; Remedies......................................23
Section 7.04 Further Assurances.......................................23
Section 7.05 Indemnification; Survival of Certain Provisions..........23
Section 7.06 Liability of the Liquidity Provider......................23
Section 7.07 Costs, Expenses and Taxes................................24
Section 7.08 Binding Effect; Participations...........................24
Section 7.09 Severability.............................................26
Section 7.10 GOVERNING LAW............................................26
Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial.........26
Section 7.12 Execution in Counterparts................................27
Section 7.13 Entirety.................................................27
Section 7.14 Headings.................................................27
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES.........27
ANNEX I Interest Advance Notice of Borrowing
ANNEX II WestLB Early Termination Advance Notice of Borrowing
ANNEX III Downgrade Advance Notice of Borrowing
ANNEX IV Final Advance Notice of Borrowing
ANNEX V Notice of Termination
ANNEX VI Notice of Replacement Subordination Agent
ANNEX VII WestLB Expiration Advance Notice of Borrowing
ii
REVOLVING CREDIT AGREEMENT (2004-ERJ1)
This REVOLVING CREDIT AGREEMENT (2004-ERJ1), dated as of June 29,
2004, is made by and 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
Trust (as defined below) (the "BORROWER"), and WESTLB AG, a joint stock company
("Aktiengesellschaft") organized under the laws of Germany, acting through its
New York Branch (the "LIQUIDITY PROVIDER").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the 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 Trust is issuing the Certificates; and
WHEREAS, the Borrower, in order to support the timely payment of a
portion of the interest on the 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 mutual agreements herein
contained, and of other good and valuable consideration the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. CERTAIN DEFINED TERMS.
(a) As used in this Agreement and unless expressly indicated, or
unless the context clearly requires otherwise, the following capitalized terms
shall have the following respective meanings for all purposes of this Agreement:
"ADDITIONAL COSTS" has the meaning assigned to such term in Section
3.01.
"ADVANCE" means an Interest Advance, a Final Advance, a Provider
Advance or an Applied Provider Advance, as the case may be.
"AGREEMENT" means this Revolving Credit Agreement (2004-ERJ1), dated
as of June 29, 2004, between the Borrower and the Liquidity Provider, as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"APPLICABLE LIQUIDITY RATE" has the meaning assigned to such term in
Section 3.07(f).
"APPLICABLE MARGIN" means (i) with respect to any Unpaid Advance or
Applied Provider Advance, 2.75% per annum and (ii) with respect to any Unapplied
Provider Advance, the rate per annum specified in the Fee Letter applicable to
this Agreement.
"APPLIED DOWNGRADE ADVANCE" has the meaning assigned to such term in
Section 2.06(a).
"APPLIED WESTLB EARLY TERMINATION ADVANCE" has the meaning assigned
to such term in Section 2.06(a).
"APPLIED PROVIDER ADVANCE" has the meaning assigned to such term in
Section 2.06(a).
"APPLIED WESTLB EXPIRATION ADVANCE" has the meaning assigned to such
term in Section 2.06(a).
"BASE RATE" means a fluctuating interest rate per annum in effect
from time to time, which rate per annum shall at all times be equal to (a) the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or if such rate
is not so published for any day that is a Business Day, the average of the
quotations for such day for such transactions received by the Liquidity Provider
from three Federal funds brokers of recognized standing selected by it, plus (b)
one-quarter of one percent (1/4 of 1%).
"BASE RATE ADVANCE" means an Advance that bears interest at a rate
based upon the Base Rate.
"BORROWER" has the meaning assigned to such term in the recital of
parties to this Agreement.
"BORROWING" means the making of Advances requested by delivery of a
Notice of Borrowing.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a
day on which commercial banks are required or authorized to close in Houston,
Texas, New York, New York or, so long as any Certificate is outstanding, the
city and state in which the Trustee, the Borrower or any Loan 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.
"DEPOSIT AGREEMENT" means the Deposit Agreement dated as of the date
hereof between Wells Fargo Bank Northwest, National Association, as Escrow
Agent, and WestLB AG, New York Branch, as Depositary, pertaining to the
Certificates, as the same may be amended, modified or supplemented from time to
time in accordance with the terms thereof.
"DEPOSITARY" has the meaning assigned to such term in the Deposit
Agreement.
"DEPOSITS" has the meaning assigned to such term in the Deposit
Agreement.
"DOWNGRADE ADVANCE" means an Advance made pursuant to Section
2.02(c).
"DOWNGRADE EVENT" means a downgrading of the Liquidity Provider's
short-term unsecured debt rating or short-term issuer credit rating, as the case
may be, issued by either Rating Agency below the applicable Threshold Rating
unless each Rating Agency shall have confirmed in writing on or prior to the
date of such downgrading that such downgrading will not result in the
downgrading, withdrawal or suspension of the ratings of the Certificates, in
which case such downgrading of the Liquidity Provider's short-term unsecured
debt rating or short-term issuer credit rating, as the case may be, shall not
constitute a Downgrade Event.
"EFFECTIVE DATE" has the meaning assigned to such term in Section
4.01. The delivery of the certificate of the Liquidity Provider contemplated by
Section 4.01(e) shall be conclusive evidence that the Effective Date has
occurred.
"EXCLUDED TAXES" means (i) Taxes imposed on, based on or measured by
the income of, or franchise Taxes imposed on, the Liquidity Provider or its
Lending Office by the jurisdiction where such Liquidity Provider's principal
office or such Lending Office is located or any other taxing jurisdiction in
which such Tax is imposed as a result of the Liquidity Provider being, or having
been, organized in, or conducting, or having conducted, any activities unrelated
to the transactions contemplated by the Operative Agreements in, such
jurisdiction or (ii) withholding taxes, whether or not indemnified under Section
3.03.
"EXCLUDED WITHHOLDING TAXES" means (i) withholding Taxes imposed by
the United States except to the extent that such United States withholding Taxes
are imposed or increased as a result of a change in applicable law after the
date hereof and, in the case of any successor Liquidity Provider, any
withholding Tax imposed by the United States except (a) if such Liquidity
Provider is, on the date it acquires its interest herein, a "resident" of an
Applicable Treaty jurisdiction entitled to claim the benefits of an Applicable
Treaty in respect of amounts payable hereunder, any such withholding Tax to the
extent imposed as a result of a change in applicable law (other than any
addition of, or change in, any "anti-treaty shopping", "limitation on benefits",
or similar provision in any treaty or other applicable law restricting the
availability of treaty benefits (including, without limitation any provision
similar to the Protocol Amending the Convention Between the United States of
America and the Kingdom of the Netherlands for the Avoidance of Double Taxation
and the Prevention of Fiscal Evasion with respect to Taxes on Income, signed at
Washington on October 13, 1993)) after the date such Liquidity Provider acquired
its interest herein and (b) any such withholding Tax to the extent the amount of
such withholding Tax imposed on such successor Liquidity Provider does not
exceed the amount of such withholding Tax that, in the absence of the transfer
to such Liquidity Provider, would have been an Indemnified Tax imposed on
payments to the predecessor Liquidity Provider pursuant to applicable law in
effect on the date such successor Liquidity Provider acquired its interest
herein, (ii) any Tax imposed or to the extent increased as a result of the
Liquidity Provider failing to deliver to the Borrower any certificate or
document (the delivery of which certificate or document in the good faith
judgment of the Liquidity Provider will not expose the Liquidity Provider to any
adverse consequence and which the Liquidity Provider is legally entitled to
provide) which is reasonably requested by the Borrower to establish that
payments under this Agreement are exempt from (or entitled to a reduced rate of)
withholding Tax, and (iii) any Tax imposed by a jurisdiction as a result of the
Liquidity Provider being, or having been, organized in, or maintaining, or
having maintained, its principal office or Lending Office in, or conducting, or
having conducted, any activities unrelated to the transactions contemplated by
the Operative Agreements in, such jurisdiction. For purposes of this definition,
"Applicable Treaty" means an income tax treaty between the United States and any
of Australia, Austria, Canada, France, Germany, Ireland, Japan, Luxembourg, The
Netherlands, Sweden, Switzerland or the United Kingdom.
"EXPENSES" means liabilities, obligations, damages, settlements,
penalties, claims, actions, suits, costs, expenses, and disbursements
(including, without limitation, reasonable fees and disbursements of legal
counsel and costs of investigation), provided that Expenses shall not include
any Taxes other than sales, use and V.A.T. taxes imposed on fees and expenses
payable pursuant to Section 7.07.
"EXPIRY DATE" means December 16, 2015.
"FINAL ADVANCE" means an Advance made pursuant to Section 2.02(d).
"INDEMNIFIED TAX" has the meaning assigned to such term in Section
3.03.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement dated as
of the date hereof, among the Trustee, the Liquidity Provider, the other
liquidity provider party thereto and the Subordination Agent, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
its terms.
"INTEREST ADVANCE" means an Advance made pursuant to Section
2.02(a).
"INTEREST PERIOD" means, with respect to any LIBOR Advance, each of
the following periods:
(i) the period beginning on the third Business Day following
either (A) the Liquidity Provider's receipt of the Notice of
Borrowing for such LIBOR Advance or (B) the withdrawal of
funds from the Cash Collateral Account for the purpose of
paying interest on the Certificates as contemplated by Section
2.06(a) hereof and, in either case, ending on the next Regular
Distribution Date; and
(ii) each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the next
Regular Distribution Date.
"LENDING OFFICE" means the lending office of the Liquidity Provider
presently located at New York, New York, or such other lending office as the
Liquidity Provider from time to time shall notify the Borrower as its Lending
Office hereunder; provided that the Liquidity Provider shall not change its
Lending Office to another lending office outside the United States of America
except in accordance with Section 3.11 hereof.
"LIBOR ADVANCE" means an Advance bearing interest at a rate based
upon the LIBOR Rate.
"LIBOR RATE" means, with respect to any Interest Period,
(i) the rate per annum appearing on display page 3750 (British
Bankers Association-LIBOR) of the Telerate Service (or any
successor or substitute therefor) at approximately 11:00 a.m.
(London time) two Business Days before the first day of such
Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period, or
(ii) if the rate calculated pursuant to clause (i) above is not
available, the average (rounded upwards, if necessary, to the
next 1/16 of 1%) of the rates per annum at which deposits in
dollars are offered for the relevant Interest Period by three
banks of recognized standing selected by the Liquidity
Provider in the London interbank market at approximately 11:00
a.m. (London time) two Business Days before the first day of
such Interest Period in an amount approximately equal to the
principal amount of the LIBOR Advance to which such Interest
Period is to apply and for a period comparable to such
Interest Period.
"LIQUIDITY EVENT OF DEFAULT" means the occurrence of either (a) the
Acceleration of all of the Equipment Notes (PROVIDED that, with respect to the
period prior to the Delivery Period Expiry Date, such Equipment Notes have an
aggregate outstanding principal balance in excess of $108,000,000) 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.
"MAXIMUM AVAILABLE COMMITMENT" means, subject to the proviso
contained in the third sentence of Section 2.02(a), at any time of
determination, (a) the Maximum Commitment at such time less (b) the aggregate
amount of each Interest Advance outstanding at such time; provided that
following a Provider Advance or a Final Advance, the Maximum Available
Commitment shall be zero.
"MAXIMUM COMMITMENT" means initially $15,827,353.87, as the same may
be reduced from time to time in accordance with Section 2.04(a).
"NOTICE OF BORROWING" has the meaning assigned to such term in
Section 2.02(f).
"NOTICE OF REPLACEMENT SUBORDINATION AGENT" has the meaning assigned
to such term in Section 3.08.
"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.
"PROSPECTUS SUPPLEMENT" means the final Prospectus Supplement dated
June 18, 2004 relating to the Certificates, as such Prospectus Supplement may be
amended or supplemented.
"PROVIDER ADVANCE" means a Downgrade Advance, a WestLB Early
Termination Advance or a WestLB Expiration Advance.
"REGULATORY CHANGE" has the meaning assigned to such term in Section
3.01.
"REPLENISHMENT AMOUNT" has the meaning assigned to such term in
Section 2.06(b).
"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 Certificates have been paid in full (or provision has
been made for such payment in accordance with the Intercreditor Agreement and
the Trust Agreement) 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 or Special 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 V to this Agreement.
"TRANSFEREE" has the meaning assigned to such term in Section
7.08(b).
"UNAPPLIED WESTLB EARLY TERMINATION ADVANCE" means any portion of a
WestLB Early Termination Advance which is not an Applied WestLB Early
Termination Advance.
"UNAPPLIED PROVIDER ADVANCE" means any portion of any Provider
Advance which is not an Applied Provider Advance.
"UNAPPLIED WESTLB EXPIRATION ADVANCE" means any portion of a WestLB
Expiration Advance that is not an Applied WestLB Expiration Advance.
"UNPAID ADVANCE" has the meaning assigned to such term in Section
2.05.
"WESTLB EARLY TERMINATION ADVANCE" means an Advance made pursuant to
Section 2.02(b).
"WESTLB EARLY TERMINATION DATE" means the date specified in a WestLB
Early Termination Notice delivered by the Liquidity Provider to the Borrower in
accordance with Section 2.10, which date shall not be earlier than the 25th day
following the receipt by the Borrower of such WestLB Early Termination Notice.
"WESTLB EARLY TERMINATION NOTICE" has the meaning assigned to such
term in Section 2.10.
"WESTLB EARLY TERMINATION NOTICE PERIOD" means the period from the
40th day to and including the 25th day prior to each anniversary of the Closing
Date.
"WESTLB TERMINATION DATE" has the meaning assigned to such term in
Section 2.02(e).
"WESTLB EXPIRATION ADVANCE" means an Advance made pursuant to
Section 2.02(e).
(b) For the purposes of this Agreement, the following terms shall
have the respective meanings assigned to such terms in the Intercreditor
Agreement:
"ACCELERATION", "CASH COLLATERAL ACCOUNT", "CERTIFICATE",
"CERTIFICATEHOLDER", "CLOSING DATE", "CONTINENTAL", "CONTINENTAL BANKRUPTCY
EVENT", "CONTROLLING PARTY", "CORPORATE TRUST OFFICE", "DELIVERY PERIOD EXPIRY
DATE", "DISTRIBUTION DATE", "DOWNGRADED FACILITY", "EARLY TERMINATED FACILITY",
"EQUIPMENT NOTES", "FEE LETTER", "FINAL LEGAL DISTRIBUTION DATE", "FINANCING
AGREEMENT", "INDENTURE", "INVESTMENT EARNINGS", "LIQUIDITY OBLIGATIONS", "LOAN
TRUSTEE", "MOODY'S", "NON-EXTENDED FACILITY", "NOTE PURCHASE AGREEMENT",
"OPERATIVE AGREEMENTS", "PARTICIPATION AGREEMENT", "PERFORMING EQUIPMENT NOTE",
"PERSON", "POOL BALANCE", "RATING AGENCIES", "RATINGS CONFIRMATION", "REGULAR
DISTRIBUTION DATES", "REPLACEMENT LIQUIDITY FACILITY", "REQUIRED AMOUNT",
"RESPONSIBLE OFFICER", "SCHEDULED PAYMENT", "SPECIAL PAYMENT", "STANDARD &
POOR'S", "STATED INTEREST RATE", "SUB-ACCOUNT", "SUBORDINATION AGENT", "TAXES",
"THRESHOLD RATING", "TRUST", "TRUST AGREEMENT", "TRUSTEE", "UNDERWRITERS",
"UNDERWRITING AGREEMENT", "WESTLB FEE LETTER", "WESTLB SUB-ACCOUNT", "WESTLB
EXPIRED FACILITY" 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 1:00 p.m. (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 Maximum 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 Maximum Available Commitment at such time and shall be
used solely for the payment when due of interest with respect to the
Certificates at the Stated Interest Rate therefor in accordance with Sections
3.6(a) and 3.6(b) of the Intercreditor Agreement. Each Interest Advance made
hereunder shall automatically reduce the Maximum Available Commitment and the
amount available to be borrowed hereunder by subsequent Advances by the amount
of such Interest Advance (subject to reinstatement as provided in the next
sentence). Upon repayment to the Liquidity Provider in full or in part of the
amount of any Interest Advance made pursuant to this Section 2.02(a), together
with accrued interest thereon (as provided herein), the Maximum Available
Commitment shall be reinstated by an amount equal to the amount of such Interest
Advance so repaid but not to exceed the Maximum Commitment; PROVIDED, HOWEVER,
that the Maximum Available Commitment shall not be so reinstated at any time if
(x) both a Performing Note Deficiency exists and a Liquidity Event of Default
shall have occurred and be continuing, or (y) a Final Advance or a Provider
Advance has been made.
(b) Subject to Section 2.10, a WestLB Early Termination Advance
shall be made in a single Borrowing if this Agreement is terminated by the
Liquidity Provider in accordance with Section 3.6(d)(ii) of the Intercreditor
Agreement (unless a Replacement Liquidity Facility to replace this Agreement
shall have been delivered to the Borrower as contemplated by said Section
3.6(d)(ii) within the time period specified in such Section 3.6(d)(ii)) 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 Maximum Available
Commitment at such time, and shall be used to fund the WestLB Sub-Account of the
Cash Collateral Account in accordance with Sections 3.6(d)(ii) and 3.6(f) of the
Intercreditor Agreement.
(c) A Downgrade Advance shall be made in a single Borrowing upon
the occurrence of a Downgrade Event (as provided for in Section 3.6(c) of the
Intercreditor Agreement) unless a Replacement Liquidity Facility to replace this
Agreement shall have been previously delivered to the Borrower in accordance
with Section 3.6(c), 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 Maximum Available Commitment at such time, and shall be used to fund the
WestLB Sub-Account of the Cash Collateral Account in accordance with Sections
3.6(c) and 3.6(f) of the Intercreditor Agreement.
(d) A Final Advance shall be made in a single Borrowing upon the
receipt by the Borrower of a Termination Notice from the 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 IV
attached hereto, signed by a Responsible Officer of the Borrower, in an amount
equal to the Maximum Available Commitment at such time, and shall be used to
fund the WestLB Sub-Account of the Cash Collateral Account in accordance with
Sections 3.6(f) and 3.6(i) of the Intercreditor Agreement.
(e) A WestLB Expiration Advance shall be made in a single
Borrowing if on December 1, 2015 (the "WESTLB TERMINATION DATE") the Maximum
Available Commitment hereunder is greater than zero by delivery to the Liquidity
Provider of a written and completed Notice of Borrowing in substantially the
form of Annex VII attached hereto, signed by a Responsible Officer of the
Borrower, in an amount equal to the Maximum Available Commitment at such time,
and shall be used to fund the WestLB Sub-Account of the Cash Collateral Account
in accordance with Sections 3.6(f) and 3.6(l) of the Intercreditor Agreement.
(f) Each Borrowing shall be made on notice in writing (a "NOTICE
OF BORROWING") in substantially the form required by Section 2.02(a), 2.02(b),
2.02(c), 2.02(d) or 2.02(e), as the case may be, given by the Borrower to the
Liquidity Provider. Each Notice of Borrowing shall be effective upon delivery of
a copy thereof to the Liquidity Provider's office at the address specified in
Section 7.02. If a Notice of Borrowing is delivered by the Borrower in respect
of any Borrowing no later than 1:00 p.m. (New York City time) on a Business Day,
upon satisfaction of the conditions precedent set forth in Section 4.02 with
respect to a requested Borrowing, the Liquidity Provider shall make available to
the Borrower, in accordance with its payment instructions, the amount of such
Borrowing in U.S. dollars and immediately available funds, before 4:00 p.m. (New
York City time) on such Business Day or on such later Business Day specified in
such Notice of Borrowing. If a Notice of Borrowing is delivered by the Borrower
in respect of any Borrowing on a day that is not a Business Day or after 1:00
p.m. (New York City time) on a Business Day, upon satisfaction of the conditions
precedent set forth in Section 4.02 with respect to a requested Borrowing, the
Liquidity Provider shall make available to the Borrower, in accordance with its
payment instructions, the amount of such Borrowing in U.S. dollars and in
immediately available funds, before 12:00 noon (New York City time) on the first
Business Day next following the day of receipt of such Notice of Borrowing or on
such later Business Day specified by the Borrower in such Notice of Borrowing.
Payments of proceeds of a Borrowing shall be made by wire transfer of
immediately available funds to the Borrower in accordance with such wire
transfer instructions as the Borrower shall furnish from time to time to the
Liquidity Provider for such purpose. Each Notice of Borrowing shall be
irrevocable and binding on the Borrower.
(g) 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. If the
Liquidity Provider makes an Advance requested pursuant to a Notice of Borrowing
before 12:00 noon (New York City time) on the second Business Day after the date
of payment specified in Section 2.02(f), the Liquidity Provider shall have fully
discharged its obligations hereunder with respect to such Advance and an event
of default shall not have occurred hereunder. Following the making of any
Advance pursuant to Section 2.02(b), 2.02(c), 2.02(d) or 2.02(e) hereof to fund
the WestLB Sub-Account of the Cash Collateral Account, the Liquidity Provider
shall have no interest in or rights to the Cash Collateral Account, any
Sub-Account thereof, the funds constituting such Advance or any other amounts
from time to time on deposit in the Cash Collateral Account or any Sub-Account
thereof; 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 3.6(f) of the Intercreditor Agreement and PROVIDED FURTHER, that the
foregoing shall not affect or impair the rights of the Liquidity Provider to
provide written instructions with respect to the investment and reinvestment of
amounts in the WestLB Sub-Account of the Cash Collateral Account to the extent
provided in Section 2.2(b) of the Intercreditor Agreement. By paying to the
Borrower proceeds of Advances requested by the Borrower in accordance with the
provisions of this Agreement, the 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 applicable to this Agreement.
Section 2.04. REDUCTIONS OR TERMINATION OF THE MAXIMUM COMMITMENT.
(a) AUTOMATIC REDUCTION. Promptly following each date on which the
Required Amount with respect to this Agreement is reduced as a result of a
reduction (or deemed reduction) in the Pool Balance of the Certificates or
otherwise, the Maximum Commitment shall automatically be reduced to an amount
equal to such reduced Required Amount (as calculated by the Borrower); PROVIDED
that on the first Regular Distribution Date, the Maximum Commitment shall
automatically be reduced to the Required Amount then in effect with respect to
this Agreement. The Borrower shall give notice of any such automatic reduction
of the Maximum 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 of the Maximum Commitment.
(b) TERMINATION. Upon the making of any Provider Advance or Final
Advance hereunder or the occurrence of the Termination Date, the obligation of
the Liquidity Provider to make further Advances hereunder shall automatically
and irrevocably terminate, and the Borrower shall not be entitled to request any
further Borrowing hereunder.
Section 2.05. REPAYMENTS OF INTEREST ADVANCES OR THE FINAL
ADVANCE. Subject to Sections 2.06, 2.07 and 2.09 hereof, the Borrower hereby
agrees, without notice of an Advance or demand for repayment from the Liquidity
Provider (which notice and demand are hereby waived by the Borrower), 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; PROVIDED that if
(i) the Liquidity Provider shall make a Provider Advance at any time after
making one or more Interest Advances which shall not have been repaid in
accordance with this Section 2.05 or (ii) this Liquidity Facility shall become a
Downgraded Facility, an Early Terminated Facility or a WestLB Expired Facility
at any time when unreimbursed Interest Advances have reduced the Maximum
Available Commitment to zero, then such Interest Advances shall cease to
constitute Unpaid Advances and shall be deemed to have been changed into an
Applied Downgrade Advance, an Applied WestLB Early Termination Advance or an
Applied WestLB Expiration Advance, as the case may be, for all purposes of this
Agreement (including, without limitation, for the purpose of determining when
such Interest Advance is required to be repaid to the Liquidity Provider in
accordance with Section 2.06 and for the purposes of Section 2.06(b)). 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 PROVIDER ADVANCES. (a) Amounts
advanced hereunder in respect of a Provider Advance shall be deposited in the
WestLB Sub-Account of the Cash Collateral Account and invested and withdrawn
from the WestLB Sub-Account of the Cash Collateral Account as set forth in
Sections 3.6(c), 3.6(d), 3.6(e), 3.6(f) and 3.6(l) of the Intercreditor
Agreement. Subject to Sections 2.07 and 2.09, 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 Provider Advance, interest on
the principal amount of any such Provider Advance as provided in Section 3.07
hereof; PROVIDED, HOWEVER, that amounts in respect of a Provider Advance
withdrawn from the WestLB Sub-Account of the Cash Collateral Account for the
purpose of paying interest on the Certificates in accordance with Section 3.6(f)
of the Intercreditor Agreement (the amount of any such withdrawal being (x) in
the case of a Downgrade Advance, an "APPLIED DOWNGRADE ADVANCE", (y) in the case
of a WestLB Early Termination Advance, an "APPLIED WESTLB EARLY TERMINATION
ADVANCE" and (z) in the case of a WestLB Expiration Advance, an "APPLIED WESTLB
EXPIRATION ADVANCE" and, together with an Applied Downgrade Advance and Applied
WestLB Early Termination Advance, an "APPLIED PROVIDER ADVANCE") shall
thereafter (subject to Section 2.06(b)) be treated as an Interest Advance under
this Agreement for purposes of determining the Applicable Liquidity Rate for
interest payable thereon; PROVIDED FURTHER, HOWEVER, that if, following the
making of a Provider Advance, the Liquidity Provider delivers a Termination
Notice to the Borrower pursuant to Section 6.01 hereof, such Provider Advance
shall thereafter be treated as a Final Advance under this Agreement for purposes
of determining the Applicable Liquidity Rate for interest payable thereon and
the obligation for repayment thereof. Subject to Sections 2.07 and 2.09 hereof,
immediately upon the withdrawal of any amounts from the WestLB Sub-Account of
the Cash Collateral Account pursuant to Section 3.6(f) of the Intercreditor
Agreement on account of a reduction (or deemed reduction) in the Required Amount
with respect to such Sub-Account, the Borrower shall repay to the Liquidity
Provider a portion of the Provider Advances in a principal amount equal to such
reduction, plus interest on the principal amount prepaid as provided in Section
3.07 hereof.
(b) At any time when an Applied Provider Advance (or any portion
thereof) is outstanding, upon the deposit in the WestLB Sub-Account of the Cash
Collateral Account of any amount pursuant to clause "third" of Section 2.4(b) of
the Intercreditor Agreement, clause "third" of Section 3.2 of the Intercreditor
Agreement or clause "fourth" of Section 3.3 of the Intercreditor Agreement (any
such amount being a "REPLENISHMENT AMOUNT") for the purpose of replenishing or
increasing the balance thereof up to the Required Amount with respect to such
Sub-Account at such time, (i) the aggregate outstanding principal amount of all
Applied Provider Advances (and of Provider Advances treated as an Interest
Advance for purposes of determining the Applicable Liquidity Rate for interest
payable thereon) shall be automatically reduced by the amount of such
Replenishment Amount and (ii) the aggregate outstanding principal amount of all
Unapplied Provider Advances shall be automatically increased by the amount of
such Replenishment Amount.
(c) Upon the provision of a Replacement Liquidity Facility in
replacement of this Agreement in accordance with Section 3.6(e) of the
Intercreditor Agreement, amounts remaining on deposit in the WestLB Sub-Account
of the Cash Collateral Account after giving effect to any Applied Provider
Advance on the date of such replacement shall be reimbursed to the replaced
Liquidity Provider, but only to the extent such amounts are necessary to repay
in full to the replaced 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 to Liquidity
Obligations then due and payable in accordance with the Intercreditor Agreement
and shall discharge in full the corresponding obligations of the Borrower
hereunder (or, if not provided for in the Intercreditor Agreement, then in such
manner as the Liquidity Provider shall deem appropriate).
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 the amounts
that constitute Scheduled Payments, Special Payments or payments under the
WestLB Fee Letter, Section 9.1 of the Participation Agreements and Section 6 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 and other applicable 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 WestLB Sub-Account of the Cash Collateral Account shall be available to
the Borrower to make payments under this Agreement only to the extent and for
the purposes expressly contemplated in Section 3.6(f) of the Intercreditor
Agreement. Amounts on deposit in the other Sub-Account in respect of the
Certificates shall not be available to make payments under this Agreement.
Section 2.10. WESTLB EARLY TERMINATION NOTICE; WESTLB EARLY
TERMINATION ADVANCE. At any time during the WestLB Early Termination Notice
Period, the Liquidity Provider shall have the right in its sole discretion to
terminate its obligations to make Advances under this Agreement upon not less
than 25 days' written notice (the "WESTLB EARLY TERMINATION NOTICE") to the
Borrower. If the Liquidity Provider delivers a WestLB Early Termination Notice
to the Borrower during the WestLB Early Termination Notice Period (and, in each
case, if the Liquidity Provider shall not have been replaced in accordance with
Section 3.6(e) of the Intercreditor Agreement on or before the expiry of the
WestLB Early Termination Notice Period), the Borrower shall be entitled at any
time prior to the WestLB Early Termination Date, to request a WestLB Early
Termination Advance in accordance with Section 2.02(b) hereof and Section
3.6(d)(ii) 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 increased 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 of the Board of Governors of the Federal Reserve
System), or the adoption or making after the date of this Agreement of any
interpretations, directives, or requirements applying to a class of banks
including the Liquidity Provider under any U.S. federal, state, municipal, or
any foreign laws or regulations (whether or not having the force of law) by any
court, central bank or monetary authority charged with the interpretation or
administration thereof (a "REGULATORY CHANGE"), which: (1) changes the basis of
taxation of any amounts payable to the Liquidity Provider under this Agreement
in respect of any such Advances or such obligation (other than with respect to
Excluded Taxes); or (2) imposes or modifies any reserve, special deposit,
compulsory loan or similar requirements relating to any extensions of credit or
other assets of, or any deposits with other liabilities of, the Liquidity
Provider (including any such Advances or such obligation or any deposits
referred to in the definition of LIBOR Rate or related definitions).
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.
Notwithstanding the preceding two paragraphs, the Liquidity Provider
and the Subordination Agent agree that any permitted assignee or participant of
the initial Liquidity Provider which is not a bank shall not be entitled to the
benefits of the preceding two paragraphs (but without limiting the provisions of
Section 7.08 hereof).
Section 3.02. CAPITAL ADEQUACY. If (1) the adoption, after the
date hereof, of any applicable governmental law, rule or regulation regarding
capital adequacy, (2) any change, after the date hereof, in the interpretation
or administration of any such law, rule or regulation by any central bank or
other governmental authority charged with the interpretation or administration
thereof or (3) compliance by the Liquidity Provider or any corporation
controlling the Liquidity Provider with any applicable guideline or request of
general applicability, issued after the date hereof, by any central bank or
other governmental authority (whether or not having the force of law) that
constitutes a change of the nature described in clause (2), has the effect of
requiring an increase in the amount of capital required to be maintained by the
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, subject to the provisions of
Section 3.11, pay to the Liquidity Provider from time to time such additional
amount or amounts as are necessary to compensate the Liquidity Provider for such
portion of such increase as shall be reasonably allocable to the Liquidity
Provider's obligations to the Borrower hereunder.
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 Liquidity Provider 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.
Notwithstanding the preceding two paragraphs, the Liquidity Provider
and the Subordination Agent agree that any permitted assignee or participant of
the initial Liquidity Provider which is not a bank shall not be entitled to the
benefits of the preceding two paragraphs (but without limiting the provisions of
Section 7.08 hereof).
Section 3.03. PAYMENTS FREE OF DEDUCTIONS. (a) All payments made
by the Borrower under this Agreement shall be made without reduction or
withholding for or on account of any present or future Taxes of any nature
whatsoever now or hereafter imposed, levied, collected, withheld or assessed,
other than Excluded Withholding Taxes (such non-excluded Taxes being referred to
herein, collectively, as "INDEMNIFIED TAXES" and, individually, as an
"INDEMNIFIED TAX") unless such reduction or withholding is required by
applicable law. If any Taxes are required to be withheld from any amounts
payable to the Liquidity Provider under this Agreement, (i) the Borrower shall
within the time prescribed therefor by applicable law pay to the appropriate
governmental or taxing authority the full amount of any such Taxes (including
any additional Tax required to be deducted or withheld in respect of the
additional amounts payable under clause (ii) hereof) and make such reports or
returns in connection therewith at the time or times and in the manner
prescribed by applicable law, and (ii) in the case of Indemnified Taxes, the
amounts payable to the Liquidity Provider shall be increased to the extent
necessary to yield to the Liquidity Provider (after deduction or withholding for
or on account of all Indemnified Taxes and any additional Taxes required to be
deducted or withheld or payable by the Liquidity Provider by reason of the
receipt or accrual of the additional amounts payable pursuant to this clause
(ii)) interest or any other such amounts payable under this Agreement at the
rates or in the amounts specified in this Agreement. If the Liquidity Provider
(including a successor Liquidity Provider) is not organized under the laws of
the United States or any State thereof, to the extent it is eligible to do so,
the Liquidity Provider agrees to provide to the Borrower, prior to the first
date any amount is payable to it hereunder, two executed original copies of
Internal Revenue Service Form W-8BEN or W-8ECI, as appropriate, or any successor
or other form prescribed by the Internal Revenue Service, certifying that the
Liquidity Provider is exempt from or entitled to a reduced rate of United States
withholding Tax on payments pursuant to this Agreement. In addition, the
Liquidity Provider will provide, from time to time upon the reasonable request
of the Borrower, such additional forms or documentation as may be necessary to
establish an available exemption from (or an entitlement to a reduced rate of)
withholding Tax on payments hereunder. Within 30 days after the date of each
payment hereunder, the Borrower shall furnish to the Liquidity Provider an
original or certified copy of a receipt (or other documentary evidence
reasonably acceptable to the Liquidity Provider) evidencing the payment of the
Taxes applicable to such payment.
(b) If the Liquidity Provider (including a successor Liquidity
Provider) is not organized under the laws of the United States or any State
thereof, all Advances made by the Liquidity Provider under this Agreement shall
be made free and clear of, and without reduction for or on account of, any Taxes
that are imposed by a jurisdiction in which the Liquidity Provider is organized,
has its Lending Office or maintains its principal place of business unless such
reduction or withholding is required by applicable law. If any such Taxes are
required to be withheld or deducted from any Advances, the Liquidity Provider
shall (i) within the time prescribed therefor by applicable law pay to the
appropriate governmental or taxing authority the full amount of any such Taxes
(and any additional Taxes in respect of the additional amounts payable under
clause (ii) hereof) and make such reports or returns in connection therewith at
the time or times and in the manner prescribed by applicable law, and (ii) pay
to the Borrower an additional amount which (after deduction of all such Taxes)
shall be sufficient to yield to the Borrower the full amount that would have
been received by it had no such withholding or deduction been required. The
Borrower shall, for United States federal income tax purposes and for all
purposes hereunder, treat such payments as Interest Advances, and, as such, will
treat such payments as loans made by the Liquidity Provider to the Borrower,
unless otherwise required by law (it being understood and agreed that the
treatment of such additional amounts shall not reduce the Maximum Available
Commitment hereunder). Within 30 days after the date of each payment hereunder,
the Liquidity Provider shall furnish to the Borrower an original or certified
copy of a receipt (or other documentary evidence reasonably acceptable to the
Borrower) evidencing the payment of the Taxes applicable to such payment.
(c) If any exemption from, or reduction in the rate of, any Taxes
required to be deducted or withheld from amounts payable by the Liquidity
Provider hereunder is reasonably available to the Borrower to establish that
payments under this Agreement are exempt from (or entitled to a reduced rate of)
Tax, the Borrower shall deliver to the Liquidity Provider such form or forms and
such other evidence of the eligibility of the Borrower for such exemption or
reduction as the Liquidity Provider may reasonably identify to the Borrower as
being required as a condition to exemption from, or reduction in the rate of,
any such Taxes.
Section 3.04. PAYMENTS. The Borrower shall make or cause to be
made each payment to the 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 U.S. dollars, to the Liquidity Provider in immediately available funds, by
wire transfer to the account of JP Morgan Chase, One Chase Manhattan Plaza, New
York, NY 10005, ABA #021-000021 for the account of WestLB AG, New York Branch,
Account # 920-1-060663, for further credit to Continental Airlines EETC
2004-ERJ1 account, ref 69170; or to such other U.S. bank account as the
Liquidity Provider may from time to time direct the Subordination Agent.
Section 3.05. COMPUTATIONS. All computations of interest based on
the Base Rate shall be made on the basis of a year of 365 or 366 days, as the
case may be, and all computations of interest based on the LIBOR Rate shall be
made on the basis of a year of 360 days, in each case for the actual number of
days (including the first day but excluding the last day) occurring in the
period for which such interest is payable.
Section 3.06. PAYMENT ON NON-BUSINESS DAYS. Whenever any payment
to be made hereunder shall be stated to be due on a day other than a Business
Day, such payment shall be made on the next succeeding Business Day and no
additional interest shall be due as a result (and if so made, shall be deemed to
have been made when due). If any payment in respect of interest on an Advance is
so deferred to the next succeeding Business Day, such deferral shall not delay
the commencement of the next Interest Period for such Advance (if such Advance
is a LIBOR Advance) or reduce the number of days for which interest will be
payable on such Advance on the next interest payment date for such Advance.
Section 3.07. INTEREST. (a) Subject to Section 2.09, the Borrower
shall pay, or shall cause to be paid, without duplication, interest on (i) the
unpaid principal amount of each Advance from and including the date of such
Advance (or, in the case of an Applied Provider Advance, from and including the
date on which the amount thereof was withdrawn from the WestLB Sub-Account of
the Cash Collateral Account to pay interest on the Certificates) to but
excluding the date such principal amount shall be paid in full (or, in the case
of an Applied Provider Advance, the date on which the WestLB Sub-Account of the
Cash Collateral Account is fully replenished in respect of such Advance) 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) that 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 the
case may be, 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.
(b) Each Advance (including, without limitation, each outstanding
Unapplied Provider Advance) will be either a Base Rate Advance or a LIBOR
Advance as provided in this Section 3.07. Each such Advance will be a Base Rate
Advance for the period from the date of its borrowing to (but excluding) the
third Business Day following the Liquidity Provider's receipt of the Notice of
Borrowing for such Advance. Thereafter, such Advance shall be a LIBOR Advance;
provided that the Borrower (at the direction of the Controlling Party, so long
as the Liquidity Provider is not the Controlling Party) may (x) convert the
Final Advance into a Base Rate Advance on the last day of an Interest Period for
such Advance by giving the Liquidity Provider no less than four Business Days'
prior written notice of such election or (y) elect to maintain the Final Advance
as a Base Rate Advance by not requesting a conversion of the Final Advance to a
LIBOR Advance under Clause (5) of the applicable Notice of Borrowing (or, if
such Final Advance is deemed to have been made, without delivery of a Notice of
Borrowing pursuant to Section 2.06, by requesting, prior to 11:00 a.m. (New York
City time) on the first Business Day immediately following the Borrower's
receipt of the applicable Termination Notice, that such Final Advance not be
converted from a Base Rate Advance to a LIBOR Advance).
(c) Each LIBOR Advance shall bear interest during each Interest
Period at a rate per annum equal to 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).
(d) Each Base Rate Advance shall bear interest at a rate per annum
equal to 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).
(e) 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 but excluding Advances) shall bear
interest at a rate per annum equal to the Base Rate plus 2.00% until paid.
(f) Each change in the Base Rate shall become effective
immediately. The rates of interest specified in this Section 3.07 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 Subordination Agent in substantially the form of
Annex VI attached hereto (a "NOTICE OF REPLACEMENT SUBORDINATION AGENT")
delivered to the Liquidity Provider by the then Borrower, the successor Borrower
designated therein shall be substituted for 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 by
reason of the liquidation or redeployment of deposits or other funds acquired by
the Liquidity Provider to fund or maintain any LIBOR Advance (but excluding loss
of anticipated profits) incurred as a result of:
(1) Any repayment 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.
Section 3.11. MITIGATION. If a condition arises or an event occurs
which would, or would upon the giving of notice, result in the payment of any
additional costs or amounts pursuant to Section 3.01, 3.02 or 3.03 or require
the conversion of any Advance pursuant to Section 3.10, the Liquidity Provider,
promptly upon becoming aware of the same, shall notify the Borrower and shall
use reasonable efforts (consistent with applicable legal and regulatory
restrictions) to mitigate the effects of such condition or event, including the
designation of a different Lending Office or furnishing of the proper
certificates under any applicable tax laws, tax treaties and conventions to the
extent that such certificates are legally available to the Liquidity Provider;
PROVIDED, that the Liquidity Provider shall be under no obligation to take any
step that, in its good-faith opinion would (i) result in its incurring any
additional costs in performing its obligations hereunder unless the Borrower has
agreed to reimburse it therefor or (ii) be otherwise disadvantageous to the
Liquidity Provider in the reasonable judgment of the Liquidity Provider.
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 each of the
following, 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 and the
Fee Letter applicable to this Agreement duly executed on
behalf of each of the parties thereto (other than the
Liquidity Provider);
(ii) The Intercreditor Agreement duly executed on behalf of each of
the parties thereto (other than the Liquidity Provider);
(iii) Fully executed copies of each of the Operative Agreements
executed and delivered on or before the Closing Date (other
than this Agreement, the Fee Letter applicable to this
Agreement and the Intercreditor Agreement);
(iv) A copy of the Prospectus Supplement and specimen copies of the
Certificates; and
(v) An executed copy of each document, instrument, certificate and
opinion delivered on or before the Closing Date pursuant to
the Trust Agreement, the Intercreditor Agreement and the other
Operative Agreements (in the case of each such opinion, other
than the opinion of counsel for the Underwriters, either
addressed to the Liquidity Provider or accompanied by a letter
from the counsel rendering such opinion to the effect that the
Liquidity Provider is entitled to rely on such opinion as of
its date 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 Trustee, the Borrower and the
Liquidity Provider created by the Operative Agreements
executed and delivered on or prior to the Closing Date;
(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 8.2.1 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
pertaining to the transactions contemplated hereby or by the
other Operative Agreements as the Liquidity Provider shall
have reasonably requested.
(b) The following statement shall be true on and as of the
Effective Date: 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.
(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 Agreement shall have been satisfied or waived, all conditions
precedent to the effectiveness of the other Liquidity Facility shall have been
satisfied or waived, and all conditions precedent to the purchase of the
Certificates by the Underwriters under the Underwriting Agreement shall have
been satisfied or waived.
(e) The Borrower shall have received a certificate, dated the date
hereof, signed by a duly authorized representative of the Liquidity Provider,
certifying that all conditions precedent to the effectiveness of Section 2.01
have been satisfied or waived.
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, on or 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 Advance 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 Maximum
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.
(c) CERTAIN OPERATIVE AGREEMENTS. Furnish to the Liquidity
Provider with reasonable promptness, such Operative Agreements entered into
after the date hereof as from time to time may be reasonably requested by the
Liquidity Provider.
Section 5.02. NEGATIVE COVENANTS OF THE BORROWER. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any Maximum
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 prior 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 (i) any Liquidity
Event of Default has occurred and is continuing and (ii) 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 (w) the
obligation of the Liquidity Provider to make Advances hereunder to expire on the
fifth Business Day after the date on which such Termination Notice is received
by the Borrower, (x) the Borrower to promptly request, and the Liquidity
Provider to promptly make, a Final Advance in accordance with Section 2.02(d)
hereof and Section 3.6(i) of the Intercreditor Agreement, (y) all other
outstanding Advances to be automatically converted into Final Advances for
purposes of determining the Applicable Liquidity Rate for interest payable
thereon, and (z) subject to Sections 2.07 and 2.09 hereof, all Advances
(including, without limitation, any Provider Advance and Applied Provider
Advance), 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 or of a
waiver by the Borrower, 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 Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telephone: (800) 733-8485
Telecopy: (302) 651-8882
Liquidity Provider: WestLB AG, New York Branch
1211 Avenue of the Americas
New York, New York 10036
Reference: Continental Airlines Pass Through Trust
2004-ERJ1
Attention: Brigitte Thieme
Telephone: (212) 852-6111
Telecopy: (212) 869-7634
with a copy to:
WestLB AG, New York Branch
1211 Avenue of the Americas
New York, New York 10036
Attention: Michael Sassos
Telephone: (212) 852-5973
Telecopy: (212) 852-6228
and
WestLB AG, New York Branch
1211 Avenue of the Americas
New York, New York 10036
Attention: Jesus Sang
Telephone: (212) 852-6389
Telecopy: (212) 302-7946
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 Article II and Article 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 9.1 of the Participation Agreements. 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 (other than any Expenses of the nature
described in Section 3.01, 3.02 or 7.07 hereof or in the Fee Letter applicable
to this Agreement (regardless of whether indemnified against pursuant to said
Sections or in such Fee Letter)), that may be imposed on, incurred by or
asserted against any Liquidity Indemnitee, in any way relating to, resulting
from, or arising out of or in connection with any action, suit or proceeding by
any third party against such Liquidity Indemnitee and relating to this
Agreement, the Fee Letter applicable to this Agreement, 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 to the extent
such Expense is (i) attributable to the gross negligence or willful misconduct
of such Liquidity Indemnitee or any other Liquidity Indemnitee; (ii) ordinary
and usual operating overhead expense; (iii) attributable to the failure by the
Liquidity Provider to perform or observe any agreement, covenant or condition on
its part to be performed or observed in this Agreement or the Intercreditor
Agreement, or (iv) a Tax. The indemnities contained in Section 9.1 of the
Participation Agreements, and the provisions of Sections 3.01, 3.02, 3.03, 3.09,
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, employees, directors or Affiliates
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 gross
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 or the Intercreditor 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. In no event, however, shall the Liquidity
Provider be liable on any theory of liability for any special, indirect,
consequential or punitive damages (including, without limitation, any loss of
profits, business or anticipated savings).
(b) Neither the Liquidity Provider nor any of its officers,
employees, directors or Affiliates shall 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 gross 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 (including, without limitation, the reasonable
fees and expenses of outside counsel for the Liquidity Provider) 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
and (B) on demand, all reasonable costs and expenses (including reasonable
counsel fees and expenses) of the Liquidity Provider 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 any
waiver or consent thereunder (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 Account. 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 hold 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
(except as contemplated by Section 3.08) the Borrower shall have the right to
assign its rights or obligations hereunder or any interest herein without the
prior written consent of the other party, subject to the requirements of Section
7.08(b). The Liquidity Provider may grant participations herein or in any of its
rights hereunder (including, without limitation, funded participations and
participations in rights to receive interest payments hereunder) and under the
other Operative Agreements to such Persons (other than Continental and its
Affiliates) as the Liquidity Provider may in its sole discretion select, subject
to the requirements of Section 7.08(b). No such granting of participations 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. Accordingly, references in this Agreement and the
other Operative Agreements to determinations, reserve and capital adequacy
requirements, increased costs, reduced receipts, additional amounts due pursuant
to Section 3.03 and the like as they pertain to the Liquidity Provider shall be
deemed also to include those of each of its participants that are banks
(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 in this Agreement to any bank or other entity (each, a
"TRANSFEREE"), then, concurrently with the effectiveness of such participation,
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 W-8ECI or Form W-8BEN, 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 W-8ECI or Form W-8BEN, 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 W-8BEN or Form
W-8ECI 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.
(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.
(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
nonexclusive 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 of 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 judgment 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, the Intercreditor
Agreement and the other Operative Agreements to which the Liquidity Provider is
a party 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 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, as agent and trustee
for the Trust, as Borrower
By___________________________________
Name:
Title:
WESTLB AG, acting through its New York
Branch, 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 WESTLB AG, acting through its New
York Branch (the "LIQUIDITY PROVIDER"), with reference to the Revolving Credit
Agreement (2004-ERJ1) dated as of June 29, 2004, 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,
subject to clause (3)(v) below, for the payment of interest on the
Certificates which was payable on ____________, ____ (the "DISTRIBUTION
DATE") in accordance with the terms and provisions of the Trust Agreement
and the Certificates, which Advance is requested to be made on
____________, ____. The Interest Advance should be transferred to [name of
bank/wire instructions/ABA number] in favor of account number [ __ ],
reference [ __ ].
(3) The amount of the Interest Advance requested hereby (i) is
$_______________.__, to be applied in accordance with Sections 3.6(a) and
3.6(b) of the Intercreditor Agreement in respect of the payment of the
interest which was due and payable on the Certificates on the Distribution
Date, (ii) does not include any amount with respect to the payment of
principal of, or premium on, the Certificates, (iii) was computed in
accordance with the provisions of the Certificates, the Trust Agreement
and the Intercreditor Agreement (a copy of which computation is attached
hereto as Schedule I), (iv) does not exceed the Maximum Available
Commitment on the date hereof, (v) does not include any amount of interest
which was due and payable on the Certificates on such Distribution Date
but which remains unpaid due to the failure of the Depositary to pay any
amount of accrued interest on the Deposits on such Distribution Date and
(vi) 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 3.6(b) 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, 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 Maximum 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 Notice of Borrowing
I-1
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:
I-2
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert copy of computations in accordance with Interest Advance
Notice of Borrowing]
I-3
Annex II to
Revolving Credit Agreement
WESTLB EARLY TERMINATION ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
borrower (the "BORROWER"), hereby certifies to WESTLB AG, acting through its New
York Branch (the "LIQUIDITY PROVIDER"), with reference to the Revolving Credit
Agreement (2004-ERJ1) dated as of June 29, 2004, 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 WestLB Early Termination Advance by the Liquidity Provider
to be used for the funding of the WestLB Sub-Account of the Cash
Collateral Account in accordance with Section 3.6(d)(ii) of the
Intercreditor Agreement, which Advance is requested to be made on
__________, ____. The WestLB Early Termination Advance should be
transferred to [name of bank/wire instructions/ABA number] in favor of
account number [ __ ], reference [ __ ].
(3) The amount of the WestLB Early Termination Advance requested
hereby (i) is $_______________.__, which equals the Maximum Available
Commitment on the date hereof and is to be applied in respect of the
funding of the WestLB Sub-Account of the Cash Collateral Account in
accordance with Sections 3.6(d)(ii) and 3.6(f) of the Intercreditor
Agreement, (ii) does not include any amount with respect to the payment of
the principal of, or premium on, the Certificates, (iii) was computed in
accordance with the provisions of the Certificates, the 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 WestLB
Sub-Account of the Cash Collateral Account and apply the same in
accordance with the terms of Sections 3.6(d)(ii) and 3.6(f) 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 WestLB Early Termination 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 WestLB Early Termination Advance requested by this Notice of Borrowing, the
II-1
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:
II-2
SCHEDULE I TO WESTLB EARLY TERMINATION ADVANCE NOTICE OF BORROWING
[Insert copy of computations in accordance with WestLB Early Termination
Advance Notice of Borrowing]
II-3
Annex III to
Revolving Credit Agreement
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
borrower (the "BORROWER"), hereby certifies to WESTLB AG, acting through its New
York Branch (the "LIQUIDITY PROVIDER"), with reference to the Revolving Credit
Agreement (2004-ERJ1) dated as of June 29, 2004, 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 WestLB Sub-Account of the Cash Collateral Account in
accordance with Section 3.6(c) of the Intercreditor Agreement by reason of
the occurrence of a Downgrade Event, which Advance is requested to be made
on __________, ____. The Downgrade Advance should be transferred to [name
of bank/wire instructions/ABA number] in favor of account number [ __ ],
reference [ __ ].
(3) The amount of the Downgrade Advance requested hereby (i) is
$_______________.__, which equals the Maximum Available Commitment on the
date hereof and is to be applied in respect of the funding of the WestLB
Sub-Account of the Cash Collateral Account in accordance with Sections
3.6(c) and 3.6(f) of the Intercreditor Agreement, (ii) does not include
any amount with respect to the payment of the principal of, or premium on,
the Certificates, (iii) was computed in accordance with the provisions of
the Certificates, the 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 WestLB
Sub-Account of the Cash Collateral Account and apply the same in
accordance with the terms of Sections 3.6(c) and 3.6(f) 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.
III-1
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:
III-2
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert copy of computations in accordance with Downgrade Advance
Notice of Borrowing]
III-3
Annex IV to
Revolving Credit Agreement
FINAL ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
borrower (the "BORROWER"), hereby certifies to WESTLB AG, acting through its New
York Branch (the "LIQUIDITY PROVIDER"), with reference to the Revolving Credit
Agreement (2004-ERJ1) dated as of June 29, 2004, 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 WestLB Sub-Account of the 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 ____________, ____. The Final Advance should be
transferred to [name of bank/wire instructions/ABA number] in favor of
account number [ __ ], reference [ __ ].
(3) The amount of the Final Advance requested hereby (i) is
$_________________.__, which equals the Maximum Available Commitment on
the date hereof and is to be applied in respect of the funding of the
WestLB Sub-Account of the Cash Collateral Account in accordance with
Sections 3.6(f) and 3.6(i) of the Intercreditor Agreement, (ii) does not
include any amount with respect to the payment of principal of, or premium
on, the Certificates, (iii) was computed in accordance with the provisions
of the Certificates, the 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 WestLB
Sub-Account of the Cash Collateral Account and apply the same in
accordance with the terms of Sections 3.6(f) and 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.
(5) The Borrower hereby requests that the Advance requested hereby
be a Base Rate Advance [and that such Base Rate Advance be converted into
a LIBOR Advance on the third Business Day following your receipt of this
notice.](1)
- ---------------
(1) Bracketed language may be included at Borrower's option.
IV-1
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:
IV-2
SCHEDULE I TO FINAL ADVANCE NOTICE OF BORROWING
[Insert copy of computations in accordance with Final Advance
Notice of Borrowing]
IV-3
Annex V to
Revolving Credit Agreement
NOTICE OF TERMINATION
[Date]
Wilmington Trust Company,
as Subordination Agent, as Borrower
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Revolving Credit Agreement dated as of June 29, 2004, between
Wilmington Trust Company, as Subordination Agent, as agent and
trustee for the Continental Airlines Pass Through Trust 2004-ERJ1,
as Borrower, and WestLB AG, acting through its New York Branch (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 the existence of a Performing Note Deficiency (each as defined 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.
V-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,
WESTLB AG, acting through its New York
Branch, as Liquidity Provider
By_________________________________
Name:
Title:
By_________________________________
Name:
Title:
cc: Wilmington Trust Company,
as Trustee
V-2
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of June 29, 2004, between Wilmington
Trust Company, as Subordination Agent, as agent and trustee for the
Continental Airlines Pass Through Trust, 2004-ERJ1, as Borrower, and
WestLB AG, acting through its New York Branch (the "LIQUIDITY AGREEMENT")
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
------------------------------
[Name of Transferee]
------------------------------
[Address of Transferee]
all rights and obligations 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 and obligations as Borrower thereunder. The
undersigned shall pay any costs and expenses of such transfer, including, but
not limited to, transfer taxes or governmental charges.
VI-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:
VI-2
Annex VII to
Revolving Credit Agreement
WESTLB EXPIRATION ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
borrower (the "BORROWER"), hereby certifies to WESTLB AG, acting through its New
York Branch (the "LIQUIDITY PROVIDER"), with reference to the Revolving Credit
Agreement (2004-ERJ1) dated as of June 29, 2004, 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 WestLB Expiration Advance by the Liquidity Provider to be
used for the funding of the WestLB Sub-Account of the Cash Collateral
Account in accordance with Section 3.6(l) of the Intercreditor Agreement,
which Advance is requested to be made on __________, ____. The WestLB
Expiration Advance should be transferred to [name of bank/wire
instructions/ABA number] in favor of account number [ __ ], reference [ __
].
(3) The amount of the WestLB Expiration Advance requested hereby
(i) is $_______________.__, which equals the Maximum Available Commitment
on the date hereof and is to be applied in respect of the funding of the
WestLB Sub-Account of the Cash Collateral Account in accordance with
Sections 3.6(f) and 3.6(l) of the Intercreditor Agreement, (ii) does not
include any amount with respect to the payment of the principal of, or
premium on, the Certificates, (iii) was computed in accordance with the
provisions of the Certificates, the 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 WestLB
Sub-Account of the Cash Collateral Account and apply the same in
accordance with the terms of Sections 3.6(f) and 3.6(l) 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 WestLB Expiration 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 WestLB
Expiration Advance requested by this Notice of Borrowing, the Borrower shall not
be entitled to request any further Advances under the Liquidity Agreement.
VII-1
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:
VII-2
SCHEDULE I TO WESTLB EXPIRATION ADVANCE NOTICE OF BORROWING
[Insert copy of computations in accordance with WestLB Expiration Advance
Notice of Borrowing]
VII-3
-----------------------------------------------------------------
REVOLVING CREDIT AGREEMENT (2004-ERJ1)
Dated as of June 29, 2004
between
WILMINGTON TRUST COMPANY,
as Subordination Agent, as agent and trustee for the
Continental Airlines Pass Through Trust 2004-ERJ1,
as Borrower,
and
CITICORP NORTH AMERICA, INC., as Liquidity Provider
-----------------------------------------------------------------
Continental Airlines Pass Through Trust 2004-ERJ1
Continental Airlines 9.558% Pass Through Certificates,
Series 2004-ERJ1
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.........................................................1
Section 1.01 Certain Defined Terms......................................1
ARTICLE II AMOUNT AND TERMS OF THE COMMITMENT.................................8
Section 2.01 The Advances...............................................8
Section 2.02 Making the Advances........................................8
Section 2.03 Fees......................................................10
Section 2.04 Reductions or Termination of the Maximum Commitment.......10
Section 2.05 Repayments of Interest Advances, the CNAI Special
Termination Advance or the Final Advance..................10
Section 2.06 Repayments of Provider Advances...........................11
Section 2.07 Payments to the Liquidity Provider Under the
Intercreditor Agreement...................................12
Section 2.08 Book Entries..............................................12
Section 2.09 Payments from Available Funds Only........................13
Section 2.10 Extension of the Expiry Date; Non-Extension Advance.......13
ARTICLE III OBLIGATIONS OF THE BORROWER......................................13
Section 3.01 Increased Costs...........................................13
Section 3.02 Capital Adequacy..........................................14
Section 3.03 Payments Free of Deductions...............................15
Section 3.04 Payments..................................................16
Section 3.05 Computations..............................................17
Section 3.06 Payment on Non-Business Days..............................17
Section 3.07 Interest..................................................17
Section 3.08 Replacement of Borrower...................................18
Section 3.09 Funding Loss Indemnification..............................18
Section 3.10 Illegality................................................19
Section 3.11 Mitigation................................................19
ARTICLE IV CONDITIONS PRECEDENT..............................................19
Section 4.01 Conditions Precedent to Effectiveness of Section 2.01.....19
Section 4.02 Conditions Precedent to Borrowing.........................21
ARTICLE V COVENANTS..........................................................21
Section 5.01 Affirmative Covenants of the Borrower.....................21
Section 5.02 Negative Covenants of the Borrower........................22
ARTICLE VI LIQUIDITY EVENTS OF DEFAULT AND SPECIAL TERMINATION...............22
Section 6.01 Liquidity Events of Default and Special Termination.......22
ARTICLE VII MISCELLANEOUS....................................................22
Section 7.01 Amendments, Etc...........................................22
Section 7.02 Notices, Etc..............................................23
Section 7.03 No Waiver; Remedies.......................................24
Section 7.04 Further Assurances........................................24
Section 7.05 Indemnification; Survival of Certain Provisions...........24
Section 7.06 Liability of the Liquidity Provider.......................24
Section 7.07 Costs, Expenses and Taxes.................................25
Section 7.08 Binding Effect; Participations............................26
Section 7.09 Severability..............................................27
Section 7.10 GOVERNING LAW.............................................27
Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial..........27
Section 7.12 Execution in Counterparts.................................28
Section 7.13 Entirety..................................................28
Section 7.14 Headings..................................................28
Section 7.15 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES..........28
ANNEX I.....Interest Advance Notice of Borrowing
ANNEX II....Non-Extension Advance Notice of Borrowing
ANNEX III...Downgrade Advance Notice of Borrowing
ANNEX IV....Final Advance Notice of Borrowing
ANNEX V.....Notice of Termination
ANNEX VI....Notice of Replacement Subordination Agent
ANNEX VII...CNAI Special Termination Advance Notice of Borrowing
ANNEX VIII..Notice of CNAI Special Termination
REVOLVING CREDIT AGREEMENT (2004-ERJ1)
This REVOLVING CREDIT AGREEMENT (2004-ERJ1), dated as of June 29,
2004, is made by and 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
Trust (as defined below) (the "BORROWER"), and CITICORP NORTH AMERICA, INC., a
Delaware corporation (the "LIQUIDITY PROVIDER").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the 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 Trust is issuing the Certificates;
WHEREAS, the Borrower, in order to support the timely payment of a
portion of the interest on the 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; and
WHEREAS, Citicorp, a Delaware corporation and an affiliate of the
Liquidity Provider (the "GUARANTOR") has entered into a guarantee, providing for
the full and unconditional guarantee of the Liquidity Provider's obligations
under this Agreement (the "GUARANTEE 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 1.01. CERTAIN DEFINED TERMS.
(a) As used in this Agreement and unless expressly indicated, or
unless the context clearly requires otherwise, the following capitalized terms
shall have the following respective meanings for all purposes of this Agreement:
"ADDITIONAL COSTS" has the meaning assigned to such term in Section
3.01.
"ADVANCE" means an Interest Advance, a Final Advance, a CNAI Special
Termination Advance, a Provider Advance or an Applied Provider Advance, as the
case may be.
"AGREEMENT" means this Revolving Credit Agreement (2004-ERJ1), dated
as of June 29, 2004, between the Borrower and the Liquidity Provider, as the
same may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"APPLICABLE LIQUIDITY RATE" has the meaning assigned to such term in
Section 3.07(f).
"APPLICABLE MARGIN" means (i) with respect to any Unpaid Advance
(other than an Unapplied CNAI Special Termination Advance) or Applied Provider
Advance, 2.75% per annum, (ii) with respect to any Unapplied Provider Advance,
the rate per annum specified in the Fee Letter applicable to this Agreement and
(iii) with respect to any Unapplied CNAI Special Termination Advance, the margin
per annum specified in the Fee Letter.
"APPLIED DOWNGRADE ADVANCE" has the meaning assigned to such term in
Section 2.06(a).
"APPLIED NON-EXTENSION ADVANCE" has the meaning assigned to such
term in Section 2.06(a).
"APPLIED PROVIDER ADVANCE" has the meaning assigned to such term in
Section 2.06(a).
"APPLIED CNAI SPECIAL TERMINATION ADVANCE" has the meaning assigned
to such term in Section 2.05.
"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)
one-quarter of one percent (1/4 of 1%).
"BASE RATE ADVANCE" means an Advance that bears interest at a rate
based upon the Base Rate.
"BORROWER" has the meaning assigned to such term in the recital of
parties to this Agreement.
"BORROWING" means the making of Advances requested by delivery of a
Notice of Borrowing.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a
day on which commercial banks are required or authorized to close in Houston,
Texas, New York, New York or, so long as any Certificate is outstanding, the
city and state in which the Trustee, the Borrower or any Loan 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.
"CNAI SPECIAL TERMINATION ADVANCE" means an Advance made pursuant to
Section 2.02(e).
"CNAI SPECIAL TERMINATION NOTICE" means the Notice of CNAI Special
Termination substantially in the form of Annex VIII to this Agreement.
"CONSENT PERIOD" has the meaning assigned to such term in Section
2.10.
"DEPOSIT AGREEMENT" means the Deposit Agreement dated as of the date
hereof between Wells Fargo Bank Northwest, National Association, as Escrow
Agent, and WestLB AG, New York Branch, as Depositary, pertaining to the
Certificates, as the same may be amended, modified or supplemented from time to
time in accordance with the terms thereof.
"DEPOSITARY" has the meaning assigned to such term in the Deposit
Agreement.
"DEPOSITS" has the meaning assigned to such term in the Deposit
Agreement.
"DOWNGRADE ADVANCE" means an Advance made pursuant to Section
2.02(c).
"DOWNGRADE EVENT" means (i) a downgrading of the Guarantor's
short-term unsecured debt rating or short-term issuer credit rating, as the case
may be, issued by either Rating Agency below the applicable Threshold Rating or
(ii) the Guarantee Agreement ceasing to be in full force and effect or becoming
invalid or unenforceable or the Guarantor denying its liability thereunder,
unless with respect to clause (i) above, each Rating Agency shall have confirmed
in writing on or prior to the date of such downgrading that such downgrading
will not result in the downgrading, withdrawal or suspension of the ratings of
the Certificates, in which case such downgrading of the Guarantor's short-term
unsecured debt rating or short-term issuer credit rating, as the case may be,
shall not constitute a Downgrade Event and shall be referred to herein as a
"PROVIDER DOWNGRADE".
"EFFECTIVE DATE" has the meaning assigned to such term in Section
4.01. The delivery of the certificate of the Liquidity Provider contemplated by
Section 4.01(e) shall be conclusive evidence that the Effective Date has
occurred.
"EXCLUDED TAXES" means (i) Taxes imposed on, based on or measured by
the income of, or franchise Taxes imposed on, the Liquidity Provider or its
Lending Office by the jurisdiction where such Liquidity Provider's principal
office or such Lending Office is located or any other taxing jurisdiction in
which such Tax is imposed as a result of the Liquidity Provider being, or having
been, organized in, or conducting, or having conducted, any activities unrelated
to the transactions contemplated by the Operative Agreements in, such
jurisdiction or (ii) withholding taxes, whether or not indemnified under Section
3.03.
"EXCLUDED WITHHOLDING TAXES" means (i) withholding Taxes imposed by
the United States except to the extent that such United States withholding Taxes
are imposed or increased as a result of a change in applicable law after the
date hereof and, in the case of any successor Liquidity Provider, any
withholding Tax imposed by the United States except (a) if such Liquidity
Provider is, on the date it acquires its interest herein, a "resident" of an
Applicable Treaty jurisdiction entitled to claim the benefits of an Applicable
Treaty in respect of amounts payable hereunder, any such withholding Tax to the
extent imposed as a result of a change in applicable law (other than any
addition of, or change in, any "anti-treaty shopping", "limitation on benefits",
or similar provision in any treaty or other applicable law restricting the
availability of treaty benefits (including, without limitation any provision
similar to the Protocol Amending the Convention Between the United States of
America and the Kingdom of the Netherlands for the Avoidance of Double Taxation
and the Prevention of Fiscal Evasion with respect to Taxes on Income, signed at
Washington on October 13, 1993)) after the date such Liquidity Provider acquired
its interest herein and (b) any such withholding Tax to the extent the amount of
such withholding Tax imposed on such successor Liquidity Provider does not
exceed the amount of such withholding Tax that, in the absence of the transfer
to such Liquidity Provider, would have been an Indemnified Tax imposed on
payments to the predecessor Liquidity Provider pursuant to applicable law in
effect on the date such successor Liquidity Provider acquired its interest
herein, (ii) any Tax imposed or to the extent increased as a result of the
Liquidity Provider failing to deliver to the Borrower any certificate or
document (the delivery of which certificate or document in the good faith
judgment of the Liquidity Provider will not expose the Liquidity Provider to any
adverse consequence and which the Liquidity Provider is legally entitled to
provide) which is reasonably requested by the Borrower to establish that
payments under this Agreement are exempt from (or entitled to a reduced rate of)
withholding Tax, and (iii) any Tax imposed by a jurisdiction as a result of the
Liquidity Provider being, or having been, organized in, or maintaining, or
having maintained, its principal office or Lending Office in, or conducting, or
having conducted, any activities unrelated to the transactions contemplated by
the Operative Agreements in, such jurisdiction. For purposes of this definition,
"Applicable Treaty" means an income tax treaty between the United States and any
of Australia, Austria, Canada, France, Germany, Ireland, Japan, Luxembourg, The
Netherlands, Sweden, Switzerland or the United Kingdom.
"EXPENSES" means liabilities, obligations, damages, settlements,
penalties, claims, actions, suits, costs, expenses, and disbursements
(including, without limitation, reasonable fees and disbursements of legal
counsel and costs of investigation), provided that Expenses shall not include
any Taxes other than sales, use and V.A.T. taxes imposed on fees and expenses
payable pursuant to Section 7.07.
"EXPIRY DATE" means June 27, 2005 initially, or any date to which
the Expiry Date is extended pursuant to Section 2.10.
"FINAL ADVANCE" means an Advance made pursuant to Section 2.02(d).
"GUARANTOR" has the meaning assigned to such term in the preliminary
statements of this Agreement.
"GUARANTEE AGREEMENT" has the meaning assigned to such term in the
preliminary statements of this Agreement.
"INDEMNIFIED TAX" has the meaning assigned to such term in Section
3.03.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement dated as
of the date hereof, among the Trustee, the Liquidity Provider, the other
liquidity provider party thereto and the Subordination Agent, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
its terms.
"INTEREST ADVANCE" means an Advance made pursuant to Section
2.02(a).
"INTEREST PERIOD" means, with respect to any LIBOR Advance, each of
the following periods:
(i) the period beginning on the third Business Day following either
(A) the Liquidity Provider's receipt of the Notice of Borrowing
for such LIBOR Advance or (B) the withdrawal of funds from the
Cash Collateral Account for the purpose of paying interest on
the Certificates as contemplated by Section 2.06(a) hereof and,
in either case, ending on the next Regular Distribution Date;
and
(ii) each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the next
Regular Distribution Date.
"LENDING OFFICE" means the lending office of the Liquidity Provider
presently located at New York, New York, or such other lending office as the
Liquidity Provider from time to time shall notify the Borrower as its Lending
Office hereunder; provided that the Liquidity Provider shall not change its
Lending Office to another lending office outside the United States of America
except in accordance with Section 3.11 hereof.
"LIBOR ADVANCE" means an Advance bearing interest at a rate based
upon the LIBOR Rate.
"LIBOR RATE" means, with respect to any Interest Period,
(i) the rate per annum appearing on display page 3750 (British
Bankers Association-LIBOR) of the Telerate Service (or any
successor or substitute therefor) at approximately 11:00 a.m.
(London time) two Business Days before the first day of such
Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period, or
(ii) if the rate calculated pursuant to clause (i) above is not
available, the average (rounded upwards, if necessary, to
the next 1/16 of 1%) of the rates per annum at which
deposits in dollars are offered for the relevant Interest
Period by three banks of recognized standing selected by
the Liquidity Provider in the London interbank market at
approximately 11:00 a.m. (London time) two Business Days
before the first day of such Interest Period in an amount
approximately equal to the principal amount of the LIBOR
Advance to which such Interest Period is to apply and for
a period comparable to such Interest Period.
"LIQUIDITY EVENT OF DEFAULT" means the occurrence of either (a) the
Acceleration of all of the Equipment Notes (PROVIDED that, with respect to the
period prior to the Delivery Period Expiry Date, such Equipment Notes have an
aggregate outstanding principal balance in excess of $108,000,000) or (b) a
Continental Bankruptcy Event.
"LIQUIDITY INDEMNITEE" means (i) the Liquidity Provider, (ii) the
Guarantor, (iii) the directors, officers, employees and agents of the Liquidity
Provider and Guarantor, and (iv) the successors and permitted assigns of the
persons described in clauses (i) through (iii), inclusive.
"LIQUIDITY PROVIDER" has the meaning assigned to such term in the
recital of parties to this Agreement.
"MAXIMUM AVAILABLE COMMITMENT" means, subject to the proviso
contained in the third sentence of Section 2.02(a), at any time of
determination, (a) the Maximum Commitment at such time less (b) the aggregate
amount of each Interest Advance outstanding at such time; provided that
following a Provider Advance, a CNAI Special Termination Advance or a Final
Advance, the Maximum Available Commitment shall be zero.
"MAXIMUM COMMITMENT" means initially $9,158,032.86, as the same may
be reduced from time to time in accordance with Section 2.04(a).
"NON-EXTENSION ADVANCE" means an Advance made pursuant to Section
2.02(b).
"NOTICE OF BORROWING" has the meaning assigned to such term in
Section 2.02(f).
"NOTICE OF REPLACEMENT SUBORDINATION AGENT" has the meaning assigned
to such term in Section 3.08.
"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.
"PROSPECTUS SUPPLEMENT" means the final Prospectus Supplement dated
June 18, 2004 relating to the Certificates, as such Prospectus Supplement may be
amended or supplemented.
"PROVIDER ADVANCE" means a Downgrade Advance or a Non-Extension
Advance.
"PROVIDER DOWNGRADE" has the meaning assigned to such term in the
definition of "Downgrade Event".
"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).
"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 Certificates have been paid in full (or provision has
been made for such payment in accordance with the Intercreditor Agreement and
the Trust Agreement) 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 or CNAI Special 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 V to this Agreement.
"TRANSFEREE" has the meaning assigned to such term in Section
7.08(b).
"UNAPPLIED PROVIDER ADVANCE" means any portion of any Provider
Advance that is not an Applied Provider Advance.
"UNAPPLIED CNAI SPECIAL TERMINATION ADVANCE" means any portion of a
CNAI Special Termination Advance that is not an Applied CNAI Special Termination
Advance.
"UNPAID ADVANCE" has the meaning assigned to such term in Section
2.05.
(b) For the purposes of this Agreement, the following terms shall
have the respective meanings assigned to such terms in the Intercreditor
Agreement:
"ACCELERATION", "CASH COLLATERAL ACCOUNT", "CERTIFICATE",
"CERTIFICATEHOLDER", "CLOSING DATE", "CNAI FEE LETTER", "CNAI SUB-ACCOUNT",
"CONTINENTAL", "CONTINENTAL BANKRUPTCY EVENT", "CONTROLLING PARTY", "CORPORATE
TRUST OFFICE", "DELIVERY PERIOD EXPIRY DATE", "DISTRIBUTION DATE", "DOWNGRADED
FACILITY", "EQUIPMENT NOTES", "FEE LETTER", "FINAL LEGAL DISTRIBUTION DATE",
"FINANCING AGREEMENT", "INDENTURE", "INVESTMENT Earnings", "LIQUIDITY
OBLIGATIONS", "LOAN TRUSTEE", "MOODY'S", "NON-EXTENDED FACILITY", "NOTE PURCHASE
AGREEMENT", "OPERATIVE AGREEMENTS", "PARTICIPATION AGREEMENT", "PERFORMING
EQUIPMENT NOTE", "PERSON", "POOL BALANCE", "RATING AGENCIES", "RATINGS
CONFIRMATION", "REGULAR DISTRIBUTION DATES", "REPLACEMENT LIQUIDITY FACILITY",
"REQUIRED AMOUNT", "RESPONSIBLE OFFICER", "SCHEDULED PAYMENT", "SPECIAL
PAYMENT", "STANDARD & POOR'S", "STATED INTEREST RATE", "SUB-ACCOUNT",
"SUBORDINATION AGENT", "TAXES", "THRESHOLD RATING", "TRUST", "TRUST AGREEMENT",
"TRUSTEE", "UNDERWRITERS", "UNDERWRITING AGREEMENT" 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 1:00 p.m. (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 Maximum 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 Maximum Available Commitment at such time and shall be
used solely for the payment when due of interest with respect to the
Certificates at the Stated Interest Rate therefor in accordance with Sections
3.6(a) and 3.6(b) of the Intercreditor Agreement. Each Interest Advance made
hereunder shall automatically reduce the Maximum Available Commitment and the
amount available to be borrowed hereunder by subsequent Advances by the amount
of such Interest Advance (subject to reinstatement as provided in the next
sentence). Upon repayment to the Liquidity Provider in full or in part of the
amount of any Interest Advance made pursuant to this Section 2.02(a), together
with accrued interest thereon (as provided herein), the Maximum Available
Commitment shall be reinstated by an amount equal to the amount of such Interest
Advance so repaid but not to exceed the Maximum Commitment; PROVIDED, HOWEVER,
that the Maximum Available Commitment shall not be so reinstated at any time if
(x) both a Performing Note Deficiency exists and a Liquidity Event of Default
shall have occurred and be continuing, or (y) a Final Advance, a Provider
Advance or a CNAI Special Termination Advance has been made.
(b) A Non-Extension Advance shall be made in a single Borrowing if
this Agreement is not extended in accordance with Section 3.6(d)(i) of the
Intercreditor Agreement (unless a Replacement Liquidity Facility to replace this
Agreement shall have been delivered to the Borrower as contemplated by said
Section 3.6(d)(i) within the time period specified in such Section 3.6(d)(i)) 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 Maximum Available
Commitment at such time, and shall be used to fund the CNAI Sub-Account of the
Cash Collateral Account in accordance with Sections 3.6(d)(i) and 3.6(f) of the
Intercreditor Agreement.
(c) A Downgrade Advance shall be made in a single Borrowing upon the
occurrence of a Downgrade Event (as provided for in Section 3.6(c) of the
Intercreditor Agreement) unless a Replacement Liquidity Facility to replace this
Agreement shall have been previously delivered to the Borrower in accordance
with Section 3.6(c), 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 Maximum Available Commitment at such time, and shall be used to fund the
CNAI Sub-Account of the Cash Collateral Account in accordance with Sections
3.6(c) and 3.6(f) of the Intercreditor Agreement.
(d) A Final Advance shall be made in a single Borrowing upon the
receipt by the Borrower of a Termination Notice from the Liquidity Provider
pursuant to Section 6.01(a) hereof by delivery to the Liquidity Provider of a
written and completed Notice of Borrowing in substantially the form of Annex IV
attached hereto, signed by a Responsible Officer of the Borrower, in an amount
equal to the Maximum Available Commitment at such time, and shall be used to
fund the CNAI Sub-Account of the Cash Collateral Account in accordance with
Sections 3.6(f) and 3.6(i) of the Intercreditor Agreement.
(e) A CNAI Special Termination Advance shall be made in a single
Borrowing upon the receipt by the Borrower of a CNAI Special Termination Notice
from the Liquidity Provider pursuant to Section 6.01(b), by delivery to the
Liquidity Provider of a written and completed Notice of Borrowing in
substantially the form of Annex VII, signed by a Responsible Officer of the
Borrower, in an amount equal to the Maximum Available Commitment at such time,
and shall be used to fund the CNAI Sub-Account of the Cash Collateral Account in
accordance with Sections 3.6(f) and 3.6(k) of the Intercreditor Agreement.
(f) Each Borrowing shall be made on notice in writing (a "NOTICE OF
BORROWING") in substantially the form required by Section 2.02(a), 2.02(b),
2.02(c), 2.02(d) or 2.02(e), as the case may be, given by the Borrower to the
Liquidity Provider. Each Notice of Borrowing shall be effective upon delivery of
a copy thereof to the Liquidity Provider's office at the address specified in
Section 7.02. If a Notice of Borrowing is delivered by the Borrower in respect
of any Borrowing no later than 1:00 p.m. (New York City time) on a Business Day,
upon satisfaction of the conditions precedent set forth in Section 4.02 with
respect to a requested Borrowing, the Liquidity Provider shall make available to
the Borrower, in accordance with its payment instructions, the amount of such
Borrowing in U.S. dollars and immediately available funds, before 4:00 p.m. (New
York City time) on such Business Day or on such later Business Day specified in
such Notice of Borrowing. If a Notice of Borrowing is delivered by the Borrower
in respect of any Borrowing on a day that is not a Business Day or after 1:00
p.m. (New York City time) on a Business Day, upon satisfaction of the conditions
precedent set forth in Section 4.02 with respect to a requested Borrowing, the
Liquidity Provider shall make available to the Borrower, in accordance with its
payment instructions, the amount of such Borrowing in U.S. dollars and in
immediately available funds, before 12:00 noon (New York City time) on the first
Business Day next following the day of receipt of such Notice of Borrowing or on
such later Business Day specified by the Borrower in such Notice of Borrowing.
Payments of proceeds of a Borrowing shall be made by wire transfer of
immediately available funds to the Borrower in accordance with such wire
transfer instructions as the Borrower shall furnish from time to time to the
Liquidity Provider for such purpose. Each Notice of Borrowing shall be
irrevocable and binding on the Borrower.
(g) 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. If the Liquidity Provider
makes an Advance requested pursuant to a Notice of Borrowing before 12:00 noon
(New York City time) on the second Business Day after the date of payment
specified in Section 2.02(f), the Liquidity Provider shall have fully discharged
its obligations hereunder with respect to such Advance and an event of default
shall not have occurred hereunder. Following the making of any Advance pursuant
to Section 2.02(b), 2.02(c), 2.02(d) or 2.02(e) hereof to fund the CNAI
Sub-Account of the Cash Collateral Account, the Liquidity Provider shall have no
interest in or rights to the Cash Collateral Account, any Sub-Account thereof,
the funds constituting such Advance or any other amounts from time to time on
deposit in the Cash Collateral Account or any Sub-Account thereof; 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 3.6(f) of the
Intercreditor Agreement and PROVIDED FURTHER, that the foregoing shall not
affect or impair the rights of the Liquidity Provider to provide written
instructions with respect to the investment and reinvestment of amounts in the
CNAI Sub-Account of the Cash Collateral Account to the extent provided in
Section 2.2(b) of the Intercreditor Agreement. By paying to the Borrower
proceeds of Advances requested by the Borrower in accordance with the provisions
of this Agreement, the 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 applicable to this Agreement.
Section 2.04. REDUCTIONS OR TERMINATION OF THE MAXIMUM COMMITMENT.
(a) AUTOMATIC REDUCTION. Promptly following each date on which the
Required Amount with respect to this Agreement is reduced as a result of a
reduction (or deemed reduction) in the Pool Balance of the Certificates or
otherwise, the Maximum Commitment shall automatically be reduced to an amount
equal to such reduced Required Amount (as calculated by the Borrower); PROVIDED
that on the first Regular Distribution Date, the Maximum Commitment shall
automatically be reduced to the Required Amount then in effect with respect to
this Agreement. The Borrower shall give notice of any such automatic reduction
of the Maximum 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 of the Maximum Commitment.
(b) TERMINATION. Upon the making of any Provider Advance, a CNAI
Special Termination 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, THE CNAI SPECIAL
TERMINATION ADVANCE OR THE FINAL ADVANCE. Subject to Sections 2.06, 2.07 and
2.09 hereof, the Borrower hereby agrees, without notice of an Advance or demand
for repayment from the Liquidity Provider (which notice and demand are hereby
waived by the Borrower), 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, the CNAI Special Termination 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; PROVIDED that if
(i) the Liquidity Provider shall make a Provider Advance at any time after
making one or more Interest Advances which shall not have been repaid in
accordance with this Section 2.05 or (ii) this Liquidity Facility shall become a
Downgraded Facility or a Non-Extended Facility at any time when unreimbursed
Interest Advances have reduced the Maximum Available Commitment to zero, then
such Interest Advances shall cease to constitute Unpaid Advances and shall be
deemed to have been changed into an Applied Downgrade Advance or an Applied
Non-Extension Advance, as the case may be, for all purposes of this Agreement
(including, without limitation, for the purpose of determining when such
Interest Advance is required to be repaid to the Liquidity Provider in
accordance with Section 2.06 and for the purposes of Section 2.06(b)); PROVIDED,
FURTHER, that amounts in respect of a CNAI Special Termination Advance withdrawn
from the CNAI Sub-Account of the Cash Collateral Account for the purpose of
paying interest on the Certificates in accordance with 3.6(f) of the
Intercreditor Agreement (the amount of an such withdrawal being an "APPLIED CNAI
SPECIAL TERMINATION ADVANCE") shall thereafter be treated as an Interest Advance
under this Agreement for the purposes of determining the Applicable Liquidity
Rate for interest payable thereon; and PROVIDED, FURTHER, that if, following the
making of a CNAI Special Termination Advance, the Liquidity Provider delivers a
Termination Notice to the Borrower pursuant to Section 6.01(a) hereof, such CNAI
Special Termination Advance shall thereafter be treated as a Final Advance under
this Agreement for purposes of determining the Applicable Liquidity Rate for
interest payable thereon and the obligation of repayment thereof. The Borrower
and the Liquidity Provider agree that the repayment in full of each Interest
Advance, the CNAI Special Termination 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 PROVIDER ADVANCES. (a) Amounts advanced
hereunder in respect of a Provider Advance shall be deposited in the CNAI
Sub-Account of the Cash Collateral Account and invested and withdrawn from the
CNAI Sub-Account of the Cash Collateral Account as set forth in Sections 3.6(c),
3.6(d), 3.6(e) and 3.6(f) of the Intercreditor Agreement. Subject to Sections
2.07 and 2.09, 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 Provider Advance, interest on the principal amount of any
such Provider Advance as provided in Section 3.07 hereof; PROVIDED, HOWEVER,
that amounts in respect of a Provider Advance withdrawn from the CNAI
Sub-Account of the Cash Collateral Account for the purpose of paying interest on
the Certificates in accordance with Section 3.6(f) of the Intercreditor
Agreement (the amount of any such withdrawal being (y) in the case of a
Downgrade Advance, an "APPLIED DOWNGRADE ADVANCE" and (z) in the case of a
Non-Extension Advance, an "APPLIED NON-EXTENSION ADVANCE" and, together with an
Applied Downgrade Advance, an "APPLIED PROVIDER ADVANCE") shall thereafter
(subject to Section 2.06(b)) be treated as an Interest Advance under this
Agreement for purposes of determining the Applicable Liquidity Rate for interest
payable thereon; PROVIDED FURTHER, HOWEVER, that if, following the making of a
Provider Advance, the Liquidity Provider delivers a Termination Notice to the
Borrower pursuant to Section 6.01(a) hereof, such Provider Advance shall
thereafter be treated as a Final Advance under this Agreement for purposes of
determining the Applicable Liquidity Rate for interest payable thereon and the
obligation for repayment thereof. Subject to Sections 2.07 and 2.09 hereof,
immediately upon the withdrawal of any amounts from the CNAI Sub-Account of the
Cash Collateral Account pursuant to Section 3.6(f) of the Intercreditor
Agreement on account of a reduction (or deemed reduction) in the Required Amount
with respect to such Sub-Account, the Borrower shall repay to the Liquidity
Provider a portion of the Provider Advances in a principal amount equal to such
reduction, plus interest on the principal amount prepaid as provided in Section
3.07 hereof.
(b) At any time when an Applied Provider Advance (or any portion
thereof) is outstanding, upon the deposit in the CNAI Sub-Account of the Cash
Collateral Account of any amount pursuant to clause "third" of Section 2.4(b) of
the Intercreditor Agreement, clause "third" of Section 3.2 of the Intercreditor
Agreement or clause "fourth" of Section 3.3 of the Intercreditor Agreement (any
such amount being a "REPLENISHMENT AMOUNT") for the purpose of replenishing or
increasing the balance thereof up to the Required Amount with respect to such
Sub-Account at such time, (i) the aggregate outstanding principal amount of all
Applied Provider Advances (and of Provider Advances treated as an Interest
Advance for purposes of determining the Applicable Liquidity Rate for interest
payable thereon) shall be automatically reduced by the amount of such
Replenishment Amount and (ii) the aggregate outstanding principal amount of all
Unapplied Provider Advances shall be automatically increased by the amount of
such Replenishment Amount.
(c) Upon the provision of a Replacement Liquidity Facility in
replacement of this Agreement in accordance with Section 3.6(e) of the
Intercreditor Agreement, amounts remaining on deposit in the CNAI Sub-Account of
the Cash Collateral Account after giving effect to any Applied Provider Advance
on the date of such replacement shall be reimbursed to the replaced Liquidity
Provider, but only to the extent such amounts are necessary to repay in full to
the replaced 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 to Liquidity
Obligations then due and payable in accordance with the Intercreditor Agreement
and shall discharge in full the corresponding obligations of the Borrower
hereunder (or, if not provided for in the Intercreditor Agreement, then in such
manner as the Liquidity Provider shall deem appropriate).
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 the amounts
that constitute Scheduled Payments, Special Payments or payments under the CNAI
Fee Letter, Section 9.1 of the Participation Agreements and Section 6 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 and other applicable 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 CNAI Sub-Account of the Cash Collateral Account shall be available to the
Borrower to make payments under this Agreement only to the extent and for the
purposes expressly contemplated in Section 3.6(f) of the Intercreditor
Agreement. Amounts on deposit in the other Sub-Account in respect of the
Certificates shall not be available to make payments under this Agreement.
Section 2.10. EXTENSION OF THE EXPIRY DATE; NON-EXTENSION ADVANCE.
No earlier than the 60th day and no later than the 40th day prior to the then
effective Expiry Date (unless such Expiry Date is on or after the date that is
15 days after the Final Legal Distribution Date for the Certificates), the
Borrower shall request that the Liquidity Provider extend the Expiry Date to the
earlier of (i) the date that is 15 days after the Final Legal Distribution Date
for the Certificates and (ii) the date that is the day immediately preceding the
364th day occurring after the last day of the Consent Period (as hereinafter
defined). Whether or not the Borrower has made such request, the Liquidity
Provider shall advise the Borrower, no earlier than the 40th day (or, if
earlier, the date of the Liquidity Provider's receipt of such request, if any,
from the Borrower) and no later than the 25th day prior to the then effective
Expiry Date (such period, the "CONSENT PERIOD"), whether, in its sole
discretion, it agrees to so extend the Expiry Date. If the Liquidity Provider
advises the Borrower on or before the date on which the Consent Period ends that
such Expiry Date shall not be so extended, or fails to irrevocably and
unconditionally advise the Borrower on or before the date on which the Consent
Period ends that such Expiry Date shall be so extended (and, in each case, if
the Liquidity Provider shall not have been replaced in accordance with Section
3.6(e) of the Intercreditor Agreement), the Borrower shall be entitled on and
after the date on which the Consent Period ends (but prior to the then effective
Expiry Date) to request a Non-Extension Advance in accordance with Section
2.02(b) hereof and Section 3.6(d)(i) 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 increased 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 of the Board of Governors of the Federal Reserve
System), or the adoption or making after the date of this Agreement of any
interpretations, directives, or requirements applying to a class of banks
including the Liquidity Provider under any U.S. federal, state, municipal, or
any foreign laws or regulations (whether or not having the force of law) by any
court, central bank or monetary authority charged with the interpretation or
administration thereof (a "REGULATORY CHANGE"), which: (1) changes the basis of
taxation of any amounts payable to the Liquidity Provider under this Agreement
in respect of any such Advances or such obligation (other than with respect to
Excluded Taxes); or (2) imposes or modifies any reserve, special deposit,
compulsory loan or similar requirements relating to any extensions of credit or
other assets of, or any deposits with other liabilities of, the Liquidity
Provider (including any such Advances or such obligation or any deposits
referred to in the definition of LIBOR Rate or related definitions).
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.
Notwithstanding the preceding two paragraphs, the Liquidity Provider
and the Subordination Agent agree that any permitted assignee or participant of
the initial Liquidity Provider which is not a bank shall not be entitled to the
benefits of the preceding two paragraphs (but without limiting the provisions of
Section 7.08 hereof).
Section 3.02. CAPITAL ADEQUACY. If (1) the adoption, after the date
hereof, of any applicable governmental law, rule or regulation regarding capital
adequacy, (2) any change, after the date hereof, in the interpretation or
administration of any such law, rule or regulation by any central bank or other
governmental authority charged with the interpretation or administration thereof
or (3) compliance by the Liquidity Provider or any corporation controlling the
Liquidity Provider with any applicable guideline or request of general
applicability, issued after the date hereof, by any central bank or other
governmental authority (whether or not having the force of law) that constitutes
a change of the nature described in clause (2), has the effect of requiring an
increase in the amount of capital required to be maintained by the 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, subject to the provisions of Section
3.11, pay to the Liquidity Provider from time to time such additional amount or
amounts as are necessary to compensate the Liquidity Provider for such portion
of such increase as shall be reasonably allocable to the Liquidity Provider's
obligations to the Borrower hereunder. From and after the Extension Effective
Date and prior to the occurrence of a Provider Downgrade, the Liquidity Provider
will be entitled to compensation pursuant to this Section 3.02 only to the
extent that the Liquidity Provider would have been so entitled if the Extension
Effective Date had not occurred. From and after the Extension Effective Date and
after the occurrence of a Provider Downgrade, the Liquidity Provider will be
entitled to compensation pursuant to this Section 3.02 only to the extent that
the Liquidity Provider would have been so entitled had the Liquidity Provider
made a Downgrade Advance upon the occurrence of such Provider Downgrade.
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 Liquidity Provider 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.
Notwithstanding the preceding two paragraphs, the Liquidity Provider
and the Subordination Agent agree that any permitted assignee or participant of
the initial Liquidity Provider which is not a bank shall not be entitled to the
benefits of the preceding two paragraphs (but without limiting the provisions of
Section 7.08 hereof).
Section 3.03. PAYMENTS FREE OF DEDUCTIONS. (a) All payments made by
the Borrower under this Agreement shall be made without reduction or withholding
for or on account of any present or future Taxes of any nature whatsoever now or
hereafter imposed, levied, collected, withheld or assessed, other than Excluded
Withholding Taxes (such non-excluded Taxes being referred to herein,
collectively, as "INDEMNIFIED TAXES" and, individually, as an "INDEMNIFIED TAX")
unless any such reduction or withholding is required by applicable law. If any
Taxes are required to be withheld from any amounts payable to the Liquidity
Provider under this Agreement, (i) the Borrower shall within the time prescribed
therefor by applicable law pay to the appropriate governmental or taxing
authority the full amount of any such Taxes (including any additional Tax
required to be deducted or withheld in respect of the additional amounts payable
under clause (ii) hereof) and make such reports or returns in connection
therewith at the time or times and in the manner prescribed by applicable law,
and (ii) in the case of Indemnified Taxes, the amounts payable to the Liquidity
Provider shall be increased to the extent necessary to yield to the Liquidity
Provider (after deduction or withholding for or on account of all Indemnified
Taxes and any additional Taxes required to be deducted or withheld or payable by
the Liquidity Provider by reason of the receipt or accrual of the additional
amounts payable pursuant to this clause (ii)) interest or any other such amounts
payable under this Agreement at the rates or in the amounts specified in this
Agreement. If the Liquidity Provider (including a successor Liquidity Provider)
is not organized under the laws of the United States or any State thereof, to
the extent it is eligible to do so, the Liquidity Provider agrees to provide to
the Borrower, prior to the first date any amount is payable to it hereunder, two
executed original copies of Internal Revenue Service Form W-8BEN or W-8ECI, as
appropriate, or any successor or other form prescribed by the Internal Revenue
Service, certifying that the Liquidity Provider is exempt from or entitled to a
reduced rate of United States withholding Tax on payments pursuant to this
Agreement. In addition, the Liquidity Provider will provide, from time to time
upon the reasonable request of the Borrower, such additional forms or
documentation as may be necessary to establish an available exemption from (or
an entitlement to a reduced rate of) withholding Tax on payments hereunder.
Within 30 days after the date of each payment hereunder, the Borrower shall
furnish to the Liquidity Provider an original or certified copy of a receipt (or
other documentary evidence reasonably acceptable to the Liquidity Provider)
evidencing the payment of the Taxes applicable to such payment.
(b) If the Liquidity Provider (including a successor Liquidity
Provider) is not organized under the laws of the United States or any State
thereof, all Advances made by the Liquidity Provider under this Agreement shall
be made free and clear of, and without reduction for or on account of, any Taxes
that are imposed by a jurisdiction in which the Liquidity Provider is organized,
has its Lending Office or maintains its principal place of business unless such
reduction or withholding is required by applicable law. If any such Taxes are
required to be withheld or deducted from any Advances, the Liquidity Provider
shall (i) within the time prescribed therefor by applicable law pay to the
appropriate governmental or taxing authority the full amount of any such Taxes
(and any additional Taxes in respect of the additional amounts payable under
clause (ii) hereof) and make such reports or returns in connection therewith at
the time or times and in the manner prescribed by applicable law, and (ii) pay
to the Borrower an additional amount which (after deduction of all such Taxes)
shall be sufficient to yield to the Borrower the full amount that would have
been received by it had no such withholding or deduction been required. The
Borrower shall, for United States federal income tax purposes and for all
purposes hereunder, treat such payments as Interest Advances, and, as such, will
treat such payments as loans made by the Liquidity Provider to the Borrower,
unless otherwise required by law (it being understood and agreed that the
treatment of such additional amounts shall not reduce the Maximum Available
Commitment hereunder). Within 30 days after the date of each payment hereunder,
the Liquidity Provider shall furnish to the Borrower an original or certified
copy of a receipt (or other documentary evidence reasonably acceptable to the
Borrower) evidencing the payment of the Taxes applicable to such payment.
(c) If any exemption from, or reduction in the rate of, any Taxes
required to be deducted or withheld from amounts payable by the Liquidity
Provider hereunder is reasonably available to the Borrower to establish that
payments under this Agreement are exempt from (or entitled to a reduced rate of)
Tax, the Borrower shall deliver to the Liquidity Provider such form or forms and
such other evidence of the eligibility of the Borrower for such exemption or
reduction as the Liquidity Provider may reasonably identify to the Borrower as
being required as a condition to exemption from, or reduction in the rate of,
any such Taxes.
Section 3.04. PAYMENTS. The Borrower shall make or cause to be made
each payment to the 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
U.S. dollars, to the Liquidity Provider in immediately available funds, by wire
transfer to the account of Citicorp North America, Inc. at Citibank, N.A., 399
Park Avenue, New York, NY 10043, ABA #021000089, Account # 4063-2387, Reference:
Continental Airlines Pass Through Trust, Series 2004-ERJ1, Attention: Craig
Thorpe; or to such other U.S. bank account as the Liquidity Provider may from
time to time direct the Subordination Agent.
Section 3.05. COMPUTATIONS. All computations of interest based on
the Base Rate shall be made on the basis of a year of 365 or 366 days, as the
case may be, and all computations of interest based on the LIBOR Rate shall be
made on the basis of a year of 360 days, in each case for the actual number of
days (including the first day but excluding the last day) occurring in the
period for which such interest is payable.
Section 3.06. PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to
be made hereunder shall be stated to be due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day and no additional
interest shall be due as a result (and if so made, shall be deemed to have been
made when due). If any payment in respect of interest on an Advance is so
deferred to the next succeeding Business Day, such deferral shall not delay the
commencement of the next Interest Period for such Advance (if such Advance is a
LIBOR Advance) or reduce the number of days for which interest will be payable
on such Advance on the next interest payment date for such Advance.
Section 3.07. INTEREST. (a) Subject to Section 2.09, the Borrower
shall pay, or shall cause to be paid, without duplication, interest on (i) the
unpaid principal amount of each Advance from and including the date of such
Advance (or, in the case of an Applied Provider Advance, from and including the
date on which the amount thereof was withdrawn from the CNAI Sub-Account of the
Cash Collateral Account to pay interest on the Certificates) to but excluding
the date such principal amount shall be paid in full (or, in the case of an
Applied Provider Advance, the date on which the CNAI Sub-Account of the Cash
Collateral Account is fully replenished in respect of such Advance) 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) that 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 the
case may be, 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.
(b) Each Advance (including, without limitation, each outstanding
Unapplied Provider Advance and Unapplied CNAI Special Termination Advance) will
be either a Base Rate Advance or a LIBOR Advance as provided in this Section
3.07. Each such Advance will be a Base Rate Advance for the period from the date
of its borrowing to (but excluding) the third Business Day following the
Liquidity Provider's receipt of the Notice of Borrowing for such Advance.
Thereafter, such Advance shall be a LIBOR Advance; provided that the Borrower
(at the direction of the Controlling Party, so long as the Liquidity Provider is
not the Controlling Party) may (x) convert the Final Advance into a Base Rate
Advance on the last day of an Interest Period for such Advance by giving the
Liquidity Provider no less than four Business Days' prior written notice of such
election or (y) elect to maintain the Final Advance as a Base Rate Advance by
not requesting a conversion of the Final Advance to a LIBOR Advance under Clause
(5) of the applicable Notice of Borrowing (or, if such Final Advance is deemed
to have been made, without delivery of a Notice of Borrowing pursuant to Section
2.06, by requesting, prior to 11:00 a.m. (New York City time) on the first
Business Day immediately following the Borrower's receipt of the applicable
Termination Notice, that such Final Advance not be converted from a Base Rate
Advance to a LIBOR Advance).
(c) Each LIBOR Advance shall bear interest during each Interest
Period at a rate per annum equal to 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).
(d) Each Base Rate Advance shall bear interest at a rate per annum
equal to 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).
(e) 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 but excluding Advances) shall bear
interest at a rate per annum equal to the Base Rate plus 2.00% until paid.
(f) Each change in the Base Rate shall become effective immediately.
The rates of interest specified in this Section 3.07 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 Subordination Agent in substantially the form of Annex VI
attached hereto (a "NOTICE OF REPLACEMENT SUBORDINATION AGENT") delivered to the
Liquidity Provider by the then Borrower, the successor Borrower designated
therein shall be substituted for 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 by
reason of the liquidation or redeployment of deposits or other funds acquired by
the Liquidity Provider to fund or maintain any LIBOR Advance (but excluding loss
of anticipated profits) incurred as a result of:
(1) Any repayment 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.
Section 3.11. MITIGATION. If a condition arises or an event occurs
which would, or would upon the giving of notice, result in the payment of any
additional costs or amounts pursuant to Section 3.01, 3.02 or 3.03 or require
the conversion of any Advance pursuant to Section 3.10, the Liquidity Provider,
promptly upon becoming aware of the same, shall notify the Borrower and shall
use reasonable efforts (consistent with applicable legal and regulatory
restrictions) to mitigate the effects of such condition or event, including the
designation of a different Lending Office or furnishing of the proper
certificates under any applicable tax laws, tax treaties and conventions to the
extent that such certificates are legally available to the Liquidity Provider;
PROVIDED, that the Liquidity Provider shall be under no obligation to take any
step that, in its good-faith opinion would (i) result in its incurring any
additional costs in performing its obligations hereunder unless the Borrower has
agreed to reimburse it therefor or (ii) be otherwise disadvantageous to the
Liquidity Provider in the reasonable judgment of the Liquidity Provider.
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 each of the
following, 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 and
the Fee Letter applicable to this Agreement duly executed on
behalf of each of the parties thereto (other than the
Liquidity Provider);
(ii) The Intercreditor Agreement duly executed on behalf of each
of the parties thereto (other than the Liquidity Provider);
(iii) Fully executed copies of each of the Operative Agreements
executed and delivered on or before the Closing Date (other
than this Agreement, the Fee Letter applicable to this
Agreement and the Intercreditor Agreement);
(iv) A copy of the Prospectus Supplement and specimen copies of
the Certificates; and
(v) An executed copy of each document, instrument, certificate
and opinion delivered on or before the Closing Date
pursuant to the Trust Agreement, the Intercreditor
Agreement and the other Operative Agreements (in the case
of each such opinion, other than the opinion of counsel
for the Underwriters, either addressed to the Liquidity
Provider or accompanied by a letter from the counsel
rendering such opinion to the effect that the Liquidity
Provider is entitled to rely on such opinion as of its
date 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 Trustee,
the Borrower and the Liquidity Provider created by the
Operative Agreements executed and delivered on or prior to
the Closing Date;
(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 8.2.1 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
pertaining to the transactions contemplated hereby or by the
other Operative Agreements as the Liquidity Provider shall
have reasonably requested.
(b) The following statement shall be true on and as of the
Effective Date: 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.
(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 Agreement shall have been satisfied or waived, all conditions
precedent to the effectiveness of the other Liquidity Facility shall have been
satisfied or waived, and all conditions precedent to the purchase of the
Certificates by the Underwriters under the Underwriting Agreement shall have
been satisfied or waived.
(e) The Borrower shall have received a certificate, dated the
date hereof, signed by a duly authorized representative of the Liquidity
Provider, certifying that all conditions precedent to the effectiveness of
Section 2.01 have been satisfied or waived.
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, on or 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 Advance 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 Maximum
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.
(c) CERTAIN OPERATIVE AGREEMENTS. Furnish to the Liquidity Provider
with reasonable promptness, such Operative Agreements entered into after the
date hereof as from time to time may be reasonably requested by the Liquidity
Provider.
Section 5.02. NEGATIVE COVENANTS OF THE BORROWER. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any Maximum
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 prior written consent
of the Liquidity Provider, which consent shall not be unreasonably withheld or
delayed.
ARTICLE VI
LIQUIDITY EVENTS OF DEFAULT AND SPECIAL TERMINATION
Section 6.01. LIQUIDITY EVENTS OF DEFAULT AND SPECIAL TERMINATION.
(a) If (i) any Liquidity Event of Default has occurred and is continuing and
(ii) 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 (w) the obligation of the Liquidity Provider to make Advances
hereunder to expire on the fifth Business Day after the date on which such
Termination Notice is received by the Borrower, (x) the Borrower to promptly
request, and the Liquidity Provider to promptly make, a Final Advance in
accordance with Section 2.02(d) hereof and Section 3.6(i) of the Intercreditor
Agreement, (y) all other outstanding Advances to be automatically converted into
Final Advances for purposes of determining the Applicable Liquidity Rate for
interest payable thereon, and (z) subject to Sections 2.07 and 2.09 hereof, all
Advances (including, without limitation, any Provider Advance and Applied
Provider Advance), any accrued interest thereon and any other amounts
outstanding hereunder to become immediately due and payable to the Liquidity
Provider.
(b) If the aggregate Pool Balance of the Certificates is greater
than the aggregate outstanding principal amount of the Equipment Notes (other
than any Equipment Notes previously sold or with respect to which the collateral
securing such Equipment Notes has been disposed of) at any time during the
18-month period prior to September 1, 2019, the Liquidity Provider may, in its
discretion, deliver to the Borrower a CNAI Special Termination Notice, the
effect of which shall be to cause (i) the obligation of the Liquidity Provider
to make Advances hereunder to expire on the fifth Business Day after the date on
which such CNAI Special Termination Notice is received by the Borrower, (ii) the
Borrower to promptly request, and the Liquidity Provider to promptly make, a
CNAI Special Termination Advance in accordance with Section 2.02(e) hereof and
Section 3.6(k) of the Intercreditor Agreement and (iii) subject to Sections 2.07
and 2.09 hereof, all Advances (including, without limitation, any Provider
Advance and Applied Provider Advance), 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 the Guarantor, and, in the case of an
amendment or of a waiver by the Borrower, 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 Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telephone: (800) 733-8485
Telecopy: (302) 651-8882
Liquidity Provider: Citicorp North America, Inc.
2 Penns Way, Suite 200
New Castle, DE 19720
Reference: Continental Airlines Pass
Through Trust 2004-ERJ1
Attention: Craig Thorpe
Telephone: (302) 894-6058
Telecopy: (212) 994-0847
with a copy to:
CITIBANK, N.A. Global Aviation
388 Greenwich Street, 23rd Floor
New York, NY 10013
Attention: Gaylord Holmes
Telephone: (212) 816-5138
Telecopy: (212) 816-5705
and
Citicorp
Treasury Department
153 East 53rd Street, 6th Floor
New York, NY 10043
Reference: Continental Airlines Pass
Through Trust 2004-ERJ1
Attention: Gregory C. Ehlke, Vice President
Telephone: (212) 559-0302
Telecopy: (212) 793-4776
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 Article II and Article 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 9.1 of the Participation Agreements. 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 (other than any Expenses of the nature
described in Section 3.01, 3.02 or 7.07 hereof or in the Fee Letter applicable
to this Agreement (regardless of whether indemnified against pursuant to said
Sections or in such Fee Letter)), that may be imposed on, incurred by or
asserted against any Liquidity Indemnitee, in any way relating to, resulting
from, or arising out of or in connection with any action, suit or proceeding by
any third party against such Liquidity Indemnitee and relating to this
Agreement, the Fee Letter applicable to this Agreement, 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 to the extent
such Expense is (i) attributable to the gross negligence or willful misconduct
of such Liquidity Indemnitee or any other Liquidity Indemnitee; (ii) ordinary
and usual operating overhead expense; (iii) attributable to the failure by the
Liquidity Provider to perform or observe any agreement, covenant or condition on
its part to be performed or observed in this Agreement or the Intercreditor
Agreement, or (iv) a Tax. The indemnities contained in Section 9.1 of the
Participation Agreements, and the provisions of Sections 3.01, 3.02, 3.03, 3.09,
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, employees, directors or Affiliates
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 gross
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 or the Intercreditor 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. In no event, however, shall the Liquidity
Provider be liable on any theory of liability for any special, indirect,
consequential or punitive damages (including, without limitation, any loss of
profits, business or anticipated savings).
(b) Neither the Liquidity Provider nor any of its officers,
employees, directors or Affiliates shall 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 gross 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 (including, without limitation, the reasonable fees and
expenses of outside counsel for the Liquidity Provider) 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 and (B)
on demand, all reasonable costs and expenses (including reasonable counsel fees
and expenses) of the Liquidity Provider 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 any waiver or
consent thereunder (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
Account. 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 hold 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
(except as contemplated by Section 3.08) the Borrower shall have the right to
assign its rights or obligations hereunder or any interest herein without the
prior written consent of the other party, subject to the requirements of Section
7.08(b). The Liquidity Provider may grant participations herein or in any of its
rights hereunder (including, without limitation, funded participations and
participations in rights to receive interest payments hereunder) and under the
other Operative Agreements to such Persons (other than Continental and its
Affiliates) as the Liquidity Provider may in its sole discretion select, subject
to the requirements of Section 7.08(b). No such granting of participations 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. Accordingly, references in this Agreement and the
other Operative Agreements to determinations, reserve and capital adequacy
requirements, increased costs, reduced receipts, additional amounts due pursuant
to Section 3.03 and the like as they pertain to the Liquidity Provider shall be
deemed also to include those of each of its participants that are banks
(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 in this Agreement to any bank or other entity (each, a
"TRANSFEREE"), then, concurrently with the effectiveness of such participation,
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 W-8ECI or Form W-8BEN, 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 W-8ECI or Form W-8BEN, 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 W-8BEN or Form
W-8ECI 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.
(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. (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 nonexclusive 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 of 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.
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, the Intercreditor Agreement
and the other Operative Agreements to which the Liquidity Provider is a party
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 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, as agent and trustee
for the Trust, as Borrower
By________________________________________
Name:
Title:
CITICORP NORTH AMERICA, INC.,
as Liquidity Provider
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 CITICORP NORTH AMERICA, INC. (the
"LIQUIDITY PROVIDER"), with reference to the Revolving Credit Agreement
(2004-ERJ1) dated as of June 29, 2004, 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,
subject to clause (3)(v) below, for the payment of interest on the
Certificates which was payable on ____________, ____ (the "DISTRIBUTION
DATE") in accordance with the terms and provisions of the Trust Agreement
and the Certificates, which Advance is requested to be made on
____________, ____. The Interest Advance should be transferred to [name of
bank/wire instructions/ABA number] in favor of account number [ __ ],
reference [ __ ].
(3) The amount of the Interest Advance requested hereby (i) is
$_______________.__, to be applied in accordance with Sections 3.6(a) and
3.6(b) of the Intercreditor Agreement in respect of the payment of the
interest which was due and payable on the Certificates on the Distribution
Date, (ii) does not include any amount with respect to the payment of
principal of, or premium on, the Certificates, (iii) was computed in
accordance with the provisions of the Certificates, the Trust Agreement
and the Intercreditor Agreement (a copy of which computation is attached
hereto as Schedule I), (iv) does not exceed the Maximum Available
Commitment on the date hereof, (v) does not include any amount of interest
which was due and payable on the Certificates on such Distribution Date
but which remains unpaid due to the failure of the Depositary to pay any
amount of accrued interest on the Deposits on such Distribution Date and
(vi) 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 3.6(b) 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, 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 Maximum 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 Notice of Borrowing
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
NON-EXTENSION ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
borrower (the "BORROWER"), hereby certifies to CITICORP NORTH AMERICA, INC. (the
"LIQUIDITY PROVIDER"), with reference to the Revolving Credit Agreement
(2004-ERJ1) dated as of June 29, 2004, 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 Non-Extension Advance by the Liquidity Provider to be used
for the funding of the CNAI Sub-Account of the Cash Collateral Account in
accordance with Section 3.6(d)(i) of the Intercreditor Agreement, which
Advance is requested to be made on __________, ____. The Non-Extension
Advance should be transferred to [name of bank/wire instructions/ABA
number] in favor of account number [ __ ], reference [ __ ].
(3) The amount of the Non-Extension Advance requested hereby (i) is
$_______________.__, which equals the Maximum Available Commitment on the
date hereof and is to be applied in respect of the funding of the CNAI
Sub-Account of the Cash Collateral Account in accordance with Sections
3.6(d)(i) and 3.6(f) of the Intercreditor Agreement, (ii) does not include
any amount with respect to the payment of the principal of, or premium on,
the Certificates, (iii) was computed in accordance with the provisions of
the Certificates, the 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 CNAI
Sub-Account of the Cash Collateral Account and apply the same in
accordance with the terms of Sections 3.6(d)(i) and 3.6(f) 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 Non-Extension 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
Non-Extension 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 NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert copy of computations in accordance
with Non-Extension Advance Notice of Borrowing]
Annex III to
Revolving Credit Agreement
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
borrower (the "BORROWER"), hereby certifies to CITICORP NORTH AMERICA, INC. (the
"LIQUIDITY PROVIDER"), with reference to the Revolving Credit Agreement
(2004-ERJ1) dated as of June 29, 2004, 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 CNAI Sub-Account of the Cash Collateral Account in
accordance with Section 3.6(c) of the Intercreditor Agreement by reason of
the occurrence of a Downgrade Event, which Advance is requested to be made
on __________, ____. The Downgrade Advance should be transferred to [name
of bank/wire instructions/ABA number] in favor of account number [ __ ],
reference [ __ ].
(3) The amount of the Downgrade Advance requested hereby (i) is
$_______________.__, which equals the Maximum Available Commitment on the
date hereof and is to be applied in respect of the funding of the CNAI
Sub-Account of the Cash Collateral Account in accordance with Sections
3.6(c) and 3.6(f) of the Intercreditor Agreement, (ii) does not include
any amount with respect to the payment of the principal of, or premium on,
the Certificates, (iii) was computed in accordance with the provisions of
the Certificates, the 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 CNAI
Sub-Account of the Cash Collateral Account and apply the same in
accordance with the terms of Sections 3.6(c) and 3.6(f) 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 IV to
Revolving Credit Agreement
FINAL ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
borrower (the "BORROWER"), hereby certifies to CITICORP NORTH AMERICA, INC. (the
"LIQUIDITY PROVIDER"), with reference to the Revolving Credit Agreement
(2004-ERJ1) dated as of June 29, 2004, 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 CNAI Sub-Account of the 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 ____________, ____. The Final Advance should be
transferred to [name of bank/wire instructions/ABA number] in favor of
account number [ __ ], reference [ __ ].
(3) The amount of the Final Advance requested hereby (i) is
$_________________.__, which equals the Maximum Available Commitment on
the date hereof and is to be applied in respect of the funding of the CNAI
Sub-Account of the Cash Collateral Account in accordance with Sections
3.6(f) and 3.6(i) of the Intercreditor Agreement, (ii) does not include
any amount with respect to the payment of principal of, or premium on, the
Certificates, (iii) was computed in accordance with the provisions of the
Certificates, the 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 CNAI
Sub-Account of the Cash Collateral Account and apply the same in
accordance with the terms of Sections 3.6(f) and 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.
(5) The Borrower hereby requests that the Advance requested hereby
be a Base Rate Advance [and that such Base Rate Advance be converted into
a LIBOR Advance on the third Business Day following your receipt of this
notice.]1
- --------
1 Bracketed language may be included at Borrower's option.
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 V to
Revolving Credit Agreement
NOTICE OF TERMINATION
[Date]
Wilmington Trust Company,
as Subordination Agent, as Borrower
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Revolving Credit Agreement dated as of June 29, 2004, between
Wilmington Trust Company, as Subordination Agent, as agent and
trustee for the Continental Airlines Pass Through Trust
2004-ERJ1, as Borrower, and Citicorp North America, Inc. (the
"LIQUIDITY AGREEMENT")
Ladies and Gentlemen:
You are hereby notified that, pursuant to Section 6.01(a) of the
Liquidity Agreement, by reason of the occurrence of a Liquidity Event of Default
and the existence of a Performing Note Deficiency (each as defined 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,
CITICORP NORTH AMERICA, INC.,
as Liquidity Provider
By____________________________________
Name:
Title:
cc: Wilmington Trust Company,
as Trustee
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of June 29, 2004, between Wilmington
Trust Company, as Subordination Agent, as agent and trustee for the
Continental Airlines Pass Through Trust, 2004-ERJ1, as Borrower, and
Citicorp North America, Inc. (the "LIQUIDITY AGREEMENT")
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
------------------------------
[Name of Transferee]
------------------------------
[Address of Transferee]
all rights and obligations 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 and obligations 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:
Annex VII to
Revolving Credit Agreement
CNAI SPECIAL TERMINATION ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
borrower (the "BORROWER"), hereby certifies to CITICORP NORTH AMERICA, INC. (the
"LIQUIDITY PROVIDER"), with reference to the Revolving Credit Agreement
(2004-ERJ1) dated as of June 29, 2004, 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 CNAI Special Termination Advance by the Liquidity Provider
to be used for the funding of the CNAI Sub-Account of the Cash Collateral
Account in accordance with Section 3.6(k) of the Intercreditor Agreement
by reason of the receipt by the Borrower of a CNAI Special Termination
Notice from the Liquidity Provider with respect to the Liquidity
Agreement, which Advance is requested to be made on ____________, ____.
The CNAI Special Termination Advance should be transferred to [name of
bank/wire instructions/ABA number] in favor of account number [ __ ],
reference [ __ ].
(3) The amount of the CNAI Special Termination Advance requested
hereby (i) is $_________________.__, which equals the Maximum Available
Commitment on the date hereof and is to be applied in respect of the
funding of the CNAI Sub-Account of the Cash Collateral Account in
accordance with Sections 3.6(f) and 3.6(k) of the Intercreditor Agreement,
(ii) does not include any amount with respect to the payment of principal
of, or premium on, the Certificates, (iii) was computed in accordance with
the provisions of the Certificates, the 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 CNAI
Sub-Account of the Cash Collateral Account and apply the same in
accordance with the terms of Sections 3.6(f) and 3.6(k) 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 CNAI Special Termination 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 CNAI Special Termination 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 CNAI SPECIAL TERMINATION ADVANCE NOTICE OF BORROWING
[Insert copy of computations in accordance with CNAI Special
Termination Advance Notice of Borrowing]
Annex VIII to
Revolving Credit Agreement
NOTICE OF CNAI SPECIAL TERMINATION
[Date]
Wilmington Trust Company,
as Subordination Agent, as Borrower
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Revolving Credit Agreement dated as of June 29, 2004, between
Wilmington Trust Company, as Subordination Agent, as agent and
trustee for the Continental Airlines Pass Through Trust
2004-ERJ1, as Borrower, and Citicorp North America, Inc. (the
"LIQUIDITY AGREEMENT")
Ladies and Gentlemen:
You are hereby notified that, pursuant to Section 6.01(b) of the
Liquidity Agreement, by reason of the aggregate Pool Balance of the Certificates
exceeding the aggregate outstanding principal amount of the Equipment Notes
(other than any Equipment Notes previously sold or with respect to which the
collateral securing such Equipment Notes has been disposed of) during the
18-month period prior to September 1, 2019, we are giving this notice to you in
order to cause (i) our obligations to make Advances 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 CNAI Special Termination Advance
under the Liquidity Agreement pursuant to Section 3.6(k) of the Intercreditor
Agreement as a consequence of your receipt of this notice.
Terms used but not defined herein shall have the respective meanings
ascribed thereto in or pursuant to the Liquidity Agreement.
THIS NOTICE IS THE "NOTICE OF CNAI SPECIAL 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,
CITICORP NORTH AMERICA, INC.,
as Liquidity Provider
By________________________________________
Name:
Title:
cc: Wilmington Trust Company,
as Trustee
June 29, 2004
Wilmington Trust Company,
as Subordination Agent and as Trustee
Rodney Square North
1100 North Market Street
Wilmington, DE 19890-0001
Ladies and gentlemen:
In consideration of Wilmington Trust Company ("Wilmington"), in the capacities
described below, entering into (a) the Revolving Credit Agreement (2004-ERJ1),
dated as of June 29, 2004 (the "Revolving Credit Agreement") between Wilmington,
as "Subordination Agent", as agent and as trustee for the Continental Airlines
Pass Through Trust 2004-ERJ1 (the "Trustee"), as "Borrower" and Citicorp North
America, Inc., a direct wholly-owned subsidiary of Citicorp ("Sub"), as
Liquidity Provider and (b) the Intercreditor Agreement (2004-ERJ1) dated as of
June 29, 2004 (the "Intercreditor Agreement" and, together with the Revolving
Credit Agreement, the "Guaranteed Documents") among Wilmington, not in its
individual capacity but solely as Trustee, Sub, as Liquidity Provider and
Wilmington, not in its individual capacity except as expressly set forth therein
but solely as Subordination Agent and trustee thereunder (Wilmington, in each of
its capacities under the Guaranteed Documents, collectively, the "Beneficiary"),
Citicorp, a corporation incorporated under the laws of Delaware (the
"guarantor"), hereby agrees in accordance with the following:
1. Citicorp guarantees to the Beneficiary the payment of the amounts owing by
Sub in accordance with the provisions of the Guaranteed Documents (the
"guaranteed obligations"), subject to the terms set forth below (this
"guarantee").
2. Except to the extent this guarantee is reinstated in accordance with
paragraph 8 below, the total liability of the guarantor under this guarantee
shall in no case exceed $9,158,032.86.
3. This guarantee is a guarantee of payment and not of collection.
4. The guarantor hereby waives any requirement that the Beneficiary protect,
secure, perfect or insure any security interest or lien on any property
subject thereto or exhaust any right or take any action against any person
or any collateral (including any rights relating to marshaling of assets).
5. The guarantor's obligations under this guarantee shall rank PARI PASSU with
the guarantor's senior unsecured debt obligations.
June 29, 2004
Page2
6. The guarantor's obligations under this guarantee are irrevocable, and may
not be unilaterally terminated by the guarantor.
7. The guarantor hereby guarantees that the guaranteed obligations will be paid
strictly in accordance with the terms of the Guaranteed Documents or any
other agreement relating thereto, regardless of the value, genuineness,
validity, regularity or enforceability of the guaranteed obligations, and of
any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of the Beneficiary with respect
thereto and the liability of the guarantor to the extent herein set forth
shall be absolute and unconditional, not subject to any reduction,
limitation, impairment, termination, defense, offset, counterclaim or
recoupment whatsoever (all of which are hereby expressly waived by the
guarantor) whether by reason of any claim of any character whatsoever,
including, without limitation, any claim of waiver, release, surrender,
alteration or compromise, or by reason of any liability at any time to the
guarantor or otherwise, whether based upon any obligations or any other
agreement or otherwise, and howsoever arising, whether out of action or
inaction or otherwise and whether resulting from default, willful
misconduct, negligence or otherwise, and without limiting the foregoing,
irrespective of:
(a) any lack of validity or enforceability of any agreement or instrument
relating to the guaranteed obligations;
(b) any change in the time, manner or place of payment of, or in any other
term in respect of, all or any of the guaranteed obligations, or any other
amendment or waiver of or consent to any departure from any other agreement
relating to any guaranteed obligations; any change in the time, manner or
place of payment of, or in any other term in respect of, all or any of the
guaranteed obligations, or any other amendment or waiver of or consent to
any departure from any other agreement relating to any guaranteed
obligations;
(c) any increase in, addition to, exchange or release of, or nonperfection
of any lien on or security interest in, any collateral, or any release or
amendment or waiver of or consent to any departure from or failure to
enforce any other guarantee, for all or any of the indebtedness;
(d) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, Sub in respect of the guaranteed
obligations or the guarantor in respect hereof;
(e) The absence of any action on the part of the Beneficiary to obtain
payment of the guaranteed obligations from Sub;
June 29, 2004
Page2
(f) any insolvency, bankruptcy, reorganization or dissolution, or any
similar proceeding of Sub, including, without limitation, rejection of the
guaranteed obligations in such bankruptcy; or
(g) the absence of notice or any delay in any action to enforce any
guaranteed obligations or to exercise any right or remedy against the
guarantor, or Sub, whether hereunder, under any guaranteed obligations or
any agreement or any indulgence, compromise or extension granted;
provided, however, Guarantor shall retain all those defenses of Sub that
would be available to Guarantor if it were primary co-obligor, jointly and
severally liable with Sub, on the guaranteed obligations.
8. The guarantor further agrees that, to the extent that Sub or the guarantor
makes a payment or payments to the Beneficiary, which payment or payments or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to Sub or the guarantor
or their respective estate, trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then to
the extent of such payment or repayment, this guarantee and the advances or
part thereof which have been paid, reduced or satisfied by such amount shall
be reinstated and continued in full force and effect as of the date such
initial payment, reduction or satisfaction occurred.
9. Until the guaranteed obligations are paid in full, the guarantor shall have
no rights (direct or indirect) of subrogation, contribution, reimbursement,
indemnification, or other rights of payment or recovery from Sub for any
payments made by the guarantor hereunder.
10. This guarantee shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns, including,
without limitation, the Beneficiary.
11. No waiver of any provision of this guarantee and no consent to any departure
by the guarantor therefrom, shall be effective unless it is in writing and
consented to by the Beneficiary, and then such a waiver or consent shall be
effective only in the specific instance and for the specific purpose for
which given.
12. If any portion of the guaranteed obligations shall not be paid as and when
such guaranteed obligations are due and payable under the Guaranteed
Documents, the guarantor shall pay the amounts thereof to the Beneficiary as
and when such guaranteed obligations are due and payable under the
Guaranteed Documents and in accordance with the terms thereof.
June 29, 2004
Page2
13. Subject to section 8 above, this guarantee and the obligations of the
guarantor hereunder shall be irrevocably valid until:
(a) return by the Beneficiary of the original of this guarantee or
(b) the close of business in New York on July 11, 2005 (the "Final
Termination Date").
Subject to section 8 above, no claim by the Beneficiary may be asserted
under this guarantee after the Final Termination Date.
14. Citicorp shall be obligated to make payment hereunder only at the principal
office of Sub in New York City.
15. This guarantee shall be governed by and construed in accordance with the
laws of the State of New York. The guarantor submits to personal
jurisdiction and service of process in any proceeding relating to this
guarantee in a federal or state court located in the Borough of Manhattan in
New York City.
IN WITNESS WHEREOF, Citicorp has caused these presents to be executed by its
duly authorized officer this twenty-ninth day of June two thousand four.
Very truly yours,
CITICORP
By:
---------------------------
Vice President
INTERCREDITOR AGREEMENT
(2004-ERJ1)
Dated as of
June 29, 2004
AMONG
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Trustee under the
Continental Airlines Pass Through Trust 2004-ERJ1
WESTLB AG,
New York Branch,
and
CITICORP NORTH AMERICA, INC.,
as Liquidity Providers
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
Page
----
ARTICLE I DEFINITIONS.......................................................2
SECTION 1.1 Definitions..................................................2
ARTICLE II TRUST ACCOUNTS; CONTROLLING PARTY...............................17
SECTION 2.1 Agreement to Terms of Subordination;
Payments from Monies Received Only........................17
SECTION 2.2 Trust Accounts..............................................18
SECTION 2.3 Deposits to the Collection Account and
Special Payments Account..................................19
SECTION 2.4 Distributions of Special Payments...........................20
SECTION 2.5 Designated Representatives..................................22
SECTION 2.6 Controlling Party...........................................23
ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF
AMOUNTS RECEIVED..........................................24
SECTION 3.1 Written Notice of Distribution..............................24
SECTION 3.2 Distribution of Amounts on Deposit in the
Collection Account........................................26
SECTION 3.3 Distribution of Amounts on Deposit
Following a Triggering Event..............................27
SECTION 3.4 Other Payments..............................................29
SECTION 3.5 Payments to the Trustee and the Liquidity
Provider..................................................29
SECTION 3.6 Liquidity Facilities........................................30
ARTICLE IV EXERCISE OF REMEDIES............................................36
SECTION 4.1 Directions from the Controlling Party.......................36
SECTION 4.2 Remedies Cumulative.........................................37
SECTION 4.3 Discontinuance of Proceedings...............................38
SECTION 4.4 Right of Certificateholders to Receive
Payments Not to Be Impaired...............................38
SECTION 4.5 Undertaking for Costs.......................................38
ARTICLE V DUTIES OF THE SUBORDINATION AGENT; AGREEMENTS
OF TRUSTEE, ETC...........................................39
SECTION 5.1 Notice of Indenture Default or Triggering
Event.....................................................39
SECTION 5.2 Indemnification.............................................40
SECTION 5.3 No Duties Except as Specified in
Intercreditor Agreement...................................40
SECTION 5.4 Notice from the Liquidity Provider and
Trustee...................................................41
ARTICLE VI THE SUBORDINATION AGENT.........................................41
SECTION 6.1 Authorization; Acceptance of Trusts and
Duties....................................................41
TABLE OF CONTENTS
(Continued)
Page
----
SECTION 6.2 Absence of Duties...........................................41
SECTION 6.3 No Representations or Warranties as to
Documents.................................................41
SECTION 6.4 No Segregation of Monies; No Interest.......................41
SECTION 6.5 Reliance; Agents; Advice of Counsel.........................42
SECTION 6.6 Capacity in Which Acting....................................42
SECTION 6.7 Compensation................................................42
SECTION 6.8 May Become Certificateholder................................43
SECTION 6.9 Subordination Agent Required; Eligibility...................43
SECTION 6.10 Money to Be Held in Trust..................................43
ARTICLE VII INDEMNIFICATION OF SUBORDINATION AGENT.........................43
SECTION 7.1 Scope of Indemnification....................................43
ARTICLE VIII SUCCESSOR SUBORDINATION AGENT.................................44
SECTION 8.1 Replacement of Subordination Agent;
Appointment of Successor..................................44
ARTICLE IX SUPPLEMENTS AND AMENDMENTS......................................45
SECTION 9.1 Amendments, Waivers, Etc....................................45
SECTION 9.2 Subordination Agent Protected...............................46
SECTION 9.3 Effect of Supplemental Agreements...........................46
SECTION 9.4 Notice to Rating Agencies..................................46
ARTICLE X MISCELLANEOUS....................................................47
SECTION 10.1 Termination of Intercreditor Agreement.....................47
SECTION 10.2 Intercreditor Agreement for Benefit of
the Trustee, the Liquidity Providers
and the Subordination Agent...............................47
SECTION 10.3 Notices....................................................47
SECTION 10.4 Severability...............................................49
SECTION 10.5 No Oral Modifications or Continuing
Waivers...................................................49
SECTION 10.6 Successors and Assigns.....................................49
SECTION 10.7 Headings...................................................49
SECTION 10.8 Counterpart Form...........................................49
SECTION 10.9 Subordination..............................................50
SECTION 10.10 Governing Law.............................................51
SECTION 10.11 Submission to Jurisdiction; Waiver of
Jury Trial; Waiver of Immunity............................51
INTERCREDITOR AGREEMENT (2004-ERJ1)
INTERCREDITOR AGREEMENT (2004-ERJ1) dated as of June 29, 2004 (this
"AGREEMENT"), among WILMINGTON TRUST COMPANY, a Delaware corporation ("WTC"),
not in its individual capacity but solely as Trustee of the Trust (as defined
below), WESTLB AG, a joint stock company ("Aktiengesellschaft") organized under
the laws of Germany, acting through its New York Branch ("WESTLB"), as a
Liquidity Provider, Citicorp North America, Inc. ("CNAI"), a Delaware
corporation and a direct wholly-owned subsidiary of Citicorp, as a 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, the related Owner Trustee
proposes to issue on a non-recourse basis one series of Equipment Notes to
finance the debt portion of the purchase price of the Aircraft referred to in
such Indenture which will be leased to Continental pursuant to the related
Lease;
WHEREAS, pursuant to the Financing Agreements, the Trust will
acquire the Equipment Notes;
WHEREAS, pursuant to the Trust Agreement, the Trust proposes to
issue Certificates bearing the interest rate and having the final distribution
date described in the Trust Agreement on the terms and subject to the conditions
set forth therein;
WHEREAS, pursuant to the Underwriting Agreement, the Underwriters
propose to purchase Certificates issued by the Trust in the aggregate face
amount set forth on Schedule I thereto on the terms and subject to the
conditions set forth therein;
WHEREAS, each Liquidity Provider proposes to enter into a separate
Liquidity Facility with the Subordination Agent, as agent for the Trustee, for
the benefit of the Certificateholders;
WHEREAS, Citicorp, a Delaware corporation (the "GUARANTOR"), will
guarantee in full, pursuant to a separate guarantee dated as of the date hereof
(the "GUARANTEE AGREEMENT"), the obligations of CNAI under its Liquidity
Facility; and
WHEREAS, it is a condition precedent to the obligations of the
Underwriters under the Underwriting Agreement that the Subordination Agent, the
Trustee and the Liquidity Providers agree to the terms of subordination set
forth in this Agreement in respect of the Certificates, and the Subordination
Agent, the Trustee 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, such amounts becoming
immediately due and payable by declaration or otherwise. "ACCELERATE",
"ACCELERATED" and "ACCELERATING" have meanings correlative to the foregoing.
"ADVANCE", with respect to any Liquidity Facility, means any
Advances as defined in such Liquidity Facility.
"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 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, that would be payable on the Certificates on each of the
eighteen successive Regular Distribution Dates immediately following such day
or, if such day is a Regular Distribution Date, on such day and the succeeding
seventeen Regular Distribution Dates, in each case calculated on the basis of
the Pool Balance (subject to the proviso in the definition of "Required Amount"
below) on such date and without regard to expected future payments of principal
on the Certificates.
"AGREEMENT" has the meaning assigned to such term in the first
paragraph of this Agreement.
"AIRCRAFT" means, with respect to each Indenture, the "Aircraft"
referred to therein.
"APPRAISAL" has the meaning assigned to such term in Section
4.1(a)(iii).
"APPRAISERS" means Aviation Specialist Group, AvSolutions and BK
Associates or any other nationally recognized appraiser reasonably selected by
the Subordination Agent or the Controlling Party.
"AVAILABLE AMOUNT" means, with respect to any Liquidity Facility, on
any drawing date, subject to the proviso contained in the first sentence of
Section 3.6(g) hereof, an amount equal to (a) the Stated Amount of such
Liquidity Facility at such time, LESS (b) the aggregate 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, a Non-Extension Drawing, a CNAI
Special Termination Drawing, a WestLB Early Termination Drawing, a WestLB
Expiration Drawing or a Final Drawing under such Liquidity Facility, the
Available Amount of such Liquidity Facility shall be zero.
"BASIC AGREEMENT" means the Pass Through Trust Agreement dated as of
September 25, 1997 between Continental and WTC, not in its individual capacity,
except as otherwise expressly provided therein, but solely as trustee.
"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 the Trustee, the Subordination Agent or any Loan Trustee
maintains its Corporate Trust Office or receives and disburses funds, and that,
solely with respect to draws under any Liquidity Facility, also is a "Business
Day" as defined in such Liquidity Facility.
"CASH COLLATERAL ACCOUNT" means an Eligible Deposit Account
consisting of the Sub-Accounts 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 any Liquidity Facility pursuant
to Section 3.6(c), 3.6(d), 3.6(i), 3.6(k) or 3.6(l) shall be deposited.
"CERTIFICATES" means the certificates issued by the Trust,
substantially in the form of Exhibit A to the Trust Agreement, and authenticated
by the Trustee, representing fractional undivided interests in the Trust, and
any certificates issued in exchange therefor or replacement thereof pursuant to
the terms of the Trust Agreement.
"CERTIFICATEHOLDER" means, at any time, any holder of one or more
Certificates.
"CLOSING DATE" means June 29, 2004.
"CNAI" has the meaning assigned to such term in the recital of
parties to this Agreement.
"CNAI FEE LETTER" means the Fee Letter dated the date hereof among
CNAI, Embraer, Continental and the Subordination Agent with respect to the
initial CNAI Liquidity Facility.
"CNAI LIQUIDITY FACILITY" means, initially, the Revolving Credit
Agreement, dated as of the date hereof, between the Subordination Agent, as
agent and trustee for the Trust, and CNAI, and, from and after the replacement
of such Revolving Credit 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.
"CNAI SPECIAL TERMINATION DRAWING" has the meaning assigned to such
term in Section 3.6(k).
"CNAI SPECIAL TERMINATION NOTICE" has the meaning assigned to such
term in the CNAI Liquidity Facility.
"CNAI SUB-ACCOUNT" means, with respect to the Cash Collateral
Account, a sub-ledger account to such Cash Collateral Account designated "CNAI
Sub-Account".
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and the 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.
"CONSENT PERIOD" has the meaning specified in Section 3.6(d).
"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 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
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; or
(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.
"CONTINENTAL PROVISIONS" has the meaning specified in Section
9.1(a).
"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 the 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 Triggering
Event Distributions with respect to the Certificates as of such Distribution
Date.
"DELIVERY PERIOD EXPIRY DATE" means the earlier of (a) December 31,
2004, or, if the Equipment Notes relating to all of the Aircraft (or Substitute
Aircraft in lieu thereof) have not been purchased by the Trustee on or prior to
such date due to any reason beyond the control of Continental and not occasioned
by Continental's fault or negligence, March 31, 2005 and (b) the date on which
Equipment Notes with respect to all Aircraft (or Substitute Aircraft in lieu
thereof) have been purchased by the Trustee in accordance with the Note Purchase
Agreement.
"DEPOSIT AGREEMENT" shall mean the Deposit Agreement dated as of the
date hereof between the Escrow Agent and the Depositary, as the same may be
amended, modified or supplemented from time to time in accordance with the terms
thereof.
"DEPOSITARY" means WestLB AG, New York Branch, as depositary under
the Deposit Agreement.
"DEPOSITS" has the meaning set forth in the Deposit Agreement.
"DESIGNATED REPRESENTATIVES" means the Subordination Agent
Representatives, the Trustee Representatives and the LP Representatives
identified under Section 2.5.
"DISTRIBUTION DATE" means a Regular Distribution Date or a Special
Distribution Date.
"DOLLARS" or "$" means United States dollars.
"DOWNGRADE DRAWING" has the meaning assigned to such term in Section
3.6(c).
"DOWNGRADE EVENT", with respect to any Liquidity Facility, has the
meaning assigned to such term in such Liquidity Facility.
"DOWNGRADED FACILITY" has the meaning assigned to such term in
Section 3.6(c).
"DRAWING" means an Interest Drawing, a Final Drawing, a
Non-Extension Drawing, a CNAI Special Termination Drawing, a WestLB Early
Termination Drawing, a WestLB Expiration 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.
"ELIGIBLE INSTITUTION" means (a) the corporate trust department of
the Subordination Agent or the 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 or issuer credit
rating, as the case may be, from each Rating Agency of at least A-3 or its
equivalent.
"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 Standard & Poor's of at least P-1 and A-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 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;
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 clause (b) above which is
issued or guaranteed by Continental or any of its Affiliates, and no investment
in the obligations of any one bank in excess of $10,000,000 shall be an Eligible
Investment, 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.
"EMBRAER" means Embraer-Empresa Brasileira de Aeronautica S.A., a
company organized under the laws of Brazil, and its successors and assigns.
"EQUIPMENT NOTES" means the 9.558% Equipment Notes issued pursuant
to any Indenture by the related Owner Trustee 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.
"ESCROW AGENT" means Wells Fargo Bank Northwest, National
Association, as escrow agent under each Escrow and Paying Agent Agreement,
together with its successors in such capacity.
"ESCROW AND PAYING AGENT AGREEMENT" shall mean the Escrow and Paying
Agent Agreement dated as of the date hereof among the Escrow Agent, the
Underwriters, the Trustee and the Paying Agent, as the same may be amended,
modified or supplemented from time to time in accordance with the terms thereof.
"EXPECTED DISTRIBUTIONS" means, on any Current Distribution Date,
the sum of (x) accrued and unpaid interest on the Certificates (excluding
interest, if any, payable with respect to any Deposits) and (y) the difference
between (A) the Pool Balance as of the immediately preceding Distribution Date
(or, if the Current Distribution Date is the first Distribution Date, the
original aggregate face amount of the Certificates), and (B) the Pool Balance as
of the Current Distribution Date calculated on the basis that (i) the principal
of the Equipment Notes has been paid when due (whether at stated maturity, upon
redemption, prepayment, purchase, Acceleration or otherwise) and such payments
have been distributed to the Certificateholders and (ii) the principal of any
Equipment Notes formerly held in the Trust that have been sold pursuant to the
terms hereof has been paid in full and such payments have been distributed to
the Certificateholders, but without giving effect to any reduction in the Pool
Balance as a result of any distribution attributable to Deposits occurring after
the immediately preceding Distribution Date (or, if the Current Distribution
Date is the first Distribution Date, occurring after the initial issuance of the
Certificates). For purposes of calculating Expected Distributions, any premium
paid on the Equipment Notes that has not been distributed to the
Certificateholders (other than such premium or a portion thereof applied to the
payment of interest on the Certificates or the reduction of the Pool Balance)
shall be added to the amount of such Expected Distributions.
"EXPIRY DATE", with respect to any Liquidity Facility, shall have
the meaning set forth in such Liquidity Facility.
"FEE LETTERS" means, collectively, the CNAI Fee Letter and the
WestLB Fee Letter and any fee letter entered into between the Subordination
Agent, Embraer, Continental and any Replacement Liquidity Provider in respect of
a Liquidity Facility.
"FINAL DRAWING" has the meaning assigned to such term in Section
3.6(i).
"FINAL LEGAL DISTRIBUTION DATE" means March 1, 2021.
"FINANCING AGREEMENTS" means each of the Participation Agreements
and the Note Purchase Agreement.
"GUARANTEE AGREEMENT" has the meaning assigned to such term in the
preliminary statements to this Agreement.
"GUARANTOR" has the meaning assigned to such term in the preliminary
statements to this Agreement.
"INDENTURE" means each of the Trust Indentures entered into by the
Loan Trustee and the Owner Trustee pursuant to the Note Purchase Agreement, in
each case 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.
"INTEREST DRAWING" has the meaning assigned to such term in Section
3.6(a).
"INTEREST PAYMENT DATE" means each date on which interest is due and
payable under the Liquidity Facilities on a Downgrade Drawing, Non-Extension
Drawing, CNAI Special Termination Drawing, WestLB Early Termination Drawing,
WestLB Expiration Drawing or Final Drawing thereunder, other than any such date
on which interest is due and payable under the Liquidity Facilities only on an
Applied Provider Advance (as such term is defined in the Liquidity Facilities).
"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, the "Lease" referred
to therein.
"LENDING OFFICE" means, with respect to the Liquidity Facility of
each initial Liquidity Provider, the lending office of such Liquidity Provider
presently located at New York, New York, or such other lending office as such
Liquidity Provider from time to time shall notify the Trustee as its lending
office under such Liquidity Facility; PROVIDED that no Liquidity Provider shall
change its Lending Office to a Lending Office outside the United States of
America except in accordance with the applicable Liquidity Facility.
"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 FACILITIES" means, collectively, the CNAI Liquidity
Facility and the WestLB Liquidity Facility.
"LIQUIDITY OBLIGATIONS" means all principal, interest, fees and
other amounts owing to the Liquidity Providers under the Liquidity Facilities,
Section 9.1 of the Participation Agreements or the Fee Letters.
"LIQUIDITY PROVIDERS" means WestLB and CNAI, together with any
Replacement Liquidity Provider which has issued a Replacement Liquidity Facility
to replace any Liquidity Facility pursuant to Section 3.6(e).
"LOAN TRUSTEE" means, with respect to any Indenture, the mortgagee
thereunder.
"LP INCUMBENCY CERTIFICATE" has the meaning assigned to such term in
Section 2.5(c).
"LP REPRESENTATIVES" has the meaning assigned to such term in
Section 2.5(c).
"MOODY'S" means Moody's Investors Service, Inc.
"NON-CONTROLLING PARTY" means, at any time, the Trustee and each
Liquidity Provider, if such person is not the Controlling Party at such time.
"NON-EXTENDED FACILITY" has the meaning assigned to such term in
Section 3.6(d).
"NON-EXTENSION DRAWING" has the meaning assigned to such term in
Section 3.6(d).
"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 Trustee, the Escrow Agent, the
Subordination Agent and the Paying Agent, as amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"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 Guarantee Agreement, the Underwriting Agreement, the Indentures,
the Trust Agreement, the Leases, the Financing Agreements, the Fee Letters, 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 the Certificates, as
of the date of determination, all Certificates theretofore authenticated and
delivered under the Trust Agreement, except:
(i) Certificates theretofore canceled by the Registrar (as
defined in the Trust Agreement) or delivered to the Trustee or such
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 of such Trust Agreement has been
theretofore deposited with the Trustee in trust for the holders of
the Certificates as provided in Section 4.01 of the Trust Agreement
pending distribution of such money to the Certificateholders
pursuant to such final distribution payment; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been authenticated and delivered pursuant to the
Trust Agreement;
PROVIDED, HOWEVER, that in determining whether the holders of the
requisite Outstanding amount of the 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 the Trustee shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only
Certificates that the 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 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.
"OWNER PARTICIPANT" means, with respect to any Participation
Agreement, the owner participant thereunder.
"OWNER TRUSTEE" means, with respect to any Indenture, 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 AGREEMENT" means, with respect to each Indenture, the
"Participation Agreement" referred to therein.
"PAYEE" has the meaning assigned to such term in Section 2.4(e).
"PAYING AGENT" means Wilmington Trust Company, as paying agent under
the Escrow and Paying Agent Agreement, together with its successors in such
capacity.
"PERFORMING EQUIPMENT NOTE" means an Equipment Note with respect to
which no payment default has occurred and is continuing (without giving effect
to any Acceleration); PROVIDED that in the event of a bankruptcy proceeding
under Title 11 of the United States Code (the "BANKRUPTCY CODE") in which
Continental is a debtor any payment default existing during the 60-day period
under Section 1110(a)(2)(A) of the Bankruptcy Code (or such longer period as may
apply under Section 1110(b) of the Bankruptcy Code or as may apply for the cure
of such payment default under Section 1110(a)(2)(B) of the Bankruptcy Code)
shall not be taken into consideration until the expiration of the applicable
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, limited liability company, joint-stock company, trust,
trustee, unincorporated organization or government or any agency or political
subdivision thereof.
"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 the Certificates or in respect of Deposits other than
payments made in respect of interest or premium thereon or reimbursement of any
costs and expenses in connection therewith. The Pool Balance as of any
Distribution Date shall be computed after giving effect to any special
distribution with respect to unused Deposits, payment of principal of the
Equipment Notes or payment with respect to other Trust Property and the
distribution thereof to be made on that date.
"PROCEEDING" means any suit in equity, action at law or other
judicial or administrative proceeding.
"PRO RATA PORTION", with respect to any Liquidity Facility or
Sub-Account, for any day, means a fraction (expressed as a percentage rounded to
a sufficient number of decimal places such that the sum of the Pro Rata Portions
shall equal 100.00%), the numerator of which is the Required Amount for such
Liquidity Facility or Sub-Account for such day and the denominator of which is
the Aggregate Required Amount for such day.
"PTC EVENT OF DEFAULT" means the failure to pay within 10 Business
Days of the due date thereof: (i) the outstanding Pool Balance of the
Certificates on the Final Legal Distribution Date or (ii) interest due on the
Certificates on any Distribution Date (unless the Subordination Agent shall have
made an Interest Drawing, or a withdrawal from the Cash Collateral Account, with
respect thereto in an aggregate amount sufficient to pay such interest and shall
have distributed such amount to the Trustee).
"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 the Certificates
below the then current rating for the Certificates or (ii) a withdrawal or
suspension of the rating of the Certificates.
"REGULAR DISTRIBUTION DATES" means the 1st day of each month,
commencing on August 1, 2004; 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 (or agreements) in substantially the
form of the replaced Liquidity Facility, including reinstatement provisions, or
in such other form or forms (which may include a letter of credit, surety bond,
financial insurance policy or guaranty) 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 replaced Liquidity Provider), in a face amount (or in an aggregate face
amount) equal to the then Required Amount for the replaced Liquidity Facility
and issued by a Person (or Persons) having an unsecured short-term debt rating
and a short-term issuer credit rating, as the case may be, issued by both Rating
Agencies which are equal to or higher than the Threshold Rating or such other
ratings and qualifications as shall permit the Rating Agencies to confirm in
writing their respective ratings then in effect for the Certificates (before the
downgrading of such ratings, if any, as a result of the downgrading of the
replaced Liquidity Provider). Without limitation of the form that a Replacement
Liquidity Facility otherwise may have pursuant to the preceding sentence, a
Replacement Liquidity Facility may have a stated expiration date earlier than 15
days after the Final Legal Distribution Date of the Certificates so long as such
Replacement Liquidity Facility provides for a Non-Extension Drawing as
contemplated by Section 3.6(d)(i) hereof.
"REPLACEMENT LIQUIDITY PROVIDER" means a Person (or Persons) who
issues a Replacement Liquidity Facility.
"REPLACEMENT LIQUIDITY PROVIDER SUB-ACCOUNT" means, with respect to
any Cash Collateral Account, a sub-ledger account to such Cash Collateral
Account having a designation indicating that it is a Sub-Account with respect to
such Replacement Liquidity Provider.
"REQUIRED AMOUNT" means (i) with respect to the WestLB Liquidity
Facility or the WestLB Sub-Account, for any day, the Aggregate Required Amount
for such day LESS the amount specified in clause (ii) below for such day and
(ii) with respect to the CNAI Liquidity Facility or CNAI Sub-Account, for any
day, the sum of the aggregate amount of interest, calculated at the rate per
annum equal to the Stated Interest Rate, that would be payable on the
Certificates on each of the eighteen successive Regular Distribution Dates
immediately following such day or, if such day is a Regular Distribution Date,
on such day and the succeeding seventeen Regular Distribution Dates, in each
case calculated on the basis of a Pool Balance equal to the lower of (x)
$63,876,911.93 and (y) the Pool Balance on such day and without regard to
expected future payments of principal on the Certificates; PROVIDED that, for
any date, the Pool Balance for purposes of determining the Aggregate Required
Amount or the amount in clause (ii) above (after determining the lower of
subclauses (x) and (y) as provided therein), shall, in the event of (A) the
disposition of any Aircraft pursuant to the exercise of remedies under an
Indenture on or prior to such date, be deemed to be reduced by an amount equal
to the outstanding principal amount of the Equipment Note secured by such
Aircraft that remains unpaid after giving effect to the application under such
Indenture of proceeds from the disposition of such Aircraft and any amounts
otherwise received from Continental in connection with such disposition at or
prior to the time of such disposition or (B) the sale of any Equipment Note
pursuant to the Intercreditor Agreement on or prior to such date, be deemed to
be reduced by an amount equal to the excess of (x) the outstanding amount of
principal as of the date of sale of such Equipment Note over (y) the excess of
(A) the net purchase price received with respect to the sale of such Equipment
Note over (B) the outstanding amount of interest accrued and payable under such
Equipment Note as of the date of sale of such Equipment Note.
"RESERVE ACCOUNT" means the Eligible Deposit Account established by
the Subordination Agent pursuant to Section 2.2 from which the Subordination
Agent shall make withdrawals to fund the Appraisals in accordance with Section
4.1 hereof.
"RESERVE AMOUNT" means $75,000.
"RESPONSIBLE OFFICER" means (i) with respect to the Subordination
Agent and the Trustee, any officer in the corporate trust administration
department of the Subordination Agent or the 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, and (ii) with respect to each Liquidity Provider, any authorized
officer of such Liquidity Provider.
"SCHEDULED PAYMENT" means, with respect to any Equipment Note, (i)
any payment of principal or interest on such Equipment Note (other than an
Overdue Scheduled Payment) due from the obligor thereon, 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, or (ii) any payment of interest on the Certificates with funds
drawn under any Liquidity Facility or any Sub-Account of the Cash Collateral
Account; 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.
"SECTION 2.4(B) FRACTION" has the meaning assigned to such term in
Section 2.4(b).
"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.
"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 Ratings Services, a
division of The McGraw-Hill Companies, Inc.
"STATED AMOUNT" means, with respect to any Liquidity Facility, the
Maximum Commitment (as defined in such Liquidity Facility) of the applicable
Liquidity Provider thereunder.
"STATED EXPIRATION DATE" has the meaning specified in Section
3.6(d)(i).
"STATED INTEREST RATE" means 9.558% per annum.
"SUB-ACCOUNT" means, collectively, the CNAI Sub-Account, the WestLB
Sub-Account and any Replacement Liquidity Provider Sub-Account.
"SUBORDINATION AGENT" has the meaning assigned to it in the
preliminary statements to this Agreement.
"SUBORDINATION AGENT INCUMBENCY CERTIFICATE" has the meaning
assigned to such term in Section 2.5(a).
"SUBORDINATION AGENT REPRESENTATIVES" has the meaning assigned to
such term in Section 2.5(a).
"SUBSTITUTE AIRCRAFT" has the meaning set forth in the Note Purchase
Agreement.
"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 of America 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 short-term issuer credit rating of A-1 by Standard & Poor's;
provided that so long as CNAI is the Liquidity Provider for any Liquidity
Facility, the Threshold Rating shall apply to the Guarantor in the case of such
Liquidity Facility.
"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, (y) the
Acceleration of all of the outstanding Equipment Notes (PROVIDED that, with
respect to the period prior to the Delivery Period Expiry Date, the aggregate
principal balance of such Equipment Notes is in excess of $108,000,000) or (z)
the occurrence of a Continental Bankruptcy Event.
"TRIGGERING EVENT DISTRIBUTIONS" means, on any Current Distribution
Date, the sum of (x) the aggregate amount of all accrued and unpaid interest on
the Certificates (excluding interest, if any, payable with respect to the
Deposits) and (y) the Pool Balance as of the immediately preceding Distribution
Date (or, if the Current Distribution Date is the first Distribution Date, the
original aggregate face amount of the Certificates) (less the amount of the
Deposits as of such preceding Distribution Date (or, if the Current Distribution
Date is the first Distribution Date, the Closing Date) other than any portion of
such Deposits thereafter used to acquire Equipment Notes pursuant to the Note
Purchase Agreement). For purposes of calculating the Triggering Event
Distributions, any premium paid on the Equipment Notes that has not been
distributed to the Certificateholders (other than such premium or a portion
thereof applied to the payment of interest on the Certificates or the reduction
of the Pool Balance) shall be added to the amount of the Triggering Event
Distributions.
"TRUST" means the Continental Airlines Pass Through Trust 2004-ERJ1
created and administered pursuant to the Trust Agreement.
"TRUST ACCOUNTS" has the meaning assigned to such term in Section
2.2(a).
"TRUST AGREEMENT" means the Basic Agreement, as supplemented by the
Trust Supplement No. 2004-ERJ1 thereto, dated the date hereof, governing the
creation and administration of the Pass Through Trust 2004-ERJ1 and the issuance
of the Certificates, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"TRUSTEE" means WTC, not in its individual capacity except as
expressly set forth in the Trust Agreement, but solely as trustee under the
Trust Agreement, together with any successor trustee appointed pursuant thereto.
"TRUSTEE INCUMBENCY CERTIFICATE" has the meaning assigned to such
term in Section 2.5(b).
"TRUSTEE REPRESENTATIVES" has the meaning assigned to such term in
Section 2.5(b).
"TRUST INDENTURE ESTATE" with respect to any Indenture, has the
meaning assigned to such term in such Indenture.
"TRUST PROPERTY" has the meaning set forth in the Trust Agreement.
"UNAPPLIED PROVIDER ADVANCE", with respect to any Liquidity
Facility, has the meaning specified in such Liquidity Facility.
"UNDERWRITERS" means Citigroup Global Markets Inc. and Morgan
Stanley & Co. Incorporated.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement dated June
18, 2004 among the Underwriters, the Depositary, Embraer and Continental,
relating to the purchase of the Certificates by the Underwriters, as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"WESTLB" has the meaning assigned to such term in the recital of
parties to this Agreement.
"WESTLB EARLY TERMINATED FACILITY" has the meaning assigned to such
term in Section 3.6(d)(ii).
"WESTLB EARLY TERMINATION DRAWING" has the meaning assigned to such
term in Section 3.6(d)(ii)
"WESTLB EARLY TERMINATION DATE" means the date specified in a WestLB
Early Termination Notice delivered by a Liquidity Provider to the Subordination
Agent in accordance with Section 3.6(d)(ii), which date shall not be earlier
than the 25th day following the receipt by the Subordination Agent of such
WestLB Early Termination Notice.
"WESTLB EARLY TERMINATION NOTICE" has the meaning assigned to such
term in Section 3.6(d)(ii).
"WESTLB EARLY TERMINATION NOTICE PERIOD" has the meaning assigned to
such term in Section 3.6(d)(ii).
"WESTLB EXPIRED FACILITY" has the meaning assigned to such term in
Section 3.6(l).
"WESTLB EXPIRATION DRAWING" has the meaning assigned to such term in
Section 3.6(l).
"WESTLB FEE LETTER" means the Fee Letter dated the date hereof among
WestLB, Embraer, Continental and the Subordination Agent with respect to the
initial WestLB Liquidity Facility.
"WESTLB LIQUIDITY FACILITY" means, initially, the Revolving Credit
Agreement, dated as of the date hereof, between the Subordination Agent, as
agent and trustee for the Trust, and WestLB, and, from and after the replacement
of such Revolving Credit 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.
"WESTLB SUB-ACCOUNT" means, with respect to the Cash Collateral
Account, a sub-ledger account to such Cash Collateral Account designated "WestLB
Sub-Account".
"WRITTEN NOTICE" means, from the Subordination Agent, the Trustee or
any Liquidity Provider, a written instrument executed by the Designated
Representative of such Person. 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) The Trustee hereby acknowledges and agrees to the
terms of subordination and distribution set forth in this Agreement in respect
of the 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, the Trustee hereby
agrees to cause the Equipment Notes purchased by the Trust to be registered in
the name of the Subordination Agent or its nominee, as agent and trustee for the
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 or payments under Section 9.1 of the
Participation Agreements or payments under Section 6 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. The Trustee and the Subordination
Agent hereby agree and, as provided in the 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, have
agreed to look solely to such amounts to the extent available for distribution
to it as provided in this Agreement and to the relevant Deposits and that none
of the Owner Trustees, Loan Trustees, Owner Participants nor the Trustee or the
Subordination Agent is personally liable to any of them for any amounts payable
or any liability under this Agreement, the 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 Trustee) as expressly provided
in the 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 Trustee, the Certificateholders and the Liquidity Providers, (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 Trustee, the
Certificateholders and the Liquidity Providers and (iii) the Reserve 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 Trustee, the
Liquidity Providers and the Certificateholders. The Subordination Agent shall
establish and maintain the Cash Collateral Account (consisting of the CNAI
Sub-Account, the WestLB Sub-Account and any Replacement Liquidity Provider
Sub-Account related thereto) 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 Account 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) 30 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, a
Non-Extension Drawing, a CNAI Special Termination Drawing, a WestLB Early
Termination Drawing or a WestLB Expiration Drawing under any Liquidity Facility,
the Subordination Agent shall invest and reinvest such amounts in the
Sub-Account related to such Liquidity Facility in Eligible Investments at the
direction of Continental (or, if and to the extent so specified to the
Subordination Agent by Continental, the Liquidity Provider with respect to such
Liquidity Facility); 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, with respect to Investment Earnings on amounts
on deposit in the Cash Collateral Account, 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 other amounts on deposit in the Collection Account are 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, except as otherwise
expressly provided in Section 3.4(b) with respect to Investment Earnings). 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 Trustee,
the Certificateholders and the Liquidity Providers, as the case may be. If, at
any time, any of the Trust Accounts or the Reserve Account 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, for which a Ratings
Confirmation shall have been obtained) establish a new Collection Account,
Special Payments Account, Reserve 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,
Reserve Account or Cash Collateral Account, as the case may be. So long as WTC
is an Eligible Institution, the Trust Accounts and the Reserve Account shall be
maintained with it as Eligible Deposit Accounts.
(d) The Subordination Agent shall possess all right, title and
interest in all funds on deposit from time to time in the Reserve Account. The
Reserve Account shall be used by the Subordination Agent solely to fund the
Appraisals when required to be obtained pursuant to Section 4.1 hereof.
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. Except as provided in Section 2.4(e) below, 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 the 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 the 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 the Business Day
which immediately follows the later to occur of (x) the 15th day after the date
of such Written Notice or (y) the date the Subordination Agent has received or
expects to receive such Special Payment. Amounts on deposit in the Special
Payments Account shall be distributed in accordance with Sections 2.4(b) and
2.4(c) hereof, as applicable.
(b) REDEMPTIONS AND PURCHASES OF EQUIPMENT NOTES. (i) 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,
purchase (including, without limitation, a purchase resulting from a sale of the
Equipment Notes permitted by Article IV hereof) or prepayment 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 Distribution 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
Distribution Date and the denominator of which is the aggregate
outstanding principal amount of all Equipment Notes (the "SECTION 2.4(B)
FRACTION"), shall be distributed to the Liquidity Providers pro rata on
the basis of the amount of the Liquidity Expenses owed to each Liquidity
Provider;
SECOND, such amount as shall be required to pay (i) (A) all accrued
and unpaid interest then in arrears on all Liquidity Obligations 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 Distribution
Date (at the rate provided in the Liquidity Facilities) MULTIPLIED BY (y)
the Section 2.4(b) Fraction and (ii) if a CNAI Special Termination Drawing
has been made under the CNAI Liquidity Facility and has not been converted
into a Final Advance, the outstanding amount of such CNAI Special
Termination Drawing, shall be distributed to the Liquidity Providers pro
rata on the basis of the amount of such Liquidity Obligations owed to each
Liquidity Provider;
THIRD, such amount as shall be required (A) if any Sub-Account of
any Cash Collateral Account had been previously funded as provided in
Section 3.6(f), to fund such Sub-Account up to its Required Amount shall
be deposited in such Sub-Account, (B) if any Liquidity Facility shall
become a Downgraded Facility, a Non-Extended Facility, a WestLB Early
Terminated Facility or a WestLB Expired Facility at a time when
unreimbursed Interest Drawings under such Liquidity Facility have reduced
the Available Amount thereunder to zero, to fund the related Sub-Account
of the Cash Collateral Account up to an amount equal to such Sub-Account's
Required Amount shall be deposited in such Sub-Account, and (C) if, with
respect to any particular Liquidity Facility, neither subclause (A) nor
subclause (B) of this clause "third" are applicable, to pay or reimburse
the Liquidity Provider in respect of such Liquidity Facility an amount
equal to the amount of any unreimbursed Interest Drawings under such
Liquidity Facility shall be distributed to such Liquidity Provider, pro
rata on the basis of the amounts of such deficiencies in respect of each
Sub-Account and unreimbursed Interest Drawings in respect of each
Liquidity Provider;
FOURTH, if, with respect to any particular Liquidity Facility, any
amounts are to be distributed pursuant to either subclause (A) or (B) of
clause "third" above, then the Liquidity Provider with respect to such
Liquidity Facility shall be paid the excess of (x) the aggregate
outstanding amount of unreimbursed Advances (whether or not then due)
under such Liquidity Facility over (y) such Liquidity Facility's Required
Amount, pro rata on the basis of such amounts in respect of each Liquidity
Provider;
FIFTH, such amount as shall be required to pay in full Expected
Distributions to the holders of the Certificates on such Special
Distribution Date shall be distributed to the Trustee; and
SIXTH, the balance, if any, of such Special Payment shall be
transferred to the Collection Account for distribution in accordance with
Section 3.2 hereof.
For the purposes of this Section 2.4(b)(i), clause (x) of the definition of
"Expected Distributions" shall be deemed to read as follows: "(x) accrued, due
and unpaid interest on the Certificates together with (without duplication)
accrued and unpaid interest on a portion of the Certificates equal to the
outstanding principal amount of the Equipment Notes held in the Trust and being
redeemed, purchased or prepaid (immediately prior to such redemption, purchase
or prepayment), in each case excluding interest, if any, payable with respect to
the Deposits".
(ii) Upon the occurrence of a Triggering Event (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 of all of the Equipment Notes issued pursuant to
an Indenture on the Special Distribution Date for such Special Payment in
accordance with Section 3.3 hereof.
(c) OTHER SPECIAL PAYMENTS. Except as provided in clause (e)
below, 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.
(e) CERTAIN PAYMENTS. Except for amounts constituting Liquidity
Obligations which shall be distributed as provided in Section 2.4(b), 3.2 or 3.3
(as the case may be), the Subordination Agent will distribute promptly upon
receipt thereof (i) any indemnity payment received by it from the Owner
Participant, the Owner Trustee or Continental in respect of the Trustee, any
Liquidity Provider, the Guarantor, the Paying Agent, the Depositary or the
Escrow Agent (collectively, the "PAYEES") and (ii) any compensation received by
it from the Owner Participant, the Owner Trustee or Continental under any
Operative Agreement in respect of any Payee, directly to the Payee entitled
thereto.
SECTION 2.5 DESIGNATED REPRESENTATIVES. (a) With the delivery of
this Agreement, the Subordination Agent shall furnish to the Liquidity Providers
and the Trustee, and from time to time thereafter may furnish to the Liquidity
Providers and the Trustee, at the Subordination Agent's discretion, or upon any
Liquidity Provider's or Trustee's request (which request shall not be made more
than one time in any 12-month period), a certificate (a "SUBORDINATION AGENT
INCUMBENCY CERTIFICATE") of a Responsible Officer of the Subordination Agent
certifying as to the incumbency and specimen signatures of the officers of the
Subordination Agent and the attorney-in-fact and agents of the Subordination
Agent (the "SUBORDINATION AGENT REPRESENTATIVES") authorized to give Written
Notices on behalf of the Subordination Agent hereunder. Until each of the
Liquidity Providers and the Trustee receive a subsequent Subordination Agent
Incumbency Certificate, it shall be entitled to rely on the last Subordination
Agent Incumbency Certificate delivered to it hereunder.
(b) With the delivery of this Agreement, the Trustee shall furnish
to the Subordination Agent, and from time to time thereafter may furnish to the
Subordination Agent, at the 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 the Trustee certifying as to the incumbency and specimen
signatures of the officers of the Trustee and the attorney-in-fact and agents of
the Trustee (the "TRUSTEE REPRESENTATIVES") authorized to give Written Notices
on behalf of the 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.
(c) 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 Responsible Officer 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 Subordination Agent Representatives and
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 Trustee 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 Trustee (with respect to the Equipment Notes issued under
such Indenture and held as Trust Property of the Trust) constituting, in the
aggregate, directions with respect to at least a majority of outstanding
principal amount of Equipment Notes), and (ii) after the occurrence and during
the continuance of an Indenture Default thereunder (which 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 upon the occurrence of an Indenture Default thereunder shall be
the Trustee. For purposes of giving effect to the rights of the Controlling
Party, the Trustee shall irrevocably agree, and the Certificateholders will 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 and any vote so exercised shall be binding upon the Trustee and all
Certificateholders.
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, a Non-Extension Drawing, a WestLB Early Termination Drawing,
a WestLB Expiration Drawing or a CNAI Special Termination Drawing) and remain
unreimbursed, (ii) the date on which the entire amount of any Downgrade Drawing,
Non-Extension Drawing, WestLB Early Termination Drawing, WestLB Expiration
Drawing or CNAI Special Termination Drawing shall have become and remain
"Applied Downgrade Advances", "Applied Non-Extension Advances", "Applied WestLB
Early Termination Advances", Applied WestLB Expiration Advances" or "Applied
CNAI Special Termination Advances", as the case may be, under and as defined in
applicable Liquidity Facility and (iii) the date on which all Equipment Notes
shall have been Accelerated (PROVIDED that, with respect to the period prior to
the Delivery Period Expiry Date, such Equipment Notes have an aggregate
outstanding principal balance of in excess of $108,000,000), the Liquidity
Provider with the highest aggregate amount of Liquidity Obligations owed to it
(so long as such Liquidity Provider has not defaulted in its obligation to make
any Drawing under its Liquidity Facility) shall have the right to elect, by
Written Notice to the Subordination Agent and the Trustee, 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.
(d) 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 Regular
Distribution Date (or Special Distribution Date for purposes of Section 2.4(b)
hereof, as the case may be), 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 Certificates, the Trustee shall separately
set forth the amounts to be paid in accordance with clause "FIFTH" of
Section 3.2 or 2.4(b)(i), as the case may be, hereof;
(ii) 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", "THIRD" and "FOURTH" of Section 3.2 or
2.4(b)(i), as the case may be, hereof; and
(iii) The Trustee shall set forth the amounts to be paid in
accordance with clause "SIXTH" 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 Certificates, the Trustee shall separately
set forth the amounts to be paid in accordance with clause "FIRST" (to
reimburse payments made by such Trustee or the Certificateholders, as the
case may be, pursuant to subclause (ii) or (iii) of clause "FIRST" of
Section 3.3 hereof), clause "SIXTH" (to reimburse payments made by the
Certificateholders pursuant to subclause (iii) of clause "SIXTH" of
Section 3.3 hereof) and clause "SEVENTH" of Section 3.3 hereof;
(ii) 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 hereof
and clauses "SECOND", "THIRD", "FOURTH" and "FIFTH" of Section 3.3 hereof;
and
(iii) The Trustee shall set forth the amounts to be paid in
accordance with clause "SIXTH" of Section 3.3 hereof.
(c) At such time as the Trustee or a Liquidity Provider shall have
received all amounts owing to it (and, in the case of the 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 the 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 the 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) on any Business Day shall be
effective on the date delivered (or if delivered later on a Business Day or if
delivered on a day which is not a Business Day 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 paragraph (a) or (b) above which is
required to enable the Subordination Agent to make a distribution to such Person
pursuant to Section 2.4(b), 3.2 or 3.3 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 "SIXTH" of Section 2.4(b), clauses "FIRST" through "SEVENTH" of
Section 3.2 and clauses "FIRST" through "EIGHTH" of Section 3.3 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 the Trustee shall request, but in any event automatically
at the end of each calendar quarter, 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 Regular Distribution Date (or, in the case
of any amount described in Section 2.4(c), on the Special Distribution Date
thereof) 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 pro rata on the basis of the amount
of the Liquidity Expenses owed to each Liquidity Provider;
SECOND, such amount as shall be required to pay in full (i) the
aggregate amount of interest accrued on all Liquidity Obligations (at the
rate, or in the amount, provided in the applicable Liquidity Facility) and
unpaid and (ii) if a CNAI Special Termination Drawing has been made under
the CNAI Liquidity Facility and has not been converted into a Final
Advance, the outstanding amount of such CNAI Special Termination Drawing,
shall be distributed to the Liquidity Providers pro rata on the basis of
the amount of such Liquidity Obligations owed to each Liquidity Provider;
THIRD, such amount as shall be required (A) if any Sub-Account of
the Cash Collateral Account had been previously funded as provided in
Section 3.6(f), to fund the Sub-Account up to its Required Amount shall be
deposited in such Sub-Account, (B) if any Liquidity Facility shall become
a Downgraded Facility, a Non-Extended Facility, a WestLB Early Terminated
Facility or a WestLB Expired Facility at a time when unreimbursed Interest
Drawings under such Liquidity Facility have reduced the Available Amount
thereunder to zero, to fund the related Sub-Account of the Cash Collateral
Account up to an amount equal to such Sub-Account's Required Amount shall
be deposited in such Sub-Account, and (C) if, with respect to any
particular Liquidity Facility, neither subclause (A) nor subclause (B) of
this clause "third" is applicable, to pay or reimburse the Liquidity
Provider in respect of such Liquidity Facility an amount equal to the
amount of all Liquidity Obligations then due under such Liquidity Facility
(other than amounts payable pursuant to clause "first" or "second" of this
Section 3.2) shall be distributed to such Liquidity Provider pro rata on
the basis of the amounts of such deficiencies in respect of each
Sub-Account and unreimbursed Liquidity Obligations in respect of each
Liquidity Provider;
FOURTH, if, with respect to any particular Liquidity Facility, any
amounts are to be distributed pursuant to either subclause (A) or (B) of
clause "third" above, then the Liquidity Provider with respect to such
Liquidity Facility shall be paid the excess of (x) the aggregate
outstanding amount of unreimbursed Advances (whether or not then due)
under such Liquidity Facility over (y) such Liquidity Facility's Required
Amount, pro rata on the basis of such amounts in respect of each Liquidity
Provider;
FIFTH, such amount as shall be required to pay in full Expected
Distributions to the holders of the Certificates on such Distribution Date
shall be distributed to the Trustee;
SIXTH, 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 the Trustee pursuant to the terms of this
Agreement and the Trust Agreement, as the case may be, shall be
distributed to the Subordination Agent and the Trustee; and
SEVENTH, the balance, if any, of any such amount remaining
thereafter shall be held in the Collection Account for later distribution
in accordance with this Article III.
SECTION 3.3 DISTRIBUTION OF AMOUNTS ON DEPOSIT FOLLOWING A
TRIGGERING EVENT. 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 (A) 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 Trust
Indenture Estate, shall be applied by the Subordination Agent in
reimbursement of such costs and expenses, (ii) the Trustee for any amounts
of the nature described in clause (i) above actually incurred by it under
the Trust Agreement (to the extent not previously reimbursed), shall be
distributed to the Trustee, and (iii) any Liquidity Provider or any
Certificateholder for payments, if any, made by it to the Subordination
Agent or the Trustee in respect of amounts described in clause (i) above,
shall be distributed to such Liquidity Provider or to the Trustee for the
account of such Certificateholder and (B) if the Subordination Agent shall
have requested the initial Appraisals and only so long as a Triggering
Event shall be continuing, to fund or replenish the Reserve Account up to
the Reserve Amount, but in no event (other than the initial funding of the
Reserve Account) more than $25,000 in the aggregate during any calendar
year, shall be distributed to the Subordination Agent for deposit in the
Reserve Account, in each such case, pro rata on the basis of all amounts
described in clauses (A)(i), (A)(ii), (A)(iii) and (B) above;
SECOND, such amount remaining as shall be required to pay all
accrued and unpaid Liquidity Expenses shall be distributed to each
Liquidity Provider pro rata on the basis of the amount of the Liquidity
Expenses owed to each Liquidity Provider;
THIRD, such amount remaining as shall be required to pay (i) accrued
and unpaid interest on the Liquidity Obligations as provided in the
Liquidity Facilities and (ii) if a CNAI Special Termination Drawing has
been made under the CNAI Liquidity Facility and has not been converted
into a Final Advance, the outstanding amount of such CNAI Special
Termination Drawing, shall be distributed to each Liquidity Provider pro
rata on the basis of the amount of such accrued and unpaid Liquidity
Obligations owed to each Liquidity Provider;
FOURTH, such amount remaining as shall be required (A) if any
Sub-Account of the Cash Collateral Account had been previously funded as
provided in Section 3.6(f), unless (i) a Performing Note Deficiency exists
and a Liquidity Event of Default shall have occurred and be continuing
with respect to the relevant Liquidity Facility or (ii) a Final Drawing
shall have occurred with respect to the relevant Liquidity Facility, to
fund such Sub-Account up to its Required Amount (less the amount of any
repayments of Interest Drawings under such Liquidity Facility while
subclause (A)(i) above is applicable) shall be deposited in such
Sub-Account, (B) if any Liquidity Facility shall become a Downgraded
Facility, a Non-Extended Facility, a WestLB Early Terminated Facility or a
WestLB Expired Facility at a time when unreimbursed Interest Drawings
under such Liquidity Facility have reduced the Available Amount thereunder
to zero, unless (i) a Performing Note Deficiency exists and a Liquidity
Event of Default shall have occurred and be continuing with respect to the
relevant Liquidity Facility or (ii) a Final Drawing shall have occurred
with respect to the related Liquidity Facility, to fund the related
Sub-Account of the Cash Collateral Account up to an amount equal to such
Sub-Account's Required Amount (less the amount of any repayments of
Interest Drawings under such Liquidity Facility while subclause (B)(i)
above is applicable) shall be deposited in such Sub-Account, and (C) if,
with respect to any particular Liquidity Facility, neither subclause (A)
nor subclause (B) of this clause "fourth" are applicable, to pay in full
the outstanding amount of all Liquidity Obligations then due under such
Liquidity Facility (other than amounts payable pursuant to clause "SECOND"
or "THIRD" of this Section 3.3) shall be distributed to such Liquidity
Provider, pro rata on the basis of the amounts of such deficiencies in
respect of each Sub-Account and unreimbursed Liquidity Obligations in
respect of each Liquidity Provider;
FIFTH, if, with respect to any particular Liquidity Facility, any
amounts are to be distributed pursuant to either subclause (A) or (B) of
clause "FOURTH" above, then the Liquidity Provider with respect to such
Liquidity Facility shall be paid the excess of (x) the aggregate
outstanding amount of unreimbursed Advances (whether or not then due)
under such Liquidity Facility over (y) such Liquidity Facility's Required
Amount (less the amount of any repayments of Interest Drawings under such
Liquidity Facility while subclause (A)(i) or (B)(i), as the case may be,
of clause "FOURTH" above is applicable), pro rata on the basis of such
amounts in respect of each Liquidity Provider;
SIXTH, 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) the Trustee for any Tax (other than Taxes imposed on
compensation paid under the Trust Agreement), expense, fee, charge, loss
or any other amount payable to the Trustee under the Trust Agreement (to
the extent not previously reimbursed), shall be distributed to the
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 Trustee for the account of such
Certificateholder, in each such case, pro rata on the basis of all amounts
described in clauses (i) through (iii) above;
SEVENTH, such amount remaining as shall be required to pay in full
Triggering Event Distributions on the Certificates shall be distributed to
the Trustee; and
EIGHTH, the balance, if any, of any such amount remaining thereafter
shall be held in the Collection Account for later distribution in
accordance with this Article III.
SECTION 3.4 OTHER PAYMENTS. (a) 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 hereof and (ii) to the extent
received or realized at any time after the Triggering Event Distributions have
been made in full, in the manner provided in clause "first" of Section 3.3
hereof.
(b) Notwithstanding the priority of payments specified in Sections
2.4(b)(i), 3.2 and 3.3, in the event any Investment Earnings on amounts on
deposit in the Cash Collateral Account resulting from an Unapplied Provider
Advance are deposited in the Collection Account or the Special Payments Account,
such Investment Earnings shall be used to pay interest payable in respect of
such Unapplied Provider Advance to the extent of such Investment Earnings.
(c) Except as otherwise provided in Section 3.3 hereof, if the
Subordination Agent receives any Scheduled Payment after the Scheduled Payment
Date relating thereto, but prior to such payment becoming an Overdue Scheduled
Payment, then the Subordination Agent shall deposit such Scheduled Payment in
the Collection Account and promptly distribute such Scheduled Payment in
accordance with the priority of distributions set forth in Section 3.2 hereof;
PROVIDED that, for the purposes of this Section 3.4(c) only, each reference in
clause "SIXTH" of Section 3.2 to "Distribution Date" shall be deemed to mean the
actual date of payment of such Scheduled Payment and each reference in clause
"FIFTH" of Section 3.2 to "Distribution Date" shall be deemed to refer to such
Scheduled Payment Date.
SECTION 3.5 PAYMENTS TO THE TRUSTEE 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 at the time of such transfer. Any amounts distributed hereunder by the
Subordination Agent to the Trustee, if the Trustee shall not be the same
institution as the Subordination Agent, shall be paid to the Trustee by wire
transfer of funds at the address the 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
Certificates (at the Stated Interest Rate), then, prior to 1:00 p.m. (New York
City time) on such Distribution Date, the Subordination Agent shall request a
drawing (each such drawing, an "INTEREST DRAWING") under each Liquidity Facility
in an amount equal to the lesser of (i) Pro Rata Portion with respect to such
Liquidity Facility of an amount sufficient to pay the amount of such accrued
interest (at the Stated Interest Rate) and (ii) the Available Amount under such
Liquidity Facility, and shall pay such amount to the Trustee in payment of such
accrued interest.
(b) APPLICATION OF INTEREST DRAWINGS. Notwithstanding anything to
the contrary contained in this Agreement, all payments received by the
Subordination Agent in respect of an Interest Drawing under the Liquidity
Facilities and all amounts withdrawn by the Subordination Agent from the Cash
Collateral Account, and payable in each case to the Certificateholders or the
Trustee, shall be promptly distributed to the Trustee.
(c) DOWNGRADE DRAWINGS. (i) With respect to each Liquidity
Facility, a Downgrade Drawing shall be requested by the Subordination Agent
thereunder as provided in Section 3.6(c)(iii), if at any time, a Downgrade Event
shall have occurred with respect to such Liquidity Facility (a "DOWNGRADED
FACILITY"), unless an event described in Section 3.6(c)(ii) occurs with respect
to such Liquidity Facility.
(ii) If at any time any Liquidity Facility becomes a Downgraded
Facility, the Subordination Agent shall request a Downgrade Drawing thereunder
in accordance with Section 3.6(c)(iii), unless such Liquidity Provider or
Continental arranges for a Replacement Liquidity Provider to issue and deliver a
Replacement Liquidity Facility to the Subordination Agent within 10 days after
receiving notice of a Downgrade Event (but not later than the expiration date of
such Downgraded Facility).
(iii) Upon the occurrence of any Downgrade Event with respect to any
Liquidity Facility, unless any event described in Section 3.6(c)(ii) occurs with
respect thereto, the Subordination Agent shall, on the 10th day referred to in
Section 3.6(c)(ii) (or if such 10th day is not a Business Day, on the next
succeeding Business Day) (or, if earlier, the expiration date of the Downgraded
Facility), request a drawing in accordance with and to the extent permitted by
the Downgraded Facility (such drawing, a "DOWNGRADE DRAWING") of the Available
Amount thereunder. Amounts drawn pursuant to a Downgrade Drawing shall be
maintained and invested as provided in Section 3.6(f) hereof. Any Liquidity
Provider whose Liquidity Facility has become a Downgraded Facility subject to a
Downgrade Event 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
such Liquidity Provider.
(d)(i) NON-EXTENSION DRAWINGS. If any Liquidity Facility, other
than the initial WestLB Liquidity Facility, is scheduled to expire on a date
(the "STATED EXPIRATION DATE") prior to the date that is 15 days after the Final
Legal Distribution Date, then, no earlier than the 60th day and no later than
the 40th day prior to the applicable Stated Expiration Date then in effect, the
Subordination Agent shall request that the relevant Liquidity Provider extend
the Stated Expiration Date until the earlier of (i) the date which is 15 days
after such Final Legal Distribution Date and (ii) the date that is the day
immediately preceding the 364th day occurring after the last day of the
applicable Consent Period (unless the obligations of such Liquidity Provider
under such Liquidity Facility are earlier terminated in accordance with such
Liquidity Facility). Whether or not such Liquidity Provider has received a
request from the Subordination Agent, such Liquidity Provider shall advise the
Subordination Agent, no earlier than the 40th day (or, if earlier, the date of
such Liquidity Provider's receipt of such request, if any, from the
Subordination Agent) and no later than the 25th day prior to the Stated
Expiration Date then in effect for such Liquidity Facility (such period, the
"CONSENT PERIOD"), whether, in its sole discretion, it agrees to extend such
Stated Expiration Date. If (A) on or before the date on which such Consent
Period ends, such Liquidity Facility shall not have been replaced in accordance
with Section 3.6(e) and (B) such Liquidity Provider fails irrevocably and
unconditionally to advise the Borrower on or before the date on which such
Consent Period ends that such Stated Expiration Date then in effect shall be so
extended, the Subordination Agent shall, on the date on which such Consent
Period ends (or as soon as possible thereafter), in accordance with the terms of
such expiring Liquidity Facility (a "NON-EXTENDED FACILITY"), request a drawing
under such expiring Liquidity Facility (such drawing, a "NON-EXTENSION DRAWING")
of all available and undrawn amounts thereunder. Amounts drawn pursuant to a
Non-Extension Drawing shall be maintained and invested in accordance with
Section 3.6(f) hereof. If any amounts shall be drawn pursuant to a Non-Extension
Drawing and, within 30 days thereafter, the related Liquidity Provider shall not
have been replaced, then at any time following the 30th day after such
Non-Extension Drawing, such Liquidity Provider may, by written notice to the
Subordination Agent, agree to reinstate its Liquidity Facility on the terms of
its existing Liquidity Facility for a period ending on the 364th day after the
end of the Consent Period; PROVIDED, HOWEVER, that in such event such Liquidity
Provider shall reimburse the Subordination Agent and Continental for any costs
actually incurred by or on behalf of the Subordination Agent or Continental, as
the case may be, in drawing pursuant to the Non-Extension Drawing and funding
the related Sub-Account of the Cash Collateral Account or otherwise in
connection with the Non-Extension Drawing.
(ii) WESTLB EARLY TERMINATION DRAWINGS. WestLB shall have the right
in its sole discretion to terminate the WestLB Liquidity Facility at any time
during the period from the 40th day to and including the 25th day prior to each
anniversary of the Closing Date (the "WESTLB EARLY TERMINATION NOTICE PERIOD")
upon not less than 25 days' written notice (the "WESTLB EARLY TERMINATION
NOTICE") to the Subordination Agent. If WestLB delivers a WestLB Early
Termination Notice to the Subordination Agent during the WestLB Early
Termination Notice Period (and, in each case, if WestLB shall not have been
replaced in accordance with Section 3.6(e) on or before the expiry of the WestLB
Early Termination Notice Period), the Subordination Agent shall as soon as
possible after receipt of such WestLB Early Termination Notice but prior to the
WestLB Early Termination Date, in accordance with and to the extent permitted by
the terms of the terminating WestLB Liquidity Facility (an "WESTLB EARLY
TERMINATED FACILITY"), request a drawing under the WestLB Early Terminated
Facility of all available and undrawn amounts thereunder (such drawing, a
"WESTLB EARLY TERMINATION DRAWING"). Amounts drawn pursuant to a WestLB Early
Termination Drawing shall be maintained and invested in accordance with Section
3.6(f).
(e) ISSUANCE OF REPLACEMENT LIQUIDITY FACILITY. (i) At any time,
Continental may, at its option, with cause or without cause, arrange for a
Replacement Liquidity Facility to replace any Liquidity Facility (including any
Replacement Liquidity Facility provided pursuant to Section 3.6(e)(ii) hereof).
If such Replacement Liquidity Facility is provided at any time after a Downgrade
Drawing, Non-Extension Drawing, WestLB Early Termination Drawing, WestLB
Expiration Drawing or CNAI Special Termination Drawing has been made, all funds
on deposit in the relevant Sub-Account of the Cash Collateral Account will be
returned to the Liquidity Provider being replaced.
(ii)(A) If a Liquidity Provider (other than WestLB) shall
determine not to extend its Liquidity Facility in accordance with Section
3.6(d)(i), then such Liquidity Provider may, at its option, arrange for a
Replacement Liquidity Facility to replace such Liquidity Facility during the
period no earlier than 40 days and no later than 25 days prior to the then
effective Stated Expiration Date. In addition, at any time after a Non-Extension
Drawing has been made under such Liquidity Facility, such Liquidity Provider
may, at its option, arrange for a Replacement Liquidity Facility to replace such
Liquidity Facility; PROVIDED, HOWEVER, that if such Liquidity Provider has
extended the Stated Expiration Date as described above, it shall not have the
right to replace such Liquidity Facility prior to the first anniversary of the
Closing Date.
(B) If WestLB shall terminate its Liquidity Facility early in
accordance with Section 3.6(d)(ii), then WestLB may, at its option, arrange for
a Replacement Liquidity Facility to replace such Liquidity Facility prior to the
WestLB Early Termination Date.
(iii) No Replacement Liquidity Facility arranged by Continental or a
Liquidity Provider in accordance with clause (i) or (ii) above or pursuant to
Section 3.6(c), respectively, shall become effective and no such Replacement
Liquidity Facility shall be deemed a "Liquidity Facility" under the Operative
Agreements, unless and until (A) each of the conditions referred to in sub
clauses (iv)(x) and (z) below shall have been satisfied, (B) if such Replacement
Liquidity Facility shall materially adversely affect the rights, remedies,
interests or obligations of the 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 and (C) in the
case of a Replacement Liquidity Facility arranged by a Liquidity Provider under
Section 3.6(e)(ii) or pursuant to Section 3.6(c), such Replacement Liquidity
Facility is acceptable to Continental.
(iv) 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 the 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 shall be made first from
available funds in the relevant Sub-Account of the Cash Collateral Account as
described in clause (iii) of Section 3.6(f) hereof, and thereafter from any
other available source, including, without limitation, a drawing under the
Replacement Liquidity Facility) 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.
(v) Upon satisfaction of the conditions set forth in clauses (iii)
and (iv) of this Section 3.6(e) with respect to a Replacement Liquidity
Facility, (w) the replaced Liquidity Facility shall terminate, (x) the
Subordination Agent shall, if and to the extent so requested by Continental or
the Liquidity Provider being replaced, execute and deliver any certificate or
other instrument required in order to terminate the replaced Liquidity Facility,
shall surrender the replaced Liquidity Facility to the Liquidity Provider being
replaced and shall execute and deliver the Replacement Liquidity Facility and
any associated Fee Letter, (y) each of the parties hereto shall enter into any
amendments to this Agreement necessary to give effect to (1) the replacement of
the applicable Liquidity Provider with the applicable Replacement Liquidity
Provider and (2) the replacement of the applicable Liquidity Facility with the
applicable Replacement Liquidity Facility and (z) 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 ACCOUNT; WITHDRAWALS; INVESTMENTS. In the
event the Subordination Agent shall draw all available amounts under any
Liquidity Facility pursuant to Section 3.6(c), 3.6(d), 3.6(i), 3.6(k) or 3.6(l)
hereof, or in the event amounts are to be deposited in a Sub-Account of the Cash
Collateral Account pursuant to subclause (A) or (B) of clause "THIRD" of Section
2.4(b)(i), subclause (A) or (B) of clause "THIRD" of Section 3.2 or subclause
(A) or (B) of clause "FOURTH" of Section 3.3, amounts so drawn or to be
deposited, as the case may be, shall be deposited by the Subordination Agent in
the relevant Sub-Account of the Cash Collateral Account. All amounts on deposit
in any such Sub-Account of the Cash Collateral Account shall be invested and
reinvested in Eligible Investments in accordance with Section 2.2(b) hereof. On
each Interest Payment Date (or, in the case of any Special Distribution Date
with respect to a distribution pursuant to Section 2.4(b) hereof occurring prior
to the occurrence of a Triggering Event, on such Special Distribution Date),
Investment Earnings on amounts on deposit in each Sub-Account of the Cash
Collateral Account (or, in the case of any Special Distribution Date with
respect to a distribution pursuant to Section 2.4(b) hereof occurring prior to
the occurrence of a Triggering Event, a fraction of such Investment Earnings
equal to the Section 2.4(b) Fraction) shall be deposited in the Collection
Account (or, in the case of any Special Distribution Date with respect to a
distribution pursuant to Section 2.4(b) hereof occurring prior to the occurrence
of a Triggering Event, the Special Payments Account) and applied on such
Interest Payment Date (or Special Distribution Date, as the case may be) in
accordance with Section 2.4, 3.2, 3.3 or 3.4 (as applicable). The Subordination
Agent shall deliver a written statement to Continental and each relevant
Liquidity Provider one day prior to each Interest Payment Date and Special
Distribution Date setting forth the aggregate amount of Investment Earnings held
in the applicable Sub-Account of the Cash Collateral Account as of such date. In
addition, from and after the date funds are so deposited with respect to any
Liquidity Facility, 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
due and owing on the Certificates (at the Stated Interest Rate) from any
other source, withdraw from the Sub-Account of the Cash Collateral Account
with respect to such Liquidity Facility, and pay to the Trustee, an amount
equal to the lesser of (x) the Pro Rata Portion with respect to such
Sub-Account of an amount necessary to pay accrued and unpaid interest (at
the Stated Interest Rate) on the Certificates and (y) the amount on
deposit in such Sub-Account;
(ii) on each date on which the Pool Balance of the Trust shall have
been reduced by payments made to the Certificateholders pursuant to
Section 2.4, 3.2 or 3.3 hereof or pursuant to Section 2.03 of the Escrow
and Paying Agent Agreement or deemed reduced pursuant to the proviso in
the definition of "Required Amount", the Subordination Agent shall
withdraw from such Sub-Account of the Cash Collateral Account such amount
as is necessary so that, after giving effect to the reduction or deemed
reduction of the Pool Balance on such date (and any reduction in the
amounts on deposit in such Sub-Account resulting from a prior withdrawal
of amounts on deposit in such Sub-Account on such date) and any transfer
of Investment Earnings from such Sub-Account to the Collection Account or
the Special Payments Account on such date, an amount equal to the sum of
the Required Amount (with respect to the relevant Liquidity Facility) plus
Investment Earnings on deposit in such Sub-Account (after giving effect to
any such transfer of Investment Earnings) will be on deposit in such
Sub-Account and shall FIRST, pay such withdrawn amount to the relevant
Liquidity Provider until the Liquidity Obligations owing to such Liquidity
Provider shall have been paid in full, and SECOND, deposit any remaining
withdrawn amount in the Collection Account;
(iii) if a Replacement Liquidity Facility for the Certificates shall
be delivered to the Subordination Agent following the date on which funds
have been deposited into such Sub-Account with respect to such Liquidity
Facility of the Cash Collateral Account, the Subordination Agent shall
withdraw all amounts on deposit in such Sub-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
(iv) following the payment of Triggering Event Distributions in
full, on the date on which the Subordination Agent shall have been
notified by the applicable Liquidity Provider that the Liquidity
Obligations owed to such Liquidity Provider have been paid in full, the
Subordination Agent shall withdraw all amounts on deposit in such
Sub-Account to the Cash Collateral Account and shall deposit such amount
in the Collection Account.
(g) REINSTATEMENT. With respect to any Interest Drawing under any
Liquidity Facility, upon the reimbursement of the applicable Liquidity
Provider in full or in 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 such Liquidity Provider but not to
exceed the Stated Amount for such Liquidity Facility; PROVIDED, HOWEVER,
that such Liquidity Facility shall not be so reinstated in part or in full
at any time if (x) both a Performing Note Deficiency exists and a
Liquidity Event of Default with respect to such Liquidity Facility shall
have occurred and be continuing or (y) a Final Drawing, Downgrade Drawing,
Non-Extension Drawing, WestLB Early Termination Drawing, WestLB Expiration
Drawing or CNAI Special Termination Drawing shall have occurred with
respect to such Liquidity Facility. In the event that (i) funds are
withdrawn from a Sub-Account pursuant to clause (i), (ii) or (iii) of
Section 3.6(f) hereof or (ii) a Liquidity Facility shall become a
Downgraded Facility, a Non-Extended Facility, a WestLB Early Terminated
Facility or a WestLB Expired Facility at a time when unreimbursed Interest
Drawings under such Liquidity Facility have reduced the Available Amount
thereunder to zero, then funds received by the Subordination Agent at any
time other than (x) any time when a Liquidity Event of Default with
respect to such Liquidity Facility shall have occurred and be continuing
and a Performing Note Deficiency exists or (y) any time after a Final
Drawing shall have occurred with respect to such Liquidity Facility shall
be deposited in the such Sub-Account as and to the extent provided in
clause "THIRD" of Section 2.4(b)(i), clause "THIRD" of Section 3.2 or
clause "FOURTH" of Section 3.3, 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 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 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. On the first Regular Distribution
Date, the Stated Amount under each Liquidity Facility shall automatically be
reduced to the Required Amount then in effect with respect to such Liquidity
Facility. On each date on which the Pool Balance of the Trust shall have been
reduced by payments made to the Certificateholders pursuant to Section 2.4, 3.2
or 3.3 hereof or pursuant to Section 2.03 of the Escrow and Paying Agent
Agreement or deemed reduced pursuant to the proviso in the definition of
"Required Amount", the Stated Amount under each Liquidity Facility shall
automatically be reduced to an amount equal to the Required Amount for such
Liquidity Facility (as calculated by the Subordination Agent after giving effect
to such payment).
(k) CNAI SPECIAL TERMINATION DRAWING. Upon receipt from a
Liquidity Provider of a CNAI Special Termination Notice with respect to any
Liquidity Facility, the Subordination Agent shall, not later than the date
specified in such CNAI Special Termination Notice, in accordance with the terms
of such Liquidity Facility, request a drawing under such Liquidity Facility of
all available and undrawn amounts thereunder (a "CNAI SPECIAL TERMINATION
DRAWING"). Amounts drawn pursuant to a CNAI Special Termination Drawing shall be
maintained and invested in accordance with Section 3.6(f) hereof.
(l) WESTLB EXPIRATION DRAWING. If on December 1, 2015, the
Available Amount under the WestLB Liquidity Facility is greater than zero, the
Subordination Agent shall request a drawing under such Liquidity Facility prior
to the Expiry Date of such Liquidity Facility of all available and undrawn
amounts thereunder (such drawing, a "WESTLB EXPIRATION DRAWING"; such Liquidity
Facility, a "WESTLB EXPIRED FACILITY"). Amounts drawn pursuant to a WestLB
Expiration Drawing shall be maintained and invested in accordance with Section
3.6(f) hereof.
(m) RELATION TO SUBORDINATION PROVISIONS. Interest Drawings under
the Liquidity Facilities and withdrawals from any Sub-Account of the Cash
Collateral Account, in each case, in respect of interest on the Certificates,
will be distributed to the Trustee, notwithstanding Sections 2.4, 3.2 and 3.3
hereof.
(n) ASSIGNMENT OF LIQUIDITY FACILITY. The Subordination Agent
agrees not to consent to the assignment by any Liquidity Provider of any of its
rights or obligations under the relevant Liquidity Facility or any interest
therein, unless (i) Continental shall have consented to such assignment and (ii)
each Rating Agency shall have provided a Ratings Confirmation in respect of such
assignment; PROVIDED, that the Subordination Agent shall consent to such
assignment if the conditions in the foregoing clauses (i) and (ii) are
satisfied, and the foregoing is not intended to and shall not be construed to
limit the rights of any Liquidity Provider under Section 3.6(e)(ii).
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 Accelerating such Equipment Notes in accordance with the
provisions of such Indenture. Subject to the Owner Trustees' and the Owner
Participants' rights, if any, set forth in the Indentures 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 direct the Subordination
Agent to sell, assign, contract to sell or otherwise dispose of and deliver all
(but not less than all) of such Equipment Notes, or sell the Aircraft subject to
the Lien of such Indenture, in either case, 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) 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.
(iii) After a Triggering Event occurs and any Equipment Note becomes
a Non-Performing Equipment Note, the Subordination Agent shall obtain a desktop
appraisal from each of three Appraisers setting forth the current market value,
current lease rate and immediate or distress sale value (in each case, as
defined by the International Society of Transport Aircraft Trading) with respect
to all of the Aircraft (the "APPRAISALS") as soon as practicable and thereafter
during the continuance of such Triggering Event additional Appraisals on or
prior to each six-month anniversary of the date of such initial Appraisals;
PROVIDED, that, the Controlling Party shall have the right to obtain or cause to
be obtained additional Appraisals (including any Appraisals based upon physical
inspection of the Aircraft) at any time.
(iv) After the Subordination Agent has requested the Appraisers to
deliver the initial Appraisals, the Reserve Account will be funded initially up
to the Reserve Amount from amounts distributed under clause "first" of Section
3.3 hereof. The Subordination Agent shall have the right to withdraw funds from
the Reserve Account to pay for the initial and any subsequent Appraisals. The
Reserve Account will subsequently be replenished up to the Reserve Amount
pursuant to clause first of Section 3.3 hereof; provided, that, except for the
initial funding of the Reserve Account up to the Reserve Amount, no more than
$25,000 will be deposited in the Reserve Account in any calendar year and no
more than $100,000 shall be on deposit in the Reserve Account at any time. On
the first Business Day following the earliest of (w) the first day after the
initial funding of the Reserve Account on which no Triggering Event exists, (x)
the Final Legal Distribution Date, (y) the date of the disposition of the last
Aircraft or the related Equipment Note hereunder, and (z) the date on which
payment of the Triggering Event Distributions is made in full, the Subordination
Agent shall withdraw all amounts (if any) on deposit in the Reserve Account and
deposit such amounts in the Collection Account.
(b) Following the occurrence and during the continuance of an
Indenture Default under any Indenture, the Controlling Party shall take such
actions as it may reasonably deem most effectual to complete the sale or other
disposition of the relevant 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, subject to the terms and conditions of the related Indenture,
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 Trustee, the Liquidity Providers, 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 the Trustee, any Liquidity Provider, 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 the Trustee, any Liquidity Provider, 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 Proceeding 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 Proceeding, be
restored to its former position and rights hereunder, and all rights, remedies
and powers of such party shall continue as if no such Proceeding 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 the 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 Proceeding for the
enforcement of any right or remedy under this Agreement or in any Proceeding
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 the Trustee or a suit by Certificateholders holding more
than 10% of the original principal amount of the Certificates.
ARTICLE V
DUTIES OF THE SUBORDINATION AGENT;
AGREEMENTS OF TRUSTEE, 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 or courier to the Rating Agencies, the Liquidity
Providers and the Trustee 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 the Trustee, one or more Liquidity Providers or one or
more Certificateholders.
(b) OTHER NOTICES. The Subordination Agent will furnish to each
Liquidity Provider and the 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.
(c) Upon the occurrence of an Indenture Default, the Subordination
Agent shall instruct the Trustee to, and the Trustee shall, request that DTC
post on its internet bulletin board a securities position listing setting forth
the names of all the parties reflected on DTC's books as holding interests in
the certificates.
(d) REPORTS. Promptly after the occurrence of a Triggering Event
or an Indenture Default resulting from the failure of Continental to make
payments on any Equipment Note and on every sixth Regular Distribution Date
while the Triggering Event or such Indenture Default shall be continuing, the
Subordination Agent will provide to the Pass Through Trustee, Liquidity
Providers, Rating Agencies and Continental a statement setting forth the
following information:
(i) after a bankruptcy of Continental, with respect to each
Aircraft, whether such Aircraft is (A) subject to the 60-day period of Section
1110 of the Bankruptcy Code, (B) subject to an election by Continental under
Section 1110(a) of the Bankruptcy Code, (C) covered by an agreement
contemplated by Section 1110(b) of the Bankruptcy Code or (D) not subject to
any of (A), (B) or (C);
(ii) to the best of the Subordination Agent's knowledge, after
requesting such information from Continental, (A) whether the Aircraft are
currently in service or parked in storage, (B) the maintenance status of the
Aircraft and (C) the location of the Engines (as defined in the Indentures);
(iii) the current Pool Balance of the Certificates and outstanding
principal amount of all Equipment Notes;
(iv) the expected amount of interest which will have accrued on the
Equipment Notes and on the Certificates as of the next Regular Distribution
Date;
(v) the amounts paid to each person on such Distribution Date
pursuant to this Agreement;
(vi) details of the amounts paid on such Distribution Date
identified by reference to the relevant provision of this Agreement and the
source of payment (by Aircraft and party);
(vii) if the Subordination Agent has made a Final Drawing under any
Liquidity Facility;
(viii) the amounts currently owed to each Liquidity Provider;
(ix) the amounts drawn under each Liquidity Facility; and
(x) after a bankruptcy of Continental, any operational reports filed
by Continental with the bankruptcy court which are available to the
Subordination Agent on a non-confidential basis.
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 5.2 or 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 TRUSTEE. If any
Liquidity Provider or the Trustee has notice of an Indenture Default or a
Triggering Event, such Person shall promptly give notice thereof to the Trustee
or the other Liquidity Provider, as the case may be, 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 AUTHORIZATION; ACCEPTANCE OF TRUSTS AND DUTIES. The
Trustee hereby designates and appoints the Subordination Agent as the agent and
trustee of the Trustee under each Liquidity Facility and authorizes the
Subordination Agent to enter into each Liquidity Facility as agent and trustee
for such Trustee. Each of the Liquidity Providers and the Trustee hereby
designates and appoints the Subordination Agent as the Subordination Agent under
this Agreement. 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 (or ordinary negligence in the handling
of funds), (b) as provided in Sections 2.2 or 5.3 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 Trustee 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 the Trustee or any Liquidity Provider as
provided in Articles II and III hereof or deposited into one or more Trust
Accounts 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 as of any date, the Subordination Agent may for all purposes hereof rely
on a certificate signed by any Responsible Officer of the 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 Trustee 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 the Trustee 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 any of the Liquidity Providers or the
Trustee 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 the
Trustee or any of the Liquidity Providers 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 of America, 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
9.1 of the Participation Agreements and Section 6 of the Note Purchase
Agreement. The indemnities contained in such Sections 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
Trustee 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 (x) a written
acceptance of its appointment as Subordination Agent hereunder to the retiring
Subordination Agent and (y) a written assumption of its obligations hereunder
and under each Liquidity Facility to each party hereto, 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 Trustee. 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 the Trustee 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), the Trustee 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 the Trustee (acting,
except in the case of any amendment pursuant to Section 3.6(e)(v)(y) hereof with
respect to any Replacement Liquidity Facility or any amendment contemplated by
the last sentence of this Section 9.1(a), with the consent of holders of the
Certificates evidencing interests in the Trust aggregating not less than a
majority in interest in the Trust or as otherwise authorized pursuant to the
Trust Agreement), the Subordination Agent and each Liquidity Provider; PROVIDED,
HOWEVER, that this Agreement may be supplemented, amended or modified without
the consent of the Trustee if such supplement, amendment or modification cures
an ambiguity or inconsistency or does not materially adversely affect the
Trustee, the Liquidity Providers or the holders of the Certificates; PROVIDED
FURTHER, HOWEVER, that, if such supplement, amendment or modification (A) would
(x) directly or indirectly modify or supersede, or otherwise conflict with,
Section 2.2(b), the proviso to the last sentence of Section 3.6(d)(i), Section
3.6(e), Section 3.6(f) (other than the last sentence thereof), Section 3.6(n),
the last sentence of this Section 9.1(a), the second sentence of Section 10.6 or
this proviso (collectively, the "CONTINENTAL PROVISIONS") or (y) otherwise
adversely affect the interests of a potential Replacement Liquidity Provider or
of Continental with respect to its ability to replace any Liquidity Facility or
with respect to its payment obligations under any Operative Agreement or (B) is
made pursuant to the last sentence of this Section 9.1(a), then such supplement,
amendment or modification shall not be effective without the additional written
consent of Continental. 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
the Trust evidenced by the Certificates issued by the Trust necessary to consent
to modify or amend any provision of this Agreement or to waive compliance
therewith or (ii) except as provided in the last sentence of this Section
9.1(a), 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 the Trustee at any time following the payment of
Triggering Event Distributions in full. If any Replacement Liquidity Facility in
accordance with Section 3.6(e) hereof is to be comprised of more than one
instrument or an instrument other than a revolving credit agreement, in each
case, as contemplated by the definition of the term "Replacement Liquidity
Facility", then each of the parties hereto agrees to amend this Agreement to
incorporate appropriate mechanics for multiple Liquidity Facilities or for such
instrument, as the case may be.
(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, consent or waiver under such Equipment Notes, the
Indenture pursuant to which such Equipment Notes were issued, or the related
Lease, Participation Agreement or other related document, (i) if no Indenture
Default shall have occurred and be continuing with respect to such Indenture,
the Subordination Agent shall request directions with respect to such Equipment
Notes from the Trustee and shall vote or consent in accordance with the
directions of the Trustee and (ii) if any Indenture Default (which 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
Sections 4.1 and 4.4 hereof; PROVIDED that no such amendment, modification or
waiver shall, without the consent of each Liquidity Provider, reduce the amount
of rent, supplemental rent or stipulated loss values payable by Continental
under any Lease.
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, consent 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.
Upon the reasonable request of any Rating Agency in writing, the
Subordination Agent and Trustee shall provide to such Rating Agency such
information available to the Subordination Agent and the Trustee as may be
relevant to maintaining such Rating Agency's rating on the Certificates. During
the continuance of a Triggering Event or an Indenture Default resulting from a
payment default under any Equipment Note, the Subordination Agent and Trustee
shall permit each Rating Agency, upon reasonable notice and on a periodic basis,
to be provided copies of documents in the possession of the Subordination Agent
and Trustee in their respective capacities as such reasonably related to the
transactions contemplated by the Operative Agreements and, on a reasonable
periodic basis, to meet or confer with officers and employees of the
Subordination Agent and Trustee in their respective capacities as such to
discuss such transactions, so long as such actions are reasonably related to
maintaining such Rating Agency's rating on the Certificates.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 TERMINATION OF INTERCREDITOR AGREEMENT. Following
payment in full of Triggering Event Distributions 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 Trustee, the
Liquidity Providers and the Subordination Agent hereunder or under the Trust
Agreement, 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 THE TRUSTEE, THE
LIQUIDITY PROVIDERS AND THE SUBORDINATION AGENT. Subject to the second sentence
of Section 10.6 and the provisions of Section 4.4, nothing in this Agreement,
whether express or implied, shall be construed to give to any Person other than
the Trustee, 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 Administration
Telecopy: (302) 651-8882
(ii) if to the 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 Administration
Telecopy: (302) 651-8882
(iii) if to CNAI, addressed to it at its office at:
Citicorp North America, Inc.
2 Penns Way, Suite 200
New Castle, DE 19720
Reference: Continental Airlines Pass Through Trust
2004-ERJ1
Attention: Craig Thorpe
Telephone: (302) 894-6058
Telecopy: (212) 994-0847
with a copy to:
CITIBANK, N.A. Global Aviation
388 Greenwich Street
23rd Floor
New York, NY 10013
Attention: Gaylord Holmes
Telephone: (212) 816-5138
Telecopy: (212) 816-5705
and
Citicorp
Treasury Department
153 East 53rd Street, 6th Floor
New York, NY 10043
Reference: Continental Airlines Pass Through Trust 2004-ERJ1
Attention: Gregory C. Ehlke, Vice President
Telephone: (212) 559-0302
Telecopy: (212) 793-4776
(iv) if to WestLB, addressed to it at its office at:
1211 Avenue of the Americas
New York, New York 10036
Reference: Continental Airlines Pass Through Trust 2004-ERJ1
Attention: Brigitte Thieme
Telephone: (212) 852-6111
Telecopy: (212) 869-7634
with a copy to:
WestLB AG, New York Branch
1211 Avenue of the Americas
New York, New York 10036
Attention: Michael Sassos
Telephone: (212) 852-5973
Telecopy: (212) 852-6228
and
WestLB AG, New York Branch
1211 Avenue of the Americas
New York, New York 10036
Attention: Jesus Sang
Telephone: (212) 852-6389
Telecopy: (212) 302-7946
Whenever any notice in writing is required to be given by the Trustee, any
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. 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.
In addition, the Continental Provisions shall inure to the benefit of
Continental and its successors and assigns, and (without limitation of the
foregoing) Continental is hereby constituted, and agreed to be, an express third
party beneficiary of the Continental Provisions.
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 Trustee and the Certificateholders, on the other hand,
and as among the Trustee and the Certificateholders, 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 the 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 Trustee (on behalf of itself 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 Trustee
and the holders of Certificates are secured by certain assets and the Liquidity
Obligations may not be so secured. The Trustee expressly agrees (on behalf of
itself 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 Trustee (on behalf of itself and the holders of
the 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 the Trustee, 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 nonexclusive 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 of 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) Each Liquidity Provider not organized under the laws of the
United States or any political subdivision thereof 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 judgment 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
By
---------------------------------------
Name:
Title:
WESTLB AG, acting through its New
York Branch, as Liquidity
Provider
By
---------------------------------------
Name:
Title:
By
---------------------------------------
Name:
Title:
CITICORP NORTH AMERICA, INC., as
Liquidity Provider
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:
DEPOSIT AGREEMENT
Dated as of June 29, 2004
between
WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION
as Escrow Agent
and
WESTLB AG,
New York Branch
as Depositary
TABLE OF CONTENTS
PAGE
SECTION 1.1 Acceptance of Depositary........................................2
SECTION 1.2 Establishment of Accounts.......................................2
SECTION 2.1 Deposits........................................................2
SECTION 2.2 Interest........................................................2
SECTION 2.3 Withdrawals.....................................................3
SECTION 2.4 Other Accounts..................................................3
SECTION 3. Termination......................................................4
SECTION 4. Payments.........................................................4
SECTION 5. Representation and Warranties....................................5
SECTION 6. Transfer.........................................................6
SECTION 7. Amendment, Etc. .................................................6
SECTION 8. Notices..........................................................6
SECTION 9. Obligations Unconditional........................................7
SECTION 10. Entire Agreement................................................7
SECTION 11. Governing Law...................................................7
SECTION 12. Waiver of Jury Trial Right......................................7
SECTION 13. Counterparts....................................................7
DEPOSIT AGREEMENT dated as of June 29, 2004 (as amended, modified or
supplemented from time to time, this "AGREEMENT") between WELLS FARGO BANK
NORTHWEST, NATIONAL ASSOCIATION, a national banking association, as Escrow Agent
under the Escrow and Paying Agent Agreement referred to below (in such capacity,
together with its successors in such capacity, the "ESCROW AGENT"), and WESTLB
AG, a joint stock company ("Aktiengesellschaft") organized under the laws of
Germany, acting through its New York Branch, as depositary bank (the
"DEPOSITARY").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Continental Airlines, Inc. ("CONTINENTAL") and Wilmington
Trust Company, not in its individual capacity except as otherwise expressly
provided therein, but solely as trustee (in such capacity, together with its
successors in such capacity, the "PASS THROUGH TRUSTEE") have entered into a
Trust Supplement, dated as of June 29, 2004, to the Pass Through Trust Agreement
dated as of September 25, 1997 (together, as amended, modified or supplemented
from time to time in accordance with the terms thereof, the "PASS THROUGH TRUST
AGREEMENT") relating to Continental Airlines Pass Through Trust 2004-ERJ1
pursuant to which the Continental Airlines Pass Through Trust, Series 2004-ERJ1
Certificates referred to therein (the "CERTIFICATES") are being issued (the date
of such issuance, the "ISSUANCE DATE");
WHEREAS, Continental, and Citigroup Global Markets Inc. and Morgan
Stanley & Co. Incorporated (collectively, the "UNDERWRITERS" and, together with
their respective transferees and assigns as registered owners of the
Certificates, the "INVESTORS") and the Depositary have entered into an
Underwriting Agreement dated as of June 18, 2004, pursuant to which the Pass
Through Trustee will issue and sell the Certificates to the Underwriters;
WHEREAS, Continental, the Pass Through Trustee, and certain other
persons concurrently herewith are entering into the Note Purchase Agreement,
dated as of the date hereof (the "NOTE PURCHASE AGREEMENT"), pursuant to which
the Pass Through Trustee has agreed to acquire from time to time on or prior to
the Delivery Period Termination Date (as defined in the Note Purchase Agreement)
equipment notes (the "EQUIPMENT NOTES") issued to finance the acquisition of
aircraft by Continental, as lessee, utilizing a portion of the proceeds from the
sale of the Certificates (the "NET PROCEEDS");
WHEREAS, the Escrow Agent, the Underwriters, the Pass Through
Trustee and Wilmington Trust Company, as paying agent for the Escrow Agent (in
such capacity, together with its successors in such capacity, the "PAYING
AGENT") concurrently herewith are entering into an Escrow and Paying Agent
Agreement, dated as of the date hereof (as amended, modified or supplemented
from time to time in accordance with the terms thereof, the "ESCROW AND PAYING
AGENT AGREEMENT"); and
WHEREAS, the Underwriters and the Pass Through Trustee intend that
the Net Proceeds (excluding any amount used to purchase Equipment Notes on the
Issuance Date) be held in escrow by the Escrow Agent on behalf of the Investors
pursuant to the Escrow and Paying Agent Agreement, subject to withdrawal upon
request of and proper certification by the Pass Through Trustee for the purpose
of purchasing Equipment Notes, and that pending such withdrawal the Net Proceeds
be deposited by the Escrow Agent with the Depositary pursuant to this Agreement,
which provides for the Depositary to pay interest for distribution to the
Investors and to establish accounts from which the Escrow Agent shall make
withdrawals upon request of and proper certification by the Pass Through
Trustee.
NOW, THEREFORE, in consideration of the obligations contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1.1 ACCEPTANCE OF DEPOSITARY. The Depositary hereby agrees
to act as depositary bank as provided herein and in connection therewith to
accept all amounts to be delivered to or held by the Depositary pursuant to the
terms of this Agreement. The Depositary further agrees to hold, maintain and
safeguard the Deposits and the Accounts (as defined below) during the term of
this Agreement in accordance with the provisions of this Agreement. The Escrow
Agent shall not have any right to withdraw, assign or otherwise transfer moneys
held in the Accounts except as permitted by this Agreement.
SECTION 1.2 ESTABLISHMENT OF ACCOUNTS. The Escrow Agent hereby
instructs the Depositary, and the Depositary agrees, to establish the separate
deposit accounts listed on Schedule I hereto and to establish such additional
separate deposit accounts as may be required, solely upon the written
instruction of an Authorized Person (as defined in Section 8 hereof) of the
Escrow Agent, in connection with the deposits contemplated by Section 2.4 hereof
(each, an "ACCOUNT" and collectively, the "ACCOUNTS"), each in the name of the
Escrow Agent and all on the terms and conditions set forth in this Agreement.
SECTION 2.1 DEPOSITS. The Escrow Agent shall direct the Underwriters
to deposit with the Depositary on the date of this Agreement (the "DEPOSIT
DATE") in Federal (same day) funds by wire transfer to: WESTLB AG, acting
through its New York Branch, Reference: 2004-ERJ1 Pass Through Trust, and the
Depositary shall accept from the Underwriters, on behalf of the Escrow Agent,
the sum of US$173,629,000 (or such lesser amount equal to the Net Proceeds less
amounts, if any, used to purchase Equipment Notes on the Issuance Date). Upon
acceptance of such sum, the Depositary shall (i) accept each of the deposits
specified in Schedule I hereto maturing on April 29, 2005 (including any deposit
made pursuant to Section 2.4 hereof, individually, a "DEPOSIT" and,
collectively, the "DEPOSITS") and (ii) credit each Deposit to the related
Account as set forth therein. No amount shall be deposited in any Account other
than the related Deposit. The Depositary shall have no duty to solicit the
delivery of any Deposit.
SECTION 2.2 INTEREST. The Depository shall pay interest on each
Deposit from and including the date of deposit to but excluding the date of
withdrawal at the rate of 9.558% per annum (computed on the basis of a year of
twelve 30 day months) payable to the Paying Agent, in accordance with the
instructions set forth in Section 4 hereof, on behalf of the Escrow Agent
monthly in arrears on the 1st day of each month, commencing on August 1, 2004
(each, an "Interest Payment Date"), and on the date of the Final Withdrawal (as
defined below), all in accordance with the terms of this Agreement (whether or
not any such Deposit is withdrawn on an Interest Payment Date). Interest accrued
on any Deposit that is withdrawn pursuant to a Notice of Purchase Withdrawal (as
defined below) shall be paid on the next Interest Payment Date, notwithstanding
any intervening Final Withdrawal (as defined below).
SECTION 2.3 WITHDRAWALS. (a) On and after the date seven days after
the receipt and acceptance of any Deposit, the Escrow Agent may, by providing at
least one Business Day's prior notice of withdrawal to the Depositary (with a
copy to the Pass Through Trustee) in the form of Exhibit A hereto (a "NOTICE OF
PURCHASE WITHDRAWAL"), signed by an Authorized Person of the Escrow Agent,
withdraw not less than the entire balance of such Deposit on a Business Day,
except that at any time prior to the actual withdrawal of such Deposit, the
Escrow Agent or the Pass Through Trustee may, by written notice, signed by an
Authorized Person of the Escrow Agent or the Pass Through Trustee, to the
Depositary (provided such notice is received by the Depositary prior to the
distribution of such withdrawal), cancel such withdrawal (including on the
scheduled date therefor), and thereafter such Deposit shall continue to be
maintained by the Depositary in accordance with the original terms thereof.
Following such withdrawal the balance of such Deposit in the related Account
shall be zero and, upon payment of interest accrued on such Deposit, the
Depositary shall close such Account. As used herein, "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
Wilmington, Delaware and which is also a day for trading by and between banks in
the London interbank Eurodollar market. The Depositary may waive the foregoing
requirement that any Deposit can only be withdrawn on or after seven days after
the establishment thereof, and may instead reserve the right, upon at least 14
days' prior written notice to Continental, the Escrow Agent and the Pass Through
Trustee, to require seven days' notice for any withdrawal.
(b) The Escrow Agent may, by providing at least 15 days' prior
notice of withdrawal to the Depositary in the form of Exhibit B hereto (a
"NOTICE OF FINAL WITHDRAWAL"), withdraw the entire amount of all of the
remaining Deposits together with the payment by the Depositary of all accrued
and unpaid interest on such Deposits up to but excluding the specified date of
withdrawal (a "FINAL WITHDRAWAL"), on such Business Day as shall be specified in
such Notice of Final Withdrawal. If a Notice of Final Withdrawal has not been
received by the Depositary on or before April 11, 2005, and there are
unwithdrawn Deposits in any of the Accounts on such date, the Depositary shall
pay, via wire transfer in accordance with the instructions set forth in Section
4 hereof, the amount of the Final Withdrawal to the Paying Agent on April 29,
2005.
(c) If the Depositary timely receives a duly completed Notice of
Purchase Withdrawal or Notice of Final Withdrawal (each, a "WITHDRAWAL NOTICE")
complying with the provisions of this Agreement, and provided a notice of
cancellation has not been timely received by the Depositary in the case of a
Notice of Purchase Withdrawal, it shall make the payments specified therein in
accordance with the provisions of this Agreement.
SECTION 2.4 OTHER ACCOUNTS. On the date of withdrawal of any Deposit
(other than the date of the Final Withdrawal), the Escrow Agent, or the Pass
Through Trustee on behalf of the Escrow Agent, shall re-deposit with the
Depositary any portion thereof not used to acquire Equipment Notes and the
Depositary shall accept the same for deposit hereunder into the account from
which it was withdrawn. On the date the Certificates are issued, the Escrow
Agent, or the Underwriters, on behalf of the Escrow Agent, shall be entitled to
deposit with the Depositary any portion of the Net Proceeds not theretofore
deposited hereunder and not used to purchase Equipment Notes on the Issuance
Date (the "UNUSED PROCEEDS") and the Depositary shall accept the Unused Proceeds
for deposit hereunder. Any sums so received for deposit shall be received as a
new Deposit, credited to a new Account, and Schedule I hereto shall be amended
to include such Deposit, all as more fully provided in Section 2.1 hereof, and
thereafter the provisions of this Agreement shall apply thereto as fully and
with the same force and effect as if such Deposit had been established on the
Deposit Date except that (i) such Deposit may not be withdrawn prior to the date
seven days after the receipt and acceptance thereof by the Depositary and (ii)
such Deposit shall mature on April 29, 2005 and bear interest as provided in
Section 2.2. The Depositary shall promptly give notice to the Escrow Agent of
receipt of each such re-deposit and the account number assigned thereto.
SECTION 3. TERMINATION. This Agreement shall terminate on the fifth
Business Day after the later of the date on which (i) all of the Deposits shall
have been withdrawn and paid as provided herein without any re-deposit and (ii)
all accrued and unpaid interest on the Deposits shall have been paid as provided
herein.
SECTION 4. PAYMENTS. All payments (including, without limitation,
those payments made in respect of Taxes (as defined and provided for below))
made by the Depositary hereunder shall be paid in United States Dollars and
immediately available funds by wire transfer (i) in the case of accrued interest
on the Deposits payable under Section 2.2 hereof or any Final Withdrawal,
directly to the Paying Agent at Wilmington Trust Company, Wilmington, DE, ABA#
031100092, Account No. 066211-000 "2004 ERJ1", Attention: Monica Henry,
Telephone No.: (302) 636-6296, Reference: Continental Airlines PTT, Series
2004-ERJ1, or to such other account as the Paying Agent may direct from time to
time in writing to the Depositary and the Escrow Agent and (ii) in the case of
any withdrawal of one or more Deposits pursuant to a Notice of Purchase
Withdrawal, directly to or as directed by the Pass Through Trustee as specified
and in the manner provided in such Notice of Purchase Withdrawal. The Depositary
hereby waives any and all rights of set-off, combination of accounts, right of
retention or similar right (whether arising under applicable law, contract or
otherwise) it may have against the Deposits howsoever arising. All payments on
or in respect of each Deposit shall be made free and clear of and without
reduction for or on account of any and all taxes, levies or other impositions or
charges (collectively, "TAXES"). However, if the Depositary shall be required by
law to deduct or withhold any Taxes from or in respect of any sum payable
hereunder, the Depositary shall (i) make such deductions or withholding, (ii)
pay the full amount deducted or withheld (including in respect of such
additional amounts) to the competent taxation authority and (iii) if the Taxes
required to be deducted or withheld are imposed by the Federal Republic of
Germany or any political subdivision thereof, pay such additional amounts as may
be necessary in order that the actual amount received by the designated
recipient of such sum under this Agreement or the Escrow and Paying Agent
Agreement after such deduction or withholding equals the sum it would have
received had no such deduction or withholding been required. The Depositary
shall not have any withholding or tax reporting obligations with respect to the
Deposits, except as may be required by law. If the date on which any payment due
on any Deposit would otherwise fall on a day which is not a Business Day, such
payment shall be made on the next succeeding Business Day, and no additional
interest shall accrue in respect of such extension.
SECTION 5. REPRESENTATION AND WARRANTIES. The Depositary hereby
represents and warrants to Continental, the Escrow Agent, the Pass Through
Trustee and the Paying Agent that:
(a) it is duly organized and validly existing as a joint stock
company ("Aktiengesellschaft") under the laws of Germany and is duly
qualified to conduct banking business in the State of New York through its
New York Branch;
(b) it has full power, authority and legal right to conduct
its business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
(c) the execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate action on the part of
it and do not require any stockholder approval, or approval or consent of
any trustee or holder of any indebtedness or obligations of it, and this
Agreement has been duly executed and delivered by it and constitutes its
legal, valid and binding obligations enforceable against it in accordance
with the terms hereof;
(d) no authorization, consent or approval of or other action
by, and no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(e) neither the execution, delivery or performance by it of
this Agreement, nor compliance with the terms and provisions hereof,
conflicts or will conflict with or results or will result in a breach or
violation of any of the terms, conditions or provisions of, or will
require any consent or approval under, any law, governmental rule or
regulation or the charter documents, as amended, or bylaws, as amended, of
it or any similar instrument binding on it or any order, writ, injunction
or decree of any court or governmental authority against it or by which it
or any of its properties is bound or of any indenture, mortgage or
contract or other agreement or instrument to which it is a party or by
which it or any of its properties is bound, or constitutes or will
constitute a default thereunder or results or will result in the
imposition of any lien upon any of its properties; and
(f) there are no pending or, to its knowledge, threatened
actions, suits, investigations or proceedings (whether or not purportedly
on behalf of it) against or affecting it or any of its property before or
by any court or administrative agency which, if adversely determined, (i)
would adversely affect the ability of it to perform its obligations under
this Agreement or (ii) would call into question or challenge the validity
of this Agreement or the enforceability hereof in accordance with the
terms hereof, nor is the Depositary in default with respect to any order
of any court, governmental authority, arbitration board or administrative
agency so as to adversely affect its ability to perform its obligations
under this Agreement.
SECTION 6. TRANSFER. Neither party hereto shall be entitled to
assign or otherwise transfer this Agreement (or any interest herein) other than
(in the case of the Escrow Agent) to a successor escrow agent under the Escrow
and Paying Agent Agreement, and any purported assignment in violation thereof
shall be void. This Agreement shall be binding upon the parties hereto and their
respective successors and (in the case of the Escrow Agent) permitted assigns.
SECTION 7. AMENDMENT, ETC. This Agreement may not be amended, waived
or otherwise modified except by an instrument in writing signed by each of the
parties hereto.
SECTION 8. NOTICES. Unless otherwise expressly provided herein, any
notice or other communication under this Agreement shall be in writing
(including by facsimile) and shall be deemed to be given and effective upon
receipt thereof. All notices shall be sent to (x) in the case of the Depositary,
WESTLB AG, New York Branch, 1211 Avenue of the Americas, New York, New York
10036, Attention: Brigitte Thieme (Telephone: (212) 852-6111, Telecopier: (212)
869-7634), with a copy to WESTLB AG, New York Branch, 1211 Avenue of the
Americas, New York, New York 10036, Attention: Eugene Chan (Telephone: (212)
852-6172, Telecopier: (212) 852-6305) or (y) in the case of the Escrow Agent,
Wells Fargo Bank Northwest, National Association, 299 South Main Street, MAC:
U1228-120, Salt Lake City, UT 84111, Attention: Corporate Trust Services
(Telephone: (801) 246-5630, Telecopier: (801) 246-5053), in each case, with a
copy to the Pass Through Trustee, Wilmington Trust Company, 1100 North Market
Street, Rodney Square North, Wilmington, DE 19890-1605, Attention: Corporate
Capital Market Services (Telephone: (800) 733-8485, Telecopier: (302) 636-4140)
and to Continental, Continental Airlines, Inc., 1600 Smith Street, Dept. HQS-FN,
Houston, TX 77002, Attention: Treasurer (Telephone: (713) 324-2544, Telecopier:
(713) 324-2447) (or at such other address as any such party may specify from
time to time in a written notice to the parties hereto). On or prior to the
execution of this Agreement, the Escrow Agent has delivered to the Depositary a
certificate containing specimen signatures of the representatives of the Escrow
Agent and the Pass Through Trustee who are authorized to give notices and
instructions with respect to this Agreement, attached hereto as Schedule IIA and
IIB, respectively ("Authorized Person"). The Depositary may conclusively rely on
such certificate until the Depositary receives written notice from the Escrow
Agent to the contrary.
In addition, the Depositary may conclusively rely on and shall be
protected in acting in reliance upon any certificate, instrument, opinion,
notice, letter or other document or security delivered to the Depositary and
believed by the Depositary in good faith to be genuine and to have been signed
and presented by the proper person or persons and may act upon any tender,
statements, request, documents, certificate, agreement or other instrument not
only as to its due execution and validity and effectiveness of its provisions,
but also as to the truth and accuracy of any information contained therein,
which the Depositary shall in good faith believe to be genuine or to have been
signed or presented by the proper person or persons. The Depositary shall have
no duties or obligations other than those specifically set forth herein or as
may be subsequently agreed to in writing between the parties hereto and by the
Pass Through Trustee. The Depositary may consult with counsel of its selection
with respect to any questions relating to its duties and responsibilities and
the advice or opinion of such counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted to be taken
by the Depositary hereunder in good faith and in accordance with the advice or
opinion of such counsel.
SECTION 9. OBLIGATIONS UNCONDITIONAL. The Depositary hereby
acknowledges and agrees that its obligation to repay each Deposit together with
interest thereon as provided herein is absolute, irrevocable and unconditional
and constitutes a full recourse obligation of the Depositary enforceable against
it to the full extent of all of its assets and properties.
SECTION 10. ENTIRE AGREEMENT. This Agreement (including all
attachments hereto) sets forth all of the promises, covenants, agreements,
conditions and understandings between the Depositary and the Escrow Agent with
respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 11. GOVERNING LAW. This Agreement, and the rights and
obligations of the Depositary and the Escrow Agent with respect to the Deposits,
shall be governed by, and construed in accordance with, the laws of the State of
New York and subject to the provisions of Regulation D of the Board of Governors
of the Federal Reserve System (or any successor), as the same may be modified
and supplemented and in effect from time to time.
SECTION 12. WAIVER OF JURY TRIAL RIGHT. EACH OF THE DEPOSITARY AND
THE ESCROW AGENT ACKNOWLEDGES AND ACCEPTS THAT IN ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS
RIGHT TO A TRIAL BY JURY.
SECTION 13. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.
IN WITNESS WHEREOF, the Escrow Agent and the Depositary have caused
this Deposit Agreement to be duly executed as of the day and year first above
written.
WELLS FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION,
as Escrow Agent
By
------------------------------------
Name:
Title:
WESTLB AG, acting through its New
York Branch, as Depositary
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
Schedule I
SCHEDULE OF DEPOSITS
-------------------------------------------------------------
| | | |
| AIRCRAFT TYPE | DEPOSIT AMOUNT | ACCOUNT NO. |
|--------------------|---------------------|------------------|
| EMB-145XR | $10,807,828.65 | N11165 |
|--------------------|---------------------|------------------|
| EMB-145XR | $10,890,935.23 | N12166 |
|--------------------|---------------------|------------------|
| EMB-145XR | $10,890,935.23 | N12167 |
|--------------------|---------------------|------------------|
| EMB-145XR | $10,943,542.59 | N14168 |
|--------------------|---------------------|------------------|
| EMB-145XR | $10,946,576.81 | N17169 |
|--------------------|---------------------|------------------|
| EMB-145XR | $10,945,289.32 | N16170 |
-------------------- --------------------- ------------------
Schedule II A & B
INCUMBENCY CERTIFICATES
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
WESTLB AG, acting through its New York Branch
1211 Avenue of the Americas
New York, New York 10036
Attention: Brigitte Thieme; Telecopier: (212) 869-7634
Eugene Chan; Telecopier: (212) 852-6305
Gentlemen:
Reference is made to the Deposit Agreement dated as of June 29, 2004
(the "DEPOSIT AGREEMENT") between Wells Fargo Bank Northwest, National
Association, as Escrow Agent, and WESTLB AG, acting through its New York Branch,
as Depositary (the "DEPOSITARY").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of the Deposit,
$[_______], Account No. ____________.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to ________________, Account No. _____, Reference: _________] on
_________ __, 200__, upon the telephonic request of a representative of the Pass
Through Trustee.
WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION,
as Escrow Agent
By
------------------------------------
Name:
Title:
Dated: _______ __, 200_
EXHIBIT B
NOTICE OF FINAL WITHDRAWAL
WESTLB AG, acting through its New York Branch
1211 Avenue of the Americas
New York, New York 10036
Attention: Brigitte Thieme; Telecopier: (212) 869-7634
Eugene Chan; Telecopier: (212) 852-6305
Gentlemen:
Reference is made to the Deposit Agreement dated as of June 29, 2004
(the "DEPOSIT AGREEMENT") between Wells Fargo Bank Northwest, National
Association, as Escrow Agent, and WESTLB AG, acting through its New York Branch,
as Depositary (the "DEPOSITARY").
In accordance with Section 2.3(b)(i) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of all Deposits
and all accrued interest to date on such Deposits.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposits and accrued interest thereon to the Paying Agent at Wilmington
Trust Company, ABA# 031100092, Account No. _____________, Reference: Continental
2004-ERJ1.
WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION,
as Escrow Agent
By
------------------------------------
Name:
Title:
Dated: _________, 200_
ESCROW AND PAYING AGENT AGREEMENT
Dated as of June 29, 2004
among
WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION
as Escrow Agent
CITIGROUP GLOBAL MARKETS INC.
and
MORGAN STANLEY & CO. INCORPORATED
as Underwriters
WILMINGTON TRUST COMPANY,
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Continental Airlines Pass Through Trust 2004-ERJ1
as Pass Through Trustee
and
WILMINGTON TRUST COMPANY
as Paying Agent
TABLE OF CONTENTS
cv
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SECTION 1. Escrow Agent...............................................2
Section 1.01. Appointment of Escrow Agent................................2
Section 1.02. Instruction; Etc...........................................2
Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts.........3
Section 1.04. Payments to Receiptholders.................................4
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt........4
Section 1.06. Additional Escrow Amounts..................................5
Section 1.07. Resignation or Removal of Escrow Agent.....................5
Section 1.08. Persons Deemed Owners......................................5
Section 1.09. Further Assurances.........................................5
SECTION 2. Paying Agent...............................................5
Section 2.01. Appointment of Paying Agent................................5
Section 2.02. Establishment of Paying Agent Account......................6
Section 2.03. Payments From Paying Agent Account.........................6
Section 2.04. Withholding Taxes..........................................7
Section 2.05. Resignation or Removal of Paying Agent.....................7
Section 2.06. Notice of Final Withdrawal.................................8
SECTION 3. Payments...................................................8
SECTION 4. Other Actions..............................................8
SECTION 5. Representations and Warranties of the Escrow AgenT.........8
SECTION 6. Representations and Warranties of the Paying Agent........10
SECTION 7. Indemnification...........................................11
SECTION 8. Amendment, Etc............................................11
SECTION 9. Notices...................................................11
SECTION 10. Transfer..................................................12
SECTION 11. Entire Agreement..........................................12
SECTION 12. Governing Law.............................................12
SECTION 13. Waiver of Jury Trial Right................................12
SECTION 14. Counterparts..............................................12
Exhibit A Escrow Receipt
Exhibit B Withdrawal Certificate
ESCROW AND PAYING AGENT AGREEMENT dated as of June 29, 2004 (as amended,
modified or supplemented from time to time, this "AGREEMENT") among WELLS FARGO
BANK NORTHWEST, NATIONAL ASSOCIATION, a national banking association, as Escrow
Agent (in such capacity, together with its successors in such capacity, the
"ESCROW AGENT"); CITIGROUP GLOBAL MARKETS INC. and MORGAN STANLEY & CO.
INCORPORATED, as Underwriters of the Certificates referred to below (the
"UNDERWRITERS" and together with their respective transferees and assigns as
registered owners of the Certificates, the "INVESTORS") under the Underwriting
Agreement referred to below; 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, together with its
successors in such capacity, the "PASS THROUGH TRUSTEE") under the Pass Through
Trust Agreement referred to below; and WILMINGTON TRUST COMPANY, a Delaware
banking corporation, as paying agent hereunder (in such capacity, together with
its successors in such capacity, the "PAYING AGENT").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, Continental Airlines, Inc. ("CONTINENTAL") and the Pass
Through Trustee have entered into a Trust Supplement, dated as of June 29, 2004
(the "TRUST SUPPLEMENT"), to the Pass Through Trust Agreement, dated as of
September 25, 1997 (together, as amended, modified or supplemented from time to
time in accordance with the terms thereof, the "PASS THROUGH TRUST AGREEMENT")
relating to Continental Airlines Pass Through Trust 2004-ERJ1 (the "PASS THROUGH
TRUST") pursuant to which the Continental Airlines Pass Through Trust, Series
2004-ERJ1 Certificates referred to therein (the "CERTIFICATES") are being issued
(the date of such issuance, the "ISSUANCE DATE");
WHEREAS, Continental, the Depositary and the Underwriters have
entered into an Underwriting Agreement dated as of June 18, 2004 (as amended,
modified or supplemented from time to time in accordance with the terms thereof,
the "UNDERWRITING AGREEMENT") pursuant to which the Pass Through Trustee will
issue and sell the Certificates to the Underwriters;
WHEREAS, Continental, the Pass Through Trustee, and certain other
persons concurrently herewith are entering into the Note Purchase Agreement,
dated as of the date hereof (the "NOTE PURCHASE AGREEMENT"), pursuant to which
the Pass Through Trustee has agreed to acquire from time to time on or prior to
the Delivery Period Termination Date (as defined in the Note Purchase Agreement)
equipment notes (the "EQUIPMENT NOTES") issued to finance the acquisition of
aircraft by Continental, as lessee, utilizing a portion of the proceeds from the
sale of the Certificates (the "NET PROCEEDS");
WHEREAS, the Underwriters and the Pass Through Trustee intend that
the Net Proceeds (excluding any amount used to purchase Equipment Notes on the
Issuance Date) be held in escrow by the Escrow Agent on behalf of the Investors,
subject to withdrawal upon request by the Pass Through Trustee and satisfaction
of the conditions set forth in the Note Purchase Agreement for the purpose of
purchasing Equipment Notes, and that pending such withdrawal the Net Proceeds be
deposited on behalf of the Escrow Agent with WESTLB AG, acting through its New
York Branch, as Depositary (the "DEPOSITARY") under the Deposit Agreement, dated
as of the date hereof between the Depositary and the Escrow Agent relating to
the Pass Through Trust (as amended, modified, supplemented or replaced from time
to time in accordance with the terms thereof, the "DEPOSIT AGREEMENT") pursuant
to which, among other things, the Depositary will pay interest for distribution
to the Investors and establish accounts from which the Escrow Agent shall make
withdrawals upon request of and proper certification by the Pass Through
Trustee;
WHEREAS, the Escrow Agent wishes to appoint the Paying Agent to pay
amounts required to be distributed to the Investors in accordance with this
Agreement; and
WHEREAS, capitalized terms used but not defined herein shall have
the meanings ascribed to such terms in the Pass Through Trust Agreement.
NOW, THEREFORE, in consideration of the obligations contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. ESCROW AGENT.
Section 1.01. APPOINTMENT OF ESCROW AGENT. Each of the Underwriters,
for and on behalf of each of the Investors, hereby irrevocably appoints,
authorizes and directs the Escrow Agent to act as escrow agent and fiduciary
hereunder and under the Deposit Agreement for such specific purposes and with
such powers as are specifically delegated to the Escrow Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. Any and all money received and held by the Escrow Agent under this
Agreement or the Deposit Agreement shall be held in escrow by the Escrow Agent
in accordance with the terms of this Agreement. This Agreement is irrevocable
and the Investors' rights with respect to any monies received and held in escrow
by the Escrow Agent under this Agreement or the Deposit Agreement shall only be
as provided under the terms and conditions of this Agreement and the Deposit
Agreement. The Escrow Agent (which term as used in this sentence shall include
reference to its affiliates and its own and its affiliates' officers, directors,
employees and agents): (a) shall have no duties or responsibilities except those
expressly set forth in this Agreement; (b) shall not be responsible to the Pass
Through Trustee or the Investors for any recitals, statements, representations
or warranties of any person other then itself contained in this Agreement or the
Deposit Agreement or for the failure by the Pass Through Trustee, the Investors
or any other person or entity (other than the Escrow Agent) to perform any of
its obligations hereunder (whether or not the Escrow Agent shall have any
knowledge thereof); and (c) shall not be responsible for any action taken or
omitted to be taken by it hereunder or provided for herein or in connection
herewith, except for its own willful misconduct or gross negligence (or simple
negligence in connection with the handling of funds).
Section 1.02. INSTRUCTION; ETC. The Underwriters, for and on behalf
of each of the Investors, hereby irrevocably instruct the Escrow Agent, and the
Escrow Agent agrees, (a) to enter into the Deposit Agreement, (b) to appoint the
Paying Agent as provided in this Agreement, (c) upon receipt at any time and
from time to time prior to the Termination Date (as defined below) of a
certificate substantially in the form of Exhibit B hereto (a "WITHDRAWAL
CERTIFICATE") executed by the Pass Through Trustee, together with an attached
Notice of Purchase Withdrawal in substantially the form of Exhibit A to the
Deposit Agreement duly completed by the Pass Through Trustee (the "APPLICABLE
NOTICE OF PURCHASE WITHDRAWAL" and the withdrawal to which it relates, a
"PURCHASE WITHDRAWAL"), immediately to execute the Applicable Notice of Purchase
Withdrawal as Escrow Agent and transmit it to the Depositary by facsimile
transmission in accordance with the Deposit Agreement; PROVIDED that, upon the
request of the Pass Through Trustee after such transmission, the Escrow Agent
shall cancel such Applicable Notice of Purchase Withdrawal, and (d) if there are
any undrawn Deposits (as defined in the Deposit Agreement) on the "TERMINATION
DATE", which shall mean the earlier of (i) March 31, 2005 and (ii) the day on
which the Escrow Agent receives notice from the Pass Through Trustee that the
Pass Through Trustee's obligation to purchase Equipment Notes under the Note
Purchase Agreement has terminated, to give notice to the Depositary (with a copy
to the Paying Agent) substantially in the form of Exhibit B to the Deposit
Agreement requesting a withdrawal of all of the remaining Deposits, together
with accrued and unpaid interest on such Deposits to the date of withdrawal, on
the 25th day after the date that such notice of withdrawal is given to the
Depositary (or, if not a Business Day, on the next succeeding Business Day) (a
"FINAL WITHDRAWAL"), PROVIDED that if the day scheduled for the Final Withdrawal
in accordance with the foregoing is within 10 days before or after a Regular
Distribution Date, then the Escrow Agent shall request that such requested Final
Withdrawal be made on such Regular Distribution Date (the date of such requested
withdrawal, the "FINAL WITHDRAWAL DATE"). If for any reason the Escrow Agent
shall have failed to give the Final Withdrawal Notice to the Depositary on or
before April 11, 2005, and there are unwithdrawn Deposits on such date, the
Final Withdrawal Date shall be deemed to be April 29, 2005.
Section 1.03. INITIAL ESCROW AMOUNT; ISSUANCE OF ESCROW RECEIPTS.
The Escrow Agent hereby directs the Underwriters to, and the Underwriters hereby
acknowledge that on the date hereof they shall, irrevocably deliver to the
Depositary on behalf of the Escrow Agent, an amount in U.S. dollars ("DOLLARS")
and immediately available funds equal to $173,629,000 (or such lesser amount
equal to the Net Proceeds less amounts, if any, used to purchase Equipment Notes
on the Issuance Date) for deposit on behalf of the Escrow Agent with the
Depositary in accordance with Section 2.1 of the Deposit Agreement. The
Underwriters hereby instruct the Escrow Agent, upon receipt of such sum from the
Underwriters, to confirm such receipt by executing and delivering to the Pass
Through Trustee an Escrow Receipt in the form of Exhibit A hereto (an "ESCROW
RECEIPT"), (a) to be affixed by the Pass Through Trustee to each Certificate and
(b) to evidence the same percentage interest (the "ESCROW INTEREST") in the
Account Amounts (as defined below) as the Fractional Undivided Interest in the
Pass Through Trust evidenced by the Certificate to which it is to be affixed.
The Escrow Agent shall provide to the Pass Through Trustee for attachment to
each Certificate newly issued under and in accordance with the Pass Through
Trust Agreement an executed Escrow Receipt as the Pass Through Trustee may from
time to time request of the Escrow Agent. Each Escrow Receipt shall be
registered by the Escrow Agent in a register (the "REGISTER") maintained by the
Escrow Agent in the same name and same manner as the Certificate to which it is
attached and may not thereafter be detached from such Certificate to which it is
to be affixed prior to the distribution of the Final Withdrawal (the "FINAL
DISTRIBUTION"). After the Final Distribution, no additional Escrow Receipts
shall be issued and the Pass Through Trustee shall request the return to the
Escrow Agent for cancellation of all outstanding Escrow Receipts.
Section 1.04. PAYMENTS TO RECEIPTHOLDERS. All payments and
distributions made to holders of an Escrow Receipt (collectively
"RECEIPTHOLDERS") in respect of the Escrow Receipt shall be made only from
amounts deposited in the Paying Agent Account (as defined below) ("ACCOUNT
AMOUNTS"). Each Receiptholder, by its acceptance of an Escrow Receipt, agrees
that (a) it will look solely to the Account Amounts for any payment or
distribution due to such Receiptholder pursuant to the terms of the Escrow
Receipt and this Agreement and (b) it will have no recourse to Continental, the
Pass Through Trustee, the Paying Agent or the Escrow Agent, except as expressly
provided herein or in the Pass Through Trust Agreement. No Receiptholder shall
have any right to vote or in any manner otherwise control the operation and
management of the Paying Agent Account or the obligations of the parties hereto,
nor shall anything set forth herein, or contained in the terms of the Escrow
Receipt, be construed so as to constitute the Receiptholders from time to time
as partners or members of an association.
Section 1.05. MUTILATED, DESTROYED, LOST OR STOLEN ESCROW RECEIPT.
If (a) any mutilated Escrow Receipt is surrendered to the Escrow Agent or the
Escrow Agent receives evidence to its satisfaction of the destruction, loss or
theft of any Escrow Receipt and (b) there is delivered to the Escrow Agent and
the Pass Through Trustee such security, indemnity or bond, as may be required by
them to hold each of them harmless, then, absent notice to the Escrow Agent or
the Pass Through Trustee that such destroyed, lost or stolen Escrow Receipt 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 Escrow Agent shall execute, authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Escrow Receipt, a new Escrow Receipt or Escrow Receipts and of like Escrow
Interest in the Account Amounts and bearing a number not contemporaneously
outstanding.
In connection with the issuance of any new Escrow Receipt under this
Section 1.05, the Escrow Agent 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 Pass
Through Trustee and the Escrow Agent) connected therewith.
Any duplicate Escrow Receipt issued pursuant to this Section 1.05
shall constitute conclusive evidence of the appropriate Escrow Interest in the
Account Amounts, as if originally issued, whether or not the lost, stolen or
destroyed Escrow Receipt 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 Escrow Receipts.
Section 1.06. ADDITIONAL ESCROW AMOUNTS. On the date of any Purchase
Withdrawal, the Pass Through Trustee may re-deposit with the Depositary some or
all of the amounts so withdrawn in accordance with Section 2.4 of the Deposit
Agreement.
Section 1.07. RESIGNATION OR REMOVAL OF ESCROW AGENT. Subject to the
appointment and acceptance of a successor Escrow Agent as provided below, the
Escrow Agent may resign at any time by giving 30 days' prior written notice
thereof to the Investors, but may not otherwise be removed except for cause by
the written consent of the Investors with respect to Investors representing
Escrow Interests aggregating not less than a majority in interest in the Account
Amounts (an "ACTION OF INVESTORS"). Upon any such resignation or removal, the
Investors, by an Action of Investors, shall have the right to appoint a
successor Escrow Agent. If no successor Escrow Agent shall have been so
appointed and shall have accepted such appointment within 30 days after the
retiring Escrow Agent's giving of notice of resignation or the removal of the
retiring Escrow Agent, then the retiring Escrow Agent may appoint a successor
Escrow Agent. Any successor Escrow Agent shall be a bank which has an office in
the United States with a combined capital and surplus of at least $100,000,000.
Upon the acceptance of any appointment as Escrow Agent hereunder by a successor
Escrow Agent, such successor Escrow Agent shall enter into such documents as the
Pass Through Trustee shall require and shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Escrow
Agent, and the retiring Escrow Agent shall be discharged from its duties and
obligations hereunder. No resignation or removal of the Escrow Agent shall be
effective unless a written confirmation shall have been obtained from each of
Moody's Investors Service, Inc. and Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., that the replacement of the Escrow
Agent with the successor Escrow Agent will not result in (a) a reduction of the
rating for the Certificates below the then current rating for the Certificates
or (b) a withdrawal or suspension of the rating of the Certificates.
Section 1.08. PERSONS DEEMED OWNERS. Prior to due presentment of a
Certificate for registration of transfer, the Escrow Agent and the Paying Agent
may treat the Person in whose name any Escrow Receipt is registered (as of the
day of determination) as the owner of such Escrow Receipt for the purpose of
receiving distributions pursuant to this Agreement and for all other purposes
whatsoever, and neither the Escrow Agent nor the Paying Agent shall be affected
by any notice to the contrary.
Section 1.09. FURTHER ASSURANCES. The Escrow Agent agrees to take
such actions, and execute such other documents, as may be reasonably requested
by the Pass Through Trustee in order to effectuate the purposes of this
Agreement and the performance by the Escrow Agent of its obligations hereunder.
SECTION 2. PAYING AGENT.
Section 2.01. APPOINTMENT OF PAYING AGENT. The Escrow Agent hereby
irrevocably appoints and authorizes the Paying Agent to act as its paying agent
hereunder, for the benefit of the Investors, for such specific purposes and with
such powers as are specifically delegated to the Paying Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. Any and all money received and held by the Paying Agent under this
Agreement or the Deposit Agreement shall be held in the Paying Agent Account for
the benefit of the Investors. The Paying Agent (which term as used in this
sentence shall include reference to its affiliates and its own and its
affiliates' officers, directors, employees and agents): (a) shall have no duties
or responsibilities except those expressly set forth in this Agreement, and
shall not by reason of this Agreement be a trustee for the Escrow Agent; (b)
shall not be responsible to the Escrow Agent for any recitals, statements,
representations or warranties of any person other then itself contained in this
Agreement or for the failure by the Escrow Agent or any other person or entity
(other than the Paying Agent) to perform any of its obligations hereunder
(whether or not the Paying Agent shall have any knowledge thereof); and (c)
shall not be responsible for any action taken or omitted to be taken by it
hereunder or provided for herein or in connection herewith, except for its own
willful misconduct or gross negligence (or simple negligence in connection with
the handling of funds).
Section 2.02. ESTABLISHMENT OF PAYING AGENT ACCOUNT. The Paying
Agent shall establish a deposit account (the "PAYING AGENT ACCOUNT") at
Wilmington Trust Company in the name of the Escrow Agent. It is expressly
understood by the parties hereto that the Paying Agent is acting as the paying
agent of the Escrow Agent hereunder and that no amounts on deposit in the Paying
Agent Account constitute part of the Trust Property.
Section 2.03. PAYMENTS FROM PAYING AGENT ACCOUNT. The Escrow Agent
hereby irrevocably instructs the Paying Agent, and the Paying Agent agrees to
act, as follows:
(a) On each Interest Payment Date (as defined in the Deposit
Agreement) or as soon thereafter as the Paying Agent has confirmed receipt
in the Paying Agent Account from the Depositary of any amount in respect
of accrued interest on the Deposits, the Paying Agent shall distribute out
of the Paying Agent Account the entire amount deposited therein by the
Depositary. There shall be so distributed to each Receiptholder of record
on the 15th day (whether or not a Business Day) preceding such Interest
Payment Date by check mailed to such Receiptholder, at the address
appearing in the Register, such Receiptholder's pro rata share (based on
the Escrow Interest in the Account Amounts held by such Receiptholder) of
the total amount of interest deposited by the Depositary in the Paying
Agent Account on such date, except that, with respect to Escrow Receipts
registered on the Record Date in the name of The Depository Trust Company
("DTC"), such distribution shall be made by wire transfer in immediately
available funds to the account designated by DTC.
(b) Upon the confirmation by the Paying Agent of receipt in
the Paying Agent Account from the Depositary of any amount in respect of
the Final Withdrawal, the Paying Agent shall forthwith distribute the
entire amount of the Final Withdrawal deposited therein by the Depositary.
There shall be so distributed to each Receiptholder of record on the 15th
day (whether or not a Business Day) preceding the Final Withdrawal Date by
check mailed to such Receiptholder, at the address appearing in the
Register, such Receiptholder's pro rata share (based on the Escrow
Interest in the Account Amounts held by such Receiptholder) of the total
amount in the Paying Agent Account on account of such Final Withdrawal,
except that, with respect to Escrow Receipts registered on the Record Date
in the name of DTC, such distribution shall be made by wire transfer in
immediately available funds to the account designated by DTC.
(c) If any payment of interest or principal in respect of the
Final Withdrawal is not received by the Paying Agent within five days of
the applicable date when due, then it shall be distributed to
Receiptholders after actual receipt by the Paying Agent on the same basis
as a Special Payment is distributed under the Pass Through Trust
Agreement.
(d) The Paying Agent shall include with any check mailed
pursuant to this Section any notice required to be distributed under the
Pass Through Trust Agreement that is furnished to the Paying Agent by the
Pass Through Trustee.
Section 2.04. WITHHOLDING TAXES. The Paying Agent shall exclude and
withhold from each distribution of accrued interest on the Deposits (as defined
in the Deposit Agreement) and any amount in respect of the Final Withdrawal any
and all withholding taxes applicable thereto as required by law. The Paying
Agent 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 Deposits (as
defined in the Deposit Agreement) or the escrow amounts, to withhold such
amounts and timely pay the same to the appropriate authority in the name of and
on behalf of the Receiptholders, 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 Receiptholder appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as such Receiptholder may reasonably request from time to
time. The Paying Agent agrees to file any other information reports as it may be
required to file under United States law.
Section 2.05. RESIGNATION OR REMOVAL OF PAYING AGENT. Subject to the
appointment and acceptance of a successor Paying Agent as provided below, the
Paying Agent may resign at any time by giving 30 days' prior written notice
thereof to the Escrow Agent, but may not otherwise be removed except for cause
by the Escrow Agent. Upon any such resignation or removal, the Escrow Agent
shall have the right to appoint a successor Paying Agent. If no successor Paying
Agent shall have been so appointed and shall have accepted such appointment
within 30 days after the retiring Paying Agent's giving of notice of resignation
or the removal of the retiring Paying Agent, then the retiring Paying Agent may
appoint a successor Paying Agent. Any Successor Paying Agent shall be a bank
which has an office in the United States with a combined capital and surplus of
at least $100,000,000. Upon the acceptance of any appointment as Paying Agent
hereunder by a successor Paying Agent, such successor Paying Agent shall enter
into such documents as the Escrow Agent shall require and shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Paying Agent, and the retiring Paying Agent shall be discharged
from its duties and obligations hereunder.
Section 2.06. NOTICE OF FINAL WITHDRAWAL. Promptly after receipt by
the Paying Agent of notice that the Escrow Agent has requested a Final
Withdrawal or that a Final Withdrawal will be made, the Paying Agent shall cause
notice of the distribution of the Final Withdrawal to be mailed to each of the
Receiptholders at its address as it appears in the Register. Such notice shall
be mailed not less than 15 days prior to the Final Withdrawal Date. Such notice
shall set forth:
(i) the Final Withdrawal Date and the date for determining
Receiptholders of record who shall be entitled to receive distributions in
respect of the Final Withdrawal,
(ii) the amount of the payment in respect of the Final
Withdrawal for each $1,000 face amount Certificate (based on information
provided by the Pass Through Trustee) and the amount thereof constituting
unused Deposits (as defined in the Deposit Agreement) and interest
thereon, and
(iii) if the Final Withdrawal 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 (based on information provided by
the Pass Through Trustee).
Such mailing may include any notice required to be given to
Certificateholders in connection with such distribution pursuant to the Pass
Through Trust Agreement.
SECTION 3. PAYMENTS. If, notwithstanding the instructions in
Section 4 of the Deposit Agreement that all amounts payable to the Escrow Agent
under the Deposit Agreement be paid by the Depositary directly to the Paying
Agent or the Pass Through Trustee (depending on the circumstances), the Escrow
Agent receives any payment thereunder, then the Escrow Agent shall forthwith pay
such amount in Dollars and in immediately available funds by wire transfer to
(a) in the case of a payment of accrued interest on the Deposits (as defined in
the Deposit Agreement) or any Final Withdrawal, directly to the Paying Agent
Account, and (b) in the case of any Purchase Withdrawal, directly to the Pass
Through Trustee or its designee as specified and in the manner provided in the
Applicable Notice of Purchase Withdrawal. The Escrow Agent hereby waives any and
all rights of set-off, combination of accounts, right of retention or similar
right (whether arising under applicable law, contract or otherwise) it may have
against amounts payable to the Paying Agent howsoever arising.
SECTION 4. OTHER ACTIONS. The Escrow Agent shall take such other
actions under or in respect of the Deposit Agreement (including, without
limitation, the enforcement of the obligations of the Depositary thereunder) as
the Investors, by an Action of Investors, may from time to time request.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE ESCROW AGENT. The
Escrow Agent represents and warrants to Continental, the Investors, the Paying
Agent and the Pass Through Trustee as follows:
(i) it is a national banking association duly organized and
validly existing in good standing under the laws of the United States of
America;
(ii) it has full power, authority and legal right to conduct
its business and operations as currently conducted and to enter into and
perform its obligations under this Agreement and the Deposit Agreement;
(iii) the execution, delivery and performance of each of this
Agreement and the Deposit Agreement have been duly authorized by all
necessary corporate action on the part of it and do not require any
stockholder approval, or approval or consent of any trustee or holder of
any indebtedness or obligations of it, and each such document has been
duly executed and delivered by it and constitutes its legal, valid and
binding obligations enforceable against it in accordance with the terms
hereof or thereof except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(iv) no authorization, consent or approval of or other action
by, and no notice to or filing with, any United States federal banking or
Utah state governmental authority or regulatory body is required for the
execution, delivery or performance by it of this Agreement or the Deposit
Agreement;
(v) neither the execution, delivery or performance by it of
this Agreement or the Deposit Agreement, nor compliance with the terms and
provisions hereof or thereof, conflicts or will conflict with or results
or will result in a breach or violation of any of the terms, conditions or
provisions of, or will require any consent or approval under, any law,
governmental rule or regulation or the charter documents, as amended, or
bylaws, as amended, of it or any similar instrument binding on it or any
order, writ, injunction or decree of any court or governmental authority
against it or by which it or any of its properties is bound or any
indenture, mortgage or contract or other agreement or instrument to which
it is a party or by which it or any of its properties is bound, or
constitutes or will constitute a default thereunder or results or will
result in the imposition of any lien upon any of its properties; and
(vi) there are no pending or, to its knowledge, threatened
actions, suits, investigations or proceedings (whether or not purportedly
on behalf of it) against or affecting it or any of its property before or
by any court or administrative agency which, if adversely determined, (A)
would adversely affect the ability of it to perform its obligations under
this Agreement or the Deposit Agreement or (B) would call into question or
challenge the validity of this Agreement or the Deposit Agreement or the
enforceability hereof or thereof in accordance with the terms hereof or
thereof, nor is the Escrow Agent in default with respect to any order of
any court, governmental authority, arbitration board or administrative
agency so as to adversely affect its ability to perform its obligations
under this Agreement or the Deposit Agreement.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE PAYING AGENT. The
Paying Agent represents and warrants to Continental, the Investors, the Escrow
Agent and the Pass Through Trustee as follows:
(i) it is a Delaware banking company duly organized and
validly existing in good standing under the laws of its jurisdiction of
incorporation;
(ii) it has full power, authority and legal right to conduct
its business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
(iii) the execution, delivery and performance of this
Agreement has been duly authorized by all necessary corporate action on
the part of it and does not require any stockholder approval, or approval
or consent of any trustee or holder of any indebtedness or obligations of
it, and such document has been duly executed and delivered by it and
constitutes its legal, valid and binding obligations enforceable against
it in accordance with the terms hereof except as such enforceability may
be limited by bankruptcy, insolvency, moratorium, reorganization or other
similar laws or equitable principles of general application to or
affecting the enforcement of creditors' rights generally (regardless of
whether such enforceability is considered in a proceeding in equity or at
law);
(iv) no authorization, consent or approval of or other action
by, and no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(v) neither the execution, delivery or performance by it of
this Agreement, nor compliance with the terms and provisions hereof,
conflicts or will conflict with or results or will result in a breach or
violation of any of the terms, conditions or provisions of, or will
require any consent or approval under, any law, governmental rule or
regulation or the charter documents, as amended, or bylaws, as amended, of
it or any similar instrument binding on it or any order, writ, injunction
or decree of any court or governmental authority against it or by which it
or any of its properties is bound or any indenture, mortgage or contract
or other agreement or instrument to which it is a party or by which it or
any of its properties is bound, or constitutes or will constitute a
default thereunder or results or will result in the imposition of any lien
upon any of its properties; and
(vi) there are no pending or, to its knowledge, threatened
actions, suits, investigations or proceedings (whether or not purportedly
on behalf of it) against or affecting it or any of its property before or
by any court or administrative agency which, if adversely determined, (A)
would adversely affect the ability of it to perform its obligations under
this Agreement or (B) would call into question or challenge the validity
of this Agreement or the enforceability hereof in accordance with the
terms hereof, nor is the Paying Agent in default with respect to any order
of any court, governmental authority, arbitration board or administrative
agency so as to adversely affect its ability to perform its obligations
under this Agreement.
SECTION 7. INDEMNIFICATION. Except for actions expressly required
of the Escrow Agent or the Paying Agent hereunder, each of the Escrow Agent and
the Paying Agent shall in all cases be fully justified in failing or refusing to
act hereunder unless it shall have been indemnified by the party requesting such
action in a manner reasonably satisfactory to it against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. In the event Continental requests any amendment to any
Operative Agreement (as defined in the Note Purchase Agreement), the Pass
Through Trustee agrees to pay all reasonable fees and expenses (including,
without limitation, fees and disbursements of counsel) of the Escrow Agent and
the Paying Agent in connection therewith.
SECTION 8. AMENDMENT, ETC. Upon request of the Pass Through Trustee
and approval by an Action of Investors, the Escrow Agent shall enter into an
amendment to this Agreement, so long as such amendment does not adversely affect
the rights or obligations of the Escrow Agent or the Paying Agent, PROVIDED that
upon request of the Pass Through Trustee and without any consent of the
Investors, the Escrow Agent shall enter into an amendment to this Agreement for
any of the following purposes:
(1) to correct or supplement any provision in this Agreement
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, PROVIDED that any such action shall not materially adversely
affect the interests of the Investors; or
(2) to comply with any requirement of the SEC, applicable law,
rules or regulations of any exchange or quotation system on which the
Certificates are listed or any regulatory body; or
(3) to evidence and provide for the acceptance of appointment
under this Agreement of a successor Escrow Agent, successor Paying Agent
or successor Pass Through Trustee.
SECTION 9. NOTICES. Unless otherwise expressly provided herein, any
notice or other communication under this Agreement shall be in writing
(including by facsimile) and shall be deemed to be given and effective upon
receipt thereof. All notices shall be sent to (a) in the case of the Investors,
as their respective addresses shall appear in the Register, (b) in the case of
the Escrow Agent, Wells Fargo Bank Northwest, National Association, 299 South
Main Street, MAC: U1228-120, Salt Lake City, UT 84111, Attention: Corporate
Trust Services (Telecopier: (801) 246-5053), (c) in the case of the Pass Through
Trustee, Wilmington Trust Company, 1100 North Market Street, Rodney Square
North, Wilmington, DE 19890-1605, Attention: Corporate Capital Market Services
(Telecopier: (302) 636-4140) or (d) in the case of the Paying Agent, Wilmington
Trust Company, 1100 North Market Street, Rodney Square North, Wilmington, DE
19890-1605, Attention: Corporate Capital Market Services (Telecopier: (302)
636-4140), in each case with a copy to Continental, Continental Airlines, Inc.,
1600 Smith Street, Dept. HQS-FN, Houston, TX 77002, Attention: Treasurer
(Telecopier: (713) 324-2447) (or at such other address as any such party may
specify from time to time in a written notice to the other parties). On or prior
to the execution of this Agreement, the Pass Through Trustee has delivered to
the Escrow Agent a certificate containing specimen signatures of the
representatives of the Pass Through Trustee who are authorized to give notices
and instructions with respect to this Agreement. The Escrow Agent may
conclusively rely on such certificate until the Escrow Agent receives written
notice from the Pass Through Trustee to the contrary.
SECTION 10. TRANSFER. No party hereto shall be entitled to assign or
otherwise transfer this Agreement (or any interest herein) other than (in the
case of the Escrow Agent) to a successor escrow agent under Section 1.06 hereof
or (in the case of the Paying Agent) to a successor paying agent under Section
2.04 hereof, and any purported assignment in violation thereof shall be void.
This Agreement shall be binding upon the parties hereto and their respective
successors and (in the case of the Escrow Agent and the Paying Agent) their
respective permitted assigns.
SECTION 11. ENTIRE AGREEMENT. This Agreement sets forth all of the
promises, covenants, agreements, conditions and understandings among the Escrow
Agent, the Paying Agent, the Underwriters and the Pass Through Trustee with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 12. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 13. WAIVER OF JURY TRIAL RIGHT. EACH OF THE ESCROW AGENT,
THE PAYING AGENT, THE INVESTORS AND THE PASS THROUGH TRUSTEE ACKNOWLEDGES AND
ACCEPTS THAT IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY.
SECTION 14. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.
IN WITNESS WHEREOF, the Escrow Agent, the Paying Agent, the
Underwriters and the Pass Through Trustee have caused this Escrow and Paying
Agent Agreement to be duly executed as of the day and year first above written.
WELLS FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION,
as Escrow Agent
By
------------------------------------------
Name:
Title:
CITIGROUP GLOBAL MARKETS INC. and MORGAN
STANLEY & CO. INCORPORATED,
as Underwriters
By: CITIGROUP GLOBAL MARKETS INC.
By
------------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Pass
Through Trustee
By
------------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
as Paying Agent
By
------------------------------------------
Name:
Title:
EXHIBIT A
CONTINENTAL AIRLINES 2004-ERJ1 ESCROW RECEIPT
No. __
This Escrow Receipt evidences a fractional undivided interest in
amounts ("ACCOUNT AMOUNTS") from time to time deposited into a certain paying
agent account (the "PAYING AGENT ACCOUNT") described in the Escrow and Paying
Agent Agreement dated as of June 29, 2004 (as amended, modified or supplemented
from time to time, the "ESCROW AND PAYING AGENT AGREEMENT") among Wells Fargo
Bank Northwest, National Association, as Escrow Agent (in such capacity,
together with its successors in such capacity, the "ESCROW AGENT"), Citigroup
Global Markets Inc. and Morgan Stanley & Co. Incorporated, as Underwriters,
Wilmington Trust Company, as Pass Through Trustee (in such capacity, together
with its successors in such capacity, the "PASS THROUGH TRUSTEE") and Wilmington
Trust Company, as paying agent (in such capacity, together with its successors
in such capacity, the "PAYING AGENT"). Capitalized terms not defined herein
shall have the meanings assigned to them in the Escrow and Paying Agent
Agreement.
This Escrow Receipt is issued under and is subject to the terms,
provisions and conditions of the Escrow and Paying Agent Agreement. By virtue of
its acceptance hereof the holder of this Escrow Receipt assents and agrees to be
bound by the provisions of the Escrow and Paying Agent Agreement and this Escrow
Receipt.
This Escrow Receipt represents a fractional undivided interest in
amounts deposited from time to time in the Paying Agent Account, and grants or
represents no rights, benefits or interests of any kind in respect of any assets
or property other than such amounts. This Escrow Receipt evidences the same
percentage interest in the Account Amounts as the Fractional Undivided Interest
in the Pass Through Trust evidenced by the Certificate to which this Escrow
Receipt is affixed.
All payments and distributions made to Receiptholders in respect of
the Escrow Receipt shall be made only from Account Amounts deposited in the
Paying Agent Account. The holder of this Escrow Receipt, by its acceptance of
this Escrow Receipt, agrees that it will look solely to the Account Amounts for
any payment or distribution due to it pursuant to this Escrow Receipt and that
it will not have any recourse to Continental, the Pass Through Trustee, the
Paying Agent or the Escrow Agent, except as expressly provided herein or in the
Pass Through Trust Agreement. No Receiptholder of this Escrow Receipt shall have
any right to vote or in any manner otherwise control the operation and
management of the Paying Agent Account, nor shall anything set forth herein, or
contained in the terms of this Escrow Receipt, be construed so as to constitute
the Receiptholders from time to time as partners or members of an association.
This Escrow Receipt may not be assigned or transferred except in
connection with the assignment or transfer of the Certificate to which this
Escrow Receipt is affixed. After payment to the holder hereof of its Escrow
Interest in the Final Distribution, upon the request of the Pass Through
Trustee, the holder hereof will return this Escrow Receipt to the Pass Through
Trustee.
The Paying Agent may treat the person in whose name the Certificate
to which this Escrow Receipt is attached as the owner hereof for all purposes,
and the Paying Agent shall not be affected by any notice to the contrary.
THIS ESCROW RECEIPT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Escrow Agent has caused this Escrow Receipt
to be duly executed.
Dated: June __, 2004
WELLS FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION,
as Escrow Agent
By
------------------------------------------
Name:
Title:
EXHIBIT B
WITHDRAWAL CERTIFICATE
Wells Fargo Bank Northwest, National Association
as Escrow Agent
Dear Ladies and Gentlemen:
Reference is made to the Escrow and Paying Agent Agreement, dated as
of June 29, 2004 (the "Agreement"). We hereby certify to you that the conditions
to the obligations of the undersigned to execute a Participation Agreement
pursuant to the Note Purchase Agreement have been satisfied. Pursuant to Section
1.02(c) of the Agreement, please execute the attached Notice of Purchase
Withdrawal and immediately transmit by facsimile to the Depositary, at (212)
869-7634 (Attention: Brigitte Thieme) and (212) 852-6305 (Attention: Eugene
Chan). Capitalized terms used herein but not defined herein shall have the
meanings set forth in the Agreement.
Very truly yours,
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Pass Through Trustee
By
------------------------------------------
Name:
Title:
Dated: ____________, 200_
----------------------------------------------------------------
NOTE PURCHASE AGREEMENT
Dated as of June 29, 2004
Among
CONTINENTAL AIRLINES, INC.,
WILMINGTON TRUST COMPANY,
as Pass Through Trustee under the
Pass Through Trust Agreement
WILMINGTON TRUST COMPANY,
as Subordination Agent
WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
as Escrow Agent
and
WILMINGTON TRUST COMPANY,
as Paying Agent
----------------------------------------------------------------
INDEX TO NOTE PURCHASE AGREEMENT
Page
SECTION 1. Financing of New Aircraft........................................3
SECTION 2. Conditions Precedent.............................................7
SECTION 3. Representations and Warranties...................................7
SECTION 4. Covenants.......................................................12
SECTION 5. Notices.........................................................13
SECTION 6. Expenses........................................................13
SECTION 7. Further Assurances..............................................14
SECTION 8. Miscellaneous...................................................15
SECTION 9. Governing Law...................................................16
SCHEDULES
Schedule I. Aircraft
Schedule II. Trust Supplement
Schedule III Mandatory Economic Terms
Schedule IV. Mandatory Document Terms
ANNEX
Annex A Definitions
EXHIBITS
Exhibit A Form of Participation Agreement
Exhibit B Form of Lease
Exhibit C Form of Trust Indenture
Exhibit D-1 Form of Purchase Agreement Assignment (Existing Aircraft)
Exhibit D-2 Form of Initial Purchase Agreement Assignment (New Aircraft)
Exhibit D-3 Form of Purchase Agreement Assignment (New Aircraft)
Exhibit E Form of Trust Agreement
Exhibit F Form of Delivery Notice
NOTE PURCHASE AGREEMENT
This NOTE PURCHASE AGREEMENT, dated as of June 29, 2004, among (i)
CONTINENTAL AIRLINES, INC., a Delaware corporation (the "COMPANY"), (ii)
WILMINGTON TRUST COMPANY ("WTC"), a Delaware banking corporation, not in its
individual capacity except as otherwise expressly provided herein, but solely as
trustee (in such capacity together with its successors in such capacity, the
"PASS THROUGH TRUSTEE") under the Pass Through Trust Agreement (as defined
below), (iii) WILMINGTON TRUST COMPANY, a Delaware banking corporation, as
subordination agent and trustee (in such capacity together with its successors
in such capacity, the "SUBORDINATION AGENT") under the Intercreditor Agreement
(as defined below), (iv) WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, a
national banking association, as Escrow Agent (in such capacity together with
its successors in such capacity, the "ESCROW Agent"), under the Escrow and
Paying Agent Agreement (as defined below) and (v) WILMINGTON TRUST COMPANY, a
Delaware banking corporation, as Paying Agent (in such capacity together with
its successors in such capacity, the "PAYING AGENT") under the Escrow and Paying
Agent Agreement.
W I T N E S S E T H:
WHEREAS, capitalized terms used but not defined herein shall have
the meanings ascribed to such terms in Annex A hereto;
WHEREAS, the Company has (i) previously taken delivery of the 11
Embraer EMB-145 XR aircraft listed in Part A of Schedule I hereto (the "EXISTING
AIRCRAFT"), each of which has been leased to the Company pursuant to a separate
lease agreement (collectively, the "EXISTING LEASES") and (ii) obtained
commitments from the Manufacturer pursuant to the Purchase Agreement for the
delivery of the five Embraer EMB-145 XR aircraft listed in Part B of Schedule I
hereto (together with any aircraft substituted therefor in accordance with the
Purchase Agreement, the "NEW AIRCRAFT" and, together with the Existing Aircraft,
the "AIRCRAFT");
WHEREAS, the Manufacturer, which is obligated to arrange lease
financing of the Aircraft for the Company, wishes to arrange debt financing with
respect to a portion of the purchase price of the Aircraft and, at the request
of the Manufacturer, the Company has entered into this Agreement;
WHEREAS, pursuant to the Basic Pass Through Trust Agreement and the
Trust Supplement set forth in Schedule II hereto, and concurrently with the
execution and delivery of this Agreement, a grantor trust (the "PASS THROUGH
TRUST") has been created to facilitate certain of the transactions contemplated
hereby, including, without limitation, the issuance and sale of pass through
certificates pursuant thereto (the "CERTIFICATES") to provide for a portion of
the financing of the Aircraft;
WHEREAS, the Company has entered into the Underwriting Agreement
dated as of June 18, 2004 (the "UNDERWRITING AGREEMENT") with the underwriters
(the "UNDERWRITERS") named therein, which provides that the Company will cause
the Pass Through Trustee to issue and sell the Certificates to the Underwriters
on the Issuance Date;
WHEREAS, concurrently with the execution and delivery of this
Agreement, (i) the Escrow Agent and the Depositary have entered into a Deposit
Agreement, dated as of the Issuance Date, relating to the Pass Through Trust
(the "DEPOSIT AGREEMENT") whereby the Escrow Agent agreed to direct the
Underwriters to make certain deposits referred to therein on the Issuance Date
(the "INITIAL DEPOSITS") and to permit the Pass Through Trustee to make
additional deposits from time to time thereafter (the Initial Deposits together
with such additional deposits are collectively referred to as the "DEPOSITS")
and (ii) the Pass Through Trustee, the Underwriters, the Paying Agent and the
Escrow Agent have entered into the Escrow and Paying Agent Agreement, dated as
of the Issuance Date, relating to the Pass Through Trust (the "ESCROW AND PAYING
AGENT AGREEMENT") whereby, among other things, (a) the Underwriters agreed to
deliver an amount equal to the amount of the Initial Deposits to the Depositary
on behalf of the Escrow Agent and (b) the Escrow Agent, upon the Depositary
receiving such amount, agreed to deliver escrow receipts to be affixed to each
Certificate;
WHEREAS, upon receipt of a Delivery Notice with respect to an
Aircraft, subject to the terms and conditions of this Agreement, the Pass
Through Trustee will enter into the applicable Financing Agreements relating to
such Aircraft;
WHEREAS, upon the financing of each Aircraft, the Pass Through
Trustee will fund its purchase of Equipment Notes with the proceeds of one or
more Deposits withdrawn by the Escrow Agent under the Deposit Agreement (or, if
financed on the Issuance Date, with a portion of the proceeds from the offering
of the Certificates); and
WHEREAS, concurrently with the execution and delivery of this
Agreement, (i) Citicorp North America, Inc. ("CNAI"), has entered into a
revolving credit agreement for the benefit of the Certificateholders with the
Subordination Agent, as agent for the Pass Through Trustee (the "CNAI LIQUIDITY
FACILITY"), (ii) WestLB AG, New York Branch ("WESTLB" and together with CNAI,
the "LIQUIDITY PROVIDERS"), has entered into a revolving credit agreement for
the benefit of the Certificateholders with the Subordination Agent, as agent for
the Pass Through Trustee (the "WESTLB LIQUIDITY FACILITY" and together with the
CNAI Liquidity Facility, the "LIQUIDITY FACILITIES") and (iii) the Pass Through
Trustee, the Liquidity Provider and the Subordination Agent have 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. FINANCING OF AIRCRAFT. (a) The Company confirms that (i)
it has previously taken delivery of the Existing Aircraft under the Purchase
Agreement and, as of the Issuance Date, leases as lessee the Existing Aircraft
pursuant to the Existing Leases and (ii) ExpressJet Airlines, Inc. has entered
into the Purchase Agreement with the Manufacturer pursuant to which ExpressJet
Airlines, Inc. has agreed to acquire, and the Manufacturer has agreed to
deliver, the New Aircraft in the months specified in Schedule I hereto, all on
and subject to terms and conditions specified in the Purchase Agreement. The
Company agrees to finance the Aircraft in the manner provided herein, all on and
subject to the terms and conditions hereof and of the relevant Financing
Agreements.
(b) In furtherance of the foregoing, the Company agrees to give the
parties hereto, the Depositary and each of the Rating Agencies not less than two
Business Days' prior notice substantially in the form of Exhibit F hereto (a
"DELIVERY NOTICE") of the scheduled closing date (the "SCHEDULED CLOSING DATE")
(or, in the case of a substitute Delivery Notice under Section 1(e) or (f)
hereof, one Business Day's prior notice) in respect of the financing of each
Aircraft under this Agreement, which notice shall:
(i) specify the Scheduled Closing Date of such Aircraft (which shall
be a Business Day before the Cut-off Date) on which the financing therefor in
the manner provided herein shall be consummated;
(ii) instruct the Pass Through Trustee to instruct the Escrow Agent
to provide a Notice of Purchase Withdrawal to the Depositary with respect to the
Equipment Notes to be issued in connection with the financing of such Aircraft
(except in the case of any such financing on the Issuance Date);
(iii) instruct the Pass Through Trustee to enter into the
Participation Agreement included in the Financing Agreements with respect to
such Aircraft in such form and at such a time on or before the Scheduled Closing
Date specified in such Delivery Notice and to perform its obligations
thereunder; and
(iv) specify the principal amount of the Equipment Notes to be
issued, and purchased by the Pass Through Trustee, in connection with the
financing of such Aircraft scheduled to be financed on such Scheduled Closing
Date (which shall in all respects comply with the Mandatory Economic Terms).
Notwithstanding the foregoing, in the case of any Aircraft to be financed
hereunder on the Issuance Date, the Delivery Notice therefor may be delivered to
the parties hereto on the Issuance Date.
(c) Upon receipt of a Delivery Notice, the Pass Through Trustee
shall, and shall cause the Subordination Agent to, enter into and perform their
obligations under the Participation Agreement specified in such Delivery Notice,
PROVIDED that such Participation Agreement and the other Financing Agreements to
be entered into pursuant to such Participation Agreement shall be in the forms
thereof annexed hereto in all material respects with such changes therein as
shall have been agreed upon by the related Owner Participant and the Company
and, if modified in any material respect, as to which Rating Agency Confirmation
shall have been obtained from each Rating Agency by the Company (to be delivered
by the Company to the Pass Through Trustee on or before the relevant Closing
Date, it being understood that if Rating Agency Confirmation shall have been
received with respect to any Financing Agreements and such Financing Agreements
are utilized for subsequent New Aircraft (or Substitute Aircraft) without
material modifications, no additional Rating Agency Confirmation shall be
required); PROVIDED, HOWEVER, that the relevant Financing Agreements as executed
and delivered shall not vary the Mandatory Economic Terms and shall contain the
Mandatory Document Terms. The Company shall pay the reasonable costs and
expenses of the Rating Agencies in connection with obtaining any such Rating
Agency Confirmation. With respect to each Aircraft, the Company shall cause WTC
(or such other person that meets the eligibility requirements to act as loan
trustee under the Trust Indenture) to execute as Loan Trustee the Financing
Agreements relating to such Aircraft to which such Loan Trustee is intended to
be a party, and shall concurrently therewith execute such Financing Agreements
to which the Company is intended to be a party and perform its respective
obligations thereunder. Upon the request of either Rating Agency, the Company
shall deliver or cause to be delivered to each Rating Agency a true and complete
copy of each Financing Agreement relating to the financing of each Aircraft
together with a true and complete set of the closing documentation (including
legal opinions) delivered to the related Loan Trustee, Subordination Agent and
Pass Through Trustee under the related Participation Agreement.
(d) [Intentionally omitted.]
(e) If after giving any Delivery Notice, there shall be a delay in
the delivery of the New Aircraft referred to therein, or if on the Scheduled
Closing Date of an Aircraft the financing thereof in the manner contemplated
hereby shall not be consummated for whatever reason, the Company shall give the
parties hereto prompt notice thereof. Concurrently with the giving of such
notice of postponement or subsequently, the Company shall give the parties
hereto a substitute Delivery Notice specifying the date to which the financing
of such Aircraft shall have been re-scheduled (which shall be a Business Day
before the Cut-off Date on which the Escrow Agent shall be entitled to withdraw
one or more Deposits under the Deposit Agreement to enable the Pass Through
Trustee to fund its purchase of the related Equipment Notes). Upon receipt of
any such notice of postponement, the Pass Through Trustee shall comply with its
obligations under Section 5.01 of the Trust Supplement and thereafter the
financing of such Aircraft, as specified in such substitute Delivery Notice,
shall take place on the re-scheduled closing date therefor (all on and subject
to the terms and conditions of the relevant Financing Agreements) unless further
postponed as provided herein.
(f) Anything in this Section 1 to the contrary notwithstanding, the
Company shall have the right to accept delivery of a New Aircraft under the
Purchase Agreement on the Delivery Date thereof by utilization of bridge
financing of such New Aircraft and promptly thereafter give the parties hereto a
Delivery Notice specifying a Scheduled Closing Date not later than 90 days after
the Delivery Date of such New Aircraft and no later than the Cut-off Date and
otherwise complying with the provisions of Section 1(b) hereof. All other terms
and conditions of this Note Purchase Agreement shall apply to the financing of
any such New Aircraft on the re-scheduled closing date therefor except (i) the
re-scheduled closing date shall be deemed the Delivery Date of such New Aircraft
for all purposes of this Section 1 and (ii) the related Financing Agreements
shall be amended to reflect the original delivery of such New Aircraft to the
Company.
(g) If the scheduled Delivery Date for any New Aircraft is delayed
(a) more than 30 days beyond the last day of the month set forth opposite such
New Aircraft under the heading "Scheduled Delivery Month" in Schedule I hereto
or (b) beyond December 31, 2004, the Company may identify for delivery a
substitute aircraft therefor meeting the following conditions (a "SUBSTITUTE
AIRCRAFT"): (i) a Substitute Aircraft must be an Embraer EMB-145 XR aircraft
manufactured after the date of this Agreement and (ii) the Company shall be
obligated to obtain Rating Agency Confirmation in respect of the replacement of
any New Aircraft by Substitute Aircraft. Upon the satisfaction of the conditions
set forth above with respect to a Substitute Aircraft, the New Aircraft to be
replaced shall cease to be subject to this Agreement and all rights and
obligations of the parties hereto concerning such New Aircraft shall cease, and
such Substitute Aircraft shall become and thereafter be subject to the terms and
conditions of this Agreement to the same extent as such New Aircraft.
(h) The Company shall have no liability for the failure of the Pass
Through Trustee to purchase Equipment Notes with respect to any Aircraft or
Substitute Aircraft.
(i) The parties agree that if, in connection with the financing of a
New Aircraft or Substitute Aircraft, any Owner Participant who is to be a party
to any Financing Agreement shall be a "Citizen of the United States" within the
meaning of Section 40102(a)(15) of the Act, then the applicable Financing
Agreements may be modified, consistent with the Mandatory Document Terms, to
eliminate the restrictions on the Owner Participant's right to control the Owner
Trustee and to make other customary changes to reflect that the Owner
Participant is a "Citizen of the United States".
(j) Anything herein to the contrary notwithstanding, the Company
shall not have the right, and shall not be entitled, at any time to request the
issuance of Equipment Notes to the Pass Through Trustee in an aggregate
principal amount in excess of the amount of the Deposits then available for
withdrawal by the Escrow Agent under and in accordance with the provisions of
the Deposit Agreement.
SECTION 2. CONDITIONS PRECEDENT. The obligation of the Pass Through
Trustee to enter into, and to cause the Subordination Agent to enter into, any
Participation Agreement as directed pursuant to a Delivery Notice and to perform
its obligations thereunder is subject to satisfaction of the following
conditions:
(a) no Triggering Event shall have occurred; and
(b) the Company shall have delivered a certificate to such Pass
Through Trustee and the Liquidity Providers stating that (i) such Participation
Agreement and the other Financing Agreements to be entered into pursuant to such
Participation Agreement do not vary the Mandatory Economic Terms and contain the
Mandatory Document Terms and (ii) any substantive modification of such Financing
Agreements from the forms of Financing Agreements attached to this Agreement do
not materially and adversely affect the Certificateholders, and such
certification shall be true and correct.
Anything herein to the contrary notwithstanding, the obligation of
the Pass Through Trustee to purchase Equipment Notes shall terminate on the
Cut-off Date.
SECTION 3. REPRESENTATIONS AND WARRANTIES. (a) The Company
represents and warrants that:
(i) the Company is duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and is a
"citizen of the United States" as defined in Section 40102(a)(15) of
the Act, and has the full corporate power, authority and legal right
under the laws of the State of Delaware to execute and deliver this
Agreement and each Financing Agreement to which it will be a party
and to carry out the obligations of the Company under this Agreement
and each Financing Agreement to which it will be a party;
(ii) the execution and delivery by the Company of this
Agreement and the performance by the Company of its obligations
under this Agreement have been duly authorized by the Company and
will not violate its Certificate of Incorporation 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
(iii) this Agreement constitutes the legal, valid and binding
obligation of the Company, enforceable against it 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.
(b) WTC represents and warrants that:
(i) WTC is duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and is a "citizen
of the United States" as defined in Section 40102(a)(15) of the Act,
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
this Agreement and each Financing Agreement to which it will be a
party and to carry out the obligations of WTC, in its capacity as
Subordination Agent, Pass Through Trustee or Paying Agent, as the
case may be, under this Agreement and each Financing Agreement to
which it will be a party;
(ii) the execution and delivery by WTC, in its capacity as
Subordination Agent, Pass Through Trustee or Paying Agent, as the
case may be, of this Agreement and the performance by WTC, in its
capacity as Subordination Agent, Pass Through Trustee or Paying
Agent, as the case may be, of its obligations under this Agreement
have been duly authorized by WTC, in its capacity as Subordination
Agent, Pass Through Trustee or Paying Agent, as the case may be, 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
(iii) this Agreement constitutes the legal, valid and binding
obligations of WTC, in its capacity as Subordination Agent, Pass
Through Trustee or Paying Agent, as the case may be, enforceable
against it 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.
(c) The Pass Through Trustee hereby confirms to each of the other
parties hereto that its representations and warranties set forth in Section 7.15
of the Basic Pass Through Trust Agreement and Section 5.04 of the Trust
Supplement are true and correct as of the date hereof.
(d) The Subordination Agent represents and warrants that:
(i) 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 this Agreement and each Financing Agreement to which it is
or will be a party and to perform its obligations under this
Agreement and each Financing Agreement to which it is or will be a
party;
(ii) this Agreement has been duly authorized, executed and
delivered by the Subordination Agent; this Agreement constitutes the
legal, valid and binding obligations of the Subordination Agent
enforceable against it 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;
(iii) none of the execution, delivery and performance by the
Subordination Agent of 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 the Subordination Agent's articles of association or
by-laws or result in any breach of, or constitute a default under,
any agreement or instrument to which the Subordination Agent is a
party or by which it or any of its properties may be bound;
(iv) neither the execution and delivery by the Subordination
Agent of this Agreement nor the consummation by the Subordination
Agent of any of the transactions contemplated hereby 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;
(v) 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 (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); and
(vi) 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.
(e) The Escrow Agent represents and warrants that:
(i) the Escrow Agent is a national banking association duly
incorporated, validly existing and in good standing under the laws
of the United States and has the full corporate power, authority and
legal right under the laws of the United States pertaining to its
banking, trust and fiduciary powers to execute and deliver this
Agreement, the Deposit Agreement and the Escrow and Paying Agent
Agreement (collectively, the "ESCROW AGENT AGREEMENTS") and to carry
out the obligations of the Escrow Agent under each of the Escrow
Agent Agreements;
(ii) the execution and delivery by the Escrow Agent of each of
the Escrow Agent Agreements and the performance by the Escrow Agent
of its obligations hereunder and thereunder have been duly
authorized by the Escrow Agent 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
(iii) each of the Escrow Agent Agreements constitutes the
legal, valid and binding obligations of the Escrow Agent enforceable
against it 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.
(f) The Paying Agent represents and warrants that:
(i) the Paying 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 United States pertaining to its banking, trust and fiduciary
powers to execute and deliver this Agreement and the Escrow and
Paying Agent Agreement (collectively, the "PAYING AGENT AGREEMENTS")
and to carry out the obligations of the Paying Agent under each of
the Paying Agent Agreements;
(ii) the execution and delivery by the Paying Agent of each of
the Paying Agent Agreements and the performance by the Paying Agent
of its obligations hereunder and thereunder have been duly
authorized by the Paying Agent 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
(iii) each of the Paying Agent Agreements constitutes the
legal, valid and binding obligations of the Paying Agent enforceable
against it 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.
SECTION 4. COVENANTS. (a) The Company covenants with each of
the other parties hereto that:
(i) [Intentionally omitted.]
(ii) subject to Section 4(a)(iv) of this Agreement, the Company
shall at all times maintain its corporate existence 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;
(iii) the Company shall at all times remain a U.S. Air Carrier (as
defined in the Financing Agreements) and shall at all times be otherwise
certificated and registered to the extent necessary to entitle the Owner Trustee
(and the Loan Trustee as assignee of the Owner Trustee's rights under each
Lease) to the rights afforded to lessors of aircraft equipment under Section
1110;
(iv) Section 13.2.1 of each Lease is hereby incorporated by
reference herein;
(v) the Company agrees to provide written notice to each of the
parties hereto of the occurrence of the Cut-off Date no later than one Business
Day after the date thereof.
(b) WTC, in its individual capacity, covenants with each of the
other parties to this Agreement 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" as defined in Section 40102(a)(15) of the Act 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. Upon WTC giving any such
notice, WTC shall, subject to Section 8.02 of any Trust Indenture then entered
into, resign as Loan Trustee in respect of such Trust Indenture.
SECTION 5. 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
delivered personally or, if promptly confirmed by mail, when dispatched by
facsimile or other written telecommunication, addressed to such party hereto at
its address or facsimile number set forth below the signature of such party at
the foot of this Agreement or to such other address or facsimile number as such
party may hereafter specify by notice to the other parties.
SECTION 6. EXPENSES. (a) The Company agrees to pay to the
Subordination Agent when due, to the extent not paid when due by the
Manufacturer, an amount or amounts equal to the fees payable to the Liquidity
Providers 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 amount of the
Deposits under the Deposit Agreement and the denominator of which shall be the
sum of (x) the then outstanding aggregate principal amount of the Equipment
Notes issued under all of the Trust Indentures and (y) the then outstanding
aggregate amount of the Deposits under the Deposit Agreement.
(b) So long as no Equipment Notes have been issued in respect of any
Aircraft, the Company agrees to pay (i) to the Subordination Agent when due, to
the extent not paid when due by the Manufacturer, (A) the amount equal to
interest on any Downgrade Advance (other than any Applied Downgrade Advance)
payable under Section 3.07 of each Liquidity Facility minus Investment Earnings
while such Downgrade Advance shall be outstanding, (B) the amount equal to
interest on any CNAI Special Termination Advance (other than any Applied CNAI
Special Termination Advance) payable under Section 3.07 of the CNAI Liquidity
Facility minus Investment Earnings from such CNAI Special Termination Advance,
(C) the amount equal to interest on any WestLB Expiration Advance (other than
any Applied WestLB Expiration Advance) payable under Section 3.07 of the WestLB
Liquidity Facility minus Investment Earnings from such WestLB Expiration
Advance; (D) the amount equal to interest on any Non-Extension Advance (other
than any Applied Non-Extension Advance) payable under Section 3.07 of the CNAI
Liquidity Facility minus Investment Earnings from such Non-Extension Advance;
(E) the amount equal to interest on any WestLB Early Termination Advance (other
than any Applied WestLB Early Termination Advance) payable under Section 3.07 of
the WestLB Liquidity Facility minus Investment Earnings from such WestLB Early
Termination Advance; (F) any other amounts owed to the Liquidity Providers by
the Subordination Agent as borrower under the Liquidity Facilities (other than
amounts due as repayment of advances thereunder or as interest on such advances,
except to the extent payable pursuant to clause (A) or (B)), (ii) all
compensation and reimbursement of expenses, disbursements and advances payable
by the Company under the Pass Through Trust Agreements, (iii) 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 and (iv) in the event
the Company requests any amendment to any Operative Agreement, all reasonable
fees and expenses (including, without limitation, fees and disbursements of
counsel) of the Escrow Agent and/or the Paying Agent in connection therewith.
For purposes of this Section 6(b), (i) 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, (ii) the terms "Applied WestLB Early Termination Advance",
"Applied WestLB Expiration Advance", "West LB Expiration Advance" and "WestLB
Early Termination Advance" shall have the meanings specified in the WestLB
Liquidity Facility and (iii) the terms "Applied Non-Extension Advance", "Applied
CNAI Special Termination Advance", "Non-Extension Advance" and "CNAI Special
Termination Advance" shall have the meanings specified in the CNAI Liquidity
Facility.
SECTION 7. FURTHER ASSURANCES. Each party hereto 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 other party hereto 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.
SECTION 8. 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 Company,
the Subordination Agent, the Escrow Agent, the Paying Agent and the Pass Through
Trustee, and the Company's, the Subordination Agent's, the Escrow Agent's, the
Paying 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. 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 Company
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 Escrow Agent and its successors as
Escrow Agent under the Escrow and Paying Agent Agreement, the Paying Agent and
its successors as Paying Agent under the Escrow and Paying Agent Agreement 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 Underwriters and each of the
beneficiaries of Section 6 hereof) with any rights of any nature whatsoever
against any of the parties hereto, and no person not a party hereto (other than
the Underwriters and each of the beneficiaries of Section 6 hereof) shall have
any right, power or privilege in respect of, or have any benefit or interest
arising out of, this Agreement.
SECTION 9. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THIS AGREEMENT
IS BEING DELIVERED IN THE STATE OF NEW YORK.
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.
By
---------------------------------------
Name:
Title:
Address: 1600 Smith Street, HQSFN
Houston, TX 77002
Attention: Treasurer
Facsimile: (713) 324-2447
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as otherwise
provided herein, but solely as Pass Through
Trustee
By
----------------------------------------
Name:
Title:
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust
Administration
Facsimile: (302) 651-8882
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as otherwise
provided herein, but solely as Subordination
Agent
By
----------------------------------------
Name:
Title:
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust
Administration
Facsimile: (302) 651-8882
WELLS FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION,
as Escrow Agent
By
----------------------------------------
Name:
Title:
Address: MAC: U1228-120
299 South Main Street
12th Floor
Salt Lake City, Utah 84111
Attention: Corporate Trust
Services
Facsimile: (801) 246-5053
WILMINGTON TRUST COMPANY,
as Paying Agent
By
----------------------------------------
Name:
Title:
Address: Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust
Administration
Facsimile: (302) 651-8882
SCHEDULE I to
NOTE PURCHASE AGREEMENT
AIRCRAFT
PART A - EXISTING AIRCRAFT
Registration Manufacturer's Scheduled
Number Serial Number Delivery Month
- ------------------- ------------------ -------------------
N11155 145782 Previously
Delivered
N10156 145786 Previously
Delivered
N12157 145787 Previously
Delivered
N14158 145791 Previously
Delivered
N17159 145792 Previously
Delivered
N12160 145799 Previously
Delivered
N13161 14500805 Previously
Delivered
N14162 14500808 Previously
Delivered
N12163 14500811 Previously
Delivered
N11164 14500817 Previously
Delivered
N11165 14500819 Previously
Delivered
PART B - NEW AIRCRAFT
N12166 14500831 July 2004
N12167 14500834 July 2004
N14168 14500840 August 2004
N17169 14500844 August 2004
N16170 14500850 September 2004
SCHEDULE II to
NOTE PURCHASE AGREEMENT
TRUST SUPPLEMENT
Trust Supplement dated as of the Issuance Date between the Company and the Pass
Through Trustee in respect of the Continental Airlines Class A Pass Through
Trust, Series 2004-ERJ1.
Schedule III to
NOTE PURCHASE AGREEMENT
MANDATORY ECONOMIC TERMS
o The aggregate principal amount of the Equipment Notes issued with
respect to an Aircraft shall not exceed the amounts set forth in the
following table:
AIRCRAFT
REGISTRATION MANUFACTURER'S PRINCIPAL AMOUNT
NUMBER SERIAL NUMBER OF EQUIPMENT NOTES
------------ -------------- ------------------
N11155 145782 $10,745,972
N10156 145786 10,686,554
N12157 145787 10,692,100
N14158 145791 10,571,853
N17159 145792 10,598,759
N12160 145799 10,926,373
N13161 14500805 11,062,500
N14162 14500808 11,348,468
N12163 14500811 10,748,893
N11164 14500817 10,822,420
N11165 14500819 11,013,029
N12166 14500831 11,096,335
N12167 14500834 11,096,335
N14168 14500840 11,149,043
N17169 14500844 11,152,077
N16170 14500850 11,150,989
o The Loan to Aircraft Value for the Equipment Notes issued for each
Aircraft computed on the date of issuance thereof (with value for
such Aircraft for these purposes initially equal to its value set
forth under "Description of the Aircraft and the Appraisals--The
Appraisals" in the column "Appraised Value" in the Prospectus
Supplement and thereafter based on such value after giving effect to
the Depreciation Assumption (as defined in the Prospectus
Supplement)) as of the issuance date of such Equipment Notes and any
Regular Distribution Date thereafter (assuming no default in the
payment of the Equipment Notes and after giving effect to scheduled
payments) will not exceed 56.5%.
o The initial average life of the Equipment Notes for any Aircraft
shall not extend beyond 10 years from the Issuance Date.
o As of the Delivery Period Termination Date, the average life of the
Certificates shall not be more than 9.8 years from the Issuance Date
(computed without regard to the acceleration of any Equipment Notes
and after giving effect to any special distribution on the
Certificates thereafter required in respect of unused Deposits).
o The final expected distribution date of the Certificates shall be as
set forth on the cover page of the Prospectus Supplement.
o The original aggregate principal amount of all of the Equipment
Notes shall not exceed the original aggregate face amount of the
Certificates.
o The interest rate applicable to the Equipment Notes must be equal to
the rate applicable to the Certificates.
o The payment dates for the Equipment Notes must be on the first day
of each month after July 1, 2004, and basic rent under the Leases
must be payable on such dates.
o Basic rent, stipulated loss values and termination values under the
Leases must be sufficient to pay amounts due with respect to the
related Equipment Notes.
o The amounts payable under the all-risk aircraft hull insurance
maintained with respect to each Aircraft must be sufficient to pay
the applicable stipulated loss value, subject to certain rights of
self-insurance.
o (a) The past due rate in the Trust Indentures and the Leases, (b)
the "Make-Whole Amount" payable under the Trust Indentures, (c) the
provisions relating to the redemption and purchase of Equipment
Notes in the Trust Indentures, (d) the minimum liability insurance
amount on Aircraft in the Leases, and (e) the indemnification of the
Loan Trustees, Subordination Agent, Liquidity Providers, Pass
Through Trustee, Escrow Agent and registered holders of the
Equipment Notes with respect to certain taxes and expenses, in each
case shall be provided as set forth in the forms of Participation
Agreements, Lease and Trust Indentures attached as exhibits to the
Note Purchase Agreement.
SCHEDULE IV TO
NOTE PURCHASE AGREEMENT
MANDATORY DOCUMENT TERMS
The terms "Form of Participation Agreement" "Form of Lease" and "Form of Trust
Indenture" correspond to Exhibits A, B and C of the Note Purchase Agreement.
1. May not modify in any material adverse respect the Granting Clause of the
Form of Trust Indenture so as to deprive the Note Holders of a first
priority security interest in and mortgage lien on the Aircraft and the
Lease or to eliminate any of the obligations secured thereby or otherwise
modify in any material adverse respect as regards the interests of the
Note Holders, the Subordination Agent, the Liquidity Providers or the
Mortgagee the provisions of Article II or III or Section 4.02, 4.03, 4.04,
5.02, 5.06, 9.01(b), 10.04, 10.11 or 10.12 of the Form of Trust Indenture.
2. May not modify in any material adverse respect as regards the interests of
the Note Holders, the Subordination Agent, the Liquidity Providers or the
Mortgagee the provisions of Section 3.2.1(b), 3.3(c), 4.7, the final
sentence of 7.1.1, 10.3.1(d)(ii), 13.3, 16, 18.3 or 18.7(a) of the Form of
Lease or otherwise modify the terms of the Form of Lease so as to deprive
the Mortgagee of rights expressly granted to the "Mortgagee" therein.
3. May not modify in any material adverse respect as regards the interests of
the Note Holders, the Subordination Agent, the Liquidity Providers or the
Mortgagee the provisions of Section 5.1.9, 5.1.10, 5.1.11, 5.1.12, 7.5,
12, 15.8(a) or 15.9 of the Form of Participation Agreement or of the
provisions of Section 5.1.2(xxv) or 10.1.1(a)(iv) of the Form of
Participation Agreement so as to eliminate the requirement to deliver to
the Loan Participant or the Mortgagee, as the case may be, the legal
opinions to be provided to such Persons thereunder (recognizing that the
lawyers rendering such opinions may be changed) or of the provisions of
Section 7.6.11(a)(ii) of the Form of Participation Agreement as regards
the rights of the Mortgagee thereunder or otherwise modify the terms of
the Form of Participation Agreement to deprive the Note Holders, the
Subordination Agent, the Liquidity Providers or the Mortgagee of any
indemnity or right of reimbursement in its favor for Expenses or Taxes.
4. May not modify, in any material adverse respect as regards the interests
of the Note Holders, the Subordination Agent, the Liquidity Providers or
the Mortgagee, the definition of "Make Whole Amount" in Annex A to the
Participation Agreement Form.
Notwithstanding the foregoing, any such Mandatory Document Term may be
modified to correct or supplement any such provision which may be
defective or to cure any ambiguity or correct any mistake, PROVIDED that
any such action shall not materially adversely affect the interests of the
Note Holders, the Subordination Agent, the Liquidity Providers, the
Mortgagee or the Certificateholders.
ANNEX A to
NOTE PURCHASE AGREEMENT
DEFINITIONS
"ACT" means part A of subtitle VII of title 49, United States Code.
"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" has the meaning set forth in the second recital to the Note Purchase
Agreement.
"ASSUMED AMORTIZATION SCHEDULE" means the amortization schedule set forth on
page S-32 of the Prospectus Supplement.
"AVERAGE LIFE DATE" means, for any Equipment Note, the date which follows the
time of determination by a period equal to the Remaining Weighted Average Life
of such Equipment Note.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, 11 U.S.C. ss.ss. 101
ET SEQ.
"BASIC PASS THROUGH TRUST AGREEMENT" means the Pass Through Trust Agreement,
dated September 25, 1997, between the Company and Pass Through Trustee, as such
agreement may be supplemented, amended or modified, but does not include the
Trust Supplement.
"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, Wilmington, Delaware or Salt Lake City, Utah.
"CERTIFICATES" has the meaning set forth in the fourth recital to the Note
Purchase Agreement.
"CERTIFICATEHOLDER" means the Person in whose name a Certificate is registered
in the Register.
"COMPANY" means Continental Airlines, Inc., a Delaware corporation.
"CORPORATE TRUST OFFICE" with respect to the Pass Through 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 the earlier of (a) the day after the Delivery Period
Termination Date and (b) the date on which a Triggering Event occurs.
"DELIVERY PERIOD TERMINATION DATE" means the earlier of (a) December 31, 2004,
or, if the Equipment Notes relating to all of the New Aircraft (or Substitute
Aircraft in lieu thereof) have not been purchased by the Pass Through Trustee on
or prior to such date due to any reason beyond the control of the Company and
not occasioned by the Company's fault or negligence, March 31, 2005 and (b) the
date on which Equipment Notes issued with respect to all of the Aircraft (or
Substitute Aircraft in lieu thereof) have been purchased by the Pass Through
Trustee in accordance with the Note Purchase Agreement.
"DELIVERY DATE" means the Business Day on which a New Aircraft is delivered to
and accepted by the Company.
"DELIVERY NOTICE" means a Delivery Notice substantially in the form of Exhibit F
to the Note Purchase Agreement.
"DEPOSIT" has the meaning set forth in the sixth recital to the Note Purchase
Agreement.
"DEPOSIT AGREEMENT" has the meaning set forth in the sixth recital to the Note
Purchase Agreement.
"DEPOSITARY" means WestLB AG, New York Branch.
"EQUIPMENT NOTES" means and includes any equipment notes issued under any Trust
Indenture in the form specified in Section 2.01 thereof (as such form may be
varied pursuant to the terms of such Trust Indenture) and any Equipment Note
issued under any Trust Indenture in exchange for or replacement of any other
Equipment Note.
"ESCROW AGENT" has the meaning set forth in the first paragraph of the Note
Purchase Agreement.
"ESCROW AGENT AGREEMENTS" has the meaning set forth in Section 3(e)(i) of the
Note Purchase Agreement.
"ESCROW AND PAYING AGENT AGREEMENT" has the meaning set forth in the fifth
recital to the Note Purchase Agreement.
"EXISTING AIRCRAFT" has the meaning set forth in the second recital to the Note
Purchase Agreement.
"EXISTING LEASES" has the meaning set forth in the second recital to the Note
Purchase Agreement.
"FAA" means the Federal Aviation Administration of the United States.
"FINAL WITHDRAWAL" with respect to the Escrow and Paying Agent Agreement, has
the meaning set forth in Section 1.02 thereof.
"FINANCING AGREEMENTS" means, collectively, the Purchase Agreement Assignment,
the Initial Purchase Agreement Assignment (if a New Aircraft), the Participation
Agreement, the Lease, the Trust Indenture, the Equipment Notes issued
thereunder, and the Trust Agreement relating to the financing of an Aircraft.
"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.
"INITIAL DEPOSITS" has the meaning set forth in the sixth recital to the Note
Purchase Agreement.
"INITIAL PURCHASE AGREEMENT ASSIGNMENT" means a Purchase Agreement Assignment
substantially in the form of Exhibit D-2 to the Note Purchase Agreement.
"INTERCREDITOR AGREEMENT" has the meaning set forth in the ninth recital to the
Note Purchase Agreement.
"ISSUANCE DATE" means the date of the original issuance of the Certificates.
"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" means a Lease Agreement substantially in the form of Exhibit B to the
Note Purchase Agreement.
"LIQUIDITY FACILITIES" has the meaning set forth in the ninth recital to the
Note Purchase Agreement.
"LIQUIDITY PROVIDERS" has the meaning set forth in the ninth recital to the Note
Purchase Agreement.
"LOAN TRUSTEE" means the "Mortgagee" as defined in the Financing Agreements.
"MANDATORY DOCUMENT TERMS" means the terms set forth on Schedule IV to the Note
Purchase Agreement.
"MANDATORY ECONOMIC TERMS" means the terms set forth on Schedule III to the Note
Purchase Agreement.
"MANUFACTURER" means Embraer-Empresa Brasileira de Aeronautica S.A., a Brazilian
corporation, solely in its capacity as manufacturer or seller of the Aircraft.
"NEW AIRCRAFT" has the meaning set forth in the second recital to the Note
Purchase Agreement.
"NOTE PURCHASE AGREEMENT" means the Note Purchase Agreement to which this Annex
A is attached.
"NOTICE OF PURCHASE WITHDRAWAL" with respect to the Deposit Agreement, has the
meaning set forth in Section 2.3 thereof.
"OPERATIVE AGREEMENTS" means, collectively, the Pass Through Trust Agreement,
the Escrow and Paying Agent Agreement, the Deposit Agreement, the Liquidity
Facilities, the Intercreditor Agreement, the Certificates and the Financing
Agreements.
"OWNER PARTICIPANT" means, with respect to any Aircraft, the Person named as the
Owner Participant in the Participation Agreement with respect to such Aircraft.
"OWNER TRUST" means, with respect to any Aircraft, the trust created by the
Trust Agreement related thereto.
"OWNER TRUSTEE" means, with respect to any Aircraft, the "Owner Trustee" party
to the Trust Agreement related thereto.
"PARTICIPATION AGREEMENT" means a Participation Agreement substantially in the
form of Exhibit A to the Note Purchase Agreement.
"PASS THROUGH TRUST" has the meaning set forth in the fourth recital to the Note
Purchase Agreement.
"PASS THROUGH TRUST AGREEMENT" means the Trust Supplement, together with the
Basic Pass Through Trust Agreement, dated as of the Issuance Date, by and
between the Company and Pass Through Trustee.
"PASS THROUGH TRUSTEE" has the meaning set forth in the first paragraph of the
Note Purchase Agreement.
"PAYING AGENT" has the meaning set forth in the first paragraph of the Note
Purchase Agreement.
"PAYING AGENT AGREEMENTS" has the meaning set forth in Section 3(f)(i) of the
Note Purchase Agreement.
"PERSON" means any individual, firm, partnership, joint venture, trust, trustee,
Government Entity, organization, association, corporation, limited liability
company, government agency, committee, department, authority and other body,
corporate or incorporate, whether having distinct legal status or not, or any
member of any of the same.
"PROSPECTUS SUPPLEMENT" means the final Prospectus Supplement, dated June 18,
2004, to the Prospectus, dated August 23, 2001, of the Company relating to the
offering of the Certificates.
"PURCHASE AGREEMENT" means the Purchase Agreement GPJ-003/96 between
Manufacturer and ExpressJet Airlines, Inc. (formerly Continental Express, Inc.)
(including all exhibits thereto, together with all letter agreements entered
into that by their terms constitute part of such Purchase Agreement), as
amended.
"PURCHASE AGREEMENT ASSIGNMENT" means a Purchase Agreement Assignment
substantially in the form of Exhibit D-1 to the Note Purchase Agreement (for an
Existing Aircraft) or Exhibit D-3 to the Note Purchase Agreement (for a New
Aircraft).
"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 Investors Service, Inc. and Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc.
"RATING AGENCY CONFIRMATION" means, with respect to (1) any Financing Agreement
that has been modified in any material respect from the forms thereof attached
to the Note Purchase Agreement or (2) a Substitute Aircraft, a written
confirmation from each of the Rating Agencies that (a) the use of such Financing
Agreement with such modifications or (b) the substituting of such Substitute
Aircraft for a New Aircraft, respectively, would not result in (i) a reduction
of the rating for the Certificates below the then current rating for the
Certificates or (ii) a withdrawal or suspension of the rating of the
Certificates.
"REGISTER" means the register maintained pursuant to Sections 3.04 and 7.12 of
the Basic Pass Through Trust Agreement with respect to the Pass Through Trust.
"REGULAR DISTRIBUTION DATE" shall mean the first day of each month, commencing
August 1, 2004.
"REMAINING WEIGHTED AVERAGE LIFE" means, on a given date with respect to any
Equipment Note, 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.
"SCHEDULED CLOSING DATE" has the meaning set forth in Section 1(b) of the Note
Purchase Agreement.
"SECTION 1110" means 11 U.S.C. ss. 1110 of the Bankruptcy Code or any successor
or analogous Section of the federal bankruptcy Law in effect from time to time.
"SUBORDINATION AGENT" has the meaning set forth in the first paragraph of the
Note Purchase Agreement.
"SUBSTITUTE AIRCRAFT" has the meaning set forth in Section 1(g) of the Note
Purchase Agreement.
"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.
"TREASURY YIELD" means, as of any date of determination, with respect to any
Equipment Note (utilizing the Assumed Amortization Schedule applicable thereto),
the interest rate (expressed 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 monthly 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). The "most recent H.15(519)" means the
H.15(519) most recently published prior to the close of business on the date of
determination of the Deposit Make-Whole Premium.
"TRIGGERING EVENT" has the meaning assigned to such term in the Intercreditor
Agreement.
"TRUST AGREEMENT" means a Trust Agreement substantially in the form of Exhibit E
to the Note Purchase Agreement.
"TRUST INDENTURE" means a Trust Indenture and Mortgage substantially in the form
of Exhibit C to the Note Purchase Agreement.
"TRUST SUPPLEMENT" means an agreement supplemental to the Basic Pass Through
Trust Agreement pursuant to which (i) a trust is created for the benefit of the
holders of the Certificates, (ii) the issuance of the Certificates representing
fractional undivided interests in such trust is authorized and (iii) the terms
of the Certificates are established.
"UNDERWRITERS" has the meaning set forth in the fifth recital to the Note
Purchase Agreement.
"UNDERWRITING AGREEMENT" has the meaning set forth in the fifth recital to the
Note Purchase Agreement.
"WTC" has the meaning set forth in the first paragraph of the Note Purchase
Agreement.
EXHIBIT A to
NOTE PURCHASE AGREEMENT
FORM OF PARTICIPATION AGREEMENT
(Filed Separately)
EXHIBIT B to
NOTE PURCHASE AGREEMENT
FORM OF LEASE
(Filed Separately)
EXHIBIT C to
NOTE PURCHASE AGREEMENT
FORM OF TRUST INDENTURE
(Filed Separately)
EXHIBIT D-1 to
NOTE PURCHASE AGREEMENT
FORM OF PURCHASE AGREEMENT ASSIGNMENT
(EXISTING AIRCRAFT)
AMENDED AND RESTATED
PURCHASE AGREEMENT ASSIGNMENT NO. 2 - [DEAL_]
AMENDED AND RESTATED PURCHASE AGREEMENT ASSIGNMENT NO. 2 - [Deal_],
dated as of June ___, 2004 (this "Restated Assignment"), between PM Limited, a
Cayman Islands company (the "Assignor" or "PM Limited"), WELLS FARGO BANK
NORTHWEST, NATIONAL ASSOCIATION, not in its individual capacity but solely as
Owner Trustee (the "Assignee"), and EXPRESSJET AIRLINES, INC., a Delaware
corporation ("Express"), which amends and restates in its entirety the Original
PAA No. 2 (as hereinafter defined).
RECITALS
WHEREAS, Express and EMBRAER-Empresa Brasileira de Aeronautica S.A., a
corporation organized under the laws of Brazil ("Embraer"), have entered into
the Purchase Agreement, pursuant to which, among other things, Embraer has
agreed to manufacture and sell to Express, and Express has agreed to purchase
from Embraer, certain aircraft, including the Aircraft (as defined in the
Purchase Agreement Assignment No. 1 described below);
WHEREAS, pursuant to a Purchase Agreement Assignment No. 1 - [Deal_],
dated as of [Initial_Delivery_Date] ("PAA No. 1"), between Express and PM
Limited, Express has, among other things, heretofore assigned to PM Limited,
with the consent of the Manufacturer, certain of its right, title and interest
in, to and under the Purchase Agreement including, without limitation, the right
to purchase the Aircraft from Embraer upon and subject to the terms and
conditions set forth in the Purchase Agreement and PAA No.
1;
WHEREAS, PM Limited has heretofore purchased the Aircraft from Embraer
and, concurrently therewith, has heretofore sold the Aircraft to Wells Fargo
Bank Northwest, National Association, acting not in its individual capacity but
solely as Owner Trustee under the Trust Agreement [Deal_], dated as of
[Initial_Delivery_Date] (the "Original Trust Agreement"), between Refine,
Inc., as Owner Participant (the "Owner Participant"), and Wells Fargo Bank
Northwest, National Association ("Wells Fargo"), as amended and restated in its
entirety by that certain Amended and Restated Trust Agreement [Deal_], dated
as of the date hereof, between the Owner Participant and Wells Fargo (the
Original Trust Agreement, as so amended and restated, the "Amended and Restated
Trust Agreement");
WHEREAS, in connection with the sale of the Aircraft by PM Limited to the
Owner Trustee and with the consent of the Manufacturer, PM Limited has, pursuant
to the Purchase Agreement Assignment No. 2-[Deal_], dated as of
[Initial_Delivery_Date] (the "PAA No. 2"), between PM Limited and the Owner
Trustee, heretofore transferred to the Owner Trustee all of PM Limited's present
and future rights, title, obligations and interests in, to and under the
Purchase Agreement as assigned by PAA No. 1, except for PM Limited's right to
purchase the Aircraft from the Manufacturer pursuant to Section 2(a) of PAA No.
1;
WHEREAS, the Owner Trustee desires to (i) issue Equipment Notes (as
defined in Annex A to the Lease Agreement referred to herein) for the purpose of
enabling the Owner Participant to repay, in part, the indebtedness relating to
the acquisition of the Aircraft by the Owner Trustee, (ii) terminate the Lease
Agreement [Deal_], dated as of the date of PAA No. 1 (the "Existing Lease"),
between the Owner Trustee and Continental Airlines, Inc. ("Continental"), in
connection therewith and (iii) re-lease the Aircraft to Continental pursuant to
the Lease Agreement (as hereinafter defined); and
WHEREAS, to facilitate the transactions described in the immediately
preceding Whereas clause, PM Limited and the Assignee desire to amend and
restate in its entirety PAA No. 2 on the terms and conditions hereof, Express
desires to agree to the terms and provisions hereof and to certain changes to
PAA No. 1, as provided herein, and the Manufacturer is willing to execute and
deliver to the Assignee a Consent and Agreement to the provisions hereof in
substantially the form attached hereto as Annex 1;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements of the parties contained herein, and for other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Assignor and the Assignee hereby agree to amend and restate
PAA No.2 in its entirety upon the terms set forth herein, and the parties hereto
further agree as follows:
Section 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 PAA No. 1.
Section 2. TRANSFER AND ASSUMPTION. The Assignor does hereby sell, assign
and transfer to the Assignee all of the Assignor's present and future rights,
title, obligations and interest in, to and under the Purchase Agreement as
assigned by PAA No. 1, excluding the right to purchase the Aircraft from the
Manufacturer (the "Assignor's Interest") and the Assignee hereby accepts the
Assignor's Interest from the Assignor. The Assignee agrees that it shall be
bound by all the terms of, and shall assume and undertake to perform all the
obligations of, the Assignor with respect to the Assignor's Interest. For all
purposes of PAA No. 1 and this Restated Assignment, Express, the Assignor and
the Assignee hereby agree that:
(I) the "Lease" or "Lease Agreement" referred to in PAA No. 1 shall
be deemed to refer to the Lease Agreement [Deal_], dated as of the date
hereof (as the same may be amended, modified or supplemented, the "Lease
Agreement"), between the Owner Trustee and Continental, providing for the
lease of the Aircraft;
(II) the Participation Agreement referred to in Paragraph 4 of PAA
No. 1 shall be deemed to refer to the Participation Agreement defined in
Annex A to the Existing Lease;
(III) Continental, in lieu of Express, shall have the rights
referred to in clause (iii)(B) of the first paragraph of Section 2 of PAA
No. 1 after notice by Continental to the Manufacturer that Continental is
entitled to possession of the Aircraft;
(IV) Continental, in lieu of Express, shall be entitled to exercise
the rights of Express under the second paragraph of Section 2 of PAA No. 1
after notice by Continental to the Manufacturer that Continental is
entitled to possession of the Aircraft; and
(V) the Manufacturer shall not be deemed to have knowledge of, and
need not recognize nor take any action with respect to, the termination of
Express's rights under PAA No. 1 by Continental to the extent permitted
hereunder or thereunder unless and until the Manufacturer shall have
received from Continental, as required by the terms of this Restated
Assignment, written notice (including notice by fax) thereof and, in
acting in accordance with the terms and conditions of the Purchase
Agreement and this Restated Assignment and PAA No. 1, the Manufacturer may
act in accordance with and conclusively rely upon any such notice.
Section 3. CONFIDENTIAL TREATMENT. The Assignee and the Assignor agree
that the provisions of Paragraph 8 of PAA No. 1 are hereby terminated and
superseded by the provisions of this Section 3 and, in furtherance thereof,
agree that they will not disclose to any third party (other than their direct
and indirect parent companies) the terms of the Purchase Agreement (whether or
not related to the Aircraft) or PAA No. 1 or this Restated Assignment, except
(a) as required by applicable law, judicial proceeding or governmental
regulation, (b) in the case of the Assignee, as required for the assignment of
its rights under this Restated Assignment in accordance with the provisions of
Article 16 of the Purchase Agreement, (c) with the prior written consent of
Express, the Assignor and the Manufacturer, which consent shall not be
unreasonably withheld with respect to a prospective bona fide purchaser of the
Aircraft, (d) to prospective and permitted transferees of Owner Participant's
interest or their or Owner Participant's respective counsel or special counsel,
independent insurance brokers, auditors, or other agents, (e) as otherwise
permitted by the Operative Agreements (as defined in Annex A to the Lease), or
(f) to such other Persons as are reasonably deemed necessary by the disclosing
party for the purposes of enforcing such documents by such party; PROVIDED that
any such disclosure under this sentence shall be made only to the extent
necessary to meet the specific requirements or needs of the Assignee or PM
Limited, as the case may be. Any disclosure as contemplated in (b), (c) or (d)
above shall include a requirement that the entity to which the information is
disclosed shall be subject to obligations of nondisclosure with respect to such
information substantially the same as those contained herein.
Section 4. ASSIGNMENT TO MORTGAGEE. The right, title and interest of the
Assignee in and to this Restated Assignment has, contemporaneously with the
execution and delivery hereof, been assigned to and is subject to a security
interest in favor of the Mortgagee (as such terms and the other capitalized
terms used hereinafter in this sentence are defined in Appendix A to the Lease)
under the Trust Indenture, for the benefit of the Loan Participants and the Note
Holders referred to the Trust Indenture, all to the extent provided in such
Trust Indenture. The Assignor hereby consents to such assignment and to the
creation of such security interest in and to this Restated Assignment.
Section 5. NOTICES. Any notices provided for in PAA No. 1 shall be
delivered to the Assignee at the following address or such other place as the
Assignee may designate in accordance with PAA No. 1:
Wells Fargo Bank Northwest,
National Association
MAC: U1228-120
Attn: Corporate Trust Dept.
299 S. Main Street, 12th Floor
Salt Lake City, UT 84111
Facsimile: 801-246-5053
Section 6. HEADINGS. The headings of the Sections herein are for
convenience of reference only and shall not define or limit any of the terms
or provisions hereof.
Section 7. GOVERNING LAW. THIS RESTATED ASSIGNMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, UNITED
STATES OF AMERICA, WITHOUT REGARD TO CONFLICT OF LAWS RULES OTHER THAN SECTION
5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
Section 8. 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.
Section 9. PURCHASE AGREEMENT. The rights and obligations of the parties
hereto are subject to the terms and conditions of the Purchase Agreement.
[Remainder of the Page is Intentionally Left Blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Restated
Assignment to be duly executed as of the day and year first written above.
PM LIMITED, as Assignor
By:
-----------------------------------
Name:
Title:
WELLS FARGO BANK
NORTHWEST, NATIONAL
ASSOCIATION, not in its
individual capacity but solely as
Owner Trustee, as Assignee
By:
-----------------------------------
Name:
Title:
EXPRESSJET AIRLINES, INC.
By:
-----------------------------------
Name:
Title:
Annex 1 to Amended
and Restated Purchase
Agreement Assignment No. 2 - [Deal_]
CONSENT AND AGREEMENT NO. 2 - [DEAL_]
The undersigned, EMBRAER-EMPRESA BRASILEIRA DE AERONAUTICA S.A., a
corporation organized and existing under the laws of Brazil, hereby acknowledges
notice of and consents to all of the terms of the foregoing Amended and Restated
Purchase Agreement Assignment No. 2 - [Deal_], dated as of ________ ___, 2004,
by and among PM Limited, WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not
in its individual capacity but solely as Owner Trustee, and EXPRESSJET AIRLINES,
INC., to the extent they relate to the Manufacturer (herein called the
"Assignment No. 2", the defined terms therein being hereinafter used with the
same meaning) and hereby confirms to the Assignee that: (i) all representations,
warranties, indemnities and agreements of the Manufacturer under the Purchase
Agreement with respect to the Aircraft shall inure to the benefit of the
Assignee to the same extent as if originally named the "Buyer" therein, subject
to the terms and conditions of the Assignment No. 2, the Purchase Agreement and
PAA No. 1; (ii) the Assignee shall not be liable for any of the obligations or
duties of Express under the Purchase Agreement, nor shall the Assignment No. 2
give rise to any duties or obligations whatsoever on the part of the Assignee
owing to the Manufacturer except for the Assignee's agreement to the effect that
in exercising any rights under the Purchase Agreement, or in making any claim
with respect to the Aircraft or other things (including without limitation data,
documents and services) delivered or to be delivered pursuant to the Purchase
Agreement, the terms and conditions of the Purchase Agreement shall apply to and
be binding upon the Assignee to the same extent as if the Assignee had been the
original "Buyer" thereunder, and with respect to such agreement the Manufacturer
agrees that, anything contained in the Purchase Agreement or the Assignment No.
2 to the contrary notwithstanding, so long as the Manufacturer shall not have
received notice that a Lease Event of Default has occurred and is continuing,
the Assignee shall not have any responsibility to the Manufacturer for failure
to comply with any of the terms of the Purchase Agreement with respect to the
Aircraft while under lease to Continental so long as the Assignee acts upon the
written instructions of Express (or, if Continental shall have specified in a
written notice to the Assignee and the Manufacturer that Continental is entitled
to possession of the Aircraft, Continental) (to which instructions the
Manufacturer understands it shall have access on request); PROVIDED that no
person other than the Manufacturer shall have any rights against the Assignee
with respect to the undertaking and agreement set forth in this clause (ii);
(iii) the Manufacturer will continue to pay to Express (or, if Continental shall
have specified in a written notice to the Assignee and the Manufacturer that
Continental is entitled to possession of the Aircraft, Continental) all payments
which the Manufacturer may be required to make in respect of the Aircraft under
the Purchase Agreement unless and until the Manufacturer shall have received
written notice addressed to its Contracts Administrator, by mail to
EMBRAER-Empresa Brasileira de Aeronautica S.A., Av. Brigadeiro Faria Lima, 2170,
12.227-901 Sao Jose dos Campos-SP, Brazil, or by fax to fax no: 55 12-3927-1257,
that a Lease Event of Default has occurred and is continuing (which such notice
from the Assignee shall be conclusive proof thereof to the Manufacturer and as
to which the Manufacturer shall have no obligation to inquire), whereupon the
Manufacturer will, until the Manufacturer shall have received notice in writing
sent or addressed as aforesaid that no Lease Event of Default exists, make any
and all payments and take any and all actions which it may be required
thereafter to make or take in respect of the Aircraft under the Purchase
Agreement and the right to receive which has been assigned under the Assignment
No. 2 directly to the Assignee at its address at MAC: U1228-120, 299 S. Main
Street, 12th Floor, Salt Lake City, Utah 84111 , telecopy no. 801-246-5053; (iv)
from and after the delivery of the Aircraft on the Delivery Date, the
Manufacturer will not assert any lien or claim against the Aircraft or any part
thereof arising with respect to or in connection with any work or other services
performed before the delivery and acceptance of the Aircraft; and (v) the
Manufacturer consents to the grant of a security interest in the Purchase
Agreement pursuant to the Trust Indenture (as defined in Appendix A to the
Lease).
The Manufacturer hereby represents and warrants that (A) the Manufacturer
is a corporation duly organized and existing in good standing under the laws of
Brazil, (B) the making and performance of the Purchase Agreement have been duly
authorized by all necessary corporate action on the part of the Manufacturer, do
not require any stockholder approval, do not contravene the Manufacturer's
By-Laws or any indenture, credit agreement or other contractual agreement to
which the Manufacturer is a party or by which it is bound, and the making of the
Purchase Agreement does not contravene any law binding on the Manufacturer, (C)
the making and performance of this Consent and Agreement have been duly
authorized by all necessary corporate action on the part of the Manufacturer, do
not require any stockholder approval and do not contravene any law binding on
the Manufacturer or contravene the Manufacturer's By-laws or any indenture,
credit agreement or other contractual agreement to which the Manufacturer is a
party or by which it is bound, (D) the Purchase Agreement constituted as of the
date thereof and at all times thereafter to and including the date of this
Consent and Agreement constitutes a binding obligation of the Manufacturer
enforceable against the Manufacturer in accordance with its terms subject to:
(i) the limitations of applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally) and (ii)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law), and (E) this Consent and
Agreement is a binding obligation of the Manufacturer enforceable against the
Manufacturer in accordance with its terms subject to: (a) the limitations of
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally; and (b) general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law). It is understood that the execution by the Manufacturer of
this Consent and Agreement is subject to the condition that concurrently with
execution and delivery hereof the Aircraft will be leased to Continental under
the Lease Agreement.
[The remainder of this page has been left blank intentionally.]
This Consent and Agreement shall be governed by the laws of the State of
New York, including all matters of construction, validity and performance, as
applicable to contracts between citizens of the state to be performed wholly
within that state, and without regard to conflicts of law rules other than
Section 5-1401 of the New York General Obligations Law.
Dated as of _______ ___, 2004.
EMBRAER-EMPRESA BRASILEIRA
DE AERONAUTICA S.A.
By
----------------------------------
Title:
By
----------------------------------
Title:
EXHIBIT D-2 to
NOTE PURCHASE AGREEMENT
FORM OF INITIAL PURCHASE AGREEMENT ASSIGNMENT
(NEW AIRCRAFT)
PURCHASE AGREEMENT ASSIGNMENT NO. 1-[DEAL]
This PURCHASE AGREEMENT ASSIGNMENT NO. 1-[DEAL] (the
"Assignment"), dated as of _______ ___, 2004, is between EXPRESSJET
AIRLINES, INC., a Delaware corporation (the "Assignor"), and PM Limited, a
Cayman Islands company (the "Assignee").
WHEREAS, the Assignor and the Manufacturer (as hereinafter defined)
are parties to the Purchase Agreement (as hereinafter defined) providing, among
other things, for the manufacture and sale by the Manufacturer to the Assignor
of certain aircraft, engines and related equipment, including the Aircraft (as
hereinafter defined), and the Aircraft is covered by the Lease Agreement (as
hereinafter defined).
WHEREAS, the Assignee wishes to acquire the Aircraft from the
Manufacturer, and the Assignor, on the terms and conditions hereinafter set
forth, is willing to assign to the Assignee certain of the Assignor's rights and
interests under the Purchase Agreement, and the Assignee is willing to accept
such assignment, as hereinafter set forth.
WHEREAS, the Manufacturer is willing to execute and deliver to
Assignee a Consent and Agreement to the provisions hereof in substantially the
form attached hereto as Annex 1.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. For all purposes of this Assignment, except as otherwise
expressly provided or unless the context otherwise requires, the following terms
shall have the following meanings:
AIRCRAFT. The Embraer Model EMB-145 XR aircraft to be delivered
under the Purchase Agreement bearing Manufacturer's Serial No. [_________] and
U.S. Registration Mark [N______] (as hereinafter defined), with two Allison
AE3007A1E engines installed on such aircraft on the date of delivery therefor,
together with the equipment, components and accessories installed thereon
pursuant to the Purchase Agreement.
LEASE OR LEASE AGREEMENT. The Lease Agreement dated as of the date
hereof as the same may be amended, modified or supplemented, between Wells Fargo
Bank Northwest, National Association, not in its individual capacity but solely
as Owner Trustee, as lessor, and Continental Airlines, Inc. ("CAL"), as lessee,
providing for the lease of the Aircraft.
MANUFACTURER. EMBRAER-Empresa Brasileira de Aeronautica S.A., a
corporation organized and existing under the laws of Brazil, and its successors
and assigns.
PURCHASE AGREEMENT. Purchase Agreement No. GPJ-003/96, dated August
5, 1996 as the same may be amended, supplemented or otherwise modified from time
to time in accordance with its terms, between the Manufacturer and the Assignor
(formerly known as Continental Express, Inc.) solely with respect to Articles 1,
2(a), 3(a), 4(a), 5(a), 6, 7(a) and (c), 12(a), 15, 17, 19, 20, 21, 24, 25, 26,
27, 28, 29 and 30 thereof, and Attachment C thereto providing, among other
things, for the manufacture and sale by the Manufacturer to the Assignor (or its
designee) of the airframe, Allison AE3007A1E engines and parts installed
thereon.
All terms used herein in capitalized form which are defined in the
Lease and not otherwise defined herein shall, when used herein, have the
meanings specified in Annex A to the Lease.
2. Subject to the terms and conditions of this Assignment, Assignor
does hereby sell, assign, transfer and set over unto the Assignee all the
Assignor's rights and interest in and to the Purchase Agreement as and to the
extent that the same relate to the Aircraft and the purchase and operation
thereof, except to the extent reserved below, including, without limitation, (a)
the right upon valid tender by the Manufacturer to purchase the Aircraft
pursuant to the Purchase Agreement (including the right to accept delivery of
such Aircraft, such right of acceptance to be exercised by a representative of
the Assignor authorized by the Assignee and designated by the Assignor pursuant
to Section 2.2(b) of the Lease), and the right to take title to the Aircraft and
to be named the buyer in the bill of sale to be delivered by the Manufacturer
for the Aircraft pursuant to Article 7(c) of the Purchase Agreement, (b) all
claims for damages in respect of the Aircraft arising as a result of any default
by the Manufacturer under the Purchase Agreement or any supplier of parts or
equipment installed on or in the Aircraft, including, without limitation, all
warranty and indemnity provisions contained in the Purchase Agreement, and all
claims arising thereunder, in respect of the Aircraft, and (c) any and all
rights of the Assignor to compel performance of the terms of the Purchase
Agreement in respect of the Aircraft; RESERVING TO THE ASSIGNOR HOWEVER, (i) all
the Assignor's rights and interests in and to the Purchase Agreement to the
extent the same relates to aircraft other than the Aircraft and the purchase and
operation of such aircraft and to the extent it pertains to any other matters
not directly pertaining to the Aircraft, and (ii) all the Assignor's rights and
obligations with respect to any post-delivery adjustment of the purchase price
of the Aircraft (and any other payments made or to be made by the Assignor in
respect of such Aircraft under the Purchase Agreement or amounts credited or to
be credited by the Manufacturer to the Assignor, PROVIDED that Assignor shall
obtain no additional rights in or to the Aircraft or any part thereof by reason
of making any such payment), and (iii) with respect to the Aircraft so long as
the Aircraft is subject to the Lease (A) the rights to demand, accept and retain
all rights in and to all property (other than the Aircraft), data and service
related to the Aircraft which the Manufacturer is obligated to provide or does
provide pursuant to the Purchase Agreement, and (B) the right to obtain
services, training, data and demonstration and test flights related to the
Aircraft pursuant to the Purchase Agreement (provided that after reasonable
prior notice by CAL to Manufacturer, CAL shall be entitled to the rights
referred to in this clause (iii) in lieu of the Assignor), and (iv) the right to
maintain plant representatives at the Manufacturer's plant pursuant to the
Purchase Agreement. The Assignee hereby accepts such assignment subject to the
terms hereof.
Notwithstanding the foregoing, so long as no Lease Event of Default
as defined in Section 14 of the Lease has occurred and is continuing, the
Assignee shall and it does hereby authorize the Assignor during the term of the
Lease, as sublessee under the Express Sublease, to the exclusion of the
Assignee, to exercise in Assignor's own name all rights and powers of the
"Buyer" under the Purchase Agreement including the right to retain any recovery
or benefit resulting from the enforcement of any warranty or indemnity under the
Purchase Agreement in respect of the Aircraft except that the Assignor may not
enter into any amendment, modification or supplement to the Purchase Agreement
without the written consent or countersignature of the Assignee if such
amendment, modification or supplement would result in any rescission,
cancellation or termination of the Purchase Agreement with respect to the
Aircraft, except as permitted by Article 9 or 22 of the Purchase Agreement
provided that after reasonable prior notice by CAL to Manufacturer, CAL shall be
entitled to exercise the rights of the Assignor referred to in this paragraph.
Until such time as written notice of a Lease Event of Default or
termination of the Lease shall have been given by the Lessor to the
Manufacturer, to its Director of Contracts, by mail to EMBRAER-Empresa
Brasileira de Aeronautica S.A., Av. Brigadeiro Faria Lima, 2170, 12.227-901 Sao
Jose dos Campos-SP, Brazil, or by fax to fax no.: 55 12-3927-1257, the
Manufacturer shall deal solely and exclusively with the Assignor. After such
notice has been given to the Manufacturer, and until the Lessor shall have
notified the Manufacturer that a Lease Event of Default is no longer continuing,
the Manufacturer shall deal solely and exclusively with the Lessor. Assignee
shall cause Lessor to promptly after all Lease Events of Default have been
remedied to the satisfaction of Lessor, give written notice that such remedy has
occurred to the Manufacturer with a copy to the Assignor, and upon the
Manufacturer's receipt of such notice, the Assignor and the Manufacturer shall
have all of the respective rights which they have hereunder and under the
Consent and Agreement annexed hereto in the absence of notice from the Lessor of
a Lease Event of Default.
For all purposes of this Assignment, the Manufacturer shall not be
deemed to have knowledge of, and need not recognize nor take any action with
respect to, the occurrence of a Lease Event of Default, or the discontinuance of
a Lease Event of Default, or the Aircraft's becoming no longer subject to the
Lease, or the termination of the Assignor's rights hereunder by CAL to the
extent permitted herewith, unless and until the Manufacturer shall have received
from the Lessor or CAL, as required by the terms of this Assignment, written
notice (including notice by fax) thereof and, in acting in accordance with the
terms and conditions of the Purchase Agreement and this Assignment, the
Manufacturer may act in accordance with and conclusively rely upon any such
notice.
3. It is expressly agreed that, anything herein contained to the
contrary notwithstanding: (a) the Assignor shall at all times remain liable to
the Manufacturer under the Purchase Agreement to perform all duties and
obligations of the "Buyer" thereunder to the same extent as if this Assignment
had not been executed; (b) the exercise by the Assignee of any of the rights
assigned hereunder shall not release the Assignor from any of its duties or
obligations to the Manufacturer under the Purchase Agreement except to the
extent that such exercise by the Assignee shall constitute performance of such
duties and obligations; (c) subject to the provisions of the penultimate
paragraph of this Section 3, the Assignee shall not have any obligation or
liability under the Purchase Agreement (including in particular, but without
limitation, any liability for the payment of any taxes and customs duties under
the Purchase Agreement, the obligation for payment of which shall remain with
the Assignor as provided in clause (d) below) by reason of, or arising out of,
this Assignment or be obligated to perform any of the obligations or duties of
the Assignor under the Purchase Agreement or to make any payment (other than to
pay the purchase price for the Aircraft as invoiced on the delivery date for
such Aircraft to the extent and upon the terms and conditions set forth in the
Purchase Agreement and the Lease Agreement) or to make any inquiry as to the
sufficiency of any payment received by it or to present or file any claim or to
take any other action to collect or enforce any claim for any payment assigned
hereunder; (d) after the delivery date for the Aircraft under the Purchase
Agreement, the Assignor will exercise its rights and perform its obligations
under the Purchase Agreement to the extent that such rights and obligations have
not been assigned hereunder or performed by the Assignee. Nothing contained in
this Section 3 shall impose upon the Assignee any liability for post-delivery
adjustments in price, which adjustments it is understood and agreed will be the
sole right and responsibility of the Assignor.
Nothing contained herein shall subject the Manufacturer to any
liability to which it would not otherwise be subject under the Purchase
Agreement or modify in any respect the Manufacturer's contract rights thereunder
or require the Manufacturer to divest itself of title to or possession of the
Aircraft therefor until delivery thereof and payment therefor on the delivery
date as provided therein.
Without in any way releasing the Assignor from any of its duties or
obligations under the Purchase Agreement, the Assignee hereby agrees, expressly
for the benefit of the Manufacturer, that notwithstanding anything contained
herein to the contrary, insofar as the provisions of the Purchase Agreement
relate to the Aircraft accepted by Assignee under the Purchase Agreement, in
exercising any rights under the Purchase Agreement, or in making any claim with
respect to the Aircraft or other things (including without limitation data,
documents and services) delivered or to be delivered pursuant to the Purchase
Agreement, the terms and conditions of the Purchase Agreement, shall apply to
and be binding upon Assignee to the same extent as if Assignee had been the
original "Buyer" thereunder. Assignee further agrees, expressly for the benefit
of the Manufacturer, that at any time and from time to time upon the written
request of the Manufacturer, Assignee shall promptly and duly execute and
deliver any and all such further assurances, instruments and documents and take
all such further action as the Manufacturer may reasonably request in order to
obtain the full benefits of Assignee's agreements set forth in this paragraph.
The Assignee hereby confirms that it shall be deemed for all
purposes to have read and be familiar with the Purchase Agreement and to
thoroughly understand the terms and conditions thereof.
4. On the delivery date for the Aircraft, the Assignee agrees,
subject to satisfaction or waiver of the conditions set forth in Section 4 of
the Participation Agreement to purchase the Aircraft from the Manufacturer and,
subject to the provisions of clause (c) of the first paragraph of Section 3
hereof, to pay (or agree to pay) the Manufacturer an amount equal to the unpaid
balance of the purchase price payable to the Manufacturer on such Delivery Date
for such Aircraft pursuant to the Purchase Agreement, as such unpaid balance may
be adjusted in accordance with the terms of the Purchase Agreement and invoiced
by the Manufacturer to the Assignee on or before the delivery date for such
Aircraft.
5. The Assignor agrees that at any time and from time to time upon
the written request of the Assignee, the Assignor will promptly and duly execute
and deliver any and all such further instruments and documents and take such
further action as the Assignee may reasonably request in order to obtain the
full benefits of this Assignment and of the rights and powers herein granted.
6. The Assignor does hereby represent and warrant (a) that the
Purchase Agreement is in full force and effect and is a legal, valid and binding
obligation of Assignor, enforceable in accordance with its terms and that
Assignor is not in default thereunder; and (b) that Assignor has not assigned,
mortgaged, charged or pledged, and hereby covenants that it will not assign,
mortgage, charge or pledge, so long as this Assignment shall remain in effect,
the whole or any part of the rights hereby assigned or any of its rights with
respect to the Aircraft under the Purchase Agreement not assigned hereby, to
anyone other than the Assignee.
7. The Assignee agrees that, so long as the Lease has not been
terminated and the Assignor remains in possession, it will not enter into any
agreement with the Manufacturer that would amend, modify, rescind, cancel or
terminate the Purchase Agreement in respect of the Aircraft without the prior
written consent of the Assignor.
8. The Assignee agrees that it will not disclose to any third party
(other than their direct and indirect parent companies) the terms of the
Purchase Agreement (whether or not related to the Aircraft) or this Assignment,
except (a) as required by applicable law, judicial proceeding or governmental
regulation, or (b) as required for the assignment of its rights under this
Assignment in accordance with the provisions of Article 16 of the Purchase
Agreement, or (c) with the prior written consent of the Assignor and the
Manufacturer, which consent shall not be unreasonably withheld with respect to a
prospective bona fide purchaser of the Aircraft. Any disclosure as contemplated
in (b) above shall include a requirement that the entity to which the
information is disclosed shall be subject to obligations of nondisclosure with
respect to such information substantially the same as those contained herein.
9. This Assignment is executed by the Assignor and the Assignee
concurrently with the execution and delivery of the Lease.
10. This Assignment 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.
11. THIS PURCHASE AGREEMENT ASSIGNMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, UNITED STATES OF
AMERICA, WITHOUT REGARD TO CONFLICT OF LAWS RULES OTHER THAN SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW.
[The remainder of this page has been left blank intentionally.]
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be duly
executed as of the day and year first above written.
EXPRESSJET AIRLINES, INC.
By
------------------------------------
PM LIMITED
By
------------------------------------
[Partial Assignment]
Annex 1 to Purchase Agreement
Assignment No. 1-[DEAL]
CONSENT AND AGREEMENT No. 1-[DEAL]
The undersigned, EMBRAER-EMPRESA BRASILEIRA DE AERONAUTICA S.A., a
corporation organized and existing under the laws of Brazil, hereby acknowledges
notice of and consents to all of the terms of the foregoing Purchase Agreement
Assignment - No. 1-[DEAL], dated as of _____ ___, 2004, between EXPRESSJET
AIRLINES, INC. and PM LIMITED, to the extent they relate to the Manufacturer
(herein called the "Assignment", the defined terms therein being hereinafter
used with the same meaning) and hereby confirms to the Assignee that: (i) all
representations, warranties, indemnities and agreements of the Manufacturer
under the Purchase Agreement with respect to the Aircraft shall inure to the
benefit of the Assignee to the same extent as if originally named the "Buyer"
therein, subject to the terms and conditions of the Assignment and the Purchase
Agreement, except as provided in paragraph 2 of the Assignment, (ii) the
Assignee shall not be liable for any of the obligations or duties of the
Assignor under the Purchase Agreement, nor shall the Assignment give rise to any
duties or obligations whatsoever on the part of the Assignee owing to the
Manufacturer except for the Assignee's agreement in the Assignment to the effect
that in exercising any rights under the Purchase Agreement, or in making any
claim with respect to the Aircraft or other things (including without limitation
data, documents and services) delivered or to be delivered pursuant to the
Purchase Agreement, the terms and conditions of the Purchase Agreement, shall
apply to and be binding upon Assignee to the same extent as if Assignee had been
the original "Buyer" thereunder, and with respect to such agreement the
Manufacturer agrees that, anything contained in the Purchase Agreement or the
Assignment to the contrary notwithstanding, so long as the Manufacturer shall
not have received notice from Lessor that a Lease Event of Default has occurred
and is continuing, the Assignee shall not have any responsibility to the
Manufacturer for failure to comply with any of the terms of the Purchase
Agreement with respect to the Aircraft while under lease to CAL so long as the
Assignee acts upon the written instructions of the Assignor (or if CAL shall
have specified in a written notice to Assignee and Manufacturer, CAL) (to which
instructions the Manufacturer understands it shall have access on request);
PROVIDED that no person other than the Manufacturer shall have any rights
against the Assignee with respect to the undertaking and agreement set forth in
this clause (ii); (iii) the Manufacturer will continue to pay to the Assignor
(or if CAL shall have specified in a written notice to Assignee and
Manufacturer, CAL) all payments which the Manufacturer may be required to make
in respect of the Aircraft under the Purchase Agreement unless and until the
Manufacturer shall have received written notice addressed to its Director of
Contracts, by mail to EMBRAER-Empresa Brasileira de Aeronautica S.A., Av.
Brigadeiro Faria Lima, 2170, 12.227-901 Sao Jose dos Campos-SP, Brazil, or by
fax to fax no: 55 12-3927-1257, that a Lease Event of Default has occurred and
is continuing (which such notice from the Assignee shall be conclusive proof
thereof to the Manufacturer and as to which the Manufacturer shall have no
obligation to inquire), whereupon the Manufacturer will, until the Manufacturer
shall have received notice in writing sent or addressed as aforesaid that no
Lease Event of Default exists, make any and all payments and take any and all
actions which it may be required thereafter to make or take in respect of the
Aircraft under the Purchase Agreement and the right to receive which has been
assigned under the Assignment to the Assignee (which has its registered office
at the offices of Caledonian Bank & Trust Limited, Caledonian House, P.O. Box
1043, Dr Roy's Drive, George Town, Grand Cayman, Cayman Islands); and (iv) from
and after the delivery of the Aircraft and payment in full therefor pursuant to
Article 4 of the Purchase Agreement as invoiced on the Delivery Date the
Manufacturer will not assert any lien or claim against the Aircraft or any part
thereof arising with respect to or in connection with any work or other services
performed before the delivery and acceptance of the Aircraft.
The Manufacturer hereby represents and warrants that (A) the
Manufacturer is a corporation duly organized and existing in good standing under
the laws of Brazil, (B) the making and performance of the Purchase Agreement
have been duly authorized by all necessary corporate action on the part of the
Manufacturer, do not require any stockholder approval, do not contravene the
Manufacturer's By-Laws or any indenture, credit agreement or other contractual
agreement to which the Manufacturer is a party or by which it is bound, and the
making of the Purchase Agreement does not contravene any law binding on the
Manufacturer, (C) the making and performance of this Consent and Agreement have
been duly authorized by all necessary corporate action on the part of the
Manufacturer, do not require any stockholder approval and do not contravene any
law binding on the Manufacturer or contravene the Manufacturer's By-laws or any
indenture, credit agreement or other contractual agreement to which the
Manufacturer is a party or by which it is bound and (D) the Purchase Agreement
constituted as of the date thereof and at all times thereafter to and including
the date of this Consent and Agreement constitutes a binding obligation of the
Manufacturer enforceable against the Manufacturer in accordance with its terms
subject to: (i) the limitations of applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally; and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law), which
principles do not make the remedies available at law or in equity with respect
to the Purchase Agreement inadequate for the practical realization of the
benefits intended to be provided thereby and this Consent and Agreement is a
binding obligation of the Manufacturer enforceable against the Manufacturer in
accordance with its terms subject to: (a) the limitations of applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally; and (b) general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law), which principles do not make the remedies available at law or in equity
which respect to this Consent and Agreement inadequate for the practical
realization of the benefits intended to be provided thereby. It is understood
that the execution by the Manufacturer of this Consent and Agreement is subject
to the condition that concurrently with the delivery of the Aircraft the
Aircraft will be leased to Lessee under the Lease Agreement.
[The remainder of this page has been left blank intentionally.]
This Consent and Agreement shall be governed by the laws of the
State of New York, including all matters of construction, validity and
performance, as applicable to contracts between citizens of the state to be
performed wholly within that state, and without regard to conflicts of law rules
other than Section 5-1401 of the New York General Obligations Law.
Dated as of
______ ___, 2004
EMBRAER-EMPRESA BRASILEIRA
DE AERONAUTICA S.A.
By
------------------------------------
Title:
By
------------------------------------
Title:
EXHIBIT D-3 to
NOTE PURCHASE AGREEMENT
FORM OF PURCHASE AGREEMENT ASSIGNMENT
(NEW AIRCRAFT)
PURCHASE AGREEMENT ASSIGNMENT NO. 2 - [DEAL_]
PURCHASE AGREEMENT ASSIGNMENT NO. 2 - [Deal_], dated as of ______ ___,
2004 (this "Assignment"), between PM Limited, a Cayman Islands company (the
"Assignor" or "PM Limited"), and WELLS FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION, not in its individual capacity but solely as Owner Trustee (the
"Assignee").
RECITALS
WHEREAS, EXPRESSJET AIRLINES, INC., a Delaware corporation ("Express") and
EMBRAER-Empresa Brasileira de Aeronautica S.A., a corporation organized under
the laws of Brazil ("Embraer"), have entered into the Purchase Agreement,
pursuant to which, among other things, Embraer has agreed to manufacture and
sell to Express, and Express has agreed to purchase from Embraer, certain
aircraft, including the Aircraft (as defined in the Purchase Agreement
Assignment No. 1 described below);
WHEREAS, pursuant to a Purchase Agreement Assignment No. 1 - [Deal_],
dated as of the date hereof ("PAA No. 1"), between Express and PM Limited,
Express has, among other things, assigned to PM Limited, with the consent of the
Manufacturer, certain of its right, title and interest in, to and under the
Purchase Agreement including, without limitation, the right to purchase the
Aircraft from Embraer upon and subject to the terms and conditions set forth in
the Purchase Agreement and PAA No. 1;
WHEREAS, PM Limited has purchased the Aircraft from Embraer and,
concurrently therewith, has sold the Aircraft to Wells Fargo Bank Northwest,
National Association, acting not in its individual capacity but solely as Owner
Trustee under the Trust Agreement [Deal_], dated as of the date hereof (the
"Original Trust Agreement"), between Refine, Inc., as Owner Participant (the
"Owner Participant"), and Wells Fargo Bank Northwest, National Association
("Wells Fargo");
WHEREAS, in connection with the sale of the Aircraft by PM Limited to the
Owner Trustee and with the consent of the Manufacturer, PM Limited shall,
pursuant to this Assignment, transfer to the Owner Trustee all of PM Limited's
present and future rights, title, obligations and interests in, to and under the
Purchase Agreement as assigned by PAA No. 1, except for PM Limited's right to
purchase the Aircraft from the Manufacturer pursuant to Section 2(a) of PAA No.
1;
WHEREAS, the Owner Trustee desires to (i) issue Equipment Notes (as
defined in Annex A to the Lease Agreement referred to herein) for the purpose of
enabling the Owner Participant to repay, in part, the indebtedness relating to
the acquisition of the Aircraft by the Owner Trustee, and (ii) lease the
Aircraft to Continental Airlines, Inc. ("Continental") pursuant to the Lease
Agreement (as hereinafter defined); and
WHEREAS, to facilitate the transactions described in the immediately
preceding Whereas clause, the Manufacturer is willing to execute and deliver to
the Assignee a Consent and Agreement to the provisions hereof in substantially
the form attached hereto as Annex 1;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements of the parties contained herein, and for other good and
valuable consideration, the receipt and adequacy of which is hereby acknowledged
the parties hereto agree as follows:
Section 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 PAA No. 1.
Section 2. TRANSFER AND ASSUMPTION. The Assignor does hereby sell, assign
and transfer to the Assignee all of the Assignor's present and future rights,
title, obligations and interest in, to and under the Purchase Agreement as
assigned by PAA No. 1, excluding the right to purchase the Aircraft from the
Manufacturer (the "Assignor's Interest") and the Assignee hereby accepts the
Assignor's Interest from the Assignor. The Assignee agrees that it shall be
bound by all the terms of, and shall assume and undertake to perform all the
obligations of, the Assignor with respect to the Assignor's Interest.
Section 3. CONFIDENTIAL TREATMENT. The Assignee and the Assignor agree
that the provisions of Paragraph 8 of PAA No. 1 are hereby terminated and
superseded by the provisions of this Section 3 and, in furtherance thereof,
agree that they will not disclose to any third party (other than their direct
and indirect parent companies) the terms of the Purchase Agreement (whether or
not related to the Aircraft) or PAA No. 1 or this Assignment, except (a) as
required by applicable law, judicial proceeding or governmental regulation, (b)
in the case of the Assignee, as required for the assignment of its rights under
this Assignment in accordance with the provisions of Article 16 of the Purchase
Agreement, (c) with the prior written consent of Express, the Assignor and the
Manufacturer, which consent shall not be unreasonably withheld with respect to a
prospective bona fide purchaser of the Aircraft, (d) to prospective and
permitted transferees of Owner Participant's interest or their or Owner
Participant's respective counsel or special counsel, independent insurance
brokers, auditors, or other agents, (e) as otherwise permitted by the Operative
Agreements (as defined in Annex A to the Lease), or (f) to such other Persons as
are reasonably deemed necessary by the disclosing party for the purposes of
enforcing such documents by such party; PROVIDED that any such disclosure under
this sentence shall be made only to the extent necessary to meet the specific
requirements or needs of the Assignee or PM Limited, as the case may be. Any
disclosure as contemplated in (b), (c) or (d) above shall include a requirement
that the entity to which the information is disclosed shall be subject to
obligations of nondisclosure with respect to such information substantially the
same as those contained herein.
Section 4. ASSIGNMENT TO MORTGAGEE. The right, title and interest of the
Assignee in and to this Assignment has, contemporaneously with the execution and
delivery hereof, been assigned to and is subject to a security interest in favor
of the Mortgagee (as such terms and the other capitalized terms used hereinafter
in this sentence are defined in Appendix A to the Lease) under the Trust
Indenture, for the benefit of the Loan Participants and the Note Holders
referred to the Trust Indenture, all to the extent provided in such Trust
Indenture. The Assignor hereby consents to such assignment and to the creation
of such security interest in and to this Assignment.
Section 5. NOTICES. Any notices provided for in PAA No. 1 shall be
delivered to the Assignee at the following address or such other place as the
Assignee may designate in accordance with PAA No. 1:
Wells Fargo Bank Northwest,
National Association
MAC: U1228-120
Attn: Corporate Trust Dept.
299 S. Main Street, 12th Floor
Salt Lake City, UT 84111
Facsimile: 801-246-5053
Section 6. HEADINGS. The headings of the Sections herein are for
convenience of reference only and shall not define or limit any of the
terms or provisions hereof.
Section 7. GOVERNING LAW. THIS ASSIGNMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, UNITED STATES OF
AMERICA, WITHOUT REGARD TO CONFLICT OF LAWS RULES OTHER THAN SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW.
Section 8. 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.
Section 9. PURCHASE AGREEMENT. The rights and obligations of the parties
hereto are subject to the terms and conditions of the Purchase Agreement.
[Remainder of the Page is Intentionally Left Blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be
duly executed as of the day and year first written above.
PM LIMITED, as Assignor
By:
-----------------------------------
Name:
Title:
WELLS FARGO BANK
NORTHWEST, NATIONAL
ASSOCIATION, not in its
individual capacity but solely as
Owner Trustee, as Assignee
By:
-----------------------------------
Name:
Title:
Annex 1 to Purchase
Agreement Assignment No. 2 - [Deal_]
CONSENT AND AGREEMENT NO. 2 - [DEAL_]
The undersigned, EMBRAER-EMPRESA BRASILEIRA DE AERONAUTICA S.A., a
corporation organized and existing under the laws of Brazil, hereby acknowledges
notice of and consents to all of the terms of the foregoing Purchase Agreement
Assignment No. 2 - [Deal_], dated as of ________ ___, 2004, by and among PM
Limited and WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not in its
individual capacity but solely as Owner Trustee, to the extent they relate to
the Manufacturer (herein called the "Assignment No. 2", the defined terms
therein being hereinafter used with the same meaning) and hereby confirms to the
Assignee that: (i) all representations, warranties, indemnities and agreements
of the Manufacturer under the Purchase Agreement with respect to the Aircraft
shall inure to the benefit of the Assignee to the same extent as if originally
named the "Buyer" therein, subject to the terms and conditions of the Assignment
No. 2, the Purchase Agreement and PAA No. 1; (ii) the Assignee shall not be
liable for any of the obligations or duties of Express under the Purchase
Agreement, nor shall the Assignment No. 2 give rise to any duties or obligations
whatsoever on the part of the Assignee owing to the Manufacturer except for the
Assignee's agreement to the effect that in exercising any rights under the
Purchase Agreement, or in making any claim with respect to the Aircraft or other
things (including without limitation data, documents and services) delivered or
to be delivered pursuant to the Purchase Agreement, the terms and conditions of
the Purchase Agreement shall apply to and be binding upon the Assignee to the
same extent as if the Assignee had been the original "Buyer" thereunder, and
with respect to such agreement the Manufacturer agrees that, anything contained
in the Purchase Agreement or the Assignment No. 2 to the contrary
notwithstanding, so long as the Manufacturer shall not have received notice that
a Lease Event of Default has occurred and is continuing, the Assignee shall not
have any responsibility to the Manufacturer for failure to comply with any of
the terms of the Purchase Agreement with respect to the Aircraft while under
lease to Continental so long as the Assignee acts upon the written instructions
of Express (or, if Continental shall have specified in a written notice to the
Assignee and the Manufacturer that Continental is entitled to possession of the
Aircraft, Continental) (to which instructions the Manufacturer understands it
shall have access on request); PROVIDED that no person other than the
Manufacturer shall have any rights against the Assignee with respect to the
undertaking and agreement set forth in this clause (ii); (iii) the Manufacturer
will continue to pay to Express (or, if Continental shall have specified in a
written notice to the Assignee and the Manufacturer that Continental is entitled
to possession of the Aircraft, Continental) all payments which the Manufacturer
may be required to make in respect of the Aircraft under the Purchase Agreement
unless and until the Manufacturer shall have received written notice addressed
to its Contracts Administrator, by mail to EMBRAER-Empresa Brasileira de
Aeronautica S.A., Av. Brigadeiro Faria Lima, 2170, 12.227-901 Sao Jose dos
Campos-SP, Brazil, or by fax to fax no: 55 12-3927-1257, that a Lease Event of
Default has occurred and is continuing (which such notice from the Assignee
shall be conclusive proof thereof to the Manufacturer and as to which the
Manufacturer shall have no obligation to inquire), whereupon the Manufacturer
will, until the Manufacturer shall have received notice in writing sent or
addressed as aforesaid that no Lease Event of Default exists, make any and all
payments and take any and all actions which it may be required thereafter to
make or take in respect of the Aircraft under the Purchase Agreement and the
right to receive which has been assigned under the Assignment No. 2 directly to
the Assignee at its address at MAC: U1228-120, 299 S. Main Street, 12th Floor,
Salt Lake City, Utah 84111 , telecopy no. 801-246-5053; (iv) from and after the
delivery of the Aircraft on the Delivery Date, the Manufacturer will not assert
any lien or claim against the Aircraft or any part thereof arising with respect
to or in connection with any work or other services performed before the
delivery and acceptance of the Aircraft; and (v) the Manufacturer consents to
the grant of a security interest in the Purchase Agreement pursuant to the Trust
Indenture (as defined in Appendix A to the Lease).
The Manufacturer hereby represents and warrants that (A) the Manufacturer
is a corporation duly organized and existing in good standing under the laws of
Brazil, (B) the making and performance of the Purchase Agreement have been duly
authorized by all necessary corporate action on the part of the Manufacturer, do
not require any stockholder approval, do not contravene the Manufacturer's
By-Laws or any indenture, credit agreement or other contractual agreement to
which the Manufacturer is a party or by which it is bound, and the making of the
Purchase Agreement does not contravene any law binding on the Manufacturer, (C)
the making and performance of this Consent and Agreement have been duly
authorized by all necessary corporate action on the part of the Manufacturer, do
not require any stockholder approval and do not contravene any law binding on
the Manufacturer or contravene the Manufacturer's By-laws or any indenture,
credit agreement or other contractual agreement to which the Manufacturer is a
party or by which it is bound, (D) the Purchase Agreement constituted as of the
date thereof and at all times thereafter to and including the date of this
Consent and Agreement constitutes a binding obligation of the Manufacturer
enforceable against the Manufacturer in accordance with its terms subject to:
(i) the limitations of applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally) and (ii)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law), and (E) this Consent and
Agreement is a binding obligation of the Manufacturer enforceable against the
Manufacturer in accordance with its terms subject to: (a) the limitations of
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally; and (b) general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law). It is understood that the execution by the Manufacturer of
this Consent and Agreement is subject to the condition that concurrently with
execution and delivery hereof the Aircraft will be leased to Continental under
the Lease Agreement.
[The remainder of this page has been left blank intentionally.]
This Consent and Agreement shall be governed by the laws of the State of
New York, including all matters of construction, validity and performance, as
applicable to contracts between citizens of the state to be performed wholly
within that state, and without regard to conflicts of law rules other than
Section 5-1401 of the New York General Obligations Law.
Dated as of _______ ___, 2004.
EMBRAER-EMPRESA BRASILEIRA
DE AERONAUTICA S.A.
By
------------------------------------------
Title:
By
------------------------------------------
Title:
EXHIBIT E to
NOTE PURCHASE AGREEMENT
FORM OF TRUST AGREEMENT
(Filed Separately)
EXHIBIT F
TO NOTE PURCHASE AGREEMENT
DELIVERY NOTICE
Dated as of [__]
To each of the addressees listed
in Schedule A hereto
RE: DELIVERY NOTICE IN ACCORDANCE WITH NOTE
PURCHASE AGREEMENT REFERRED TO BELOW
Ladies and Gentlemen:
Reference is made to the Note Purchase Agreement, dated as of June 29,
2004, among Continental Airlines, Inc. (the "COMPANY"), Wilmington Trust
Company, as Pass Through Trustee under the Pass Through Trust Agreement (as
defined therein) (the "PASS THROUGH TRUSTEE"), Wilmington Trust Company, as
Subordination Agent (the "SUBORDINATION AGENT"), Wells Fargo Bank Northwest,
National Association, as Escrow Agent (the "ESCROW AGENT") and Wilmington Trust
Company, as Paying Agent (the "PAYING AGENT") (as in effect from time to time,
the "NOTE PURCHASE AGREEMENT"). Unless otherwise defined herein, capitalized
terms used herein shall have the meanings set forth in the Note Purchase
Agreement or, to the extent not defined therein, the Intercreditor Agreement.
Pursuant to Section 1(b) of the Note Purchase Agreement, the undersigned
hereby notifies you, in respect of the Embraer Model EMB-145 XR aircraft with
manufacturer's serial number [MSN] (the "AIRCRAFT"), of the following:
(1) The Scheduled Closing Date of the Aircraft is [_________]; and
(2) The principal amount of the Equipment Notes to be issued, and purchased by
the Pass Through Trustee on such Scheduled Closing Date, in connection
with the financing of such Aircraft is $[_______].
The Company hereby instructs the Pass Through Trustee to (i) execute a
Withdrawal Certificate in the form of Annex A hereto dated as of [__________]
and attach thereto a Notice of Purchase Withdrawal dated such date completed as
set forth on Exhibit A hereto and (ii) deliver such Withdrawal Certificate and
Notice of Purchase Withdrawal to the Escrow Agent.1
The Company hereby instructs the Pass Through Trustee to (i) purchase
Equipment Notes in an amount set forth in clause (2) above with a portion of the
proceeds [of the withdrawals of Deposits referred to in the Notice of Purchase
Withdrawal referred to above]2 [received on the Scheduled Closing Date from the
Underwriters]3 and (ii) re-deposit with the Depositary any amount not used on
the Scheduled Closing Date to purchase Equipment Notes.
The Company hereby instructs the Pass Through Trustee to (a) enter into
the Participation Agreement [TN] dated as of [__________] among the Company, as
Lessee, Wilmington Trust Company, as Mortgagee and Loan Participant, Wells Fargo
Bank Northwest, National Association, as Owner Trustee and Lessor, [_______], as
Owner Participant, and Embraer-Empresa Brasileira de Aeronautica, (b) perform
its obligations thereunder and (c) deliver such certificates, documents and
legal opinions relating to the Pass Through Trustee as required thereby.
Yours faithfully,
Continental Airlines, Inc.
By:
-------------------------
Name:
Title:
- -------------------
1. Eliminate if the Scheduled Closing Date is the Issuance Date.
2. Eliminate if the Scheduled Closing Date is the Issuance Date.
3. Insert if the Scheduled Closing Date is the Issuance Date.
SCHEDULE A
Wilmington Trust Company, as
Pass Through Trustee, Subordination
Agent and Paying Agent
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
Facsimile: (302) 651-8882
Wells Fargo Bank Northwest, National Association,
MAC:U1228-120 as Escrow Agent
299 South Main Street, 12th Floor
Salt Lake City, Utah 84111
Attention: Corporate Trust Services
Facsimile: (801) 246-5053
WestLB AG, New York Branch, as Depositary
1211 Avenue of the Americas
New York, New York 10036
Attention: Brigitte Thieme
Facsimile: (212) 869-7634
Attention: Eugene Chan
Facsimile: (212) 852-6305
Standard & Poor's Ratings Services
55 Water Street, 35th Floor
New York, New York 10004
Attention: Michael K. Vernier
Facsimile: (212) 438-6632
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: Richard Bittenbender
Facsimile: (212) 553-3855
Annex A
WITHDRAWAL CERTIFICATE
Wells Fargo Bank Northwest, National Association
as Escrow Agent
Ladies and Gentlemen:
Reference is made to the Escrow and Paying Agent Agreement, dated as
of June 29, 2004 (the "Agreement"). We hereby certify to you that the conditions
to the obligations of the undersigned to execute a Participation Agreement
pursuant to the Note Purchase Agreement have been satisfied. Pursuant to Section
1.02(c) of the Agreement, please execute the attached Notice of Purchase
Withdrawal and immediately transmit by facsimile to the Depositary, at (212)
869-7634 (Attention: Brigitte Thieme) and (212) 852-6305 (Attention: Eugene
Chan). Capitalized terms used herein but not defined herein shall have the
meanings set forth in the Agreement.
Very truly yours,
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Pass Through Trustee
By:
-----------------------------------------
Name:
Title:
Dated: As of ____________, 200_
Exhibit A
NOTICE OF PURCHASE WITHDRAWAL
WestLB AG, New York Branch
1211 Avenue of the Americas
New York, New York 10036
Attention: Brigitte Thieme
Facsimile: (212) 869-7634
Attention: Eugene Chan
Facsimile: (212) 852-6305
Ladies and Gentlemen:
Reference is made to the Deposit Agreement dated as of June 29, 2004
(the "DEPOSIT AGREEMENT") between Wells Fargo Bank Northwest, National
Association, as Escrow Agent, and WestLB AG, New York Branch, as Depositary (the
"DEPOSITARY").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of the Deposit,
$[_______], Account No. [____________].
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to [________________], Account No. [_____], Reference: [_________]
on [_________ __, 200__], upon the telephonic request of a representative of the
Pass Through Trustee.
WELLS FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION,
as Escrow Agent
By
------------------------------------
Name:
Title:
Dated: As of _______ __, 200_
----------------------------------------------------------
| CONFIDENTIAL: SUBJECT TO RESTRICTIONS ON DISSEMINATION |
| SET FORTH IN SECTION 8 OF THIS AGREEMENT |
----------------------------------------------------------
================================================================================
PARTICIPATION AGREEMENT [TN]
Dated as of [DD]
Among
CONTINENTAL AIRLINES, INC.,
Lessee,
[OP],
Owner Participant,
WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
Not in its individual capacity
except as expressly provided herein,
but solely as owner trustee,
Owner Trustee and Lessor
WILMINGTON TRUST COMPANY,
Not in its individual capacity
except as expressly provided herein,
but solely as Mortgagee, Subordination Agent
under the Intercreditor Agreement, and Pass Through
Trustee under the Pass Through Trust Agreement,
Mortgagee and Loan Participant,
and
EMBRAER-EMPRESA BRASILEIRA DE AERONAUTICA S.A.
Airframe Manufacturer
----------------------------
One Embraer Model EMB-145 XR Aircraft
Bearing Manufacturer's Serial No. [MSN]
and U.S. Registration No. N[REG]
with Two Allison Model AE3007A1E Engines
================================================================================
CONTENTS
SECTION 1. DEFINITIONS AND CONSTRUCTION.....................................2
[SECTION 2. ISSUANCE OF EQUIPMENT NOTES; TERMINATION OF
OBLIGATION TO PARTICIPATE........................................2
2.1 Issuance of Equipment Notes......................................2
2.2 Termination of Obligation to Participate.........................2
SECTION 3. TERMINATION OF EXISTING FINANCING AGREEMENTS;
COMMITMENT TO LEASE AIRCRAFT.....................................3
3.1 Termination of Existing Financing Agreements.....................3
3.2 Commitment to Lease..............................................3
SECTION 4. CLOSING; PROCEDURE FOR PAYMENT; POSTPONEMENT OF
SCHEDULED CLOSING DATE...........................................3
4.1 Closing..........................................................3
4.2 Payment of Proceeds..............................................4
4.3 Postponement of Scheduled Closing Date...........................4
SECTION 2. PARTICIPATION IN LESSOR'S COST; ISSUANCE OF EQUIPMENT
NOTES; TERMINATION OF OBLIGATION TO PARTICIPATE..................5
2.1 Participation in Lessor's Cost...................................5
2.2 Nature of Obligations of Participants............................5
2.3 Termination of Obligation to Participate.........................5
SECTION 3. COMMITMENT TO LEASE AIRCRAFT.....................................5
SECTION 4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S
COST; POSTPONEMENT OF SCHEDULED DELIVERY DATE....................6
4.1 Closing..........................................................6
4.2 Payment of Lessor's Cost.........................................6
4.3 Postponement of Scheduled Closing Date...........................7
SECTION 5. CONDITIONS PRECEDENT.............................................7
5.1 Conditions Precedent to Obligations of Participants..............7
5.2 Conditions Precedent to Obligations of Owner Trustee............13
5.3 Conditions Precedent to Obligations of Mortgagee................14
5.4 Conditions Precedent to Obligations of Lessee...................14
5.5 Post-Registration Opinion.......................................15
SECTION 6. REPRESENTATIONS AND WARRANTIES..................................15
6.1 Lessee's Representations and Warranties.........................15
6.2 Owner Participant's Representations and Warranties..............18
6.3 Wells Fargo's Representations and Warranties....................20
6.4 WTC's Representations and Warranties............................23
6.5 Airframe Manufacturer's Representations and Warranties..........26
SECTION 7. COVENANTS, UNDERTAKINGS AND AGREEMENTS..........................28
7.1 Covenants of Lessee.............................................28
7.2 Covenants of Owner Participant..................................30
7.3 Covenants of Wells Fargo and Owner Trustee......................32
7.4 Covenants of WTC................................................34
7.5 Covenants of Note Holders.......................................35
7.6 Agreements......................................................36
SECTION 8. CONFIDENTIALITY.................................................42
SECTION 9. INDEMNIFICATION AND EXPENSES....................................42
9.1 General Indemnity...............................................42
9.2 Expenses........................................................48
9.3 General Tax Indemnity...........................................48
9.4 Payments........................................................58
9.5 Interest........................................................58
9.6 Benefit of Indemnities..........................................58
SECTION 10. ASSIGNMENT OR TRANSFER OF INTERESTS.............................58
10.1 Participants, Owner Trustee and Note Holders....................58
10.2 Effect of Transfer..............................................60
SECTION 11. [RESERVED]......................................................60
SECTION 12. SECTION 1110....................................................60
SECTION 13. CHANGE OF CITIZENSHIP...........................................61
13.1 Generally.......................................................61
13.2 Owner Participant...............................................61
13.3 Owner Trustee...................................................61
13.4 Mortgagee.......................................................62
SECTION 14. CONCERNING OWNER TRUSTEE........................................62
SECTION 15. MISCELLANEOUS...................................................62
15.1 Amendments......................................................62
15.2 Severability....................................................62
15.3 Survival........................................................63
15.4 Reproduction of Documents.......................................63
15.5 Counterparts....................................................63
15.6 No Waiver.......................................................63
15.7 Notices.........................................................63
15.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE................64
15.9 Third-Party Beneficiary.........................................65
15.10 Entire Agreement................................................65
15.11 Further Assurances..............................................65
ANNEX, SCHEDULES AND EXHIBITS
ANNEX A - Definitions
SCHEDULE 1 - Accounts; Addresses
SCHEDULE 2 - Commitments
SCHEDULE 3 - Certain Terms
EXHIBIT A - Opinion of special counsel to Lessee
EXHIBIT B - Opinion of corporate counsel to Lessee
EXHIBIT C-1 - Opinion of corporate counsel to Airframe Manufacturer
EXHIBIT C-2 - Opinion of special counsel to Airframe Manufacturer
EXHIBIT D - Opinion of special counsel to Owner Trustee
EXHIBIT E - Opinion of special counsel to Mortgagee
EXHIBIT F - Opinion of special counsel to Owner Participant
EXHIBIT G - Opinion of special counsel in Oklahoma City, Oklahoma
EXHIBIT H - Opinion of special counsel to Seller
PARTICIPATION AGREEMENT [TN]
PARTICIPATION AGREEMENT [TN], dated as of [DD] (this "Agreement"), among
(a) CONTINENTAL AIRLINES, INC., a Delaware corporation ("Lessee"), (b) [OP], a
corporation organized under the laws of the OP Jurisdiction ("Owner
Participant"), (c) WELLS FARGO BANK NORTHWEST, 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, "Wells Fargo"), (d) WILMINGTON TRUST
COMPANY, a Delaware banking corporation, not in its individual capacity, except
as expressly provided herein, but solely as Mortgagee (in its capacity as
Mortgagee, "Mortgagee" and in its individual capacity, "WTC"), (e) WILMINGTON
TRUST COMPANY, not in its individual capacity, except as expressly provided
herein, but solely as Pass Through Trustee under the Pass Through Trust
Agreement ("Pass Through Trustee"), (f) WILMINGTON TRUST COMPANY, not in its
individual capacity, except as expressly provided herein, but solely as
Subordination Agent under the Intercreditor Agreement ("Subordination Agent"),
and (g) EMBRAER-EMPRESA BRASILEIRA DE AERONAUTICA S.A., a company organized
under the laws of Brazil ("Airframe Manufacturer").
RECITALS
A. Express and Airframe Manufacturer have entered into the Purchase
Agreement, pursuant to which, among other things, Airframe Manufacturer has
agreed to manufacture and sell to Express and Express has agreed to purchase
from Airframe Manufacturer certain aircraft, including the Aircraft.
[B. Prior to the date hereof, in connection with the interim financing of
the Aircraft, (i) certain of Express' rights under the Purchase Agreement with
respect to the Aircraft were assigned to Lessor and (ii) the Aircraft was
purchased by Lessor, leased to Lessee pursuant to the Existing Lease and
subleased to Express pursuant to the Existing Sublease.]1
[B. On the Delivery Date, Express and Seller will enter into the Initial
Purchase Agreement Assignment and Seller and Owner Trustee will enter into the
Purchase Agreement Assignment, pursuant to which, among other things, Express'
right to purchase the Aircraft from Airframe Manufacturer will be assigned to
Seller and reassigned to the Owner Trustee upon and subject to the terms and
conditions set forth in the Purchase Agreement, the Initial Purchase Agreement
Assignment and the Purchase Agreement Assignment.]2
C. In order to effectuate the long-term financing of the Aircraft, the
parties hereto intend that (i) the Owner Trustee issue, on a non-recourse basis,
pursuant to the Trust Indenture the Equipment Notes to the Pass Through Trustee,
[(ii) the Existing Lease be terminated and replaced with the Lease, and the
- --------
1. Delete for New Aircraft.
2. Insert for New Aircraft.
Aircraft continue to be leased to Lessee and subleased to Express]3 [(ii) the
Owner Trustee will purchase the Aircraft from the Airframe Manufacturer
utilizing the Commitments and lease it to Lessee pursuant to the Lease and the
Lessee will sublease the Aircraft to Express]4 and (iii) Owner Trustee grant a
security interest to Mortgagee in the Aircraft and the Lease for the benefit of
the Note Holders.
D. The parties hereto wish to set forth in this Agreement the terms and
conditions upon and subject to which the aforesaid transactions shall be
effected.
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
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.
[SECTION 2. ISSUANCE OF EQUIPMENT NOTES; TERMINATION OF
OBLIGATION TO PARTICIPATE
2.1 ISSUANCE OF EQUIPMENT NOTES
Subject to the terms and conditions of this Agreement, on the Closing
Date, the Pass Through Trustee shall make a non-recourse secured loan to Owner
Trustee to finance, in part, the Owner Trustee's payment of Lessor's Cost in the
amount in Dollars equal to the Pass Through Trustee's PTT Percentage multiplied
by Lessor's Cost, such loan to be evidenced by one or more Equipment Notes,
dated the Closing Date, issued to the Subordination Agent as the registered
holder on behalf of the Pass Through Trustee for the Pass Through Trust by Owner
Trustee in accordance with this Agreement and the Trust Indenture, in an
aggregate principal amount equal to the Commitment of the Pass Through Trustee.
2.2 TERMINATION OF OBLIGATION TO PARTICIPATE
Notwithstanding any other provision of this Agreement, if the Closing does
not occur on or before the Commitment Termination Date, the Commitment of the
Loan Participant and its obligation to participate in the payment of Lessor's
Cost shall expire and be of no further force and effect; PROVIDED, that the
liability of the Loan Participant that has defaulted in the payment of its
Commitment shall not be released.]5
- --------
3. Delete for New Aircraft.
4. Insert for New Aircraft.
5. Delete for New Aircraft.
[SECTION 3. TERMINATION OF EXISTING FINANCING AGREEMENTS; COMMITMENT TO
LEASE AIRCRAFT
3.1 TERMINATION OF EXISTING FINANCING AGREEMENTS
(a) The Existing Lease and Existing Sublease for the Aircraft shall be
terminated in order to be replaced by the Lease and the Express Sublease, and
each of Lessor and Lessee shall take such action to evidence such termination as
Owner Trustee or Mortgagee shall reasonably request, including execution and
delivery of a termination agreement for the Existing Lease and Existing Sublease
in form and substance reasonably acceptable to Owner Trustee and satisfactory
for filing with the FAA, and UCC-3 termination statements with respect to the
termination of the Existing Lease and Existing Sublease.
(b) The Existing Participation Agreement shall be terminated, effective as
of the Closing, and the parties thereto shall have no further obligation
thereunder except for Sections 7, 10 and 11 thereof and for any breach of such
Agreement arising prior to the Closing.
(c) Lessor shall refund to Lessee "Basic Rent" (as defined in the Existing
Lease) paid in advance by Lessee attributable to periods on and after the
Closing Date determined by multiplying such Basic Rent by a fraction, the
numerator of which shall be the number of days remaining in the month in which
the Closing Date occurs (from and including the Closing Date) and the
denominator of which shall be the total number of days in such month.
(d) Airframe Manufacturer shall pay and discharge all applicable sales,
use or similar Taxes, duties or fees assessed or levied by any federal, state,
provincial or local taxing authority as a result of the replacement of the
existing financing agreements with the Operative Agreements and the Express
Sublease or issuance of the Equipment Notes contemplated by this Agreement.
Owner Trustee and Lessee will cooperate in order to minimize Taxes applicable to
the termination of the existing financing agreements or issuance of the
Equipment Notes contemplated by this Agreement.
3.2 COMMITMENT TO LEASE
Subject to the terms and conditions of this Agreement, concurrently with
the issuance of the Equipment Notes, Owner Trustee shall continue the lease of
the Aircraft to Lessee, and Lessee shall continue the lease of the Aircraft from
Owner Trustee, under the Lease.]6
[SECTION 4. CLOSING; PROCEDURE FOR PAYMENT; POSTPONEMENT OF SCHEDULED
CLOSING DATE
4.1 CLOSING
The Closing shall occur at the offices of Hughes Hubbard & Reed LLP, One
Battery Park Plaza, New York, New York 10004, or such other place as the parties
shall agree, at the time specified pursuant to notice given in accordance with
Section 1 of the Note Purchase Agreement.
- --------
6. Delete for New Aircraft.
4.2 PAYMENT OF PROCEEDS
(a) The Loan Participant agrees, subject to the terms and conditions of
this Agreement, to make the Dollar amount of its Commitment available, by wire
transfer of immediately available funds to the account of WTC, ABA No.
031100092, Account No. [ ], reference Continental Lease [TN], at or before 12:00
Noon, New York City time, on the Scheduled Closing Date. All such funds made
available by the Loan Participant to WTC shall, until payment thereof to Owner
Trustee as provided in Section 4.2(c) or return thereof to the Loan Participant
as provided in Section 4.3, be held by WTC in trust for the benefit of the Loan
Participant, as the sole and exclusive property of the Loan Participant and not
as part of the Trust Estate or the Trust Indenture Estate.
(b) Subject to the satisfaction or waiver by the applicable party of the
conditions precedent set forth in Section 5, and simultaneously with the receipt
by the parties hereto of all amounts to be paid to them on the Closing Date
pursuant to this Section 4.2, Owner Trustee shall:
(i) execute the Trust Indenture and the initial Trust Indenture
Supplement and issue the Equipment Notes to the Subordination Agent in
accordance with Section 2.1(b);
(ii) lease the Aircraft to Lessee pursuant to the Lease; and
(iii) take such other action as may be required to be taken by the
Owner Trustee on the Closing Date by the terms of any Operative Agreement.
(c) Subject to the satisfaction or waiver by the applicable party of the
conditions precedent set forth in Section 5, WTC shall pay to the Owner Trustee
the amounts received from the Loan Participants pursuant to Section 4.2(a).
4.3 POSTPONEMENT OF SCHEDULED CLOSING DATE
If for any reason whatsoever the Closing is not consummated on the
Scheduled Closing Date, Airframe Manufacturer may by telephonic notice, given by
5:00 p.m., New York City time (such telephonic notice to be promptly confirmed
in writing by personal delivery or facsimile), on the Scheduled Closing Date to
Lessee, the Loan Participant, Owner Trustee and Mortgagee, designate a Delayed
Closing Date, in which case any funds made available by the Loan Participant
shall be returned on such Scheduled Closing Date and the Loan Participant shall
comply with its obligations under Section 2.02(b) of the Trust Supplement.]7
- --------
7. Delete for New Aircraft.
[SECTION 2. PARTICIPATION IN LESSOR'S COST; ISSUANCE OF EQUIPMENT NOTES;
TERMINATION OF OBLIGATION TO PARTICIPATE
2.1 PARTICIPATION IN LESSOR'S COST
Subject to the terms and conditions of this Agreement, on the Closing
Date, Owner Participant and the Pass Through Trustee shall participate in the
payment of Lessor's Cost as follows:
(a) Owner Participant shall participate in the payment of Lessor's Cost
for the Aircraft by making an equity investment in the beneficial ownership of
the Aircraft in the amount in Dollars equal to Owner Participant's Percentage
multiplied by Lessor's Cost; and
(b) The Pass Through Trustee shall make a non-recourse secured loan to
Owner Trustee to finance, in part, the Owner Trustee's payment of Lessor's Cost
in the amount in Dollars equal to the Pass Through Trustee's PTT Percentage
multiplied by Lessor's Cost, such loan to be evidenced by one or more Equipment
Notes, dated the Closing Date, issued to the Subordination Agent as the
registered holder on behalf of each Pass Through Trustee for the Pass Through
Trust by Owner Trustee in accordance with this Agreement and the Trust
Indenture, in an aggregate principal amount equal to the Commitment of the Pass
Through Trustee.
2.2 NATURE OF OBLIGATIONS OF PARTICIPANTS
The obligations hereunder of each Participant are several, and not joint,
and a Participant shall have no obligation to make available to Owner Trustee
any portion of any amount not paid hereunder by any other Participant. The
failure by either Participant to perform its obligations hereunder shall not
affect the obligations of Lessee toward the other Participant, except to the
extent provided in Section 5.4.
2.3 TERMINATION OF OBLIGATION TO PARTICIPATE
Notwithstanding any other provision of this Agreement, if the Closing does
not occur on or before the Commitment Termination Date, the Commitment of each
Participant and its obligation to participate in the payment of Lessor's Cost
shall expire and be of no further force and effect; provided, that the liability
of any Participant that has defaulted in the payment of its Commitment shall not
be released.]8
[SECTION 3. COMMITMENT TO LEASE AIRCRAFT
Subject to the terms and conditions of this Agreement, concurrently with
the issuance of the Equipment Notes, Owner Trustee shall purchase and accept
delivery of the Aircraft under and pursuant to the Purchase Agreement and the
- --------
8. Insert for New Aircraft.
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.]9
[SECTION 4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S COST;
POSTPONEMENT OF SCHEDULED DELIVERY DATE
4.1 CLOSING
The Closing shall occur at the offices of Hughes Hubbard & Reed LLP, One
Battery Park Plaza, New York, New York 10004, or such other place as the parties
shall agree at the time specified pursuant to notice given in accordance with
Section 1 of the Note Purchase Agreement.
4.2 PAYMENT OF LESSOR'S COST
(a) Each Participant agrees, subject to the terms and conditions of this
Agreement, to make the Dollar amount of its respective Commitment available, by
wire transfer of immediately available funds to the account of WTC, ABA No.
031100092, Account No. [_____], reference Continental Lease [TN], at or before
12:00 Noon, New York City time, on the Scheduled Closing Date. All such funds
made available by each Participant to WTC shall, until payment thereof to
Airframe Manufacturer as provided in Section 4.2(b)(ii) or return thereof to the
respective Participant as provided in Section 4.3.2, be held by WTC in trust for
the benefit of the respective Participant, as the sole and exclusive property of
the respective Participant and not as part of the Trust Estate or the Trust
Indenture Estate.
(b) Subject to the satisfaction or waiver by the applicable party of the
conditions precedent set forth in Section 5, and simultaneously with the receipt
by the parties hereto of all amounts to be paid to them on the Closing Date
pursuant to this Section 4.2, Owner Trustee shall:
(i) purchase, take title to, and accept delivery of, the Aircraft;
(ii) in consideration of the transfer of title to the Aircraft to
Owner Trustee, direct WTC to pay Lessor's Cost, from the funds made
available to WTC hereunder by the Participants, to Airframe Manufacturer,
by wire transfer of immediately available funds to Airframe Manufacturer's
account set forth in Schedule 1;
(iii) execute an application for registration of the Aircraft with
the FAA and Lease Supplement No. 1, in each case with respect to the
Aircraft;
(iv) execute the Trust Indenture and the initial Trust Indenture
Supplement and issue the Equipment Notes to the Subordination Agent in
accordance with Section 2.1(b);
(v) lease the Aircraft to Lessee, pursuant to the Lease; and
- --------
9. Insert for New Aircraft.
(vi) take such other action as may be required to be taken by the
Owner Trustee on the Closing Date by the terms of any Operative Agreement.
4.3 POSTPONEMENT OF SCHEDULED CLOSING DATE
4.3.1 POSTPONEMENT
If for any reason whatsoever the Closing is not consummated on the
Scheduled Closing Date, Airframe Manufacturer may, by telephonic notice, given
by 5:00 p.m., New York City time (such telephonic notice to be promptly
confirmed in writing by personal delivery or facsimile), on the Scheduled
Closing Date to Lessee, each Participant, Owner Trustee and Mortgagee, designate
a Delayed Closing Date, in which case the Owner Participant will make its funds
available to WTC on the Delayed Closing Date in accordance with Section 4.2(a),
and the Loan Participant shall comply with its obligations under Section
[2.02(b)] of the Trust Supplement.
4.3.2 RETURN OF FUNDS
WTC shall promptly return to each Participant that makes funds available
to it in accordance with Section 4.2(a) such funds, if the Closing fails to
occur on the Scheduled Delivery Date.]10
SECTION 5. CONDITIONS PRECEDENT
5.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTICIPANTS
The obligation of [each]11 [the Loan]12 Participant to make the Dollar
amount of its Commitment available for payment as directed by the Owner Trustee
on the Closing Date and of each Participant to take the other actions required
by this Agreement to be taken by it at the Closing is subject to satisfaction or
waiver by each such Participant, at or prior to the Closing, of the conditions
precedent set forth below in this Section 5.1; PROVIDED, that it shall not be a
condition precedent to the obligation of any Participant that any document be
produced or action taken that is to be produced or taken by such Participant or
by a Person within such Participant's control; PROVIDED, FURTHER, that Section
5.1.2(iii) [and (xv)]13 shall not be conditions precedent to the obligation of
Loan Participant, and Section 5.1.5 shall not be a condition precedent to the
obligation of Owner Participant.
- --------
10. Insert for New Aircraft.
11. Insert for New Aircraft.
12. Delete for New Aircraft.
13. Delete for New Aircraft.
5.1.1 NOTICE
Such Participant shall have received the notice described in Section 4.1
or, in the case of a Delayed Closing Date, 4.3, when and as required thereby, or
shall have waived such notice.
5.1.2 DELIVERY OF DOCUMENTS
Such Participant shall, except as noted below, have received executed
counterparts of the following agreements, instruments, certificates or
documents, and each of such counterparts (a) shall have been duly authorized,
executed and delivered by the respective party or parties thereto, (b) shall be
reasonably satisfactory in form and substance to such Participant and (c) shall
be in full force and effect:
(i) the Lease; PROVIDED, that only Mortgagee shall receive the sole
executed chattel paper original thereof;
(ii) Lease Supplement No. 1; PROVIDED, that only Mortgagee shall
receive the sole executed chattel paper original thereof;
(iii) the Tax Indemnity Agreement; PROVIDED, that only Owner
Participant and Lessee shall receive copies of the Tax Indemnity
Agreement;
(iv) the Trust Agreement;
(v) the Trust Indenture;
(vi) the initial Trust Indenture Supplement;
(vii) [the Initial Purchase Agreement Assignment and]14 the Purchase
Agreement Assignment;
(viii) the Consent and Agreement;
(ix) the Equipment Notes dated the Closing Date; PROVIDED, that only
the Subordination Agent shall receive the authenticated Equipment Notes;
(x) an excerpted copy of the Purchase Agreement to the extent
relating to Airframe Manufacturer's warranties or related obligations or
any right in the Purchase Agreement assigned to Owner Trustee pursuant to
the Purchase Agreement Assignment; PROVIDED, that only Owner Trustee and
Mortgagee shall receive copies of such agreements (copies of which may be
inspected by Participants and their respective special counsel on the
Closing Date, but after the Closing Date such copies shall be retained by
Owner Trustee and Mortgagee and may be inspected and reviewed by Owner
Participant or Loan Participant or their respective counsel if and only if
there shall have occurred and be continuing a Lease Default or Lease Event
of Default);
- --------
14. Insert for New Aircraft.
[(xi) the OP Guaranty;]15
(xii) the Express Sublease;
(xiii) the broker's report and insurance certificates required by
Section 11 of the Lease;
[(xiv) termination agreements with respect to the Existing Lease and
the Existing Sublease and, in the case of Owner Participant and Lessee,
the Existing Participation Agreement and the "Tax Indemnity Agreement" as
defined in the Existing Lease;]16
[(xv) the Satisfaction and Discharge Agreement, dated as of the date
of the Participation Agreement, among the Airframe Manufacturer, Seller,
Owner Participant and Owner Trustee;]17
[(xiv) the Bills of Sale;]18
[(xv) an invoice from Seller to Owner Trustee in respect of the
Aircraft;]19
(xvi) (A) a copy of the Certificate of Incorporation and By-Laws of
Lessee and resolutions of the board of directors of Lessee and/or the
executive committee thereof, in each case certified as of the Closing
Date, by the Secretary or an Assistant Secretary of Lessee, duly
authorizing the execution, delivery and performance by Lessee of the
Lessee Operative Agreements required to be executed and delivered by
Lessee on or prior to the Closing Date in accordance with the provisions
hereof and thereof; (B) an incumbency certificate of Lessee, Airframe
Manufacturer, Owner Participant, Wells Fargo and WTC as to the person or
persons authorized to execute and deliver the relevant Operative
Agreements on behalf of such party; and (C) a copy of the Certificate of
Incorporation or Articles of Incorporation and By-Laws and general
authorizing resolutions of the boards of directors (or executive
committees) or other satisfactory evidence of authorization of Airframe
Manufacturer, Owner Participant, Wells Fargo and WTC, certified as of the
Closing Date by the Secretary or an Assistant or Attesting Secretary of
Airframe Manufacturer, Owner Participant, Wells Fargo and WTC,
respectively, which authorize the execution, delivery and performance by
Airframe Manufacturer, Owner Participant, Wells Fargo and WTC,
respectively, of each of the Operative Agreements to which it is a party,
together with such other documents and evidence with respect to it as
Lessee or any Participant may reasonably request in order to establish the
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15. Include if the OP is an Affiliate of Airframe Manufacturer.
16. Delete for New Aircraft.
17. Delete for New Aircraft.
18. Insert for New Aircraft.
19. Insert for New Aircraft.
consummation of the transactions contemplated by this Agreement and the
taking of all corporate proceedings in connection therewith;
(xvii) an Officer's Certificate of Lessee, dated as of the Closing
Date, stating that its representations and warranties set forth in this
Agreement are true and correct as of the Closing Date (or, to the extent
that any such representation and warranty expressly relates to an earlier
date, true and correct as of such earlier date);
(xviii) an Officer's Certificate of Wells Fargo, dated as of the
Closing Date, stating that its representations and warranties, in its
individual capacity and as Owner Trustee, set forth in this Agreement are
true and correct as of the Closing Date (or, to the extent that any such
representation and warranty expressly relates to an earlier date, true and
correct as of such earlier date);
(xix) an Officer's Certificate of Owner Participant, dated as of the
Closing Date, stating that its representations and warranties set forth in
this Agreement are true and correct as of the Closing Date (or, to the
extent that any such representation and warranty expressly relates to an
earlier date, true and correct as of such earlier date);
(xx) an Officer's Certificate of WTC, dated as of the Closing Date,
stating that its representations and warranties in its individual capacity
or as Mortgagee, Pass Through Trustee or Subordination Agent, as the case
may be, set forth in this Agreement are true and correct as of the Closing
Date (or, to the extent that any such representation and warranty
expressly relates to an earlier date, true and correct as of such earlier
date);
(xxi) an Officer's Certificate of Airframe Manufacturer, dated as of
the Closing Date, stating that its representations and warranties set
forth in this Agreement are true and correct as of the Closing Date (or,
to the extent that any such representation and warranty expressly relates
to an earlier date, true and correct as of such earlier date);
[(xxii) an appointment of authorized representatives by Owner
Trustee, and an acceptance thereof by such representatives;]20
(xxiii) a copy of the application for registration of the Aircraft
with the FAA in the name of Owner Trustee;
(xxiv) the Financing Statements;
(xxv) the following opinions of counsel, in each case dated the
Closing Date:
(A) an opinion of Hughes Hubbard & Reed LLP, special counsel
to Lessee, substantially in the form of Exhibit A;
(B) an opinion of Lessee's Legal Department, substantially in
the form of Exhibit B;
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20. Insert for New Lease.
(C) an opinion of (x) corporate counsel to Airframe
Manufacturer, substantially in the form of Exhibit C-1, and (y)
Katten Muchin Zavis Rosenman, special counsel to Airframe
Manufacturer, substantially in the form of Exhibit C-2;
(D) an opinion of Ray, Quinney & Nebeker, special counsel to
Owner Trustee, substantially in the form of Exhibit D;
(E) an opinion of Richards, Layton & Finger, special counsel
to Mortgagee and Loan Participant, substantially in the form of
Exhibit E;
(F) an opinion of special counsel to Owner Participant,
substantially in the form of Exhibit F;
(G) an opinion of Lytle Soule & Curlee, special counsel in
Oklahoma City, Oklahoma, substantially in the form of Exhibit G;
(H) an opinion of Walkers, special counsel to Seller,
substantially in the form of Exhibit H;
(xxvi) a copy of a current, valid Standard Certificate of
Airworthiness for the Aircraft duly issued by the FAA;
(xxvii) the Participants and their respective counsel shall have
received copies of such documents and papers as such Participants may
reasonably request, other than (A) in the case of Loan Participant, copies
of the Purchase Agreement, provided that special counsel for Loan
Participant may inspect the Purchase Agreement in connection with the
transactions contemplated hereby or as a basis for such counsel's closing
opinion, and (B) in the case of parties other than Owner Participant and
its special counsel, the Tax Indemnity Agreement.
5.1.3 OTHER COMMITMENTS
[Each other]21 [The Loan]22 Participant shall have made available the
Dollar amount of its Commitment in accordance with Section 4.
5.1.4 VIOLATION OF LAW
No change shall have occurred after the date of this Agreement in any
applicable Law that makes it a violation of Law for (a) Lessee, any Participant,
Subordination Agent, Owner Trustee or Mortgagee to execute, deliver and perform
the Operative Agreements to which any of them is a party or (b) [any]23 [the
Loan]24 Participant to make the Dollar amount of its Commitment available or to
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21. Insert for New Aircraft.
22. Delete for New Aircraft.
23. Insert for New Aircraft.
24. Delete for New Aircraft.
acquire an Equipment Note or to realize the benefits of the security afforded by
the Trust Indenture.
5.1.5 PERFECTED SECURITY INTEREST
On the Closing Date, after giving effect to the filing of the FAA Filed
Documents and the Financing Statements, Mortgagee shall have received a duly
perfected first priority security interest in all of Owner Trustee's right,
title and interest in the Aircraft and the Lease, subject only to Permitted
Liens.
5.1.6 REPRESENTATIONS, WARRANTIES AND COVENANTS
The representations and warranties of each other party to this Agreement
made, in each case, in this Agreement and in any other Operative Agreement to
which it is a party, shall be true and accurate in all material respects as of
the Closing Date (unless any such representation and warranty shall have been
made with reference to a specified date, in which case such representation and
warranty shall be true and accurate as of such specified date) and each other
party to this Agreement shall have performed and observed, in all material
respects, all of its covenants, obligations and agreements in this Agreement and
in any other Operative Agreement to which it is a party to be observed or
performed by it as of the Closing Date.
5.1.7 NO EVENT OF DEFAULT
On the Closing Date, no event shall have occurred and be continuing, or
would result from the mortgage or lease of the Aircraft, which constitutes a
Lease Default or Lease Event of Default, or an Indenture Default or Indenture
Event of Default.
5.1.8 NO EVENT OF LOSS
On the Closing Date, no Event of Loss with respect to the Airframe or any
Engine shall have occurred and no circumstance, condition, act or event that,
with the giving of notice or lapse of time or both, would give rise to or
constitute an Event of Loss with respect to the Airframe or any Engine shall
have occurred.
5.1.9 TITLE
Owner Trustee shall have good title to the Aircraft [(subject to filing
and recordation of the FAA Bill of Sale with the FAA)]25, free and clear of
Liens, except (a) the rights of Lessee under the Lease and Lease Supplement No.
1, (b) the Lien created by the Trust Indenture and the initial Trust Indenture
Supplement and (c) other Permitted Liens.
5.1.10 CERTIFICATION
The Aircraft shall have been duly certificated by the FAA as to type and
airworthiness.
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25. Insert for New Aircraft.
5.1.11 SECTION 1110
Owner Trustee, as lessor under the Lease (and Mortgagee, as assignee of
Owner Trustee under the Trust Indenture), shall be entitled to the benefits of
Section 1110 (as currently in effect) with respect to the right to take
possession of the Airframe and Engines and to enforce any of its other rights or
remedies as provided in the Lease in the event of a case under Chapter 11 of the
Bankruptcy Code in which Lessee is a debtor.
5.1.12 FILING
On the Closing Date (a) the FAA Filed Documents shall have been duly filed
for recordation (or shall be in the process of being so duly filed for
recordation) with the FAA in accordance with the Act and (b) each Financing
Statement shall have been duly filed (or shall be in the process of being so
duly filed) in the appropriate jurisdiction.
5.1.13 NO PROCEEDINGS
No action or proceeding shall have been instituted, nor shall any action
be threatened in writing, before any Government Entity, nor shall any order,
judgment or decree have been issued or proposed to be issued by any Government
Entity, to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or any other Operative Agreement or the
transactions contemplated hereby or thereby.
5.1.14 GOVERNMENTAL ACTION
All appropriate action required to have been taken prior to the Closing
Date by the FAA, or any governmental or political agency, subdivision or
instrumentality of the United States, in connection with the transactions
contemplated by this Agreement shall have been taken, and all orders, permits,
waivers, authorizations, exemptions and approvals of such entities required to
be in effect on the Closing Date in connection with the transactions
contemplated by this Agreement shall have been issued.
5.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF OWNER TRUSTEE
The obligation of Owner Trustee to execute and deliver the Equipment Notes
on the Closing Date is subject to satisfaction or waiver by Owner Trustee, at or
prior to the Closing, of the conditions precedent set forth below in this
Section 5.2.
5.2.1 NOTICE
Owner Trustee shall have received the notice described in Section 4.1 or,
in the case of a Delayed Closing Date, 4.3, when and as required thereby, or
shall have waived such notice.
5.2.2 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Owner Trustee,
except as specifically provided therein, unless the failure to receive any such
agreement, instrument, certificate or document is the result of any action or
inaction by Owner Trustee.
5.2.3 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 5.1.4, 5.1.6, 5.1.7 and
5.1.11 shall have been satisfied unless the failure of any such condition to be
satisfied is the result of any action or inaction by Owner Trustee.
5.3 CONDITIONS PRECEDENT TO OBLIGATIONS OF MORTGAGEE
The obligation of Mortgagee to authenticate the Equipment Notes on the
Closing Date is subject to the satisfaction or waiver by Mortgagee, at or prior
to the Closing, of the conditions precedent set forth below in this Section 5.3.
5.3.1 NOTICE
Mortgagee shall have received the notice described in Section 4.1 or, in
the case of a Delayed Closing Date, 4.3, when and as required thereby, or shall
have waived such notice.
5.3.2 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Mortgagee,
except as specifically provided therein, unless the failure to receive any such
agreement, instrument, certificate or document is the result of any action or
inaction by Mortgagee.
5.3.3 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 5.1.4, 5.1.6, 5.1.7 and
5.1.11 shall have been satisfied unless the failure of any such condition to be
satisfied is the result of any action or inaction by Mortgagee.
5.4 CONDITIONS PRECEDENT TO OBLIGATIONS OF LESSEE
The obligation of Lessee to lease the Aircraft on the Closing Date and to
take the other actions required by this Agreement to be taken by it at the
Closing is subject to the satisfaction or waiver by Lessee, at or prior to the
Closing, of the conditions precedent set forth below in this Section 5.4.
5.4.1 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Lessee, except
as specifically provided therein, and shall be satisfactory to Lessee, unless
the failure to receive any such agreement, instrument, certificate or document
is the result of any action or inaction by Lessee.
5.4.2 SALES TAX
Lessee shall be satisfied that no sales, use, value added, goods and
services or like tax, and no stamp tax duty, is payable with respect to the
transactions to occur at the Closing pursuant to this Agreement to the extent
that Lessee has liability therefor under Section 9.3.
5.4.3 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 5.1.3, 5.1.4, 5.1.6, 5.1.7
(as to Indenture Defaults or Indenture Events of Default not constituting Lease
Defaults or Lease Events of Default, respectively), 5.1.8, 5.1.9, 5.1.10,
5.1.11, 5.1.12, 5.1.13 and 5.1.14 shall have been satisfied or waived by Lessee,
unless the failure of any such condition to be satisfied is the result of any
action or inaction by Lessee.
5.5 POST-REGISTRATION OPINION
Promptly upon the registration of the Aircraft and the recordation of the
FAA Filed Documents pursuant to the Act, Airframe Manufacturer will cause Lytle
Soule & Curlee, special counsel in Oklahoma City, Oklahoma, to deliver to
Lessee, each Participant, Owner Trustee and Mortgagee a favorable opinion or
opinions addressed to each of them with respect to such registration and
recordation.
SECTION 6. REPRESENTATIONS AND WARRANTIES
6.1 LESSEE'S REPRESENTATIONS AND WARRANTIES
Lessee represents and warrants to each Participant, Airframe Manufacturer,
Subordination Agent, Owner Trustee and Mortgagee that:
6.1.1 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 each jurisdiction in which the
nature and extent of the business conducted by it, or the ownership of its
properties, requires such qualification, except where the failure to be so
qualified would not give rise to a Material Adverse Change to Lessee.
6.1.2 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.
6.1.3 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 Closing Date of the transactions contemplated thereby, do not and
will not (a) violate any provision of the Certificate of Incorporation or
By-Laws of Lessee, (b) violate any Law applicable to or binding on Lessee or (c)
violate or constitute any default under (other than any violation or default
that would not result in a Material Adverse Change to Lessee), or result in the
creation of any Lien (other than as permitted under the Lease) upon the Aircraft
under, any 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 bound.
6.1.4 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 Closing Date of the transactions contemplated thereby do not and
will not require the consent or approval 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 (x) the
FAA Filed Documents and the Financing Statements (and continuation statements
periodically) and (y) filings, recordings, notices or other ministerial actions
pursuant to any routine recording, contractual or regulatory requirements
applicable to it.
6.1.5 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.
6.1.6 LITIGATION
Except as set forth in Lessee's most recent Annual Report on Form 10-K, as
amended, filed by Lessee with the SEC on or prior to the Closing Date, or in any
Quarterly Report on Form 10-Q or Current Report on Form 8-K (or any amendment
thereof) filed by Lessee with the SEC subsequent to such Form 10-K and on or
prior to the Closing Date, no action, claim or proceeding is now pending or, to
the Actual Knowledge of Lessee, threatened, against Lessee, before any court,
governmental body, arbitration board, tribunal or administrative agency, which
is reasonably likely to be determined adversely to Lessee and if determined
adversely to Lessee would result in a Material Adverse Change.
6.1.7 FINANCIAL CONDITION
The audited consolidated balance sheet of Lessee with respect to Lessee's
most recent fiscal year included in Lessee's most recent Annual Report on Form
10-K, as amended, filed by Lessee with the SEC, and the related consolidated
statements of operations and cash flows for the period then ended 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 the
date of such balance sheet, there has been no material adverse change in such
financial condition or operations of Lessee, except for matters disclosed in (a)
the financial statements referred to above or (b) any subsequent Quarterly
Report on Form 10-Q or Current Report on Form 8-K (or any amendment thereof)
filed by Lessee with the SEC on or prior to the date hereof.
6.1.8 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 Mortgagee 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 in order
to establish and perfect the right, title or interest of Owner Trustee, and the
Mortgagee's security interest, in the Aircraft and the Lease, as against Lessee
and any other Person, in each case, in any applicable jurisdiction in the United
States.
6.1.9 LOCATION
Lessee's location (as such term is used in Section 9-307 of the UCC) is
Delaware.
6.1.10 NO DEFAULT
No event which, if the Aircraft were subject to the Lease, constitutes a
Lease Event of Default has occurred and is continuing.
6.1.11 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
has 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.
6.1.12 COMPLIANCE WITH LAWS
(a) Lessee is a Citizen of the United States and a U.S. Air Carrier.
(b) 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.
(c) 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.
6.1.13 SECURITIES LAWS
Neither Lessee 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 the Lease or any interest in the Trust Estate and
Trust Agreement, or any of the Equipment Notes 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.
6.1.14 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.
6.1.15 SECTION 1110
Owner Trustee, as lessor under the Lease (and Mortgagee, as assignee 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 and to enforce any of its other rights or remedies as provided in the
Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which
Lessee is a debtor.
6.2 OWNER PARTICIPANT'S REPRESENTATIONS AND WARRANTIES
Owner Participant represents and warrants to Lessee, Loan Participant,
Airframe Manufacturer, Subordination Agent, Owner Trustee and Mortgagee that:
6.2.1 ORGANIZATION, ETC.
Owner Participant is a corporation duly incorporated, validly existing and
in good standing under the Laws of the OP Jurisdiction 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.
6.2.2 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.
6.2.3 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 Closing Date of the
transactions contemplated thereby, do not and will not (a) violate any provision
of the Certificate of Incorporation or By-Laws of Owner Participant, (b) violate
any Law applicable to or binding on Owner Participant or (c) violate or
constitute any default under (other than any violation or default that would not
result in a Material Adverse Change to Owner Participant), 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 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 bound.
6.2.4 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 Closing Date of the
transactions contemplated thereby do not and will not require the consent or
approval 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.
6.2.5 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.
6.2.6 CITIZENSHIP
On the Closing Date, Owner Participant is not a Citizen of the United
States, but holds 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 or any other provision that could restrict Lessee's use or
operation of the Aircraft).
6.2.7 NO LIENS
On the Closing Date, there are no Lessor Liens attributable to Owner
Participant in respect of all or any part of the Trust Estate.
6.2.8 INVESTMENT BY OWNER PARTICIPANT
Owner Participant's beneficial interest in the Trust Estate has been
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 10, the disposition by Owner Participant of its
beneficial interest in the Trust Estate shall at all times be within its
control.
6.2.9 ERISA
No part of the funds used by Owner Participant to acquire or hold its
interests in the Trust Estate directly or indirectly constitutes assets of a
Plan.
6.2.10 LITIGATION
There are no pending or, to the Actual Knowledge of Owner Participant,
threatened actions or proceedings against Owner Participant before any court,
governmental body, arbitration board, administrative agency or tribunal which,
if determined adversely to Owner Participant, would materially adversely affect
the ability of Owner Participant to perform its obligations under, or affect the
validity or enforceability of, the Owner Participant Agreements.
6.2.11 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 Equipment Notes 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 registration provisions of the
Securities Act or applicable state securities Laws.
6.2.12 BROKER'S FEES
No Person acting on behalf of Owner Participant is or will be entitled to
any broker's fee, commission or finder's fee in connection with the
Transactions.
6.3 WELLS FARGO'S REPRESENTATIONS AND WARRANTIES
Wells Fargo represents and warrants (in the case of Section 6.3.13, solely
in its capacity as Owner Trustee) to Lessee, Owner Participant, Airframe
Manufacturer, Loan Participants, Subordination Agent and Mortgagee that:
6.3.1 ORGANIZATION, ETC.
Wells Fargo 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.
6.3.2 CORPORATE AUTHORIZATION
Wells Fargo 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 Articles of Association or By-Laws) to
authorize the execution and delivery by Wells Fargo, in its individual capacity
and as Owner Trustee, of each of the Owner Trustee Agreements, and the
performance of its obligations thereunder.
6.3.3 NO VIOLATION
The execution and delivery by Wells Fargo, in its individual capacity and
as Owner Trustee, of the Owner Trustee Agreements, the performance by Wells
Fargo, in its individual capacity and as Owner Trustee, of its obligations
thereunder and the consummation by Wells Fargo in its individual capacity and as
Owner Trustee on the Closing Date of the transactions contemplated thereby, do
not and will not (a) violate any provision of the Articles of Association or
By-Laws of Wells Fargo, (b) violate any Law of the State of Utah or federal
banking Law applicable to or binding on Owner Trustee or Wells Fargo or (c)
violate or constitute any default under (other than any violation or default
that would not result in a Material Adverse Change to Wells Fargo, in its
individual capacity or as Owner Trustee), or result in the creation of any Lien
(other than the lien of the Trust Indenture) upon any property of Wells Fargo,
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 Wells Fargo, in its individual capacity or as Owner Trustee, is a party
or by which Wells Fargo, in its individual capacity or as Owner Trustee, or any
of its properties is or may be bound or affected.
6.3.4 APPROVALS
The execution and delivery by Wells Fargo, in its individual capacity and
as Owner Trustee, of the Owner Trustee Agreements, the performance by Wells
Fargo, in its individual capacity and as Owner Trustee, of its obligations
thereunder and the consummation by Wells Fargo, in its individual capacity and
as Owner Trustee, on the Closing 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 Wells Fargo or (b) any Government Entity
governing banking and trust powers, other than the filing of the FAA Filed
Documents and the Financing Statements.
6.3.5 VALID AND BINDING AGREEMENTS
The Owner Trustee Agreements have been duly authorized, executed and
delivered by Wells Fargo, in its individual capacity or as Owner Trustee, as the
case may be, and constitute the legal, valid and binding obligations of Wells
Fargo, 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 Wells Fargo, 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.
6.3.6 CITIZENSHIP
On the Closing Date, Wells Fargo is a Citizen of the United States.
6.3.7 LOCATION
The Owner Trustee's location (as such term is used in Section 9-307 of the
UCC) is Utah.
6.3.8 TITLE
On the Delivery Date, Owner Trustee received whatever title to the
Aircraft as was conveyed to it by Seller.
6.3.9 NO LIENS; FINANCING STATEMENTS
On the Closing Date, there are no Lessor Liens attributable to Wells Fargo
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 and the one or
more UCC-1 financing statements covering the Aircraft and filed for
precautionary purposes by the Owner Trustee in connection with the delivery of
the Aircraft to Lessee under the Existing Lease on the Delivery Date, it has
not, either in its individual capacity or as Owner Trustee, executed any UCC
financing statements relating to the Aircraft or the Lease.
6.3.10 LITIGATION
There are no pending or, to the Actual Knowledge of Wells Fargo,
threatened actions or proceedings against Wells Fargo or Owner Trustee before
any court, governmental body, arbitration board, administrative agency or
tribunal which, if determined adversely to Wells Fargo or Owner Trustee, would
materially adversely affect the ability of Wells Fargo or Owner Trustee to
perform its obligations under, or affect the validity or enforceability of, the
Owner Trustee Agreements.
6.3.11 SECURITIES LAWS
Neither Wells Fargo, 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
Equipment Notes 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, except for the offering and sale of the Pass Through Certificates.
6.3.12 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, Pass Through Trustee,
Subordination Agent, Owner Trustee or Mortgagee (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 Equipment
Notes, 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.
[6.3.13 PRIOR ACTIVITIES
Owner Trustee has not engaged in any activities except holding title to
the Aircraft and leasing the Aircraft pursuant to the terms of the "Trust
Agreement" (as defined in the Existing Lease) and the Existing Lease,
respectively, and Owner Trustee has not incurred any debt or other financial
obligation, except as expressly provided in the "Trust Agreement" (as defined in
the Existing Lease) and the Existing Lease or such other debt that shall have
been satisfied or discharged in full contemporaneously with the Closing.]26
6.4 WTC'S REPRESENTATIONS AND WARRANTIES
WTC represents and warrants (with respect to Section 6.4.10, solely in its
capacity as Subordination Agent) to Lessee, Owner Participant, Airframe
Manufacturer, and Owner Trustee that:
6.4.1 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, the Pass Through Trustee Agreements and the Subordination
Agent Agreements.
6.4.2 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 WTC, in its individual capacity or as
Mortgagee, Pass Through Trustee or Subordination Agent, as the case may be, of
the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements and the performance of its obligations
thereunder.
6.4.3 NO VIOLATION
The execution and delivery by WTC, in its individual capacity or as
Mortgagee, Pass Through Trustee or Subordination Agent, as the case may be, of
the Mortgagee Agreements, the Pass Through Trustee Agreements and the
- ----------
26. Delete for New Aircraft.
Subordination Agent Agreements, the performance by WTC, in its individual
capacity or as Mortgagee, Pass Through Trustee or Subordination Agent, as the
case may be, of its obligations thereunder and the consummation on the Closing
Date of the transactions contemplated thereby, do not and will not (a) violate
any provision of the Certificate of Incorporation or By-Laws of WTC, (b) violate
any Law applicable to or binding on WTC, in its individual capacity or (except
in the case of any Law relating to any Plan) as Mortgagee, Pass Through Trustee
or Subordination Agent, or (c) violate or constitute any default under (other
than any violation or default that would not result in a Material Adverse Change
to WTC, in its individual capacity or as Mortgagee, Pass Through Trustee or
Subordination Agent), or result in the creation of any Lien (other than the lien
of the Trust Indenture) upon any property of WTC, in its individual capacity or
as Mortgagee, Pass Through Trustee or Subordination Agent, or any of WTC's
subsidiaries under, any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, lease, loan or other agreement, instrument or
document to which WTC, in its individual capacity or as Mortgagee, Pass Through
Trustee or Subordination Agent, is a party or by which WTC, in its individual
capacity or as Mortgagee, Pass Through Trustee or Subordination Agent, or any of
their respective properties is bound.
6.4.4 APPROVALS
The execution and delivery by WTC, in its individual capacity or as
Mortgagee, Pass Through Trustee or Subordination Agent, as the case may be, of
the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements, the performance by WTC, in its individual
capacity or as Mortgagee, Pass Through Trustee or Subordination Agent, as the
case may be, of its obligations thereunder and the consummation on the Closing
Date by WTC, in its individual capacity or as Mortgagee, Pass Through Trustee or
Subordination Agent, 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.
6.4.5 VALID AND BINDING AGREEMENTS
The Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent 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, in its individual capacity or as Mortgagee, Pass Through Trustee or
Subordination Agent, as the case may be, and are enforceable against WTC, in its
individual capacity or as Mortgagee, Pass Through Trustee or Subordination
Agent, as the case may be, 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.
6.4.6 CITIZENSHIP
WTC is a Citizen of the United States.
6.4.7 NO LIENS
On the Closing 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.
6.4.8 LITIGATION
There are no pending or, to the Actual Knowledge of WTC, threatened
actions or proceedings against WTC, in its individual capacity or as Mortgagee,
Pass Through Trustee or Subordination Agent, before any court, administrative
agency or tribunal which, if determined adversely to WTC, in its individual
capacity or as Mortgagee, Pass Through Trustee or Subordination Agent, as the
case may be, would materially adversely affect the ability of WTC, in its
individual capacity or as Mortgagee, Pass Through Trustee or Subordination
Agent, as the case may be, to perform its obligations under, or affect the
validity or enforceability of, any of the Mortgagee Agreements, the Pass Through
Trustee Agreements or the Subordination Agent Agreements.
6.4.9 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
Equipment Notes 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, except for the offering and sale of the Pass Through Certificates.
6.4.10 INVESTMENT
The Equipment Notes to be acquired by the Subordination Agent are being
acquired by it for the account of the Pass Through Trustee, 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 10.1.3, the disposition by it
of its Equipment Notes shall at all times be within its control.
6.4.11 TAXES
There are no Taxes payable by the Pass Through Trustee or WTC, as the case
may be, 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 or WTC, as the case may be, of this Agreement or any of
the Pass Through Trustee Agreements (other than franchise or other taxes based
on or measured by any fees or compensation received by any the Pass Through
Trustee or WTC, as the case may be, for services rendered in connection with the
transactions contemplated by the Pass Through Trust Agreement), and there are no
Taxes payable by the Pass Through Trustee or WTC, as the case may be, 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 or WTC, as the
case may be, for services rendered in connection with the transactions
contemplated by the Pass Through Trust Agreement), and, assuming that the trust
created by the Pass Through Trust Agreement will not be taxable as a
corporation, but, rather, will be characterized as a grantor trust under subpart
E, Part I of Subchapter J of the Code or as a partnership under Subchapter K of
the Code, such trust will not be subject to any Taxes imposed by the State of
Delaware or any political subdivision thereof.
6.4.12 CONTROL
WTC is not an Affiliate of the Owner Participant or the Owner Trustee.
6.4.13 BROKER'S FEES
No Person acting on behalf of WTC, in its individual capacity or as
Mortgagee, Pass Through Trustee or Subordination Agent, is or will be entitled
to any broker's fee, commission or finder's fee in connection with the
Transactions.
6.5 AIRFRAME MANUFACTURER'S REPRESENTATIONS AND WARRANTIES
Airframe Manufacturer represents and warrants to Lessee, each Participant,
Subordination Agent, Owner Trustee and Mortgagee that:
6.5.1 ORGANIZATION, ETC.
Airframe Manufacturer is a corporation duly incorporated, validly existing
and in good standing under the Laws of Brazil, 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 Airframe Manufacturer Agreements. [OP Guarantor has a tangible net
worth (exclusive of goodwill) greater than $25,000,000.]27
6.5.2 CORPORATE AUTHORIZATION
Airframe Manufacturer 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 constitutional documents) to authorize
the execution and delivery of each of the Airframe Manufacturer Agreements, and
the performance of its obligations thereunder.
6.5.3 NO VIOLATION
The execution and delivery by Airframe Manufacturer of the Airframe
Manufacturer Agreements, the performance by Airframe Manufacturer of its
obligations thereunder and the consummation by Airframe Manufacturer on the
Closing Date of the transactions contemplated thereby, do not and will not (a)
violate any provision of the constitutional documents of Airframe Manufacturer,
(b) violate any Law applicable to or binding on Airframe Manufacturer or (c)
violate or constitute any default under (other than any violation or default
that would not result in a Material Adverse Change to Airframe Manufacturer), 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
- ----------
27. Insert if Op is an Affiliate of Airframe Manufacturer.
indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, lease, loan or other material agreement, instrument or document to
which Airframe Manufacturer is a party or by which Airframe Manufacturer or any
of its properties is bound.
6.5.4 APPROVALS
The execution and delivery by Airframe Manufacturer of the Airframe
Manufacturer Agreements, the performance by Airframe Manufacturer of its
obligations thereunder and the consummation by Airframe Manufacturer on the
Closing Date of the transactions contemplated thereby do not and will not
require the consent or approval 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 Airframe Manufacturer and (b) any Government Entity, other than the
filing of the FAA Filed Documents and the Financing Statements.
6.5.5 VALID AND BINDING AGREEMENTS
The Airframe Manufacturer Agreements have been duly authorized, executed
and delivered by Airframe Manufacturer and, assuming the due authorization,
execution and delivery by the other party or parties thereto, constitute the
legal, valid and binding obligations of Airframe Manufacturer and are
enforceable against Airframe Manufacturer 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.
6.5.6 TITLE
On the Closing Date, Lessor shall have good and marketable title to the
Aircraft, free and clear of all claims, Liens and encumbrances of any nature,
except Permitted Liens.
6.5.7 TAXES
Lessor has filed or will cause to be filed all Federal and all material
state, local and foreign tax returns which are required to be filed by it and
have paid or will cause to be paid all Taxes which are due and payable in
connection with the Aircraft.
6.5.8 LITIGATION
There are no pending or, to the Actual Knowledge of Airframe Manufacturer,
threatened actions or proceedings against Airframe Manufacturer before any
court, governmental body, arbitration board, administrative agency or tribunal
which, if determined adversely to Airframe Manufacturer, would materially
adversely affect the ability of Airframe Manufacturer to perform its obligations
under, or affect the validity or enforceability of, the Airframe Manufacturer
Agreements.
6.5.9 SECURITIES LAWS
Neither Airframe Manufacturer nor any person Airframe Manufacturer 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 Equipment Notes 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.
6.5.10 BROKER'S FEES
No Person acting on behalf of Airframe Manufacturer is or will be entitled
to any broker's fee, commission or finder's fee in connection with the
Transactions, except for the placement agent's fees and commissions payable with
respect to the offering of the Pass Through Certificates and the fees and
expenses of Equity Advisor, which are the sole responsibility of Airframe
Manufacturer.
SECTION 7. COVENANTS, UNDERTAKINGS AND AGREEMENTS
7.1 COVENANTS OF LESSEE
Lessee covenants and agrees with Owner Participant, Loan Participant,
Owner Trustee and Mortgagee as follows:
7.1.1 CORPORATE EXISTENCE; U.S. AIR CARRIER
Lessee shall at all times maintain its corporate existence, except as
permitted by Section 13.2 of the Lease, and shall at all times remain a U.S.
Air Carrier.
7.1.2 NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE
Lessee will give Owner Participant, Owner Trustee and Mortgagee timely
written notice (but in any event within 30 days prior to the expiration of the
period of time specified under applicable Law to prevent lapse of perfection) of
any change of its location (as such term is used in Section 9-307 of the UCC)
from its then present location and will promptly take any action required by
Section 7.1.3(c) as a result of such relocation.
7.1.3 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 Owner Participant, Owner Trustee or
Mortgagee shall reasonably request for accomplishing the purposes of this
Agreement and the other Operative Agreements, PROVIDED THAT any instrument or
other document so executed by Lessee will not expand any obligations or limit
any rights of Lessee in respect of the transactions contemplated by any
Operative Agreement.
(b) Lessee shall promptly take such action with respect to the recording,
filing, re-recording and re-filing of the Lease, the Trust Agreement and the
Trust Indenture and the respective supplements thereto, including, without
limitation, Lease Supplement No. 1 and the initial 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 Indenture, and Lessee shall pay
all out-of-pocket costs and expenses thereof to the extent not paid by another
party as Transaction Expenses. 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).
(c) Lessee 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 change of its location (as such term is used in Section 9-307 of the UCC))
in respect of the Financing Statements to be prepared and, subject only to the
execution and delivery thereof by Owner Trustee and Mortgagee, 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). Lessee hereby authorizes Owner Trustee and/or Mortgagee to prepare
and file any UCC financing statements (including any amendments thereto) and
continuation statements referred to in this Section 7.1.3(c).
(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, Mortgagee 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 Owner Trustee and
Mortgagee stating that, in the opinion of such counsel, either that (i) such
action has been taken with respect to the recording, filing, re-recording and
re-filing of the Operative Agreements and any supplements and amendments thereto
as is necessary to establish, perfect and protect Owner Trustee's and
Mortgagee'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.
7.1.4 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 Equipment Notes 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.
7.2 COVENANTS OF OWNER PARTICIPANT
Owner Participant covenants and agrees with Lessee, and except with
respect to Section 7.2.4, Loan Participant, Owner Trustee and Mortgagee as
follows:
7.2.1 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, 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.
Owner Participant will hold harmless and indemnify Lessee, Owner Trustee, each
Note Holder, Mortgagee, 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,
in each case imposed on, incurred by or asserted against any of the foregoing as
a consequence of any such Lessor Lien.
7.2.2 REVOCATION OF TRUST AGREEMENT
(a) Owner Participant will comply with the provisions of the Trust
Agreement applicable to it, and will not terminate or revoke the Trust Agreement
or the trusts created thereunder without the prior written consent of Lessee and
Mortgagee 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 Mortgagee or any Note Holder, without the consent of Mortgagee.
(b) Notwithstanding Section 7.2.2(a), Owner Participant may at any time
remove Owner Trustee pursuant to Section 9.1 of the Trust Agreement or terminate
the Trust Agreement pursuant to Section 11.2 of the Trust Agreement.
7.2.3 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 9.3 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 Note Holders or the
Pass Through Trustee 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 (it
being agreed that if a Lease Event of Default shall have occurred and is then
continuing, it shall not be unreasonable for Owner Participant to withhold its
consent to moving the situs of the Trust, notwithstanding the provision by
Lessee of such additional tax indemnification, unless a Section 1110 Event shall
have occurred and is then continuing), (b) the rights and obligations under the
Operative Agreements of Owner Participant, the Note Holders, Pass Through
Trustee and Mortgagee 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 be necessary or as may
reasonably be requested by Mortgagee to protect and maintain the perfection and
priority of such Lien, (d) Owner Participant, Pass Through Trustee and Mortgagee
shall have received an opinion or opinions of counsel (which counsel is
reasonably satisfactory to Owner Participant, Pass Through Trustee and
Mortgagee) in scope, form and substance reasonably satisfactory to Owner
Participant, Pass Through Trustee and Mortgagee 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, Pass Through Trustee or Mortgagee may reasonably request, (e) if
such removal involves the replacement of Owner Trustee, then Owner Participant,
Pass Through Trustee and Mortgagee shall have received an opinion of counsel to
such successor Owner Trustee in form and substance reasonably satisfactory to
Owner Participant, Pass Through Trustee and Mortgagee covering the matters
described in the opinion delivered pursuant to Section 5.1.2(xxv)(D) and (f)
Lessee shall indemnify and hold harmless Owner Participant, Note Holders, Pass
Through Trustee and Wells Fargo, 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, Note Holders, Pass Through Trustee or Owner
Trustee in connection with such change of situs. Owner Participant agrees with
Lessee that it will not consent to or direct a change in the situs of the Trust
Estate without the prior written consent of Lessee, except that if a Lease Event
of Default shall have occurred and is then continuing, except during a Section
1110 Period, such consent shall not be required.
7.2.4 COMPLIANCE WITH LEASE PROVISIONS
Owner Participant will, solely for the benefit of Lessee, comply with the
express provisions applicable to it contained in the Lease.
7.2.5 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 Equipment Notes 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 registration provisions 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.
7.2.6 REGARDING THE OWNER TRUSTEE
Owner Participant will instruct Owner Trustee to perform its obligations
under each Owner Trustee Agreement.
7.3 COVENANTS OF WELLS FARGO AND OWNER TRUSTEE
Wells Fargo, in its individual capacity and/or as Owner Trustee, as
provided below, covenants and agrees with Lessee, Owner Participant, each Note
Holder and Mortgagee as follows:
7.3.1 LIENS
Wells Fargo (a) will not directly or indirectly create, incur, assume or
suffer to exist any Lessor Lien 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, take such action as may be
necessary to discharge any Lessor Lien attributable to Wells Fargo or Owner
Trustee on all or any part of the Trust Estate, the Trust Indenture Estate or
the Aircraft. Wells Fargo will in its individual capacity hold harmless and
indemnify Lessee, Owner Participant, each Note Holder, Mortgagee, 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, in each case imposed on, incurred by or
asserted against any of the foregoing as a consequence of any such Lessor Lien.
7.3.2 OTHER BUSINESS
Owner Trustee will not enter into any business or other activity except as
contemplated by the Operative Agreements.
7.3.3 NOTICE OF CHANGE OF LOCATION
Wells Fargo, in its individual capacity and as Owner Trustee, will give
Lessee, each Participant and Mortgagee 30 days' prior written notice of any
change of its location (as such term is used in Section 9-307 of the UCC) from
its then present location and will promptly take any action required by Section
7.3.8 as a result of such relocation.
7.3.4 SECURITIES ACT
Wells Fargo, 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
Equipment Notes 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
registration provisions of the Securities Act or applicable state or foreign
securities Laws, provided that the foregoing shall not be deemed to impose on
Wells Fargo in its individual capacity or as Owner Trustee, any responsibility
with respect to any such offer, sale or solicitation by any other party hereto.
7.3.5 PERFORMANCE OF AGREEMENTS
Owner Trustee shall perform its obligations under the Owner Trustee
Agreements in accordance with the terms thereof.
7.3.6 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 Mortgagee or Owner Participant), shall, at Lessee's
request and expense, use its reasonable efforts to procure from Mortgagee the
prompt release of the Lien of the Trust Indenture with respect to such property.
7.3.7 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 and Mortgagee
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.
7.3.8 FILINGS
After the Closing 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 change of its location (as such term is
used in Section 9-307 of the UCC)), 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. Owner Trustee hereby authorizes the Mortgagee to prepare and file
any UCC financing statements (including any amendments thereto) and continuation
statements referred to in this Section 7.3.8.
7.3.9 TRUST AGREEMENT
Each of Wells Fargo and Owner Trustee hereby (i) agrees with Lessee, Loan
Participant and Mortgagee 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 Mortgagee 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 Wells Fargo to resign as Owner Trustee in accordance with the
provisions of the Trust Agreement.
7.4 COVENANTS OF WTC
WTC in its individual capacity or as Mortgagee, Pass Through Trustee or
Subordination Agent, as the case may be, covenants and agrees with Lessee, Owner
Participant and Owner Trustee as follows:
7.4.1 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 in its
individual capacity hold harmless and indemnify Lessee, Owner Participant, each
Note 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,
in each case imposed on, incurred by or asserted against any of the foregoing as
a consequence of any such Lessor Lien.
7.4.2 SECURITIES ACT
WTC in its individual capacity or as Mortgagee, Pass Through Trustee or
Subordination Agent, 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 Equipment Notes 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 WTC any
responsibility with respect to any such offer, sale or solicitation by any other
party hereto.
7.4.3 PERFORMANCE OF AGREEMENTS
WTC, in its individual capacity and as Mortgagee, Pass Through Trustee or
Subordination Agent, as the case may be, shall perform its obligations under the
Mortgagee Agreements, the Pass Through Trustee Agreements and the Subordination
Agent Agreements in accordance with the terms thereof.
7.4.4 WITHHOLDING TAXES
WTC shall indemnify (on an after-tax basis) and hold harmless Lessee,
Lessor 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 Note Holder if such Note Holder failed to
provide to Mortgagee necessary certificates or forms to substantiate the right
to exemption from such withholding tax.
7.5 COVENANTS OF NOTE HOLDERS
Each Note Holder (including Subordination Agent) as to itself only
covenants and agrees with Lessee, Owner Participant, Owner Trustee and Mortgagee
as follows:
7.5.1 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, Lessor, Owner Participant and
Mortgagee 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 Mortgagee 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.
7.5.2 TRANSFER; COMPLIANCE
(a) Such Note Holder will (i) not transfer any Equipment Note 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 Note Holder any responsibility with respect to
any such offer, sale or solicitation by any other party hereto, and (ii) perform
and comply with the obligations specified to be imposed on it (as a Note Holder)
under each of the Trust Indenture and the form of Equipment Note set forth in
the Trust Indenture.
(b) Except as otherwise required by the terms of Section 2.13 of the Trust
Indenture, each Note Holder will not sell, assign, convey, exchange or otherwise
transfer any Equipment Note or any interest in, or represented by, any Equipment
Note (it being understood that this provision is not applicable to the Pass
Through Certificates) unless the proposed transferee thereof first provides
Lessee and Owner Participant with both of the following:
(i) a written representation and covenant 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
(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) and the other
covenants of the Note Holders contained in the Operative Agreements.
7.6 AGREEMENTS
7.6.1 OWNER TRUSTEE IS OWNER FOR ALL PURPOSES
Lessee, the Owner Participant and Owner 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.
7.6.2 COMMENCEMENT OF BANKRUPTCY PROCEEDINGS
Lessee, each Participant, each Note Holder, Wells Fargo, Owner Trustee,
WTC and Mortgagee 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 Note Holder,
Wells Fargo, Owner Trustee, WTC or Mortgagee from filing any claim against the
Trust Estate in any case commenced against the Trust Estate or preclude the
exercise of remedies pursuant to, or limit the rights of Mortgagee under, the
Trust Indenture.
7.6.3 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,
Wells Fargo or Owner Participant is required, by reason of Wells Fargo or Owner
Participant being held to have recourse liability to any Note Holder or
Mortgagee directly or indirectly (other than the recourse liability of Wells
Fargo 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 Equipment
Notes, and (c) any Note Holder or Mortgagee actually receives any Excess Amount,
as defined below, which reflects any payment by Wells Fargo or Owner Participant
on account of (b) above, then such Note Holder or Mortgagee, as the case may be,
shall promptly refund to Wells Fargo or Owner Participant (whichever shall have
made such payment) such Excess Amount.
For purposes of this Section 7.6.3, "Excess Amount" means the amount by
which such payment exceeds the amount that would have been received by a Note
Holder or Mortgagee if Wells Fargo or Owner Participant had not become subject
to the recourse liability referred to in clause (b) above, and such Note Holder
or Mortgagee receives written notice that such amount is an Excess Amount prior
to its distribution thereof. Nothing contained in this Section 7.6.3 shall
prevent a Note Holder or Mortgagee from enforcing any personal recourse
obligation (and retaining the proceeds thereof) of Wells Fargo 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 2.13 or 4.03 of the Trust
Indenture.
7.6.4 QUIET ENJOYMENT; SALE BY OWNER TRUSTEE BINDING
(a) Owner Participant, Pass Through Trustee, Subordination Agent, each
Note Holder, Owner Trustee and Mortgagee 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.
(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 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.
7.6.5 RELEASE OF LIEN OF TRUST INDENTURE
Each of Lessee, Lessor and Mortgagee agrees that in each instance referred
to in the Lease in which a transfer of any property is required to be made by
Lessor to Lessee or any other Person (other than Mortgagee), Mortgagee shall,
upon request of Lessor and compliance with the applicable provisions of the
Lease and Trust Indenture, promptly execute (at Lessee's cost and expense) such
instruments as Lessor or Lessee may reasonably request to evidence the release
of the Lien of the Trust Indenture with respect to such property.
7.6.6 NON-RECOURSE
Loan Participant and Mortgagee agree that (a) obligations of Owner Trustee
under the Trust Indenture or any other Operative Agreement and with respect to
the Equipment Notes shall be non-recourse to Owner Participant and to Wells
Fargo 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 Note Holder or Mortgagee as provided in the Trust Indenture and that neither
Owner Participant nor Wells Fargo will be personally liable to Loan Participant
or Mortgagee for any amounts payable by Owner Trustee under the Trust Indenture
or any other Operative Agreement; PROVIDED, HOWEVER, that the foregoing is not
intended nor shall it be construed to limit any recourse liability of Owner
Participant or Wells Fargo to the extent that such liability is expressly set
forth in this Agreement or in any of the Operative Agreements or arises by
reason of the breach of any representation or warranty or covenant given by such
Person (in the case of Wells Fargo, in its individual capacity).
7.6.7 OTHER DOCUMENTS; AMENDMENT
(a) Each of the Owner Participant and the Owner Trustee hereby agrees with
Lessee, the Loan Participant, and the Mortgagee not to amend, supplement or
otherwise modify any provision of the Trust Agreement in a manner that could
materially adversely affect such party without the prior written consent of such
party (including without limitation in the case of such agreement with Lessee,
Section 4.2.5 of the Trust Agreement). Notwithstanding the foregoing, so long as
the Lease has not been terminated or expired, each Participant, the Mortgagee
and the Owner Trustee hereby agree for the benefit of Lessee that without the
consent of Lessee they will not amend, supplement or otherwise modify (i)
Article III, Article IX or Sections 2.02 (third paragraph), 2.05 or 3.06 (second
sentence) of the Trust Indenture, (ii) any provision of any Operative Agreement
that will affect the stated principal amount of or premium or interest on the
Equipment Notes or (iii) any other provision of the Trust Indenture or Equipment
Notes in a manner that could materially adversely affect Lessee. Mortgagee and
Owner Trustee agree promptly to furnish to Lessee copies of any supplement,
amendment, waiver or modification of any of the Operative Agreements to which
Lessee is not a party. Loan Participant agrees that it will not take any action
in respect of the Trust Indenture Estate except through the Mortgagee pursuant
to the Trust Indenture or as otherwise permitted by the Trust Indenture.
(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.
7.6.8 CONSENTS
Owner Participant, Pass Through Trustee, Subordination Agent, Owner
Trustee and Mortgagee each 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 Mortgagee under the terms of any of the
Operative Agreements which by its terms is not to be unreasonably withheld.
7.6.9 INSURANCE
Each of Owner Participant, the Pass Through Trustee, the Subordination
Agent and the Owner Trustee agrees not to obtain or maintain insurance for its
own account as permitted by Section 11.2 of the Lease if such insurance would
limit or otherwise materially 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.
7.6.10 EXTENT OF INTEREST OF NOTE HOLDERS
A Note 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 Equipment
Note 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.
7.6.11 FOREIGN REGISTRATION
Each Participant, Owner Trustee and Mortgagee hereby agree, 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 the following requirements is satisfied:
(A) such registration shall be made only after the Tax
Attribute Period, unless Lessee prepays on a lump sum
basis calculated pursuant to Section 5(f) of the Tax
Indemnity Agreement any liability 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 (C) below,
PROVIDED, that notwithstanding the foregoing, such
registration may be made during the taxable year in
which the seventh anniversary of the Delivery Date
occurs so long as the Aircraft is not "used
predominantly outside the United States" within the
meaning of Section 168(g) of the Code during such
taxable year;
(B) no Lease Event of Default shall have occurred and be
continuing at the time of such registration;
(C) such proposed change of registration is made in
connection with a Permitted Sublease to a Permitted Air
Carrier; and
(D) such country is a Permitted Country with which the
United States then maintains normal diplomatic
relations.
(ii) the Owner Trustee, Owner Participant and Mortgagee shall have
received an opinion, in form and substance reasonably satisfactory to the
Owner Participant (subject to customary exceptions), of counsel reasonably
satisfactory to the Owner Participant and Mortgagee addressed to each such
party to the effect that:
(A) such country would recognize the Owner Trustee's title
to, ownership interest in and right to possession of,
the Aircraft;
(B) the obligations of Lessee, and the rights and remedies
of Owner Trustee, under the Lease are valid, binding and
enforceable under the laws of such country (or the laws
of the country to which the laws of such country would
refer as the applicable governing law);
(C) after giving effect to such change in registration,
the Lien of the Trust Indenture on the Owner
Trustee's right, title and interest in and to the
Aircraft and the Lease shall continue as a valid and
duly perfected first priority security interest and
all filing, recording or other action necessary to
protect the same shall have been accomplished (or, if
such opinion cannot be given at the time of such
proposed change in registration because such change
in registration is not yet effective, (1) the opinion
shall detail what filing, recording or other action
is necessary and (2) Owner Trustee and the Mortgagee
shall have received a certificate from Lessee that
all possible preparations to accomplish such filing,
recording and other action shall have been done, and
such filing, recording and other action shall be
accomplished and a supplemental opinion to that
effect shall be delivered to Owner Trustee and the
Mortgagee on or prior to the effective date of such
change in registration;
(D) it is not necessary, solely as a consequence of such
change in registration and without giving effect to
any other activity of Owner Trustee, the Owner
Participant or the Mortgagee (or any Affiliate
thereof), as the case may be, for Owner Trustee, the
Owner Participant or the Mortgagee to qualify to do
business in such country as a result of such
reregistration;
(E) there is no tort liability of the owner or lessor or
mortgagee of an aircraft not in possession thereof
under the laws of such country (it being agreed that,
in the event such latter opinion cannot be given in a
form satisfactory to the Owner Participant and
Mortgagee, such opinion shall be waived if insurance
reasonably satisfactory to the Owner Participant and
Mortgagee is provided to cover such risk); and
(F) unless Lessee shall have agreed to provide insurance
reasonably satisfactory to Owner Participant and
Mortgagee 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 requisition by such
government of such use.
(b) In addition, as a condition precedent to any change in registration
Lessee shall have given to Lessor and Mortgagee assurances reasonably
satisfactory to each of them:
(i) to the effect that the provisions of Section 11 of the Lease
have been complied with after giving effect to such change of
registration; and
(ii) of the payment by Lessee of all reasonable out-of-pocket
expenses at no after-tax cost to any Participant of
Lessor, each Participant and Mortgagee in connection with
such change of registry, including, without limitation
(1) the reasonable fees and disbursements of counsel to
Lessee, Lessor and Mortgagee, (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 Mortgagee for the benefit of Note 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 Mortgagee for the benefit of Note
Holders and (4) costs in connection with the calculation
of the lump sum payment described in clause (i)(A) of this
Section 7.6.11.
7.6.12 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 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 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) The Airframe Manufacturer, by its execution and delivery of the
Consent and Agreement, shall not be deemed to have waived any rights, remedies
or claims which Airframe Manufacturer (or any subcontractor or supplier of
Airframe Manufacturer) 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 Airframe Manufacturer (or any subcontractor or supplier of
Airframe Manufacturer).
7.6.13 INTEREST IN CERTAIN ENGINES
Each Participant, Owner Trustee, and Mortgagee agree, for the benefit of
each of the lessor, conditional seller, mortgagee 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, mortgagee 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 mortgagee or secured
party.
SECTION 8. CONFIDENTIALITY
Lessee, Owner Participant, Note Holders, Owner Trustee, Mortgagee and
Airframe Manufacturer shall keep Annexes B, C and D and Schedules 1, 2, 3 and 4
to the Lease, the Purchase Agreement Assignment and the Tax Indemnity Agreement
confidential and shall not disclose, or cause to be disclosed, the same to any
other Person, except (A) to prospective and permitted transferees of Lessee's,
Owner Participant's, a Note Holder's, a Liquidity Provider's, Owner Trustee's,
Mortgagee's or other Indenture Indemnitee'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 Note Holder's, a Liquidity Provider's, Pass Through Trustee's,
Owner Trustee's, Mortgagee's or other Indenture Indemnitee'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 and state and local income tax auditors or any stock
exchange, (D) with respect to Lessee and Owner Participant, by mutual agreement
of such parties, (E) with respect to a Note Holder or Pass Through Trustee, to a
nationally recognized rating agency for the purpose of obtaining a rating on the
Equipment Notes or the Pass Through Certificates or to support an NAIC rating
for the Equipment Notes or the Pass Through 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.
SECTION 9. INDEMNIFICATION AND EXPENSES
9.1 GENERAL INDEMNITY
9.1.1 INDEMNITY
If the Closing occurs, Lessee shall indemnify, protect, defend and hold
harmless each Indemnitee from, against and in respect of, and shall pay on a net
after-tax basis, any and all Expenses of any kind or nature whatsoever that may
be imposed on, incurred by or asserted against any Indemnitee, relating to,
resulting from, or arising out of or in connection with, any one or more of the
following:
(a) The Operative Agreements, the Pass Through Agreements, or the
enforcement of any of the terms of any of the Operative Agreements or the Pass
Through Agreements;
(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, 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, or delivery of any Equipment Notes, Pass Through
Certificates or any interest therein or represented thereby; and
(d) 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 or any Pass Through
Agreement or the falsity of any representation or warranty of Lessee in any
Lessee Operative Agreement or any Pass Through Agreement other than in the Tax
Indemnity Agreement.
9.1.2 EXCEPTIONS
Notwithstanding anything contained in Section 9.1.1, Lessee shall not be
required to indemnify, protect, defend and hold harmless any Indemnitee pursuant
to Section 9.1.1 in respect of any Expense of such Indemnitee:
(a) For any Taxes or a loss of Tax benefit, whether or not Lessee is
required to indemnify therefor pursuant to Section 9.3 or the Tax Indemnity
Agreement; PROVIDED, HOWEVER, this Section 9.1.1(a) shall not apply to any taxes
taken into account in making any payment on a net after tax basis;
(b) Except to the extent attributable to acts or events occurring prior
thereto, acts or events (other than acts or events related to the performance or
failure to perform by Lessee of its obligations pursuant to the terms of the
Lessee Operative Agreements) that occur after the earlier of: (i) with respect
to the Airframe, any Engine or any Part, the return of possession (it being
understood that the date of the placement of the Aircraft in storage as provided
in Section 5 of the Lease constitutes the date of return of the Aircraft under
the Lease) 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 9.1 shall survive for so long as
Lessor or Mortgagee shall be entitled to exercise remedies under such Section
15) or (ii) the termination of the Term in accordance with the Lease;
(c) To the extent attributable to any Transfer (voluntary or involuntary)
by or on behalf of such Indemnitee of any Equipment Note or interest therein,
except (i) 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 and (ii) as otherwise required by the
terms of Section 2.13 of the Trust Indenture;
(d) To the extent attributable to any Transfer (voluntary or involuntary)
by or on behalf of Owner Participant of any interest in the Aircraft, or the
Trust Estate except for costs and expenses incurred as a result of such
Transfer, if such Transfer arises directly from a Lease Event of Default that
shall have occurred and be continuing;
(e) To the extent 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) In the case of Wells Fargo, to the extent attributable to matters
enumerated in the proviso to Section 14;
(g) To the extent attributable to the incorrectness or breach of any
representation or warranty of such Indemnitee or any related Indemnitee
contained in or made pursuant to any Operative Agreement or any Pass Through
Agreement;
(h) 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 or any Pass
Through Agreement;
(i) To the extent attributable to the offer or sale by such Indemnitee or
any related Indemnitee of any interest in the Aircraft, the Equipment Notes, the
Pass Through 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 (other than any offer or sale thereof
caused by the acts or omissions of Lessee);
(j) (i) With respect to any Indemnitee (other than Mortgagee), to the
extent attributable to the failure of the Mortgagee to distribute funds received
and distributable by it in accordance with the Trust Indenture, (ii) with
respect to any Indemnitee (other than the Owner Trustee), to the extent
attributable to the failure of the Owner Trustee to distribute funds received
and distributable by it in accordance with the Trust Agreement, (iii) with
respect to any Indemnitee (other than the Subordination Agent), 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,
(iv) with respect to any Indemnitee (other than the Pass Through Trustee), to
the extent attributable to the failure of the Pass Through Trustee to distribute
funds received and distributable by it in accordance with the Pass Through Trust
Agreement, (v) with respect to any Indemnitee (other than the Escrow Agent), to
the extent attributable to the failure of the Escrow Agent to pay funds received
and payable by it in accordance with any Escrow Agreement, (vi) with respect to
any Indemnitee (other than the Paying Agent), to the extent attributable to the
failure of the Paying Agent to distribute funds received and distributable by it
in accordance with any Escrow Agreement, (vii) to the extent attributable to the
failure of the Depositary to pay funds payable by it in accordance with any
Deposit Agreement, (viii) with respect to Mortgagee, to the extent attributable
to the negligence or willful misconduct of Mortgagee in the distribution of
funds received and distributable by it in accordance with the Trust Indenture,
(ix) with respect to Owner Trustee, to the extent attributable to the negligence
or willful misconduct of Owner Trustee in the distribution of funds received and
distributable by it in accordance with the Trust Agreement, (x) with respect to
the Subordination Agent, 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, (xi) with
respect to the Pass Through Trustee, to the extent attributable to the
negligence or willful misconduct of the Pass Through Trustee in the distribution
of funds received and distributable by it in accordance with the Pass Through
Trust Agreement, (xii) with respect to the Escrow Agent, to the extent
attributable to the negligence or willful misconduct of the Escrow Agent in the
payment of funds received and payable by it in accordance with any Escrow
Agreement, and (xiii) with respect to the Paying Agent, to the extent
attributable to the negligence or willful misconduct of the Paying Agent in the
distribution of funds received and distributable by it in accordance with any
Escrow Agreement.
(k) Other than during the continuation of a Lease Event of Default, to the
extent attributable to the authorization or giving or withholding of any future
amendments, supplements, waivers or consents with respect to any Operative
Agreement or Pass Through 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 or Pass Through Agreements (unless such requirement results from the
actions of an Indemnitee not required by or made pursuant to the Operative
Agreements or the Pass Through Agreements);
(l) To the extent attributable to any amount which any Indemnitee
expressly agrees to pay or such Indemnitee expressly agrees shall not be paid by
or be reimbursed by Lessee;
(m) To the extent that it is an ordinary and usual operating or overhead
expense;
(n) With respect to the Owner Participant or the Owner Trustee, or any
related Indemnitee, to the extent 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) If another provision of an Operative Agreement or a Pass Through
Agreement specifies the extent of Lessee's responsibility or obligation with
respect to such Expense, to the extent arising from other than failure of Lessee
to comply with such specified responsibility or obligation;
(q) To the extent it is a Transaction Expense;
(r) To the extent constituting principal, Make-Whole Amount or interest on
the Equipment Notes attributable solely to an Event of Default not constituting
a Lease Event of Default; or
(s) To the extent incurred by or asserted against an Indemnitee as a
result of any "prohibited transaction", within the meaning of Section 406 of
ERISA or Section 4975(c)(1) of the Code; or
(t) To the extent not included in the definition of Supplemental Rent as a
result of the provisions of clause (e) of such definition.
For purposes of this Section 9.1, a Person shall be considered a "related"
Indemnitee with respect to an Indemnitee if such Person is an Affiliate or
employer of such Indemnitee, a director, officer, employee, agent, or servant of
such Indemnitee or any such Affiliate or a successor or permitted assignee of
any of the foregoing.
9.1.3 SEPARATE AGREEMENT
This Agreement constitutes a separate agreement with respect to each
Indemnitee and is enforceable directly by each such Indemnitee.
9.1.4 NOTICE
If a claim for any Expense that an Indemnitee shall be indemnified against
under this Section 9.1 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 9.1.4, or in Section 9.1.5, shall
not release Lessee from any of its obligations to indemnify such Indemnitee
hereunder, except to the extent that such failure results in an additional
Expense to Lessee (in which event Lessee shall not be responsible for such
additional Expense) or materially impairs Lessee's ability to contest such
claim.
9.1.5 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 9.1, 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
and, subject to Section 9.1.5(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 in writing
not to dispute liability to the Indemnitee giving notice of such action, suit or
proceeding under this Section 9.1.5 for indemnification hereunder or under any
insurance policies pursuant to which coverage is sought, control the defense of,
any action, suit or proceeding, relating to any Expense for which
indemnification is sought pursuant to this Section 9.1, 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, or proceeding or compromise any such Expense (i) during the continuance of
any Lease Event of Default arising under Section 14.1 of the Lease, (ii) if such
proceedings would entail a material risk of the sale, forfeiture or loss of the
Aircraft or (iii) if such proceedings would entail a risk of criminal liability
or greater than de minimis risk of material civil penalties being imposed on
such Indemnitee. 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, with counsel reasonably satisfactory to
Lessee; 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.
(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, 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 9.1.
(d) 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.
(e) 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 9 and Section
15.8 prior to making any payment to such Indemnitee under this Section 9.
(f) 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 Equipment Notes or a guarantee of any
residual value of the Aircraft.
(g) Nothing contained in this Section 9.1.5 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.
9.1.6 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 9.1.5. 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 9.1.5.
9.1.7 EFFECT OF OTHER INDEMNITIES; SUBROGATION; FURTHER
ASSURANCES
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.
9.1.8 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 Mortgagee) to hold as security for Lessee's obligations under the
Lessee Operative Agreements or, if requested by Lessee, applied to satisfy such
obligations.
9.2 EXPENSES
9.2.1 TRANSACTION EXPENSES
Owner Participant shall pay all Transaction Expenses (which shall exclude
the ongoing fees, disbursements and expenses of Mortgagee and the Owner
Trustee), up to an aggregate amount equal to the Expense Limit. Airframe
Manufacturer shall pay all Transaction Expenses in excess of the Expense Limit
and the ongoing fees, disbursements and expenses of Mortgagee and the Owner
Trustee, provided that if Airframe Manufacturer shall fail to make any payment
when due of the ongoing fees, disbursements and expenses of Mortgagee or Owner
Trustee, Lessee shall make such payment if so requested by Mortgagee or Owner
Trustee, as applicable, in which case Airframe Manufacturer shall be obligated
to immediately reimburse Lessee for any payment made by Lessee pursuant to this
sentence. Lessee shall have no liability or obligation with respect to
Transaction Expenses, except as provided in the preceding sentence.
9.2.2 PAYMENT OF OTHER EXPENSES
Lessee will be responsible for the fees and charges of its counsel
incurred in connection with the preparation, execution and delivery of the
Operative Agreements. All out-of-pocket costs and expenses of Lessee (including,
without limitation, reasonable attorney's fees and charges) incurred in
performance of Sections 7.1.3(a), (b) and (c) (other than with respect to the
first parenthetical of Section 7.1.3(c)) to the extent constituting Transaction
Expenses, shall be paid pursuant to Section 9.2.1 and, otherwise, shall be paid
by Airframe Manufacturer. Airframe Manufacturer shall pay all costs and expenses
incurred by it in connection with the Operative Agreements.
9.3 GENERAL TAX INDEMNITY
9.3.1 GENERAL
Except as provided in Section 9.3.2, 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 under any Operative Agreement, shall be free
of all withholdings or deductions with respect to Taxes of any nature (other
than U.S. federal 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) Lessee shall
make all such withholdings or deductions, (y) the amount payable by Lessee shall
be increased so that after making all required withholdings or deductions such
Tax Indemnitee receives (at no after-Tax cost to the Tax Indemnitee) the same
amount that it would have received had no such withholdings or deductions been
made, and (z) Lessee shall pay the full amount withheld or deducted to the
relevant Taxing Authority in accordance with applicable law. Lessee further
agrees that, in the event it is required to withhold from any payment of Basic
Rent, Termination Value, Stipulated Loss Value (and amounts determined by
reference thereto), or amounts payable upon exercise of Lessee's purchase option
pursuant to Section 17.3 of the Lease, any Tax imposed upon Owner Participant or
Owner Trustee (including any withholding Tax based on income or receipts of
Owner Participant or Owner Trustee) and such Tax is excluded from
indemnification pursuant to Section 9.3.2, Lessee shall pay such additional
amount, if any, required so that the total amount paid by Lessee (after making
all required withholdings) is equal to (assuming timely payment of the Equipment
Notes prior to the relevant Payment Date) the aggregate principal amount of
scheduled installments due on the Equipment Notes outstanding on the relevant
Payment Date, together with accrued and unpaid interest, due on the Equipment
Notes; Owner Participant or Owner Trustee, as the case may be, shall reimburse
Lessee for any such additional amounts within two Business Days after demand
therefor. Except as provided in Section 9.3.2 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 Equipment
Notes) 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 Estate) or the transactions contemplated thereby.
9.3.2 CERTAIN EXCEPTIONS
The provisions of Section 9.3.1 shall not apply to, and Lessee shall have
no liability hereunder for, Taxes:
(a) imposed on a Tax Indemnitee by the federal government of the United
States or any Taxing Authority of any jurisdiction within the United States in
which such Tax Indemnitee is incorporated or maintains its principal place of
business or is otherwise subject to Taxes of such type as a result of
transactions or activities by such Tax Indemnitee or its Affiliates that are
independent of the transactions and activities contemplated by the Operative
Agreements (i) on, based on, or measured by, gross or net income or gross or net
receipts, 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 withholding taxes on, based on or measured by gross or net
income or receipts or (ii) on, or with respect to, or measured by, capital or
net worth 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), sales, use,
license or property Taxes, Taxes in the nature of sales or use taxes, value
added taxes imposed in lieu of any of the foregoing, airport excise taxes or any
excise taxes imposed in the nature of or in lieu of any of the foregoing and
other than, in the case of clause (ii), any doing business taxes imposed by a
taxing authority in any jurisdiction (other than the jurisdiction within which
such Tax Indemnitee is incorporated or maintains its principal place of
business) if such doing business taxes attributable to the transactions
contemplated by the Operative Agreements were subject to indemnity pursuant to
the provisions of this clause 9.3.2(a) (without regard to this parenthetical)
solely as a result of the usage or location of the Aircraft in such jurisdiction
by a Lessee Person when such Tax Indemnitee was not incorporated or doing
business or otherwise subject to Taxes of such type in such jurisdiction, if in
a subsequent taxable period such Indemnitee becomes subject to Taxes of such
type as a result of activities or transactions other than those contemplated by
the Operative Agreements, to the extent that such taxes (and in an amount no
more than the amount of such Taxes that) would have continued to be imposed
solely as a result of the usage or location of the Aircraft by a Lessee Person
in such jurisdiction in the absence of any additional nexus between such Tax
Indemnitee and such jurisdiction);
(b) imposed as a result of the replacement of the existing financing
agreements with the Operative Agreements and the Express Sublease or the
issuance of the Equipment Notes;
(c) on, or with respect to, or measured by, any trustee fees, commissions
or compensation received by Owner Trustee, Pass Through Trustee, Subordination
Agent or Mortgagee;
(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;
(e) that are being contested as provided in Section 9.3.4 hereof, for so
long as such contest is continuing;
(f) imposed on any Tax Indemnitee to the extent that such Taxes result
from the gross negligence or willful misconduct of such Tax Indemnitee, a
related 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
(including a deemed transfer or disposition) by such Tax Indemnitee or a related
Tax Indemnitee (or, in the case of the Owner Participant, by Owner Trustee
(unless requested by the Lessee), or, in the case of Taxes imposed on a
transferee, by the transferor) of any interest in the Aircraft, the Airframe,
any Engine or any Part, the Rent (other than the assignment of Rent to the
Mortgagee pursuant to the Trust Indenture), the Trust, the Trust Estate, the
Trust Indenture Estate, the Lease or any interest arising under the Operative
Agreements or any Equipment Note or a transfer or disposition (including a
deemed transfer or disposition) of any interest in a Tax Indemnitee (other than
(A) a substitution or replacement of the Aircraft, the Airframe, any Engine or
any Part by a Lessee Person that is treated for Tax purposes as a transfer or
disposition, (B) a transfer pursuant to an exercise of remedies upon a Lease
Event of Default that shall have occurred and have been continuing, or (C) a
transfer to Lessee pursuant to Section 17.3 of the Lease);
(h) except with respect to gross-ups, imposed subsequent to (and not in
respect of) a transfer or other disposition described in paragraph (g) above and
not described in the last parenthetical of such paragraph (g) and in excess of
those that would have been imposed had there not been a transfer or other
disposition by or to such Tax Indemnitee or a related Tax Indemnitee described
in paragraph (g) above;
(i) imposed on the Owner Participant and indemnified by Lessee pursuant to
the Tax Indemnity Agreement;
(j) imposed with respect to any period after 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 (provided that this exclusion (j)
shall not apply to Taxes imposed after such period arising as a result of events
occurring prior to such expiration or earlier termination);
(k) consisting of any interest, penalties or additions to tax imposed on a
Tax Indemnitee resulting from a failure of such Tax Indemnitee or a related 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 9.3.6 with respect to such return, PROVIDED that if any such return is
required to be filed in a jurisdiction outside the United States, which return
would not have been required to be filed in the absence of the transactions
contemplated under the Operative Agreements or Lessee's transactions or
activities in such jurisdiction, this exclusion shall not apply if (A) Lessee
has not informed the Tax Indemnitee in writing of the need to file such return
at least 30 days prior to the due date thereof (or such shorter period as would
reasonably allow the Tax Indemnitee to file such return if, under the
circumstances, the Lessee could not have reasonably informed the Tax Indemnitee
of the need to file at least 30 days prior to the due date thereof), or (B) the
Tax Indemnitee had determined in good faith that such filing would subject it or
any Affiliate to adverse consequences in such jurisdiction for which it had not
been (and would not have been) indemnified;
(l) 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 a related Tax Indemnitee;
(m) imposed on any Tax Indemnitee as a result of the breach by such Tax
Indemnitee or a related Tax Indemnitee 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;
(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 Note
Holder in any Equipment Note 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 unrelated to the transactions contemplated by the Operative
Agreements in the taxing jurisdiction of such Tax Indemnitee;
(o) that are included in Lessor's Cost and paid to the appropriate Taxing
Authority;
(p) imposed on a Tax Indemnitee by a Taxing Authority of a jurisdiction
outside the United States within which such Tax Indemnitee is incorporated or
maintains its principal place of business or to the extent that such Taxes would
not have been imposed but for a connection between the Tax Indemnitee or a
related Tax Indemnitee and such jurisdiction imposing such Tax unrelated to the
transactions contemplated by the Operative Agreements; or
(q) Taxes relating to ERISA or Section 4975 of the Code.
For purposes hereof, a Tax Indemnitee and any other Tax Indemnitees that
are successors, assigns, agents, servants or Affiliates of such Tax Indemnitee
shall be related Tax Indemnitees.
9.3.3 PAYMENT
(a) Lessee's indemnity obligation to a Tax Indemnitee under this Section
9.3 shall equal the amount which, after taking into account any Tax imposed upon
the receipt or accrual of the amounts payable under this Section 9.3 and any tax
benefits actually recognized by such Tax Indemnitee as a result of the
indemnifiable Tax (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 9.3), shall equal the amount
of the Tax indemnifiable under this Section 9.3. The loss, disallowance or
recapture of such tax benefits taken into account by such Tax Indemnitee shall
be treated as a Tax subject to indemnity under this Section 9.3.1 without regard
to the provisions of Section 9.3.2 (other than Section 9.3.2(f)).
(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 9.3 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 (computed using a discount rate equal to the
Debt Rate, compounded monthly) 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 9.3; provided, that notwithstanding anything to the
contrary contained herein, no Tax Indemnitee shall be required to provide Lessee
with any Tax returns.
(d) 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 9.3. Lessee shall pay
any amount for which it is liable pursuant to this Section 9.3 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 9.3.4, within 30 days after a Final
Determination (as defined below)), but in no event more than two Business Days
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 9.3, 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 9.3.4, which decision, judgment,
decree or other order has become final and unappealable (by law or by Lessee
hereunder), (ii) a closing agreement or settlement agreement entered into in
accordance with Section 9.3.4 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.
(e) If any Tax Indemnitee shall actually realize a tax savings by reason
of any Tax paid or indemnified by Lessee pursuant to this Section 9.3 (whether
such tax savings shall be by means of a foreign tax credit, depreciation or cost
recovery deduction or otherwise) and such savings is not otherwise taken into
account in computing such payment or indemnity, such Tax Indemnitee shall pay to
Lessee (within 30 days after the realization of such tax savings) an amount
equal to the lesser of (i) the amount of such tax savings, plus any additional
tax savings recognized as the result of any payment made pursuant to this
sentence, when, as, if, and to the extent, realized or (ii) the amount of all
payments (other than in respect of contest costs) pursuant to this Section 9.3
by Lessee to such Tax Indemnitee (less any payments previously made by such Tax
Indemnitee to Lessee pursuant to this Section 9.3.3 (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 Lessee to make payments to such Tax Indemnitee pursuant to this
Section 9.3); provided, that such Tax Indemnitee shall not be required to make
any payment pursuant to this sentence so long as a Lease 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 9.3.1 without regard to the provisions of Section
9.3.2 (other than Section 9.3.2 (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.
(f) For purposes of this Section 9.3, items of foreign Tax of any Tax
Indemnitee shall be deemed to be utilized by such Tax Indemnitee as credits or
deductions for any taxable year in accordance with the following priorities:
(x) First, all utilizable foreign Taxes (taking into account the
limitations of Section 904(d) of the Code) other than those described in clause
(y) below;
(y) Second, all utilizable foreign Taxes (taking into account the
limitations of Section 904(d) of the Code) arising out of the transactions
contemplated by the Operative Agreements and other equipment leasing
transactions to the extent such Tax Indemnitee is indemnified or held harmless
for such Taxes by the Lessee or a lessee on a pari passu basis.
9.3.4 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 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, 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 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, in its good faith opinion, 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 to be contested by the Lessee in its own name,
allow Lessee to contest) through appropriate administrative and judicial
proceedings the validity, applicability or amount of such Taxes by (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. If requested to do so by Lessee, the Tax Indemnitee shall appeal any
adverse administrative or judicial decision, except that the Tax Indemnitee
shall not be required to pursue any appeals to the United States Supreme Court.
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, such Tax Indemnitee shall permit Lessee to
contest such matter in its own name, if permitted by applicable law, and shall
provide to Lessee (at Lessee's cost and expense) such information or data that
is in such Tax Indemnitee's control or possession that is reasonably necessary
to conduct such contest (other than such Tax Indemnitee's federal income tax
returns), and Lessee shall keep such Tax Indemnitee reasonably informed
concerning the progress of such contest and shall provide such Tax Indemnitee
with copies of all submissions and judicial and administrative proceedings. In
the case of a contest controlled by a Tax Indemnitee, 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. A Tax Indemnitee shall not fail to take any action expressly required
by this Section 9.3.4 (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 Lessee (except as
contemplated by Section 9.3.4(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 and 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), (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 and the Owner Participant in a manner
reasonably satisfactory to such Tax Indemnitee and the Owner Participant)
(provided, that such Tax Indemnitee agrees to notify Lessee in writing promptly
after it becomes aware of any such risk), (iv) no Lease Event of Default shall
have occurred and be continuing unless Lessee has provided adequate 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
controlled by Lessee, 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
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 9.3 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 9.3.4(c), and subject to Section 9.3.4(c), such Tax
Indemnitee shall repay to Lessee any amount previously paid or advanced to such
Tax Indemnitee with respect to such claim (other then contest costs), 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 9.3, 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 9.3
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 9.3 (other than contest costs) 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.
9.3.5 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 realized 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 9.3 (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 to such Tax Indemnitee pursuant
to this Section 9.3). 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. If any such refund or credit or any interest thereon for which a Tax
Indemnitee shall have paid Lessee is later recaptured, denied, disallowed or
reduced, such recapture, denial, disallowance or reduction shall be treated as a
Tax indemnifiable under Section 9.3.1 without regard to the provisions of
Section 9.3.2 (other than Section 9.3.2(f)).
9.3.6 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 9.3, 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 which a 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, or if the same is required by law to be
filed in the Tax Indemnitee's own name, it shall notify such Tax Indemnitee in
writing 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.
9.3.7 FORMS
Each Tax Indemnitee agrees to furnish from time to time to Lessee or
Mortgagee or to such other person as Lessee or Mortgagee may designate, at
Lessee's or Mortgagee'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, (y) Lessee
has provided such Tax Indemnitee with any information necessary to complete such
form not otherwise reasonably available to such Tax Indemnitee, and (z) if such
return is required to be filed in a jurisdiction outside the United States, the
Tax Indemnitee has not made a good faith determination that such filing would
subject it or any Affiliate to any adverse consequences in such jurisdiction for
which it has not been (and would not have been) indemnified.
9.3.8 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 9.3 and Section 15.8 prior to making any
payment to such Tax Indemnitee under this Section 9.3.
9.3.9 SUBROGATION
Upon payment of any Tax by Lessee pursuant to this Section 9.3 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.
9.3.10 FOREIGN TAX ON LOAN PAYMENTS
If an Owner Participant is incorporated or organized, or maintains a place
of business or conducts activities (other than any activities of the Owner
Participant resulting from its participation in the transactions contemplated by
the Operative Agreements or resulting from any activities of Lessee in such
jurisdiction) in a country other than the United States or in a territory,
possession or commonwealth of the United States (within the meaning of the tax
law of that foreign jurisdiction) and if as a result thereof any foreign Taxes
(including withholding Taxes) are imposed on Pass Through Trustee, Pass Through
Trust, or any Note Holder, then Owner Participant shall reimburse Lessee for any
payments Lessee is required to make to or on behalf of Pass Through Trustee,
Pass Through Trust, or any Note Holder under this Section 9.3 as a result of the
imposition of such 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 such Pass Through Trustee, Pass
Through Trust or Note Holder.
9.4 PAYMENTS
Any payments made pursuant to Section 9.1 and Section 9.3 shall be due on
the 60th day after demand is made to the indemnifying party therefor (other than
any payments for which a different time is provided under Section 9.3.3 hereof)
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.
9.5 INTEREST
If any amount, payable by Lessee, any Indemnitee or any Tax Indemnitee
under Section 9.1 or 9.3 is not paid when due, the person obligated to make such
payment 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.
9.6 BENEFIT OF INDEMNITIES
The obligations of Lessee in respect of all indemnities, obligations,
adjustments and payments in Section 9.1 or 9.3 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 10. ASSIGNMENT OR TRANSFER OF INTERESTS
10.1 PARTICIPANTS, OWNER TRUSTEE AND NOTE HOLDERS
10.1.1 OWNER PARTICIPANT
(a) 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 the obligations of Owner Participant
under this Agreement and the other Owner Participant Agreements and shall
provide reasonably satisfactory evidence of such power and authority to
Lessee, Owner Trustee and Mortgagee;
(ii) The Transferee shall enter into one or more legal, valid,
binding and enforceable agreements effective to confirm that such
Transferee agrees to be bound by all the terms of, and to undertake all of
the obligations arising after such transfer of, the transferring Owner
Participant contained in the Owner Participant Agreements and in which it
makes representations and warranties substantially the same as those
contained in Section 6.2 of this Participation Agreement;
(iii) Lessee shall not be obligated to pay any greater amount or
incur any greater obligation than that which it would have been obliged to
pay or incur under the Lease or other Lessee Operative Agreement if no
transfer or assignment had taken place, and the terms and conditions of
the Lease and the other Lessee Operative Agreements insofar as they relate
to the rights and obligations of Lessee or the Loan Participants shall not
be altered;
(iv) Owner Participant shall deliver to Lessee, Owner Trustee and
Mortgagee an opinion of counsel reasonably satisfactory to each of them
(which, if the Transferee is an Affiliate of the Owner Participant, may be
in-house counsel to such Owner Participant) to the effect that such
agreement or agreements referred to in Section 10.1.1(a)(ii) and, if
applicable, 10.1.1(a)(vi) are legal, binding and enforceable in accordance
with its or their terms and that such transfer will not violate applicable
securities laws, the Act or any other applicable Law and is in accordance
with this Section 10.1.1;
(v) The Transferee is a Citizen of the United States (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 any
other provision that would restrict Lessee's use or operation of the
Aircraft), 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 or any other provision that would
restrict Lessee's use or operation of the Aircraft);
(vi) The Transferee shall be one person and shall be either (A) a
Permitted Institution or (B) any other person (other than, without
Lessee's consent, a commercial air carrier, a commercial aircraft
operator, a freight forwarder or an Affiliate of any of the foregoing) the
obligations of which under the Owner Participant Agreements are guaranteed
by a Permitted Institution in any case, pursuant to a written guaranty, in
form and substance reasonably satisfactory to Lessee, Owner Trustee and
Mortgagee; and
(vii) The Transferee shall be a "U.S. Person" as defined in Section
7701(a)(30) of the Code (or any successor provision thereto).
(b) Owner Participant shall give written notice to Lessee, Mortgagee 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 satisfaction of the requirements described in
Section 10.1.1(a)(vi)(A) or (B) above.
(c) Any fees, charges and expenses, including the reasonable legal fees,
charges and expenses incurred by Lessee, Owner Participant, Mortgagee, any Note
Holder or Owner Trustee in connection with any Transfer by Owner Participant
permitted by this Section 10.1.1, or by the Transferee in any such case, will be
paid for by Owner Participant.
10.1.2 OWNER TRUSTEE
Owner Trustee may transfer its interests in the Trust Agreement pursuant
to Section 9 thereof.
10.1.3 NOTE HOLDERS
Subject to Section 7.5.2 hereof and Section 2.07 of the Trust Indenture,
any 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 Notes and the Trust
Indenture Estate to any person (it being understood that the sale or issuance of
Pass Through Certificates by the 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
neither Lessee, Lessor, nor Owner Participant shall have any increased liability
or obligations as a result of any such participation. In the case of any such
Transfer, the Transferee, by acceptance of Equipment Notes in connection with
such Transfer, shall be deemed to be bound by all of the covenants of Note
Holders contained in the Operative Agreements.
10.2 EFFECT OF TRANSFER
Upon any Transfer in accordance with Section 10.1.1, 10.1.2 or 10.1.3
(other than any Transfer by any Note Holder, to the extent it only grants
participations in Equipment Notes or in its beneficial interest therein),
Transferee shall be deemed an "Owner Participant," "Owner Trustee" or a "Note
Holder," respectively, for all purposes of this Agreement and the other
Operative Agreements and, in the case of a Transferee of any Participant or Note
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 Note Holder,
respectively, shall thereafter be deemed a reference to such Transferee for all
purposes, and the transferring Owner Participant, Owner Trustee, Loan
Participant or Note Holder shall be released (except, in the case of Owner
Participant, to the extent of any guaranty provided by it under Section
10.1.1(a)(vi)) 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 or Note 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.
SECTION 11. [RESERVED]
SECTION 12. SECTION 1110
It is the intention of each of Lessee, Owner Participant, Loan
Participant, the Note Holders (such intention being evidenced by each of their
acceptance of an Equipment Note), Owner Trustee and Mortgagee that Owner
Trustee, as lessor under the Lease (and Mortgagee as assignee of Owner Trustee
under the Trust Indenture), shall be entitled to the benefits of Section 1110 in
the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a
debtor. Lessee shall at all times be certificated and registered to the extent
necessary to entitle Owner Trustee to the rights afforded to lessors of aircraft
equipment under Section 1110 of the Bankruptcy Code.
SECTION 13. CHANGE OF CITIZENSHIP
13.1 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, Wells Fargo and WTC 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.
13.2 OWNER PARTICIPANT
Owner Participant agrees, solely for the benefit of Lessee and the Note
Holders 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 or any other
provision that may restrict Lessee's use or operation of the Aircraft), 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 10.1.
13.3 OWNER TRUSTEE
Upon Wells Fargo giving any notice in accordance with Section 13.1(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.
13.4 MORTGAGEE
Upon WTC giving any notice in accordance with Section 13.1(a), Mortgagee
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 Mortgagee's
citizenship could have any adverse effect on Lessee, any Participant or any Note
Holder), subject to Section 8.02 of the Trust Indenture, resign as Mortgagee
promptly upon its ceasing to be such a citizen.
SECTION 14. 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 14 shall be deemed to limit in scope or substance the personal liability
of Wells Fargo (a) to Owner Participant as expressly set forth in the Trust
Agreement, (b) in respect of the representations, warranties and agreements of
Wells Fargo 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.
SECTION 15. MISCELLANEOUS
15.1 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.
15.2 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.
15.3 SURVIVAL
The indemnities set forth herein shall survive 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 Note Holder of its Equipment Note and the expiration or other
termination of this Agreement or any other Operative Agreement.
15.4 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.
15.5 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.
15.6 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.
15.7 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.
15.8 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. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
(B) EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS
ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
IN THE CITY AND COUNTY OF NEW YORK AND OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK, IN CONNECTION WITH ANY LEGAL ACTION, SUIT OR PROCEEDING
WITH RESPECT TO ANY MATTER RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT.
(C) 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 PURSUANT TO SECTION 15.7. EACH PARTY HERETO HEREBY AGREES THAT
SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS
SECTION 15.8(C), 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.
(D) TO THE EXTENT THAT ANY PARTY HERETO HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM JURISDICTION OF ANY OF THE ABOVE-NAMED COURTS OR FROM ANY LEGAL
PROCESS THEREIN, SUCH PARTY HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, SUCH IMMUNITY, AND EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY
WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING
BROUGHT HEREUNDER IN ANY OF THE ABOVE-NAMED COURTS, (I) THE DEFENSE OF SOVEREIGN
IMMUNITY, (II) THAT IT OR ANY OF ITS PROPERTY IS IMMUNE FROM THE ABOVE DESCRIBED
LEGAL PROCESS AND (III) THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT
THIS AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY
SUCH COURTS.
(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.
15.9 THIRD-PARTY BENEFICIARY
This Agreement is not intended to, and shall not, provide any person not a
party hereto (other than each Indemnitee, which is an intended third party
beneficiary with respect to the provisions of Section 9.1 as provided in Section
9.1.3, and the other persons referred to in Section 7.6.13, who are intended
third party beneficiaries of such Section) with any rights of any nature
whatsoever against any of the parties hereto and no person not a party hereto
(other than each Indemnitee, with respect to the provisions of Section 9.1 as
provided in Section 9.1.3, and the other persons referred to in Section 7.6.13,
with respect to such Section) shall have any right, power or privilege in
respect of any party hereto, or have any benefit or interest, arising out of
this Agreement.
15.10 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 (except that the Indemnity Agreement shall not be superseded).
15.11 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
effectively 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.
[This space intentionally left blank]
IN WITNESS WHEREOF, each of the parties 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:
[OP],
Owner Participant
By
----------------------------------------
Name:
Title:
WELLS FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION,
not in its individual capacity, except
as expressly provided herein, but
solely as Owner Trustee
By
----------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except
as expressly provided herein, but
solely as Mortgagee
By
----------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as expressly
provided herein, but solely as Pass
Through Trustee under the Pass Through
Trust Agreement for the Continental
Airlines Pass Through Trust, 2004-ERJ1
By
----------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as expressly
provided herein, but solely as
Subordination Agent
By
----------------------------------------
Name:
Title:
EMBRAER-EMPRESA BRASILEIRA DE AERONAUTICA
S.A.,
Airframe Manufacturer
By
----------------------------------------
Name:
Title:
-------------------------------------
| ANNEX A - DEFINITIONS |
-------------------------------------
ANNEX A
DEFINITIONS
GENERAL PROVISIONS
(a) In each Operative Agreement, unless otherwise expressly provided, a
reference to:
(i) each of "Lessee," "Lessor," "Loan Participant," "Owner Trustee,"
"Owner Participant," "Mortgagee," "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.
(e) For purposes of each Operative Agreement, the occurrence and
continuance of a Lease Default or Lease Event of Default referred to in Section
14.5 of the Lease shall not be deemed to prohibit the Lessee from taking any
action or exercising any right that is conditioned on no Lease Event of Default,
Bankruptcy Default or Lease Default having occurred and be continuing if a
Section 1110 Event shall have occurred and is then continuing.
DEFINED TERMS
"ACT" means part A of subtitle VII of title 49, United States Code.
"ACTUAL KNOWLEDGE" means (a) as it applies to Owner Trustee or Mortgagee,
as the case may be, actual knowledge of a responsible officer in the Corporate
Trust Department (in the case of Owner Trustee) or the Corporate Trust Office
(in the case of Mortgagee) and (b) as it applies to Owner Participant, Airframe
Manufacturer or Lessee, actual knowledge of a Vice President or more senior
officer of Owner Participant, Airframe Manufacturer or Lessee, respectively, or
any other officer of Owner Participant, Airframe Manufacturer or Lessee,
respectively, having responsibility for the transactions contemplated by the
Operative Agreements; PROVIDED that each of Lessee, Owner Participant, Owner
Trustee, Mortgagee and Airframe Manufacturer 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 Mortgagee, such notice having
been given pursuant to Section 15.7 of the Participation Agreement.
"ADDITIONAL INSURED" is defined in Section D of Annex D to the Lease.
"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 Seller 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) to be maintained with respect to the Aircraft, Airframe,
Engines or Parts; 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, by the 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 behalf of Lessee (PROVIDED, that all such materials shall
be maintained in the English language).
"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 Embraer-Empresa Brasileira de Aeronautica
S.A., a Brazilian corporation.
"AIRFRAME MANUFACTURER AGREEMENTS" means, collectively, the Participation
Agreement, [the OP Guaranty,]1 the Purchase Agreement and the Consent and
Agreement.
"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 such Equipment Note delivered pursuant to Section 2.02
of the Trust Indenture.
"APPRAISER" means a firm of internationally recognized, independent
aircraft appraisers.
"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.
- --------------------
1. Delete if OP is not an Affiliate of Airframe Manufacturer.
"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.
Sec. 101 ET SEQ.
"BANKRUPTCY DEFAULT" means a Lease Event of Default under Section 14.5 of
the Lease.
"BASE LEASE TERM" means the period beginning on and including the Closing
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 PASS THROUGH TRUST AGREEMENT" means the Pass Through Trust
Agreement, dated September 25, 1997, between Lessee and Pass Through Trustee,
but does not include any Trust Supplement.
"BASIC RENT" means the rent payable for the Aircraft pursuant to Section
3.2.1 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.
"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, Houston, Texas, Wilmington, Delaware, 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, Mortgagee 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
Rating Services or Moody's Investors Service, Inc. equal to A1 or higher.
"CHANGE IN TAX LAW" means any change or proposed change in the Code or the
regulations promulgated thereunder or any change in the interpretation of the
Code or such regulations in a decision by the United States Supreme Court, the
United States Tax Court, the United States Claims Court or any of the United
States Courts of Appeal or District Courts, or any issuance of an Internal
Revenue Ruling, Revenue Procedure or administrative pronouncement by the
Internal Revenue Service or the Department of the Treasury.
"CITICORP GUARANTEE" means the guarantee dated as of the Issuance Date
from the Liquidity Guarantor in favor of the Subordination Agent.
"CITIZEN OF THE UNITED STATES" is defined in Section 40102(a)(15) of the
Act and in the FAA Regulations.
"CLOSING" means the occurrence of the following concurrent events: (i)
execution, authentication and delivery of the Equipment Notes in accordance with
the Participation Agreement; (ii) [payment of the Commitments of the Loan
Participants to Owner Trustee]2 [purchase of the Aircraft by the Owner
Trustee]3; (iii) lease of the Aircraft by Owner Trustee to Lessee pursuant to
the Lease; and (iv) completion of the other events contemplated by the
Participation Agreement to occur at the Closing.
"CLOSING DATE" means the Business Day specified in Lease Supplement No. 1
as the Closing Date, which shall be the date on which the Closing occurs.
"CNAI" means Citicorp North America, Inc.
"CNAI LIQUIDITY FACILITY" means the Revolving Credit Agreement between the
Subordination Agent, as borrower, and CNAI, as Liquidity Provider, dated as of
the Issuance Date, PROVIDED that, for purposes of any obligation of Lessee, no
amendment, modification or supplement to, or substitution or replacement of,
such Liquidity Facility shall be effective unless consented to by Lessee.
"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.
"COMMITMENT" means, for any [Loan]4 Participant, the amount of its
commitment set forth in Schedule 2 to the Participation Agreement.
"COMMITMENT TERMINATION DATE" is defined in Schedule 3 to the
Participation Agreement.
"CONSENT AND AGREEMENT" means the Manufacturer Consent and Agreement [TN],
dated as of even date with the Participation Agreement, of Airframe
Manufacturer.
- --------------------
2. Delete for New Aircraft.
3. Insert for New Aircraft.
4. Delete for New Aircraft.
"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,
Mortgagee and each Note Holder.
"CORPORATE TRUST OFFICE" means the principal office of Mortgagee located
at Mortgagee's address for notices under the Participation Agreement or such
other office at which Mortgagee's corporate trust business shall be administered
which Mortgagee 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. Sec. 9511-13 or any similar substitute program.
"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.
"DEBT RATE" means the rate per annum specified 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.
"DELAYED CLOSING DATE" means a delayed Closing Date notified to Lessee,
each Participant, Owner Trustee and Mortgagee by Airframe Manufacturer pursuant
to Section 4.3 of the Participation Agreement, which delayed Closing Date shall
be a Business Day not later than the Commitment Termination Date.
"DELIVERY DATE" means the date on which the Aircraft was leased to Lessee
by Lessor, as lessor, under the [Existing]5 Lease.
"DEPOSIT AGREEMENT" means the Deposit Agreement between the Depositary and
the Escrow Agent, dated as of the Issuance Date, which relates to the Pass
Through Trust, PROVIDED that, for purposes of any obligation of Lessee, no
amendment, modification or supplement to, or substitution or replacement of,
such Deposit Agreement shall be effective unless consented to by Lessee.
"DEPOSITARY" means WestLB AG, New York Branch, as Depositary under the
Deposit Agreement.
- --------------------
5. Delete for New Aircraft.
"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.
"ELIGIBLE ACCOUNT" means an account established by and with an Eligible
Institution at the request of the Mortgagee, which institution agrees, for all
purposes of the UCC including Article 8 thereof, that (a) such account shall be
a "securities account" (as defined in Section 8-501 of the UCC), (b) all
property (other than cash) credited to such account shall be treated as a
"financial asset" (as defined in Section 8-102(9) of the UCC), (c) the Mortgagee
shall be the "entitlement holder" (as defined in Section 8-102(7) of the UCC) in
respect of such account, (d) it will comply with all entitlement orders issued
by the Mortgagee to the exclusion of the Lessee and the Owner Trustee, and (e)
the "securities intermediary jurisdiction" (under Section 8-110(e) of the UCC)
shall be the State of New York.
"ELIGIBLE INSTITUTION" means the corporate trust department of (a)
Wilmington Trust Company, acting solely in its capacity as a "securities
intermediary" (as defined in Section 8-102(14) of the UCC), 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 Moody's and
Standard & Poor's of at least A-3 or its equivalent.
"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 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 MANUFACTURER" means Rolls-Royce Company, formerly known as Allison
Engine Company, Inc., a Delaware corporation.
"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 Equipment
Note.
"EQUITY ADVISOR" has the meaning provided in Schedule 3 to the
Participation Agreement.
"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.
"ESCROW AGENT" means Wells Fargo Bank Northwest, National Association, as
Escrow Agent under the Escrow Agreement.
"ESCROW AGREEMENT" means the Escrow and Paying Agent Agreement, among the
Escrow Agent, the Paying Agent, certain initial purchasers of the Pass Through
Certificates named therein and the Pass Through Trustee, dated as of the
Issuance Date, which relates to the Pass Through Trust, PROVIDED that, for
purposes of any obligation of Lessee, no amendment, modification or supplement
to, or substitution or replacement of, such Escrow Agreement shall be effective
unless consented to by Lessee.
"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
economic repair or rendition of such property permanently unfit for
normal use by Lessee;
(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 theft, hijacking or disappearance of such property for a period
of 180 consecutive days or more or, if earlier, the end of the Term;
(d) any seizure, condemnation, confiscation, taking or requisition
(including loss of title) of such property by any Government Entity
or purported Government Entity (other than a requisition of use by
the U.S. Government) for a period exceeding 180 consecutive days or,
if earlier, at the end of the Term;
(e) any seizure, condemnation, confiscation, taking or requisition of
use of such property by the U.S. Government that continues until the
last day of the Term, PROVIDED that no such Event of Loss shall
exist if Lessor shall have elected not to treat such event as an
Event of Loss pursuant to Section 10.6 of the Lease; 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 of 180 consecutive days, unless Lessee, prior to the
expiration of such 180 day period, shall have undertaken and
shall be diligently carrying forward such steps as may be
necessary or desirable to permit the normal use of such property
by Lessee, but in any event if such use shall have been
prohibited for a period of 720 days, provided that no Event of
Loss shall be deemed to have occurred if such prohibition has
been applicable to Lessee's (or a Permitted Sublessee's) entire
U.S. fleet of such property and Lessee (or a Permitted
Sublessee), prior to the expiration of such 720-day period, shall
have conformed at least one unit of such property in its fleet to
the requirements of any such law, rule, regulation, order or
other action and commenced regular commercial use of the same in
such jurisdiction and shall be diligently carrying forward, in a
manner which does not discriminate against such property in so
conforming such property, steps which are necessary or desirable
to permit the normal use of such property by Lessee, but in any
event if such use shall have been prohibited for a period of
three years or such use shall be prohibited at the expiration of
the Term.
"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 9
of the Participation Agreement or any corresponding payments under the Lease,
(ii) proceeds of public liability insurance paid or payable as a result of
insurance claims made, or losses 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
11.2 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
amount payable to the Owner Participant by any transferee as the purchase price
of the Owner Participant's interest in the Trust Estate, (vi) 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 (v) above, (vii) proceeds of
any right to enforce the payment of any amount described in clauses (i) through
(vi) above (PROVIDED, that the rights referred to in this clause (vii) 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 (viii) 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.
["EXISTING LEASE" has the meaning provided in Schedule 3 to the
Participation Agreement.]6
["EXISTING PARTICIPATION AGREEMENT" has the meaning provided in
Schedule 3 to the Participation Agreement.]7
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6. Delete for New Aircraft.
["EXISTING SUBLEASE" means the Aircraft Sublease Agreement, dated the
date of the Existing Participation Agreement, between Lessee and Express
relating to the Aircraft.]8
"EXPENSE LIMIT" has the meaning provided in Schedule 3 to the
Participation Agreement.
"EXPENSES" means any and all liabilities, obligations, losses, damages,
settlements, penalties, claims, 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).
"EXPRESS" means ExpressJet Airlines, Inc., a Delaware corporation.
"EXPRESS SUBLEASE" means the Permitted Sublease, dated as of the date of
the Participation Agreement, between Lessee and Express relating to the
Aircraft.
"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 Seller.
"FAA FILED DOCUMENTS" means the Lease, Lease Supplement No. 1, the Express
Sublease, the Trust Indenture, the Trust Agreement, the initial Trust Indenture
Supplement, the FAA Bill of Sale, [the Termination Agreements]9 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 applicable
Renewal Lease Term, 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 monthly, and (c) the Aircraft would be leased during any such
- -----------------
(Footnote continued from previous page)
7. Delete for New Aircraft.
8. Delete for New Aircraft.
9. Delete for New Aircraft.
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 (except as otherwise
provided in Section 15.4 of the Lease) 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, [(a)]10 UCC-1 financing
statements (i) covering the Trust Indenture Estate, by Owner Trustee, as debtor,
showing Mortgagee as secured party, for filing in Utah and each other
jurisdiction that, in the opinion of Mortgagee, is necessary to perfect its Lien
on the Trust Indenture Estate and (ii) covering the Lease and the Aircraft, as a
precautionary matter, by Lessee, as lessee, showing Owner Trustee as lessor and
Mortgagee as assignee of Owner Trustee, for filing in Delaware and each other
jurisdiction that, in the opinion of Owner Trustee and Mortgagee, is reasonably
desirable [and (b) UCC-3 financing statements evidencing the termination of the
Existing Lease and the Existing Sublease, for filing in Delaware and each other
jurisdiction that, in the opinion of Owner Trustee and Mortgagee, is reasonably
desirable].11
"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.
"INDEMNITEE" means (i) Wells Fargo and Owner Trustee, (ii) WTC and
Mortgagee, (iii) each separate or additional trustee appointed pursuant to the
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10. Delete for New Aircraft.
11. Delete for New Aircraft.
Trust Agreement or the Trust Indenture, (iv) each Participant, (v) the Trust
Estate and the Trust Indenture Estate, (vi) each Affiliate of the persons
described in clauses (i) through (iv), inclusive, (vii) the respective
directors, officers, employees, agents and servants of each of the persons
described in clauses (i) through (iv) inclusive and in clause (vi), (viii) the
successors and permitted assigns of the persons described in clauses (i) through
(iv), inclusive, and in clauses (vi) and (vii) and (ix) the Pass Through
Indemnitees; provided that the Pass Through Indemnitees are Indemnitees only for
purposes of Section 9.1 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, Loan Participant or Note Holder.
"INDEMNITY AGREEMENT" means the agreement, dated as of June 18, 2004,
between Lessee and Airframe Manufacturer, which states that it is the Indemnity
Agreement for purposes of the Pass Through Certificates.
"INDENTURE AGREEMENTS" means the Participation Agreement, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the 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 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 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.
"INDENTURE INDEMNITEE" means (i) WTC and the Mortgagee, (ii) each separate
or additional trustee appointed pursuant to the Trust Indenture, (iii) the
Subordination Agent, (iv) each Liquidity Provider and the Liquidity Guarantor,
(v) the Pass Through Trustee, (vi) the Paying Agent, (vii) the Escrow Agent and
(viii) each of the respective directors, officers, employees, agents and
servants of each of the persons described in clauses (i) through (vii) inclusive
above.
["INITIAL PURCHASE AGREEMENT ASSIGNMENT" means the Purchase Agreement
Assignment [TN], dated as of even date with the Participation Agreement, between
Express and Seller.]12
"INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement among
the Pass Through Trustee, each Liquidity Provider and the Subordination Agent,
dated as of the Issuance Date, PROVIDED that, for purposes of any obligation of
Lessee, no amendment, modification or supplement to, or substitution or
replacement of, such Intercreditor Agreement shall be effective unless consented
to by Lessee.
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12. Insert for New Aircraft.
"IRS" means the Internal Revenue Service of the United States or any
Government Entity succeeding to the functions of such Internal Revenue Service.
"ISSUANCE DATE" means June 29, 2004.
"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 [TN], 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
Closing Date.
"LESSEE" means Continental Airlines, Inc., a Delaware corporation.
"LESSEE OPERATIVE AGREEMENTS" means the Participation Agreement, the
Lease, Lease Supplement No. 1, the Express Sublease[, the Termination Agreement
with respect to the Existing Sublease]13 and the Tax Indemnity Agreement.
"LESSEE PERSON" means Lessee, any sublessee, assignee, successor or other
user or person in possession of the Aircraft, Airframe or an Engine during the
Term with or without color of right, or any Affiliate of any of the foregoing
(excluding any Tax Indemnitee or any related Tax 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, but not excluding any Person claiming directly or indirectly
through or under the Lease).
"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 Trust Estate, the Trust Indenture
Estate, the Aircraft, Airframe, Engines, Parts or Aircraft Documents) or any
payments, any Lien on such property or payments which (a) arises from claims
against such person (if such person is a trustee, whether in its individual
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13. Delete for New Aircraft.
capacity or in its capacity as a trustee) not related to any of the transactions
contemplated by the Operative Agreements, (b) results from acts or omissions of
such person (if such person is a trustee, whether in its individual capacity or
in its capacity as a trustee) in violation of such person's obligations under
any of the terms of the Operative Agreements, or not related to the transactions
contemplated by the Operative Agreements, (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, or (d) claims
against such person arising out of any transfer by such person of its interest
in the Aircraft, the Trust Estate or the Operative Agreements, other than a
Transfer permitted by the terms of the Operative Agreements or pursuant to the
exercise of remedies set forth in Section 15 of the Lease.
"LESSOR'S COST" means the amount paid by Owner Trustee to Airframe
Manufacturer to purchase the Aircraft pursuant to the Purchase Agreement, and is
designated by Dollar amount in Schedule 3 to the Participation Agreement.
"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 CNAI Liquidity Facility and the WestLB
Liquidity Facility.
"LIQUIDITY GUARANTOR" means Citicorp, as guarantor of the obligations of
CNAI as a Liquidity Provider.
"LIQUIDITY PROVIDERS" means WestLB and CNAI, as Liquidity Providers (as
such term is defined in the Intercreditor Agreement) under their respective
Liquidity Facility, or any successor thereto.
"LOAN PARTICIPANT" means, until the Closing shall have been consummated,
the Pass Through Trustee, and after the Closing shall have been consummated,
each Note Holder.
"LOSS PAYMENT DATE" means the date on which payment is due pursuant to
Section 10.1.2(a)(i) of the Lease.
"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, 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, Lessee, 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 monthly 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 sum of (i) 50 basis points and (ii) the
interest rate (expressed 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 monthly 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.
"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, or affect the
validity or enforceability of the Operative Agreements.
"MORTGAGED PROPERTY" is defined in Section 3.03 of the Trust Indenture.
"MORTGAGEE" means Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as loan trustee under the
Trust Indenture.
"MORTGAGEE AGREEMENTS" means, collectively, the Participation Agreement,
the Trust Indenture and any Trust Indenture Supplement.
"MORTGAGEE EVENT" means (i) in the event of a reorganization proceeding
involving the Lessee under Chapter 11 of the Bankruptcy Code, (A) the trustee in
such proceeding or the Lessee not assuming or agreeing to perform its
obligations under the Lease, as contemplated under Section 1110, during the
60-day period under Section 1110(a)(2)(A) of the Bankruptcy Code (or such longer
period as may apply under Section 1110(b) of the Bankruptcy Code) or (B) at any
time after 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 (ii) either the Equipment Notes shall have become due
and payable pursuant to Section 4.04(b) of the Trust Indenture or Mortgagee has
taken action or notified Owner Trustee that it intends to take action to
foreclose the Lien of the Trust Indenture or otherwise commence the exercise of
any significant remedy in accordance with Section 4.04(a) of the Trust
Indenture.
"NET ECONOMIC RETURN" means the Owner Participant's net after-tax yield
utilizing the multiple investment sinking fund method of analysis and aggregate
net after-tax cash flow, computed on the basis of the same methodology and
assumptions as were utilized by the initial Owner Participant in determining
Stipulated Loss Value percentages and Termination Value percentages, as of the
Closing Date.
"NET WORTH" means, for any person, the excess of its total assets over its
total liabilities in accordance with GAAP.
"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
the Issuance Date, among Continental Airlines, Inc., the Subordination Agent,
the Escrow Agent, the Paying Agent and the Pass Through Trustee under the Pass
Through Trust Agreement providing for, among other things, the issuance and sale
of certain equipment notes, PROVIDED that, for purposes of any obligation of
Lessee, no amendment, modification or supplement to, or substitution or
replacement of, such Agreement shall be effective unless consented to by Lessee.
"OBSOLETE PART" is defined in Section D of Annex C to the Lease.
"OFFICER'S CERTIFICATE" means, in respect of any party to the
Participation Agreement, a certificate signed by the Chairman, the President,
any Vice President (including those with varying ranks such as Executive,
Senior, Assistant or Staff 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 Lease, Lease Supplement No. 1, the Trust Indenture, the initial
Trust Indenture Supplement, the Bills of Sale, the Tax Indemnity Agreement[, the
Termination Agreements]14 and the Equipment Notes.
"OPERATIVE INDENTURES" means each of the indentures under which notes have
been issued and purchased by the Pass Through Trustee.
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14. Delete for New Aircraft.
["OP GUARANTOR" means the Airframe Manufacturer.]15
["OP GUARANTY" means the Guaranty, dated as of the date of the
Participation Agreement, providing, among other things, for the guaranty by the
OP Guarantor of Owner Participant's obligations under the Operative
Agreements.]16
"OP JURISDICTION" is defined in Schedule 3 to the Participation Agreement.
"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 PARTICIPANT" means the person executing the Participation Agreement
as "Owner Participant" or, if a second person becomes an "Owner Participant"
pursuant to Section 10.1.1 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 and the Trust Agreement.
"OWNER PARTICIPANT'S PERCENTAGE" means the percentage of Lessor's Cost
allocated to the Owner Participant in Schedule 2 to the Participation Agreement.
"OWNER TRUSTEE" means Wells Fargo Bank Northwest, 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 and
the Purchase Agreement Assignment.
"PARTICIPANTS" means, collectively, Owner Participant and each Loan
Participant and "Participant" means Owner Participant or a Loan Participant,
individually.
"PARTICIPATION AGREEMENT" means the Participation Agreement [TN] dated as
of [ID] among Lessee, Owner Participant, Owner Trustee, the Pass Through
Trustee, Subordination Agent, Mortgagee and Airframe Manufacturer.
"PARTS" means all appliances, parts, components, avionics, landing gear,
instruments, appurtenances, accessories, furnishings, seats and other equipment
- --------------------
15. Insert if OP is an Affiliate of Airframe Manufacturer.
16. Insert if OP is an Affiliate of Airframe Manufacturer.
of whatever nature (other than (a) Engines or engines, and (b) any items leased
by Lessee from a third party other than Lessor)), that may from time to time be
installed or incorporated in or attached or appurtenant to the Airframe or any
Engine.
"PASS THROUGH AGREEMENTS" means the Pass Through Trust Agreement, the Note
Purchase Agreement, the Deposit Agreement, the Escrow Agreement, the
Intercreditor Agreement, the Citicorp Guarantee, the Liquidity Facilities and
the Fee Letter (as defined in the Intercreditor Agreement), provided, that no
amendment, modification or supplement to, or substitution or replacement of, any
such Fee Letter shall be effective for purposes of any obligation of Lessee,
unless consented to by Lessee.
"PASS THROUGH CERTIFICATES" means the pass through certificates issued by
the Pass Through Trust (and any other pass through certificates for which such
pass through certificates may be exchanged).
"PASS THROUGH INDEMNITEES" means (i) the Subordination Agent, the Paying
Agent, the Escrow Agent, each Liquidity Provider, the Liquidity Guarantor and
the Pass Through Trustee, (ii) each Affiliate of a person described in the
preceding clause (i), (iii) the respective directors, trustees, officers,
employees, agents and servants of each of the persons described in the preceding
clauses (i) and (ii) and (iv) the successors and permitted assigns of the
persons described in the preceding clauses (i), (ii) and (iii).
"PASS THROUGH TRUST" means the pass through trust created under the Pass
Through Trust Agreement.
"PASS THROUGH TRUST AGREEMENT" means the Trust Supplement, dated as of the
Issuance Date, by and between the Lessee and Pass Through Trustee, together with
the Basic Pass Through Trust Agreement.
"PASS THROUGH TRUSTEE" means Wilmington Trust Company, a Delaware banking
corporation, in its capacity as trustee under the Pass Through Trust Agreement.
"PASS THROUGH TRUSTEE AGREEMENTS" means the Participation Agreement, the
Pass Through Trust Agreement, the Note Purchase Agreement, the Deposit
Agreement, the Escrow Agreement and the Intercreditor Agreement.
"PAYING AGENT" means Wilmington Trust Company, as Paying Agent under
the Escrow Agreement.
"PAYMENT DATE" means the first day of each month during the Term,
commencing with [____________________].
"PAYMENT DEFAULT" means the failure by Lessee to pay any amount of Basic
Rent, Renewal Rent, Stipulated Loss Value or Termination Value when due.
"PAYMENT DUE RATE" is defined in Schedule 1 to the Lease.
"PAYMENT PERIOD" means each of the consecutive monthly periods during the
Term ending on a Payment Date, the first such period commencing on and including
the Closing Date and being other than monthly.
"PERMITTED AIR CARRIER" means (i) any Permitted Foreign Air Carrier, (ii)
any person approved in writing by Lessor or (iii) any U.S. Air Carrier.
"PERMITTED COUNTRY" means any country listed on Schedule 5 to the Lease.
"PERMITTED FOREIGN AIR CARRIER" means any air carrier with its principal
executive offices in any Permitted Country and which is authorized to conduct
commercial airline operations and to operate jet aircraft similar to the
Aircraft under the applicable Laws of such Permitted Country.
"PERMITTED GOVERNMENT ENTITY" means (i) the U.S. Government or (ii) any
Government Entity if the Aircraft is then registered under the Laws of the
country of such Government Entity.
"PERMITTED INSTITUTION" means any bank, trust company, insurance company,
financial institution, partnership, limited liability company or corporation
(other than, without Lessee's consent, a commercial air carrier, a commercial
aircraft operator, a freight forwarder or Affiliate of any of the foregoing), in
each case with a combined capital and surplus or net worth of at least
$25,000,000.
"PERMITTED LIEN" means any Lien described in clauses (a) through (f),
inclusive, of Section 6 of the Lease.
"PERMITTED SUBLEASE" means a sublease or sub-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, limited liability companies, 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, or any plan within the meaning of Section 4975(e)(1) of the Code.
"PRELIMINARY NOTICE" is defined in Section 17.1 of the Lease.
"PREMIUM TERMINATION DATE" means August 25, 2013.
"PTT PERCENTAGE" means, with respect to the Pass Through Trustee, the
percentage of Lessor's Cost allocated to such Pass Through Trustee in Schedule 2
to the Participation Agreement.
"PURCHASE AGREEMENT" means the Purchase Agreement GPJ-003/96 between
Airframe Manufacturer and Express (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 [Amended and Restated]17
Purchase Agreement Assignment [TN], dated as of even date with the Participation
Agreement, among Seller [, Express]18 and Owner Trustee.
"PURCHASE DATE" means the last Business Day of the Base Lease Term or any
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.
"REMOVABLE PARTS" is defined in Section D of Annex C to the Lease.
"RENEWAL LEASE TERM" means each two year term for which the Lease is
extended by Lessee, if any, pursuant to the first or second such extensions in
accordance with Section 17 of the Lease.
"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
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 CLOSING DATE" means the expected Closing Date notified to
Lessee, each Participant, Owner Trustee and Mortgagee by Airframe Manufacturer
- --------------------
17. Delete for New Aircraft.
18. Delete for New Aircraft.
pursuant to Section 4.1 of the Participation Agreement, which expected Closing
Date shall be a Business Day not later than the Commitment Termination Date.
"SCHEDULED EXPIRATION DATE" is defined in Schedule 1 to the Lease.
"SCHEDULED RENEWAL TERM EXPIRATION DATE" means, in the case of the first
Renewal Lease Term, the second anniversary of the Scheduled Expiration Date, and
in the case of the second Renewal Lease Term, the fourth anniversary of the
Scheduled Expiration 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.
"SECTION 1110" means 11 U.S.C. Sec. 1110 of the Bankruptcy Code or any
successor or analogous section of the federal bankruptcy Law in effect from time
to time.
"SECTION 1110 EVENT" means the institution of reorganization proceedings
with respect to Lessee under Chapter 11 of the Bankruptcy Code and thereafter so
long as the Section 1110 Period continues.
"SECTION 1110 PERIOD" means the continuous period of 60 days specified in
Section 1110(a)(2)(A) of the Bankruptcy Code (or such longer period, if any,
agreed to under Section 1110(b) of the Bankruptcy Code), plus an additional
period, if any, commencing with the trustee or debtor-in-possession in such
proceeding agreeing to perform its obligations under the Lease with the approval
of the applicable court and continuing until such time as such trustee or
debtor-in-possession ceases to fully perform its obligations thereunder with the
result that the period during which the Owner Trustee is prohibited from
repossessing the Aircraft under the Lease comes to an end.
"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.
"SELLER" is defined in Schedule 3 to the Participation Agreement.
"SIMILAR AIRCRAFT" is defined in Schedule 1 to the Lease.
"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 3.2.3 of the Lease) opposite the Stipulated Loss Value Date by (ii)
Lessor's Cost, (b) during any Renewal Lease Term, the amount determined pursuant
to Section 17.2.3 of the Lease and (c) during any extension of the Term pursuant
to the proviso to the definition of "Term", the Stipulated Loss Value
immediately prior to the commencement of such extension. 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.
"SUBORDINATION AGENT AGREEMENTS" means the Participation Agreement, the
Liquidity Facilities and the Intercreditor Agreement.
"SUPPLEMENTAL RENT" means, without duplication (a) all 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 9 of the Participation Agreement, but excluding any amount as to which
Lessee is obligated to pay a pro rata share pursuant to clause (e) of this
definition, (b) (i) to the extent not payable (whether or not in fact paid)
under Section 6(a) of the Note Purchase Agreement (as originally in effect or
amended with the consent of the Owner Participant), an amount or amounts equal
to the fees payable to the Liquidity Providers 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 Equipment Notes and the
denominator of which shall be the then outstanding aggregate principal amount of
all "Equipment Notes" (as defined in the Intercreditor Agreement); (ii) (x) the
amount equal to interest on any Downgrade Advance (other than any Applied
Downgrade Advance) payable under Section 3.07 of each Liquidity Facility minus
Investment Earnings from such Downgrade Advance multiplied by (y) the fraction
specified in the foregoing clause (i); (iii) (x) the amount equal to interest on
any CNAI Special Termination Advance (other than any Applied CNAI Special
Termination Advance) payable under Section 3.07 of the CNAI Liquidity Facility
minus Investment Earnings from such CNAI Special Termination Advance multiplied
by (y) the fraction specified in the forgoing clause (i); (iv) (x) the amount
equal to interest on any WestLB Expiration Advance (other than an Applied WestLB
Expiration Advance) payable under Section 3.07 of the WestLB Liquidity Facility
minus Investment Earnings from such WestLB Expiration Advance multiplied by (y)
the fraction specified in the foregoing clause (i); (v) (x) the amount equal to
interest on any Non-Extension Advance (other than any Applied Non-Extension
Advance) payable under Section 3.07 of the CNAI Liquidity Facility minus
Investment Earnings from such Non-Extension Advance multiplied by (y) the
fraction specified in the foregoing clause (i); (vi) (x) the amount equal to
interest on any WestLB Early Termination Advance (other than any Applied WestLB
Early Termination Advance) payable under Section 3.07 of the WestLB Liquidity
Facility minus Investment Earnings from such WestLB Early Termination Advance
multiplied by (y) the fraction specified in the foregoing clause (i); (vii) if
any payment default shall have occurred and be continuing with respect to
interest on any Equipment Notes, (x) the excess, if any, of (1) an amount equal
to interest on any Unpaid Advance, Applied Downgrade Advance, Applied CNAI
Special Termination Advance, Applied WestLB Early Termination Advance, Applied
WestLB Expiration Advance or Applied Non-Extension Advance payable under Section
3.07 of the applicable Liquidity Facility over (2) the sum of Investment
Earnings from any Final Advance plus any amount of interest at the Payment Due
Rate actually payable (whether or not in fact paid) by Owner Trustee on the
overdue scheduled interest on the Equipment Notes in respect of which such
Unpaid Advance, Applied Downgrade Advance, Applied CNAI Special Termination
Advance, Applied WestLB Early Termination Advance, Applied WestLB Expiration
Advance or Applied Non-Extension Advance was made multiplied by (y) a fraction
the numerator of which shall be the then aggregate overdue amounts of interest
on the 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 "Equipment Notes"
(as defined in the Intercreditor Agreement) (other than interest becoming due
and payable solely as a result of acceleration of any such "Equipment Notes");
and (viii) Lessee's pro rata share of any other amounts owed to either Liquidity
Provider by the Subordination Agent as borrower under the applicable 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 (i),
(ii), (iii), (iv), (v), (vi), or (vii) above, in each case, to the extent not
paid when due by the Airframe Manufacturer pursuant to the Fee Letters (as
defined in the Intercreditor 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 Agreement, (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, (e) Lessee's pro
rata share of any amount payable under Section 9.1 (and, if attributable
thereto, Section 9.5) of the Participation Agreement to any Pass Through
Indemnitee to the extent such amount relates to, results from or arises out of
or in connection with (i) the Pass Through Agreements or the enforcement of any
of the terms of any of the Pass Through Agreements, (ii) the offer, sale or
delivery of the Pass Through Certificates or any interest therein or represented
thereby or (iii) 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 Pass Through Agreement or the falsity of any
representation or warranty of Lessee in any Pass Through Agreement and (f) in
the event Lessee requests any amendment to any Operative Agreement or Pass
Through Agreement, Lessee's pro rata share of all reasonable fees and expenses
(including, without limitation, fees and disbursements of counsel) of the Escrow
Agents and the Paying Agents in connection therewith payable by the Pass Through
Trustee under the Escrow 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 all "Equipment Notes" (as such
term is defined in each of the Operative Indentures). For purposes of this
definition, (i) 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,
(ii) the terms "Applied WestLB Early Termination Advance", "Applied WestLB
Expiration Advance", "WestLB Expiration Advance" and "WestLB Early Termination
Advance" shall have the meanings specified in the WestLB Liquidity Facility and
(iii) the terms "Applied Non-Extension Advance", "Applied CNAI Special
Termination Advance", "Non-Extension Advance" and "CNAI Special Termination
Advance" shall have the meanings specified in the CNAI Liquidity Facility.
"TAX ATTRIBUTE PERIOD" is defined in Section 1(e) of the Tax Indemnity
Agreement.
"TAX INDEMNITEE" means (a) Wells Fargo and Owner Trustee, (b) WTC and
Mortgagee, (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.
"TAX INDEMNITY AGREEMENT" means the Tax Indemnity Agreement [TN], 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 Closing Date, for which the
Aircraft is leased pursuant to Section 3 of the Lease, and shall include the
Base Lease Term and, if applicable, any Renewal Lease Term; PROVIDED that if at
the scheduled end of the Term the Aircraft or Airframe is being used, or was
within six (6) months prior thereto being used, by the U.S. Government pursuant
to CRAF, the Term shall be deemed extended for the period necessary to
accommodate usage of the Aircraft or Airframe pursuant to CRAF plus six months
thereafter, and Lessee shall be obligated to pay Basic Rent with respect to any
such period of extension at a rate equal to the Basic Rent paid during the Base
Lease Term or the applicable Renewal Lease Term, whichever shall have ended
immediately prior to such extension.
["TERMINATION AGREEMENTS" means, collectively, the termination agreement
with respect to the Existing Lease and the termination agreement with respect to
the Existing Sublease, in each case delivered pursuant to Section 5.1.2(xiv) of
the Participation Agreement.]19
- --------------------
19. Delete for New Aircraft.
"TERMINATION DATE" means any Payment 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 3.2.3 of the
Lease) opposite the applicable Payment 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.
"THRESHOLD AMOUNT" is defined in Schedule 1 to the Lease.
"TRANSACTIONS" means the transactions contemplated by the Participation
Agreement and the other Operative Agreements to occur on the Closing Date.
"TRANSACTION EXPENSES" means (a) all costs and expenses incurred by Owner
Participant, the Pass Through Trustee, the Subordination Agent, Owner Trustee
and Mortgagee in connection with the preparation, execution and delivery of the
Operative Agreements (including, without limitation, the reasonable fees and
expenses of counsel for such parties), (b) all costs and expenses for 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, (c) the OP Pro Rata Share of (i) the
placement fees and expenses attributable to the offering and sale of the Pass
Through Certificates and (ii) all costs and expenses incurred by the Pass
Through Trustee, the Subordination Agent, Owner Trustee and Mortgagee in
connection with the preparation, execution and delivery of the Pass Through
Agreements (including, without limitation, the reasonable fees and expenses of
counsel for such parties), (d) the reasonable fees and disbursements of special
counsel in Oklahoma City, Oklahoma, in connection with the Closing, and (e) all
initial and ongoing fees, disbursements and expenses of Owner Trustee and
Mortgagee. For purposes of the foregoing, "OP PRO RATA SHARE" shall mean a
fraction, the numerator of which shall be one and the denominator of which shall
be the number of aircraft financed under the Note Purchase Agreement.
"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 10.1.1(a),
10.1.2 or 10.1.3 (but excluding participants in any participation referred to in
Section 10.1.3), respectively, of the Participation Agreement.
"TRUST" means the trust created by the Trust Agreement.
"TRUST AGREEMENT" means the [Amended and Restated]20 Trust Agreement [TN],
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 and the Purchase
Agreement 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, 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, Note
Holders or WTC, or to any of their respective directors, officers, employees,
servants and agents, pursuant to Section 9 of the Participation Agreement).
Notwithstanding the foregoing, "Trust Estate" shall not include any Excluded
Payment.
"TRUST INDENTURE" means the Trust Indenture and Mortgage [TN], dated as of
even date with the Participation Agreement, between Owner Trustee and Mortgagee.
"TRUST INDENTURE ESTATE" is defined in the "Granting Clause" of the Trust
Indenture.
"TRUST INDENTURE SUPPLEMENT" means a Trust Indenture and Mortgage [TN]
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.
"TRUST SUPPLEMENT" means an agreement supplemental to the Basic Pass
Through Trust Agreement pursuant to which (i) a separate trust is created for
the benefit of the holders of the Pass Through Certificates, (ii) the issuance
of the Pass Through Certificates representing fractional undivided interests in
such trust is authorized and (iii) the terms of the Pass Through Certificates
are established.
"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 Person 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.
- --------------------
20. Delete for New Aircraft.
"U.S. PERSON" means any Person described in Section 7701(a)(30) of the
Code.
"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.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, with respect to any specified
Debt, at the time of the determination thereof the number of years obtained by
dividing the then Remaining Dollar-years of such Debt by the then outstanding
principal amount of such Debt. The term "Remaining Dollar-years" shall mean the
amount obtained by (1) multiplying the amount of each then-remaining principal
payment on such Debt by the number of years (calculated at the nearest
one-twelfth) that will elapse between the date of determination of the Weighted
Average Life to Maturity of such Debt and the date of that required payment and
(2) totaling all the products obtained in clause (1) above.
"WELLS FARGO" means Wells Fargo Bank Northwest, National Association, a
national banking association, not in its capacity as Owner Trustee under the
Trust Agreement, but in its individual capacity.
"WESTLB" means WestLB AG, acting through its New York Branch.
"WESTLB LIQUIDITY FACILITY" means the Revolving Credit Agreement between
the Subordination Agent, as borrower, and WestLB, as Liquidity Provider, dated
as of the Issuance Date, PROVIDED that, for the purposes of any obligation of
Lessee, no amendment, modification or supplement to, or substitution or
replacement of, such Liquidity Facility shall be effective unless consented to
by Lessee.
"WET LEASE" means any arrangement whereby Lessee or a Permitted Sublessee
agrees to furnish the Aircraft, Airframe or any Engine to a third party pursuant
to which the Aircraft, Airframe or Engine shall at all times be in the
operational control of Lessee or a Permitted Sublessee, provided that Lessee's
obligations under this Lease shall continue in full force and effect
notwithstanding any such arrangement.
"WTC" means Wilmington Trust Company, a Delaware banking corporation, not
in its capacity as Mortgagee under the Trust Indenture, but in its individual
capacity.
-------------------------------------
| SCHEDULE 1 |
| TO |
| PARTICIPATION AGREEMENT [TN] |
-------------------------------------
ACCOUNTS; ADDRESSES
ACCOUNT FOR PAYMENTS ADDRESS FOR NOTICES
CONTINENTAL JPMorgan Chase Continental Airlines, Inc.
AIRLINES, INC. New York, New York 10081 1600 Smith Street
Account No.: 910-2-499291 Dept. HQS-FN
ABA#: 021-000021 Houston, Texas 77002
Attention: Darlene Cafferata Attention: Treasurer
Voice: 312-807-4084 Facsimile: (713) 324-2447
Facsimile: 312-807-4501
Reference: Continental
Lease [TN]
OWNER PARTICIPANT [Banco do Brasil S.A. [Refine, Inc.
New York Branch c/o CT Corporation
ABA# 026003557 1209 Orange St.
Account No.: 75592-011 Wilmington, DE 19801
Reference: Continental Lease [TN]] Facsimile: 202-298-7570]
WELLS FARGO BANK Wells Fargo Bank Northwest, Wells Fargo Bank Northwest,
NORTHWEST, National Association National Association
NATIONAL ABA: 121000248 MAC: U1228-120
ASSOCIATION Cr: Corporate Trust Services 299 South Main Street, 12th Floor
A/C: 051-09221-15 Salt Lake City, Utah 84111
Ref: Continental Lease [TN] Attention: Corporate Trust Services
Facsimile: (801) 246-5053
WILMINGTON TRUST Wilmington Trust Company Wilmington Trust Company
COMPANY, AS Wilmington, Delaware 19890 Rodney Square North
MORTGAGEE Account No.: [AC] 1100 North Market Street
ABA #: 031-100092 Wilmington, Delaware 19890
Attention: Corporate Capital Market Attention: Corporate Trust
Services/Monica M. Henry Administration
Reference: Continental Facsimile: (302) 636-4141
Lease [TN]
WILMINGTON TRUST Wilmington Trust Company Wilmington Trust Company
COMPANY, AS Wilmington, Delaware 19890 Rodney Square North
SUBORDINATION Account No.: 64060-0 1100 North Market Street
AGENT ABA #: 031-100092 Wilmington, Delaware 19890
Attention: Corporate Capital Market Attention: Corporate Trust
Services/Monica M. Henry Administration
Reference: Continental Facsimile: (302) 636-4141
Lease [TN]
WILMINGTON TRUST Wilmington Trust Company Wilmington Trust Company
COMPANY, AS PASS Wilmington, Delaware 19890 Rodney Square North
THROUGH TRUSTEE Account No.: 64021-0 1100 North Market Street
FOR THE 2004-ERJ1 ABA #: 031-100092 Wilmington, Delaware 19890
PASS THROUGH Attention: Corporate Capital Market Attention: Corporate Trust
TRUST Services/Monica M. Henry Administration
Reference: Continental Facsimile: (302) 636-4141
Lease [TN]
EMBRAER-EMPRESA Banco do Brasil S.A. EMBRAER-Empresa Brasileira de
BRASILEIRA DE Av. Nelson D'Avila, 149 Aeronautica S.A.
AERONAUTICA S.A. 12245-030, Sao Jose dos Av. Brigadeiro Faria Lima, 2170
Campos-SP 12227-901 Sao Jose dos Campos-SP
Brazil Brazil
Swift Code: BRASBRRJSJC Attention: General Counsel
Account No.: 9405-6 Facsimile: (55-123) 927-1257
Reference: COEX Lease [TN]
-------------------------------------
| SCHEDULE 2 |
| TO |
| PARTICIPATION AGREEMENT [TN] |
-------------------------------------
COMMITMENTS
PARTICIPANT PERCENTAGE OF LESSOR'S COST DOLLAR AMOUNT
----------- --------------------------- -------------
PASS THROUGH TRUSTEE LOAN PARTICIPANT'S
PTT PERCENTAGE
2004-ERJ1 [PTT]% $[DA]
OWNER PARTICIPANT OWNER PARTICIPANT'S PERCENTAGE
[OPP]% $[OPDA]
TOTAL $[TDA]
-------------------------------------
| SCHEDULE 3 |
| TO |
| PARTICIPATION AGREEMENT [TN] |
-------------------------------------
CERTAIN TERMS
DEFINED TERM DEFINITION
[OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]
-----------------------------------------------------------------------
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 8 OF THE PARTICIPATION
AGREEMENT (AS DEFINED HEREIN)
-----------------------------------------------------------------------
=============================================================
LEASE AGREEMENT [TN]
Dated as of [DD]
Between
WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
Not in its Individual Capacity,
except as expressly provided herein,
but solely as Owner Trustee,
Lessor
and
CONTINENTAL AIRLINES, INC.,
Lessee
-------------------------------------------------------------
One Embraer Model EMB-145 XR Aircraft
Bearing United States Registration No. N[REG] and
Bearing Manufacturer's Serial No. [MSN] with two
Allison AE3007A1E Engines
Bearing Engine Manufacturer's Serial Nos. CAE[E1] and CAE[E2]
=============================================================
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 [TN], dated as of [DD], for the benefit
of the holders of the Equipment Notes 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.
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..............................................4
SECTION 4. DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR;
SECTION 1110 MATTERS.......................................4
4.1 Disclaimer............................................4
4.2 Certain Agreements of Lessor..........................5
4.3 Quiet Enjoyment.......................................5
4.4 Investment of Funds Held as Security..................5
4.5 Title Transfers by Lessor.............................6
4.6 Lessor's Interest in Certain Engines..................6
4.7 Lease For U.S. Federal Income Tax Law
Purposes; Section 1110 of Bankruptcy Code.............7
SECTION 5. RETURN OF AIRCRAFT.........................................7
5.1 Compliance with Annex B...............................7
5.2 Storage and Related Matters...........................7
5.3 Return of Other Engines...............................7
SECTION 6. LIENS......................................................8
SECTION 7. REGISTRATION, OPERATION, POSSESSION, SUBLEASING
AND RECORDS................................................8
7.1 Registration and Operation............................8
7.2 Possession...........................................10
7.3 Certain Limitations on Subleasing or Other
Relinquishment of Possession.........................13
SECTION 8. MAINTENANCE; REPLACEMENT AND POOLING OF PARTS;
ALTERATIONS, MODIFICATIONS AND ADDITIONS; OTHER
LESSEE COVENANTS..........................................14
8.1 Maintenance; Replacement and Pooling of Parts;
Alterations, Modifications and Additions.............14
8.2 Information, Certificates, Notices and Reports.......14
SECTION 9. VOLUNTARY TERMINATION UPON OBSOLESCENCE...................15
9.1 Right of Termination.................................15
9.2 Election by Lessor to Sell...........................16
9.3 Retention of Aircraft by Lessor......................18
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC.......................19
10.1 Event of Loss With Respect to Aircraft..............19
10.2 Event of Loss With Respect to an Engine.............20
10.3 Conditions to any Replacement.......................21
10.4 Conveyance to Lessee................................23
10.5 Application of Payments.............................23
10.6 Requisition of Aircraft for Use.....................24
10.7 Requisition of an Engine for Use....................24
10.8 Application of Payments.............................24
10.9 Application of Payments During Existence
of a Lease Event of Default.........................24
SECTION 11. INSURANCE.................................................25
11.1 Lessee's Obligation to Insure.......................25
11.2 Insurance for Own Account...........................25
11.3 Indemnification by Government in Lieu of
Insurance...........................................25
11.4 Application of Insurance Proceeds...................25
11.5 Application of Payments During Existence
of Default..........................................26
SECTION 12. INSPECTION................................................26
SECTION 13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE...............27
13.1 In General..........................................27
13.2 Merger of Lessee....................................27
13.3 Assignment Security for Lessor's Obligations........28
13.4 Successor Owner Trustee.............................28
SECTION 14. LEASE EVENTS OF DEFAULT...................................28
14.1 Payments............................................29
14.2 Insurance...........................................29
14.3 Other Covenants.....................................29
14.4 Representations and Warranties......................29
14.5 Bankruptcy and Insolvency...........................29
SECTION 15. REMEDIES AND WAIVERS......................................30
15.1 Remedies............................................30
15.2 Limitations Under CRAF..............................32
15.3 Right to Perform for Lessee.........................33
15.4 Determination of Fair Market Sales Value............33
15.5 Remedies Cumulative.................................33
SECTION 16. LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC........34
SECTION 17. RENEWAL AND PURCHASE OPTIONS..............................34
17.1 Notices Generally...................................34
17.2 Renewal Options.....................................35
17.3 Purchase Option.....................................36
17.4 Appraisals..........................................37
SECTION 18. MISCELLANEOUS.............................................38
18.1 Amendments..........................................38
18.2 Severability........................................38
18.3 Third-Party Beneficiary.............................38
18.4 Reproduction of Documents...........................38
18.5 Counterparts........................................39
18.6 Notices.............................................39
18.7 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE....39
18.8 No Waiver...........................................40
18.9 Entire Agreement....................................40
ANNEXES, EXHIBITS AND SCHEDULES
ANNEX A Definitions
ANNEX B Return Conditions
ANNEX C Maintenance
ANNEX D Insurance
EXHIBIT A Form of Lease Supplement
EXHIBIT B Form of Return Acceptance Supplement
SCHEDULE 1 Certain Terms
SCHEDULE 2 Basic Rent
SCHEDULE 3 Stipulated Loss Value
SCHEDULE 4 Termination Value
SCHEDULE 5 Permitted Countries
SCHEDULE 6 Placards
LEASE AGREEMENT [TN]
LEASE AGREEMENT [TN], dated as of [DD] (this "Agreement" or
"Lease"), between (a) WELLS FARGO BANK NORTHWEST, 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 Participation Agreement,
pursuant to which, among other things, Lessor and Lessee have agreed to enter
into this Agreement.
B. 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
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.
SECTION 2. DELIVERY AND ACCEPTANCE
2.1 DELIVERY AND LEASE OF AIRCRAFT
Lessor hereby agrees (subject to the satisfaction or waiver of the
conditions set forth in Section 5 of the Participation Agreement) to lease to
Lessee for the Term and Lessee hereby agrees (subject to the satisfaction or
waiver of the conditions set forth in Section 5 of the Participation Agreement)
to lease from Lessor for the Term, the Aircraft, commencing immediately upon
acquisition of the Aircraft by Lessor pursuant to the Participation Agreement.
2.2 ACCEPTANCE BY LESSEE
By executing and delivering Lease Supplement No. 1, Lessee confirms
to Lessor that Lessee has duly and irrevocably accepted delivery 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.
3.2 RENT
3.2.1 BASIC RENT
(a) During the Base 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, Basic Rent in the amount specified in the column with the heading "Total
Basic Rent" in Schedule 2 for such Payment Date, which shall be rent paid in
advance for the Payment Period ending on the next Payment Date (except that the
first payment shall include rent in arrears since the Closing Date).
(b) 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 Equipment Notes prior to such Date), the
aggregate principal amount of scheduled installments due on the Equipment Notes
outstanding on such Payment Date, together with the accrued and unpaid interest
thereon, due on such Payment Date in respect of the Equipment Notes; provided,
however, that no installment of Basic Rent shall be increased to the extent such
increase would be based upon (i) any attachment or diversion of Basic Rent on
account of Lessor Liens attributable to Lessor or Owner Participant, (ii) any
modification of the payment terms of the Equipment Notes, or (iii) the
acceleration of any Equipment Note or Equipment Notes 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 whomever 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 whomever shall be entitled thereto
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 12:30 p.m., New York time, on the
date when due (so long as, in the case of any Person not a party to the
Participation Agreement, Lessee had received timely notice of the account to
which such payment was required to be made), for the period from and including
the date on which the same was due to, but excluding, the date of payment in
full.
3.2.3 ADJUSTMENTS TO STIPULATED LOSS VALUES AND
TERMINATION VALUES
(a) In the event that Lessee is required to indemnify the Owner
Participant under the Tax Indemnity Agreement, the Stipulated Loss Value
percentages set forth in Schedule 3 and the Termination Value percentages set
forth in Schedule 4 shall be recalculated (upwards or downwards) by Owner
Participant, using the same methods and assumptions (except to the extent such
assumptions shall be varied to take into account the Loss or Foreign Tax Credit
Loss (as each such term is defined in the Tax Indemnity Agreement) that is the
subject of such indemnification and any prior or contemporaneous Loss or Foreign
Tax Credit Loss) used to calculate the Stipulated Loss Value percentages and the
Termination Value percentages on the Closing Date, in order to maintain the
Owner Participant's Net Economic Return.
(b) All adjustments pursuant to Section 3.2.3(a) 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 the other of any event
requiring an adjustment. Any recalculation of the percentages of Stipulated Loss
Value and Termination Value shall be prepared by Owner Participant, subject to
verification at the request of Lessee in accordance with Section 3.2.3(c), on
the basis of the same methodology and assumptions used by Owner Participant in
determining the percentages of Stipulated Loss Value and Termination Value as of
the Closing Date, 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 required pursuant to Section 3.2.3(a) shall be set forth in a Lease
Supplement or in an amendment to this Lease, and, promptly after execution
thereof by Lessor and Lessee, Lessee shall give a copy thereof to Mortgagee.
(c) If Lessee believes that any calculations by Owner Participant
pursuant to Section 3.2.3(b) 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 Lessee and reasonably satisfactory to
Owner Participant 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
3.2.3(b) 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 absent manifest
error. Lessee will pay the reasonable costs and expenses of such further
verification by such accountants, provided that if it results in a decrease in
the present value (discounted at the Debt Rate) of any Stipulated Loss Value or
Termination Value by ten or more basis points from such Stipulated Loss Value or
Termination Value as recalculated by the Owner Participant, then the Owner
Participant will pay such costs and expenses.
3.3 PAYMENTS
(a) Payments of Rent by Lessee shall be paid by wire transfer of
immediately available Dollars, not later than 12:30 p.m., New York 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 at least 10 Business Days prior to the
date such payment of Rent is due 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 at least 10 Business Days prior to the date
such payment of Rent is due.
(b) Except as otherwise expressly provided herein, whenever any
payment of Rent 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 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 Lessee has not received written notice from the
Mortgagee that the Trust Indenture has been discharged, and notwithstanding
Section 3.3(a), Lessor hereby irrevocably 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 at least 10 Business Days prior to the date such payment of Rent is due.
(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 at least 10 Business Days prior to the date such payment is required to be
made.
(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 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) LESSEE HAS SELECTED THE AIRCRAFT AND
MANUFACTURER THEREOF AND (ii) 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, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO:
(v) THE AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR USE OR FOR ANY PARTICULAR
PURPOSE OF THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF;
(w) THE QUALITY OF THE MATERIAL OR WORKMANSHIP WITH RESPECT TO THE
AIRFRAME, ANY ENGINE OR ANY PART THEREOF;
(x) THE ABSENCE OF LATENT OR ANY OTHER DEFECT IN THE AIRFRAME, ANY
ENGINE OR ANY PART THEREOF, WHETHER OR NOT DISCOVERABLE;
(y) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT OR THE LIKE; OR
(z) THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY
OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF.
4.2 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 any of its subcontractors or suppliers, as the case may
be, pursuant to and in accordance with the terms of the Purchase Agreement
Assignment.
4.3 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
continued possession, use and operation of, and quiet enjoyment 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 the Lessee pursuant to
Section 16, which obligations are absolute and unconditional.
4.4 INVESTMENT OF FUNDS HELD AS SECURITY
4.4.1 INVESTMENT
Any moneys required to be paid to or retained by Lessor that are
required to be paid to Lessee or applied as provided herein shall, until paid to
Lessee as provided herein or applied as provided herein, 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, such moneys shall be invested and held
by Mortgagee, as assignee of Lessor, in accordance with this Lease and upon
discharge of such Lien, Mortgagee shall pay any such money held by it to Lessor
to be held and invested in accordance with this Section.
4.4.2 PAYMENT OF GAIN OR LOSS
Any net gain (including interest received) realized as the result of
investments pursuant to Section 4.4.1 (net of any fees, commissions and other
reasonable 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 reasonable expenses, if any, incurred in connection with
such investment), such amount so paid to be held and applied by Lessor as
contemplated in Section 4.4.1 above.
4.4.3 LIMITATION OF LIABILITY
All investments under this Section 4.4 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 4.4 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.
4.5 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 this Lease,
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, free and clear of all Lessor Liens
but otherwise on an "as-is", "where is" basis, (2) so long as the Lien of the
Trust Indenture has not been discharged, comply with the Trust Indenture
relating to the release of the Aircraft, Airframe or such Engine, (3) 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 with
respect to the Aircraft, Airframe or such Engine, and (4) 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, 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, evidencing such transfer and assignment, and such
other instruments of transfer, all in form and substance reasonably satisfactory
to Lessee (or such other person, as the case may be), as Lessee (or such other
person, as the case may be) may reasonably request.
4.6 LESSOR'S INTEREST IN CERTAIN ENGINES
Lessor hereby agrees for the benefit of each lessor, conditional
seller, indenture trustee or secured party of any engine leased to, or purchased
by, Lessee or any Permitted Sublessee subject to a lease, conditional sale,
trust indenture or other security agreement that Lessor, its successors and
assigns 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.
4.7 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 and to enforce any of
its other rights or remedies as provided in this Lease.
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.
5.2 STORAGE AND RELATED MATTERS
If Lessor gives written notice to Lessee not less than 60 days nor
more than 120 days prior to the end of the Term requesting storage of the
Aircraft upon its return hereunder, Lessee will provide Lessor, or cause Lessor
to be provided, with outdoor parking facilities for the Aircraft for a period up
to 30 days, commencing on the date of such return, and upon request of Lessor to
Lessee made at least 10 days prior to the end of such initial 30 day period, for
an additional 120 day period commencing upon expiration of such initial period,
at such storage facility in the 48 contiguous states of the United States on
Lessee's route system for Similar Aircraft as Lessor may select as the site for
such return of the Aircraft. Such storage shall be at Lessor's risk, and Lessor
shall pay all applicable storage fees, except that Lessee shall pay the parking
fees for the initial 30 day storage period; PROVIDED that Lessee's obligation to
provide parking shall be subject to Lessor entering into an agreement prior to
the commencement of the storage period with the storage facility providing,
among other things, that Lessor shall bear all maintenance charges and other
costs (other than parking fees for the initial 30 day period) incurred.
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, 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. Thereupon,
Lessor will transfer to Lessee the Engine constituting part of such Aircraft but
not installed on such Airframe at the time of the return of the Airframe.
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 or any Part, title to any of the foregoing or any interest of Lessee
therein, or the Lessee's rights in and to this Lease or any Permitted Sublease,
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 with respect to any Participant, Lessor or
Mortgagee; (c) the rights of others under agreements or arrangements to the
extent permitted by the terms of Sections 7.2 and 7.3 or 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 danger of the sale, forfeiture or
loss of the Aircraft, the Airframe, any Engine or any Part thereof; (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 for more than 35 days or is being contested in good
faith by appropriate proceedings, so long as such Liens and such proceedings do
not involve any material danger of the sale, forfeiture or loss of the Aircraft,
the Airframe, any Engine or any Part thereof; and (f) Liens arising out of any
judgment or award against Lessee (or against 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 of the Aircraft, the Airframe or any Engine. Lessee shall promptly (and in
any case, by the end of the Term), at its own expense, take (or cause to be
taken) such action as may be necessary to duly discharge (by bonding or
otherwise) any Lien not excepted above if the same shall at any time arise in
respect of the Aircraft, the Airframe, any Engine or any Part during the Term.
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 13 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). Lessor shall execute any and all such documents as Lessee (or any
Permitted Sublessee) may reasonably request for the purpose of effecting and
continuing such registration. Unless Mortgagee has given Lessee notice that the
Trust Indenture has been discharged, 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 that such perfection or priority
cannot be maintained 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 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 only in compliance with, and subject to all of the conditions set
forth in, Section 7.6.11 of the Participation Agreement.
7.1.3 MARKINGS
If permitted by applicable Law, on or reasonably promptly after the
Closing, 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 Closing, 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. 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.
7.1.4 COMPLIANCE WITH LAWS
Lessee shall not, and shall not allow any other person to, operate,
use, maintain, service, repair or overhaul the Aircraft (a) in violation of any
Law binding on or applicable to the Aircraft, the Airframe or any Engine, or (b)
in violation of any airworthiness certificate, license or registration of any
Government Entity relating to Lessee or the Aircraft, the Airframe or any
Engine, except (1) immaterial or non-recurring violations 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 or
requirement relating to any such certificate, license or registration in good
faith in any reasonable manner that does not involve a material danger of the
sale, forfeiture or loss of the Aircraft, the Airframe, or any Engine, any risk
of criminal liability or a greater than de minimis risk of material civil
penalties being imposed against Lessor, Mortgagee or any Participant or impair
the Lien of the Trust Indenture.
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 11.3 or (b) in any recognized
area of hostilities unless fully covered in accordance with Annex D by war-risk
insurance as required by the terms of Section 11 (including, without limitation,
Section 11.3), unless in any case referred to in this Section 7.1.5 the Aircraft
is only temporarily operated, used or 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.
7.2 POSSESSION
Lessee will not, without the prior written consent of Lessor and
Owner Participant (which consent shall not be unreasonably withheld), 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, 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 by Lessee or
such Permitted Sublessee, as the case may be, in the ordinary course of
business; PROVIDED, HOWEVER, that if 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.
7.2.2 TESTING AND SERVICE
Deliver or permit any Permitted Sublessee to deliver possession of
the Aircraft, Airframe, any Engine or any Part (i) to the manufacturer thereof
or 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 Annex C, for alterations
or modifications in or additions to the Aircraft, Airframe or any Engine or (ii)
to any Person for the purpose of transport to a Person referred to in the
preceding clause (i).
7.2.3 TRANSFER TO U.S. GOVERNMENT
Transfer or permit any Permitted Sublessee to transfer possession of
the Aircraft, Airframe or any Engine to the U.S. Government, in which event
Lessee shall promptly notify Lessor and Mortgagee in writing of any such
transfer of possession and, in the case of any transfer pursuant to CRAF, in
such notification shall identify by name, address and telephone numbers 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 to the extent applicable under CRAF.
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) Permitted Liens and those that do not apply
to the Engines 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.
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 or
Permitted Sublessee, as the case may be, 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 that it will not acquire or claim any right, title or
interest in, or Lien on, such Engine by reason of such Engine being installed on
such airframe at any time while such Engine is subject to this Lease or is owned
by Lessor.
7.2.6 INSTALLATIONS OF ENGINES ON FINANCED AIRCRAFT
So long as no Payment Default, Bankruptcy Default or Lease Event of
Default shall have occurred and be continuing, 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 any such installation shall be deemed an
Event of Loss with respect to such Engine, and Lessee shall comply with Section
10.2 hereof in respect thereof.
7.2.7 SUBLEASING
With respect to the Aircraft, Airframe or any Engine, so long as no
Payment Default, Bankruptcy Default or Lease Event of Default has occurred and
is continuing, enter into a sublease with any Permitted Air Carrier, but only
if:
(a) Lessee shall provide written notice to Lessor of Lessee's intent
to enter into a Permitted Sublease (except if the Permitted Sublessee is
Express) and of any permitted sub-sublease, such notice in the event of a
sublease to a U.S. Air Carrier to be given promptly after entering into any such
sublease or, in the case of a sublease to any other Permitted Air Carrier, 20
days in advance of entering into such sublease;
(b) At the time that Lessee enters into such Permitted Sublease or a
sublessee enters into a permitted sub-sublease, such Permitted Sublessee shall
not be subject to any bankruptcy, insolvency, liquidation, reorganization,
dissolution or similar proceeding, shall not be seeking any reorganization or
any readjustment of its debts and shall not be, or shall not have substantially
all of its property, in the possession of any liquidator, trustee, receiver or
similar person and, if such Permitted Sublessee is a Permitted Foreign Air
Carrier, the United States then maintains normal diplomatic relations with the
country in which such Permitted Sublessee has its principal executive offices;
(c) Any such Permitted Sublease (including any permitted
sub-sublease) (i) shall include provisions for the maintenance, operation,
possession, inspection and insurance of the Aircraft that are the same in all
material respects as the applicable provisions of this Lease, (ii) shall provide
that, except if Express or any subsidiary of Lessee is the Permitted Sublessee,
such Permitted Sublessee 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 not extend beyond
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;
(d) In connection with a sublease (including any permitted
sub-sublease) to a Permitted Foreign Air Carrier, Lessee shall have furnished
Lessor and Mortgagee an opinion of counsel, reasonably satisfactory to Lessor
and Mortgagee, in the country of domicile of such Permitted Foreign Air Carrier,
that (i) the terms of such sublease 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) 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 title to the Aircraft, Airframe or Engines in the event of the
requisition by such government of such title (unless Lessee shall provide
insurance in the amounts required with respect to hull insurance under Section
11 covering the requisition of 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), (v) the agreement of such Permitted Foreign Air
Carrier that its rights under the sublease are subject and subordinate to all
the terms of this Lease is enforceable against such Permitted Foreign Air
Carrier under applicable Law, and (vi) there is no tort liability of the owner
or Lessor of an aircraft not in possession thereof under the Laws of such
country (it being agreed that, in the event such latter opinion cannot be given
in a form satisfactory to the Owner Participant and Mortgagee, such opinion
shall be waived if insurance reasonably satisfactory to the Owner Participant
and Mortgagee is provided to cover such risk);
(e) No such sublease shall be made to a "tax exempt entity" as
defined in Section 168(h)(2) of the Code (including any Permitted Foreign Air
Carrier) prior to the close of the Tax Attribute Period, unless Lessee prepays
on a lump-sum basis any liability 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, PROVIDED, that
notwithstanding the foregoing, such sublease may be made without requiring such
prepayment during the taxable year in which the seventh anniversary of the
Closing Date occurs so long as the Aircraft is not "used predominantly outside
the United States" within the meaning of Section 168(g) of the Code during such
taxable year;
(f) Lessee shall furnish to Lessor and Mortgagee evidence reasonably
satisfactory to Lessor and Mortgagee that the insurance required by Section 11
remains in effect at the time such sublease (including any permitted
sub-sublease) is entered into;
(g) 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 Lessor, and the first priority perfected security interest (subject to
Permitted Liens) of Mortgagee, in the Aircraft, Airframe and Engines;
(h) Except for the initial sublease to Express, Lessee shall
reimburse Lessor and Mortgagee for all of its reasonable out-of-pocket fees and
expenses, including, without limitation, reasonable fees and disbursements of
counsel, incurred by Lessor and Mortgagee in connection with any such sublease;
and
(i) 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.
7.3 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, any Engine or any Part 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;
(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; and
(e) Any Wet Lease shall not constitute a delivery, transfer or
relinquishment of possession for purposes of Section 7.2 and shall not be
prohibited by the terms hereof.
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.
8.2 INFORMATION, CERTIFICATES, NOTICES AND REPORTS
8.2.1 FINANCIAL INFORMATION
Lessee will furnish to Lessor and Mortgagee:
(a) Within 90 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 (excluding exhibits) or an
e-mail notice that such report has been filed with the SEC and providing a
website address at which such report may be accessed 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 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 (excluding exhibits) or an e-mail notice that such report has been
filed with the SEC and providing a website address at which such report may be
accessed 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 and Mortgagee an Officer's Certificate of Lessee
(which, in lieu of delivery pursuant to Section 18.6, may be delivered by e-mail
and, in such case, need not include a manual signature of a required officer but
instead shall set forth a typed signature of such officer) to the effect that
such officer is familiar with or has reviewed or caused to be reviewed the
relevant terms of this Lease and the other Lessee Operative Agreements and that
such officer does not have knowledge of the existence as at the date of such
certificate of any Lease Event of Default or if there is knowledge of a Lease
Event of Default, the steps that are being taken with respect thereto.
8.2.3 INFORMATION FOR FILINGS
Lessee shall promptly furnish to Owner Participant, Mortgagee 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, to enable Mortgagee timely to file any
reports required to be filed by it as Mortgagee under the Trust Indenture or to
enable Owner Participant to timely file any reports required to be filed by it,
as the beneficiary of the Trust Estate, in any such case, with any Government
Entity because of, or in connection with, the interest of Owner Participant,
Mortgagee 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, Mortgagee 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, Mortgagee 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, Mortgagee or Lessor, and if any
such waiver or consent is evidenced to the reasonable satisfaction of Owner
Participant, Mortgagee or Lessor, as the case may be, then Lessee shall not be
required to furnish such information to Owner Participant, Mortgagee or Lessor.
SECTION 9. VOLUNTARY TERMINATION UPON OBSOLESCENCE
9.1 RIGHT OF TERMINATION
(a) Unless a Lease Event of Default, Payment Default or Bankruptcy
Default shall have occurred and be continuing, 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 end of the Tax
Attribute Period, if:
(i) Lessee makes a good faith determination that the Aircraft 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; and
(ii) written notice of Lessee's exercise of its option to terminate
this Agreement shall be given to Lessor not less than 90 days prior to the
proposed Termination Date specified in such notice.
(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 45 days after Lessee gives Lessor written notice pursuant to Section
9.1(a)(ii). 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
Unless Lessor has given Lessee notice of Lessor's election to retain
the Aircraft, Lessee, as agent for Lessor, shall, until the date ten Business
Days prior to the proposed Termination Date, use commercially 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 ten Business 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 has an arrangement for the future use of the Aircraft by
Lessee or any such Affiliate) submitting such bid. In the event Lessor receives
any bid on or prior to the date ten Business Days prior to the proposed
Termination Date, Lessor shall, at least ten Business 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 cash bid (net of
applicable brokerage commissions) on or before the date ten Business 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 4.5, against cash paid to Lessor in the amount of
such highest bid (net of applicable brokerage commissions and all
reasonable out-of-pocket fees and expenses incurred by Lessor, Mortgagee
and Owner Participant in connection with such sale and the related
termination of this Lease (collectively, the "Expenses of Sale") 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), net of
Expenses of Sale, 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:
(i) all unpaid Basic Rent due at any time prior to such Termination
Date, but excluding Basic Rent due on 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, net of Expenses of 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 Supplemental Rent due by Lessee to Lessor, Mortgagee or the
Participants under this Lease (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 Equipment
Notes upon such sale, (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, (C) the Expenses of 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 4.5,
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, Lessee may give another notice pursuant to
Section 9.1.
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 20 days prior to the proposed Termination Date,
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 Lessee may give another notice pursuant to Section 9.1;
PROVIDED that Lessee shall not be entitled to give more than three notices
pursuant to Section 9.1.
(b) Lessee shall pay all reasonable out-of-pocket fees and expenses
of Lessor, Mortgagee and Owner 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 Equipment Notes 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;
(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, but excluding Basic Rent due on such Termination Date; plus
(2) 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; and
(iv) Lessee shall also pay all Supplemental Rent due and payable by
Lessee to Lessor, Mortgagee or the Participants under this Lease
(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 Equipment Notes,
(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 reasonable 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 4.5,
any Engines constituting part of the Aircraft but which were not then
installed on the Airframe and returned therewith; and
(ii) The obligation of Lessee to pay Basic Rent otherwise due on or
after the Termination Date shall cease, and the Term for the Aircraft
shall end effective as of such Termination Date.
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 Business Days after
such occurrence) give Lessor and Mortgagee written notice of such Event of Loss.
Within 45 days after such occurrence, Lessee shall give Lessor and Mortgagee
written notice of Lessee's election to make payment in respect of such Event of
Loss, as provided in Section 10.1.2, 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 Payment Default, a Bankruptcy Default 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 the Stipulated Loss Value Date next following the earlier of
(x) the 120th day following the date of the occurrence of such Event of
Loss, and (y) the twentieth day following the receipt of insurance proceeds
with respect to such occurrence (but in any event not earlier than the date
of Lessee's election under Section 10.1.1 to make payment under this
Section 10.1.2), Lessee shall pay to Lessor:
(1) all unpaid Basic Rent or Renewal Rent, as the case may be, due
at any time prior to such Stipulated Loss Value Date; plus
(2) the Stipulated Loss Value of the Aircraft computed as of such
Stipulated Loss Value Date; 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;
PROVIDED, that if such Stipulated Loss Value Date is a Payment Date,
Lessee shall not be obligated to pay the Basic Rent or Renewal Rent
otherwise required to be paid on such date; 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 Lessee Operative Agreement.
(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 4.5.
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 Engine actually suffering the Event of Loss, then Lessee
shall, as promptly as possible and in any event within 120 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 that is the
same model as the Airframe to be replaced thereby, or an improved model, and
that has a value, utility and remaining useful life (without regard to hours or
cycles remaining until the next regular maintenance check), at least equal to
the Airframe to be replaced thereby (assuming that such Airframe had been
maintained in accordance with the Lease). 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 10 Business Days
after such occurrence) give Lessor written notice of such Event of Loss.
10.2.2 REPLACEMENT OF ENGINE
Lessee shall, promptly and in any event within 90 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 a value, utility and
remaining useful life (without regard to hours and cycles remaining until
overhaul) at least equal to the Engine to be replaced thereby (assuming that
such Engine had been maintained in accordance with the Lease).
10.2.3 ENGINE EXCHANGE
Unless a Payment Default, Bankruptcy Default or Lease Event of
Default shall have occurred and be continuing, upon not less than five (5)
Business Days' prior written notice to Lessor, Lessee may replace any Engine
leased hereunder with another engine (the "Exchanged Engine") meeting the
requirements of Section 10.2.2. Such Exchanged Engine shall be deemed to be a
"Replacement Engine" and Lessor and Lessee shall comply with the provisions of
Section 10.3 with regard to the Exchanged Engine and the Engine so replaced.
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 take each of the
following actions:
(a) furnish Lessor with a full warranty bill of sale duly conveying
to Lessor such Replacement Airframe or Replacement Engine, in form and substance
reasonably satisfactory to Lessor and cause such Replacement Airframe to be duly
registered in the name of Lessor pursuant to the Act;
(b) 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 or Mortgagee 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;
(c) furnish such evidence of compliance with the insurance
provisions of Section 11 with respect to such Replacement Airframe or
Replacement Engine as Lessor may reasonably request;
(d) furnish an opinion or opinions of Lessee's counsel (which may be
Lessee's legal department) reasonably satisfactory to Lessor and Mortgagee and
addressed to Lessor and Mortgagee to the effect that (i) such full warranty bill
of sale referred to in Section 10.3.1(a) constitutes an effective instrument for
the conveyance of title to the Replacement Airframe or Replacement Engine and
(ii) in the case of a Replacement Airframe, Lessor and Mortgagee, as assignee of
Lessor, will be entitled to the benefits of Section 1110 with respect to the
Replacement Airframe, provided that such opinion referred to in this clause (ii)
need not be delivered to the extent that immediately prior to such replacement
the benefits of Section 1110 were not, solely by reason of a change in law or
court interpretation thereof, available to Lessor or Mortgagee, as assignee of
Lessor;
(e) furnish an opinion of Lessee's aviation law counsel reasonably
satisfactory to Lessor and Mortgagee and addressed to Lessor and Mortgagee as to
the due registration of any such Replacement Airframe, the ownership of title to
such Replacement Airframe by Owner Trustee and the absence of Liens of record
with respect to such Replacement Airframe (other than Permitted Liens) and the
due filing for recordation of each Lease Supplement and Trust Indenture
Supplement with respect to such Replacement Airframe or Replacement Engine under
the Act;
(f) with respect to the replacement of the Airframe, and any Engine
installed thereon at the time of the subject Event of Loss, if requested by
Lessor and at Lessee's expense, furnish a certified report of a qualified
independent aircraft appraiser, reasonably satisfactory to Lessor, certifying
that such Replacement Airframe and any such Replacement Engine complies with the
value, utility and remaining useful life requirements set forth in Section
10.1.3(b); and
(g) furnish a certificate of a qualified aircraft engineer (who may
be an employee of Lessee) certifying that such Replacement Engine complies with
the value, utility and remaining useful life requirements set forth in Section
10.2.2.
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 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, 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 compliance by Lessee with the applicable terms of Sections
10.1.3, 10.2 and 10.3.1, 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 4.5.
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:
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, upon compliance by
Lessee with the applicable terms of Section 10.1.3 with respect to the Event of
Loss for which such amounts are received, such amounts shall be paid over to, or
retained by, 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), upon compliance by Lessee with the applicable terms of Section 10.2.2
with respect to the Event of Loss for which such amounts are received, such
amounts shall be paid over to, or retained by, 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 (or to Mortgagee so
long as Mortgagee has not given notice to Lessee that the Lien of the Trust
Indenture has been duly discharged, except with respect to Excluded Payments) to
the extent necessary to pay in full such sum;
(b) SECOND, the remainder, if any, shall be paid to Lessee.
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
to Lessor by Lessee at the end of the Term, unless Lessor shall have elected,
upon notice given not less than 30 days nor more than 120 days before the end of
the Term, not to treat such event as constituting an Event of Loss with respect
to the Aircraft, Lessee shall be obligated to pay the Stipulated Loss Value and
all other amounts payable pursuant to Section 10.1.2 with respect to the
Aircraft. If Lessor shall have elected not 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, and Lessee shall
pay to Lessor upon such return an amount equal to the average daily Basic Rent
payable by Lessee during the Term for each day after the end of the Term to but
excluding the day of such return, up to a maximum of 30 days.
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, then all such payments shall be paid
over to Lessor (or to Mortgagee so long as Mortgagee has not given notice to
Lessee that the Trust Indenture has been duly discharged), and held as provided
in Section 10.5.
10.9 APPLICATION OF PAYMENTS DURING EXISTENCE OF A LEASE EVENT 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 Event of Default, Payment Default or Bankruptcy Default
shall have occurred and be continuing, but shall instead be held by or paid over
to Lessor (or to Mortgagee so long as Mortgagee has not given notice to Lessee
that the Trust Indenture has been duly discharged) as security for the
obligations of Lessee under this Lease and the other Lessee Operative Agreements
and shall be invested pursuant to Section 4.4 hereof unless and until Lessor
shall have demanded liquidated damages pursuant to Section 15.1.3 or 15.1.4 and
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 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 Event of Default, Payment Default or Bankruptcy 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.
11.2 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 Owner 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
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.
11.3 INDEMNIFICATION BY GOVERNMENT IN LIEU OF INSURANCE
Lessor agrees to accept, in lieu of insurance against any risk with
respect to the Aircraft described in Annex D, indemnification from, or insurance
provided by, the U.S. Government, or upon the written consent of Lessor and
Mortgagee, other Government Entity, against such risk in an amount that, when
added to the amount of insurance (including permitted self-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.
11.4 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, and any balance remaining after such repairs or replacement with
respect to such damage or loss shall be paid over to, or retained by, Lessee.
11.5 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 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
Mortgagee has not given notice to Lessee that the Trust Indenture has been duly
discharged) as security for the obligations of Lessee under this Lease and shall
be invested pursuant to Section 4.4 hereof unless and until Lessor shall have
demanded liquidated damages pursuant to Section 15.1.3 or 15.1.4 and 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 Event of Default, such
amount shall be paid to Lessee to the extent not previously applied in
accordance with this Section 11.5.
SECTION 12. INSPECTION
(a) Lessor, Mortgagee or their respective authorized representatives
(the "Inspecting Parties") may, upon reasonable notice to Lessee, 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) Except during the continuance of any Lease Event of Default
while the Section 1110 Period shall not be in effect, any inspection of the
Aircraft hereunder shall be limited to a visual, walk-around inspection and
shall not include the opening of any panels, bays or other components of the
Aircraft, Airframe or Engines. Any inspection permitted hereunder, including any
inspection conducted during the continuance of a Lease Event of Default, shall
be conducted in a manner which does not interfere with Lessee's or a Permitted
Sublessee's operation, use and maintenance of such Aircraft, which determination
of interference shall be made by Lessee in its reasonable sole discretion.
(c) With respect to such rights of inspection, neither Lessor nor
Mortgagee shall have any duty or liability to make, or any duty or liability by
reason of not making, any such visit, inspection or survey.
(d) Each Inspecting Party shall bear its own expenses in connection
with any such inspection (including the cost of any copies made in accordance
with Section 12(a)); PROVIDED, that if a Lease Event of Default shall have
occurred and be continuing, Lessee shall bear all such reasonable expenses,
except, in the case of a Chapter 11 reorganization, during the Section 1110
Period.
(e) If requested by Lessor or Mortgagee, Lessee shall promptly
advise, or shall cause any Permitted Sublessee to advise, Lessor of the date
upon which the Aircraft, Airframe or any Engine undergoes its next scheduled
maintenance visit or 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. An Inspecting Party shall have the
opportunity to attend such scheduled maintenance visit or major check, subject
to the other provisions of this Section 12.
SECTION 13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE
13.1 IN GENERAL
This Lease and the other Lessee 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 by the
terms of the Lease or any other Lessee Operative Agreement, Lessee will not,
without the prior written consent of Lessor and Mortgagee, assign any of its
rights under this Lease. Except as otherwise provided herein (including, without
limitation, under the provisions of Section 15 hereof) or in the Trust
Indenture, Lessor and Mortgagee 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.
13.2 MERGER OF LESSEE
13.2.1 IN GENERAL
Lessee shall not consolidate with or merge 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 and, upon consummation of such transaction, such person will be a U.S.
Air Carrier;
(b) such person executes and delivers to Lessor and Mortgagee a duly
authorized, legal, valid, binding and enforceable agreement, reasonably
satisfactory in form and substance to Lessor and Mortgagee, 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;
(c) such person makes such filings and recordings with the FAA
pursuant to the Act as shall be necessary to evidence such consolidation or
merger; and
(d) immediately after giving effect to such consolidation or merger
no Lease Event of Default shall have occurred and be continuing.
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 Lease.
13.3 ASSIGNMENT SECURITY FOR LESSOR'S OBLIGATIONS
In order to secure the indebtedness evidenced by the Equipment
Notes, 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.
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 so long as it shall not have been remedied:
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 Supplemental
Rent (other than Stipulated Loss Value or Termination Value) when due and such
failure shall continue for a period in excess of ten (10) Business Days from and
after the date of any written notice to Lessee from Lessor, Mortgagee or Owner
Participant of the failure to make such payment when due; provided that any such
failure to pay any Excluded Payment 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 ten (10) 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.
14.3 OTHER COVENANTS
Lessee shall fail to observe or perform (or cause to be observed and
performed) in any material respect 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 Tax Indemnity Agreement),
and such failure shall continue unremedied for a period of 30 days from and
after the date of written notice thereof to Lessee from Lessor, Owner
Participant or Mortgagee, unless such failure is capable of being corrected and
Lessee shall be diligently proceeding to correct such failure, in which case
there shall be no Lease Event of Default unless and until such failure shall
continue unremedied for a period of 90 days after receipt of such notice.
14.4 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 the Tax Indemnity Agreement) (a)
shall prove to have been untrue or inaccurate in any material respect as of the
date made, (b) such untrue or inaccurate representation or warranty is material
at the time in question, (c) and the same shall remain uncured (to the extent of
the adverse impact of such incorrectness on the interest of the Participants or
Lessor) for a period in excess of 30 days from and after the date of written
notice thereof from Lessor, Owner Participant or Mortgagee to Lessee (except
that this clause (c) shall be inapplicable in the case of Section 6.1.7 of the
Participation Agreement).
14.5 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 substantially
all 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
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's board of directors shall adopt a resolution authorizing 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 substantially all of its property, or
substantially all of the property of Lessee shall be sequestered, and any such
order, judgment or decree of appointment or sequestration shall remain in force
undismissed, unstayed and unvacated for a period of 90 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 90 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 substantially all of its property and such jurisdiction,
custody or control remains in force unrelinquished, unstayed and unterminated
for a period of 90 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:
15.1.1 RETURN AND REPOSSESSION
Lessor may cause Lessee, upon giving written notice to Lessee, to
return promptly, and Lessee shall return promptly, the 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 Airframe or Engine 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 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 to a hearing prior to repossession of the Aircraft.
15.1.2 SALE AND USE
Lessor may sell the Airframe and/or any Engine at public or private
sale, at such times and places, and to such Persons (including Lessor, Mortgagee
or any Participant), as Lessor may determine; or Lessor may otherwise dispose
of, hold, use, operate, lease to others or keep idle the Airframe and/or any
Engine, as Lessor, in its sole discretion, may determine, all free and clear of
any rights of Lessee and without any duty to account to Lessee with respect to
such action or inaction or for any proceeds with respect thereto, except as
hereinafter set forth in this Section 15, 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.
Lessor shall give Lessee at least 15 days prior written notice of the date fixed
for any public sale of the Airframe and/or any Engine or of the date on or after
which will occur the execution of any contract providing for any private sale.
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 Airframe and/or any Engine, or any Part thereof, Lessor, by written
notice to Lessee specifying a payment date (which shall be the Stipulated Loss
Value Date next 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 Stipulated Loss Value Date specified in such notice,
but excluding Basic Rent or Renewal Rent due on such Stipulated Loss Value Date;
plus
(b) an amount equal to the excess, if any, of the Stipulated Loss
Value for the Aircraft, computed as of the Stipulated Loss Value Date specified
in such notice, over the Fair Market Sales Value of the Aircraft, as of the
Stipulated Loss 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; plus
(d) interest on the amount specified in the foregoing clause (b) at
the Payment Due Rate from and including the Stipulated Loss Value Date specified
in such notice to the date of payment of such amount.
15.1.4 LIQUIDATED DAMAGES UPON SALE
If Lessor, pursuant to Section 15.1.2 or applicable Law, shall have
sold the Aircraft, Lessor, in lieu of exercising its rights under Section 15.1.3
with respect to the Aircraft, 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, due
at any time prior to the Stipulated Loss Value Date on or immediately preceding
the date of such sale, but excluding Basic Rent or Renewal Rent due on such
Stipulated Loss Value Date; plus
(b) an amount equal to the excess, if any, of (i) the Stipulated
Loss Value of the Aircraft, computed as of the Stipulated Loss Value Date used
in the foregoing clause (a) for the computation of unpaid Rent, over (ii) the
proceeds of such sale, minus all reasonable costs of Lessor in connection with
the sale; plus
(c) if the date of such sale is not a Stipulated Loss Value Date, an
amount equal to interest on the outstanding principal amount of the Equipment
Notes at the rate per annum borne thereby from and including the Stipulated Loss
Value Date used in the foregoing clause (a) for the computation of unpaid Rent
to the date of 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; plus
(e) interest on the sum of the amounts specified in the foregoing
clause (b) at the Payment Due Rate from and including the date of such sale to
the date of payment of such amounts.
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
reasonable attorneys' fees and other costs and expenses of Lessor, 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 reasonable
costs and expenses of Lessor incurred in connection with the return of the
Airframe or any Engine, in accordance with the terms of Section 5 or in placing
the Airframe or any Engine, 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 or Mortgagee 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.
15.3 RIGHT TO PERFORM FOR LESSEE
If Lessee (i) fails to make any payment of Rent required to be made
by it hereunder or (ii) fails to perform or comply with any of its agreements
contained herein and such failure continues for a period of thirty days after
written notice thereof is given by Lessor, Mortgagee or Owner Participant to
Lessee, Lessor 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 or Mortgagee 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 by Lessor or Mortgagee,
whichever is entitled thereto. 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 SALES VALUE
For the purpose of this Section 15, the "Fair Market Sales Value" of
the Aircraft 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 sale of the Aircraft. 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 Sales
Value for purposes of this Section 15 shall be zero.
15.5 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.
SECTION 16. LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC.
(a) Lessee's obligation to pay Rent hereunder shall be absolute and
unconditional, 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 Note Holder, 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;
or (iv) 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 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. 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, except in accordance with the express terms hereof.
(c) 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 (a) and (b) above).
Without limiting the foregoing, nothing in this Section 16 shall be construed as
a waiver by Lessee, or otherwise limit Lessee in pursuing any claim by Lessee,
of any breach by Lessor, Owner Participant or any other Person of any covenant
or obligation contained in any Operative Agreement.
SECTION 17. RENEWAL AND PURCHASE OPTIONS
17.1 NOTICES GENERALLY
(a) At least 225 days but not more than 375 days prior to the
Scheduled Expiration Date or, if a Renewal Lease Term is then in effect, prior
to the Scheduled Renewal Term Expiration Date of such Renewal Lease Term, Lessee
may provide notice to Lessor that Lessee may exercise either the option to
extend the leasing of the Aircraft for a Renewal Lease Term pursuant to Section
17.2 or the option to purchase the Aircraft on the Scheduled Expiration Date or
Scheduled Renewal Term Expiration Date of such Renewal Lease Term, as the case
may be, pursuant to Section 17.3 (a "Preliminary Notice").
(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.
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 two occasions, in each case until the next Scheduled Renewal
Term Expiration Date, 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 not less than 180 days
but not more than 375 days prior to (i) if the Base Lease Term is then in
effect, the Scheduled Expiration Date, or (ii) if a Renewal Lease Term is
then in effect, the Scheduled Renewal Term Expiration Date for such
Renewal Lease Term.
(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 a Renewal Lease Term if any Payment Default, Bankruptcy Default or
Lease Event of Default shall have occurred and be continuing on and as of
the date that such Renewal Lease Term would otherwise commence.
(ii) Any Renewal Notice shall be revocable by Lessee until 10
Business Days after the Renewal Rent is determined in accordance with
Sections 17.2.2 and unless revoked by written notice by Lessee to Lessor
shall thereafter become irrevocable and shall constitute an unconditional
obligation of Lessee to extend the leasing of the Aircraft hereunder for
the Renewal Lease Term to which such Renewal Notice relates.
(iii) Lessee shall not be entitled to give any Renewal Notice if it
has (x) not delivered a Preliminary Notice or (y) 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.
(b) The Renewal Rent payable by Lessee on each Payment Date during
any Renewal Lease Term shall be the Fair Market Rental Value of the Aircraft for
such Renewal Lease Term. Any such Fair Market Rental Value shall be determined
not more than 10 Business Days after Lessee gives a Preliminary Notice 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 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 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 and Termination Values for any such Renewal Lease
Term shall, commencing on the first day of such Renewal Lease Term, be equal to
the Fair Market Sales Value of the Aircraft, computed as of the first day of
such Renewal Lease Term, and shall decline ratably on a monthly basis to the
Fair Market Sales Value of the Aircraft as of the last day of such Renewal Lease
Term, but shall be adjusted to credit Lessee for any Renewal Rent paid in
advance attributable to any subsequent period.
(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 lesser of (i) the Purchase Price
Cap (as defined in Schedule 1 to the Lease) and (ii) 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 less than 180 and
not more than 375 days prior to the Purchase Date specified in such
Purchase Notice.
(c) Notwithstanding anything to the contrary in this Agreement or
any other Operative Agreement:
(i) Any Purchase Notice (whether delivered or deemed to have been
delivered) shall be revocable until 10 Business Days after the
determination of the Fair Market Sales Value in accordance with Section
17.3.2 and unless revoked by written notice by Lessee to Lessor shall
thereafter become irrevocable and shall constitute an unconditional
obligation of Lessee to purchase the Aircraft under this Section 17.3.
(ii) No Preliminary Notice or Purchase Notice shall be binding on
Lessor or oblige Lessor to sell the Aircraft hereunder if any Payment
Default, Bankruptcy Default or Lease Event of Default shall have occurred
and be continuing on and as of such Purchase Date.
(iii) Lessee shall not be entitled to give any Purchase Notice in
respect of any Purchase Date if it has (x) not delivered a Preliminary
Notice or (y) delivered a Renewal Notice for a Renewal Lease Term that
would commence immediately following such Purchase Date.
17.3.2 DETERMINATION OF FAIR MARKET SALES VALUE
The Fair Market Sales Value of the Aircraft shall be determined not
more than 10 Business Days after Lessee gives a Preliminary Notice 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 purchase
price 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, Lessor will transfer to Lessee title to the Aircraft in accordance
with Section 4.5.
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 190 days before the end of the Base Lease Term or the current
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 shall be borne equally by Lessee and Lessor, PROVIDED that
if Lessee elects not to renew this Lease or purchase the Aircraft following the
conclusion of such appraisal, Lessee shall pay all expenses of such appraisal.
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 with the written
consent of the Mortgagee if required by the Trust Indenture. 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 THIRD-PARTY BENEFICIARY
This Agreement is not intended to, and shall not, provide any person
not a party hereto (other than Mortgagee, the Participants, the Indenture
Indemnitees and the Persons referred to in Section 4.6, with respect to matters
expressly for their benefit in this Lease) with any rights of any nature
whatsoever against either of the parties hereto, and no person not a party
hereto (other than Mortgagee, the Participants, the Indenture Indemnitees and
the Persons referred to in Section 4.6, with respect to matters expressly for
their benefit in this Lease) shall have any right, power or privilege in respect
of, or have any benefit or interest arising out of, this Agreement.
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 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.
18.7 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. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
(B) EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS
ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
IN THE CITY AND COUNTY OF NEW YORK AND OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK, IN CONNECTION WITH ANY LEGAL ACTION, SUIT OR PROCEEDING
WITH RESPECT TO ANY MATTER RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT.
(C) 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 PURSUANT TO SECTION 18.6. EACH PARTY HERETO HEREBY AGREES THAT
SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS
SECTION 18.7(C), 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.
(D) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A
DEFENSE, OR OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER IN
ANY OF THE ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT
THIS AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY
SUCH COURTS.
(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.
18.8 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 further action in any circumstances without notice or
demand.
18.9 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.]
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Agreement to be duly executed as of the day and year first above written.
WELLS FARGO BANK NORTHWEST, 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:
Title:
Receipt of this original counterpart of the foregoing Lease
Agreement is hereby acknowledged on this ____ day of _________, _______.
WILMINGTON TRUST COMPANY,
as Mortgagee
By
--------------------------------------
Name:
Title:
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Agreement to be duly executed as of the day and year first above written.
WELLS FARGO BANK NORTHWEST, 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:
Title:
ANNEX A
DEFINITIONS
[SEE PARTICIPATION AGREEMENT ANNEX A]
ANNEX B
RETURN CONDITIONS
[OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]
ANNEX C
MAINTENANCE
[OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]
ANNEX D
INSURANCE
[OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]
------------------------------------
| EXHIBIT A - LEASE SUPPLEMENT |
| LEASE AGREEMENT [TN] |
------------------------------------
LEASE SUPPLEMENT NO.__
LEASE SUPPLEMENT No. __, dated ________, 200_, between WELLS FARGO
BANK NORTHWEST, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, but solely as Owner Trustee under the [Amended and
Restated]1 Trust Agreement [TN], dated as of [DD], 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 Lease
Agreement [TN], dated as of [DD], relating to one Embraer Model EMB-145 XR
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
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 Embraer EMB-145 XR aircraft (the "Aircraft"), which Aircraft as
of the date hereof consists of the following components:
(i) Airframe: U.S. Registration No. ___________;
manufacturer's serial no. ___________; and
(ii) Engines: two (2) Allison AE3007A1E engines bearing,
respectively, manufacturer's serial nos. ___________ and ____________(each
of which engines has 750 or more rated takeoff horsepower or the
equivalent of such horsepower).
3. The Closing Date for the Aircraft is the date of this Lease
Supplement set forth in the opening paragraph hereof.
- --------
1. Delete for New Aircraft.
4. 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.
5. 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.
6. 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.
7. 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.]
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.
WELLS FARGO BANK NORTHWEST, 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:
Title:
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.
WELLS FARGO BANK NORTHWEST, 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:
Title:
Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this ____ day of _________, __________.
WILMINGTON TRUST COMPANY,
as Mortgagee
By
--------------------------------------
Name:
Title:
------------------------------------------------
| EXHIBIT B - RETURN ACCEPTANCE SUPPLEMENT |
| LEASE AGREEMENT [TN] |
------------------------------------------------
RETURN ACCEPTANCE SUPPLEMENT
RETURN ACCEPTANCE SUPPLEMENT dated ________, between WELLS FARGO
BANK NORTHWEST, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, but solely as Owner Trustee under the [Amended and
Restated]2 Trust Agreement [TN], dated as of [DD], 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 Lease
Agreement [TN], dated as of [DD], relating to one Embraer Model EMB-145 XR
aircraft (herein called the "Lease" and the defined terms therein being
hereinafter used with the same meanings). The Lease relates to the Airframe and
Engines described below.
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:
1. This Return Acceptance Supplement is executed by Lessor and
Lessee to confirm that on the date hereof the following described Airframe
and Engines were returned by Lessee to Lessor:
(i) Airframe: U.S. Registration No. ______________; manufacturer's
serial no. __________________; and
(ii) Engines: two (2) Allison AE3007A1E engines bearing,
respectively, manufacturer's serial nos. ____________________________
and _________________________.
2. This Return Acceptance Supplement is intended to be delivered in
_____________________.
3. Lessor and Lessee agree that the return of the Aircraft is in
compliance with Section 5 and Annex B of the Lease, except as set forth
below:
4. Lessor and Lessee agree that the Lease is terminated, except for
the provisions thereof that expressly survive termination.
- --------
2. Delete for New Aircraft.
IN WITNESS WHEREOF, Lessor and Lessee have each caused this Return
Acceptance Supplement to be duly executed as of the day and year first above
written.
WELLS FARGO BANK NORTHWEST, 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:
Title:
------------------------------------
| SCHEDULE 1 - CERTAIN TERMS |
| LEASE AGREEMENT [TN] |
------------------------------------
CERTAIN TERMS
DEFINED TERM DEFINITION
[OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]
------------------------------------
| SCHEDULE 2 - BASIC RENT |
| LEASE AGREEMENT [TN] |
------------------------------------
BASIC RENT
PAYMENT DATE TOTAL BASIC RENT
------------ ----------------
[OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]
--------------------------------------
| SCHEDULE 3 - STIPULATED LOSS VALUE |
| LEASE AGREEMENT [TN] |
--------------------------------------
STIPULATED LOSS VALUE
STIPULATED LOSS
DATE VALUE
------------- -----------------------
[OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]
--------------------------------------
| SCHEDULE 4 - TERMINATION VALUE |
| LEASE AGREEMENT [TN] |
--------------------------------------
TERMINATION VALUE
DATE TERMINATION VALUE
------------- -----------------------
[OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]
--------------------------------------
| SCHEDULE 5 - PERMITTED COUNTRIES |
| LEASE AGREEMENT [TN] |
--------------------------------------
PERMITTED COUNTRIES
Argentina Luxembourg
Australia Malaysia
Austria Malta
Bahamas Mexico
Belgium Netherlands
Brazil New Zealand
Canada Norway
Chile Philippines
Denmark Portugal
Ecuador Republic of China (Taiwan)
Egypt Singapore
Finland South Africa
France South Korea
Germany Spain
Greece Sweden
Hungary Switzerland
Iceland Thailand
India Tobago
Indonesia Trinidad
Ireland United Kingdom
Italy Venezuela
Japan
--------------------------------------
| SCHEDULE 6 - PLACARDS |
| LEASE AGREEMENT [TN] |
--------------------------------------
PLACARDS
Leased from
Wells Fargo Bank Northwest, 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
==============================================================================
TRUST INDENTURE AND MORTGAGE [TN]
Dated as of [DD]
Between
WELLS FARGO BANK NORTHWEST, 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 Mortgagee,
Mortgagee
==============================================================================
EQUIPMENT NOTES COVERING
ONE EMBRAER EMB-145 XR AIRCRAFT
BEARING U.S. REGISTRATION MARK N[REG]
LEASED BY CONTINENTAL AIRLINES, INC.
TABLE OF CONTENTS
PAGE
GRANTING CLAUSE...............................................................1
ARTICLE I
DEFINITIONS
ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes........................................7
SECTION 2.02. Issuance and Terms of Equipment Notes..........................11
SECTION 2.03. Payments from Trust Indenture Estate Only......................13
SECTION 2.04. Method of Payment..............................................14
SECTION 2.05. Application of Payments........................................17
SECTION 2.06. Termination of Interest in Trust Indenture Estate..............17
SECTION 2.07. Registration Transfer and Exchange of Equipment Notes..........17
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes...........18
SECTION 2.09. Payment of Expenses on Transfer; Cancellation..................19
SECTION 2.10. Mandatory Redemptions of Equipment Notes.......................19
SECTION 2.11. [Reserved].....................................................20
SECTION 2.12. Redemptions; Notice of Redemption..............................20
SECTION 2.13. Option to Purchase Equipment Notes.............................20
SECTION 2.14. Priority of Distributions......................................21
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Basic Rent Distribution........................................22
SECTION 3.02. Event of Loss; Replacement; Voluntary Termination; Optional
Redemption....................................................22
SECTION 3.03. Payments After Event of Default................................23
SECTION 3.04. Certain Payments...............................................24
SECTION 3.05. Other Payments.................................................25
SECTION 3.06. Payments to Owner Trustee......................................25
(i)
TABLE OF CONTENTS
(Continued)
PAGE
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; EVENTS OF
DEFAULT; REMEDIES OF MORTGAGEE
SECTION 4.01. Covenants of Owner Trustee.....................................26
SECTION 4.02. Event of Default...............................................27
SECTION 4.03. Certain Rights.................................................29
SECTION 4.04. Remedies.......................................................30
SECTION 4.05. Return of Aircraft, Etc........................................33
SECTION 4.06. Remedies Cumulative............................................34
SECTION 4.07. Discontinuance of Proceedings..................................34
SECTION 4.08. Waiver of Past Defaults........................................34
SECTION 4.09. Appointment of Receiver.......................................34
SECTION 4.10. Mortgagee Authorized to Execute Bills of Sale, Etc.............35
SECTION 4.11. Rights of Note Holders to Receive Payment......................35
ARTICLE V
DUTIES OF THE MORTGAGEE
SECTION 5.01. Notice of Event of Default.....................................35
SECTION 5.02. Action upon Instructions; Certain Rights and Limitations.......36
SECTION 5.03. Indemnification................................................38
SECTION 5.04. No Duties Except as Specified in Trust Indenture or
Instruction...................................................39
SECTION 5.05. No Action Except Under Lease, Trust Indenture or
Instruction...................................................39
SECTION 5.06. Replacement Airframes and Replacement Engines..................39
SECTION 5.07. Indenture Supplements for Replacements.........................40
SECTION 5.08. Effect of Replacement..........................................40
SECTION 5.09. Investment of Amounts Held by Mortgagee........................40
ARTICLE VI
THE OWNER TRUSTEE AND THE MORTGAGEE
SECTION 6.01. Acceptance of Trusts and Duties................................41
SECTION 6.02. Absence of Duties..............................................41
SECTION 6.03. No Representations or Warranties as to Aircraft or
Documents.....................................................42
(ii)
TABLE OF CONTENTS
(Continued)
PAGE
SECTION 6.04. No Segregation of Monies; No Interest..........................42
SECTION 6.05. Reliance; Agreements; Advice of Counsel........................42
SECTION 6.06. Capacity in Which Acting.......................................43
SECTION 6.07. Compensation...................................................43
SECTION 6.08. Instructions from Note Holders.................................43
ARTICLE VII
INDEMNIFICATION OF MORTGAGEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification.......................................44
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee..............................45
SECTION 8.02. Resignation of Mortgagee; Appointment of Successor.............45
SECTION 8.03. Appointment of Additional and Separate Trustees................46
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO
TRUST INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Instructions of Majority; Limitations..........................48
SECTION 9.02. Trustees Protected.............................................50
SECTION 9.03. Documents Mailed to Note Holders...............................50
SECTION 9.04. No Request Necessary for Lease Supplement or Trust
Indenture Supplement..........................................50
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Trust Indenture................................50
SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders......51
SECTION 10.03. Sale of Aircraft by Mortgagee Is Binding......................51
SECTION 10.04. Trust Indenture for Benefit of Owner Trustee, Mortgagee,
Owner Participant, Note Holders and the Other Indenture
Indemnitees..................................................51
SECTION 10.05. Notices.......................................................51
SECTION 10.06. Severability..................................................52
(iii)
TABLE OF CONTENTS
(Continued)
PAGE
SECTION 10.07. No Oral Modification or Continuing Waivers....................52
SECTION 10.08. Successors and Assigns........................................52
SECTION 10.09. Headings......................................................52
SECTION 10.10. Normal Commercial Relations...................................52
SECTION 10.11. Governing Law; Counterpart Form...............................53
SECTION 10.12. Voting by Note Holders........................................53
SECTION 10.13. Bankruptcy....................................................53
EXHIBIT A Form of Trust Indenture and Mortgage Supplement
SCHEDULE I Equipment Notes Amortization and Interest Rates
(iv)
TRUST INDENTURE AND MORTGAGE [TN]
TRUST INDENTURE AND MORTGAGE [TN], dated as of [DD] ("Trust
Indenture"), between WELLS FARGO BANK NORTHWEST, 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
Mortgagee hereunder (together with its successors hereunder, the "Mortgagee").
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 Trust
Indenture;
WHEREAS, the parties hereto desire by this Trust Indenture, among
other things, (i) to provide for the issuance by the Owner Trustee of the
Equipment Notes and (ii) to provide for the assignment, mortgage and pledge by
the Owner Trustee to the Mortgagee, 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 the Participation Agreement 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 and the Lessee's
obligations to the Note Holders and the Indenture Indemnitees;
WHEREAS, all things have been done to make the Equipment Notes, when
executed by the Owner Trustee and authenticated and delivered by the Mortgagee
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, the Loan
Participant and each of the Indenture Indemnitees and the prompt payment of all
amounts from time to time owing hereunder, under the Participation Agreement and
the Lease to the Loan Participant, the Note Holders or any Indenture Indemnitee
by the Owner Trustee or the Lessee 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 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 Mortgagee, its successors in trust and
assigns, for the security and benefit of the Loan Participant, the Note Holders
and each of the Indenture Indemnitees, 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 EMBRAER EMB-145 XR aircraft with the
FAA Registration number of N[REG] and the manufacturer's serial number of [MSN]
and two Engines, with the manufacturer's serial numbers of CAE[E1] and CAE[E2],
each of which is an Allison engine and is of 750 or more rated takeoff
horsepower or the equivalent of such horsepower (such Airframe and Engines more
particularly described in the Trust Indenture Supplement executed and delivered
as provided herein) 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, 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 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;
(b) the Purchase Agreement Assignment, with the 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,
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
Mortgagee pursuant to any terms of this Trust Indenture or the Lease or required
hereby or by the Lease to be held by the Mortgagee 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 this Trust Indenture, the Owner
Trustee will deliver to the Mortgagee 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 and the
Purchase Agreement (to the extent assigned by the Purchase Agreement
Assignment), the Purchase Agreement Assignment, with the Consent and Agreement
attached thereto.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Mortgagee, and its successors and assigns, in trust for the equal and
proportionate benefit and security of the Loan Participant, the Note Holders and
the Indenture Indemnitees, except as provided in Section 2.14 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.
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 Mortgagee, the Loan Participant,
the Note Holders and the Indenture Indemnitees shall have no obligation or
liability under the Indenture Agreements, by reason of or arising out of the
assignment hereunder, nor shall the Mortgagee, the Loan Participant, the Note
Holders or the Indenture Indemnitees 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 Mortgagee 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 Mortgagee 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 2.13, 4.03 and 4.04(a) hereof, during the continuance
of any Event of Default under this Trust Indenture, the Mortgagee 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 Mortgagee may deem necessary or
appropriate to protect and preserve the right, title and interest of the
Mortgagee in and to such Rents and other sums and the security intended to be
afforded hereby; PROVIDED, HOWEVER, that no action of the Mortgagee 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 Mortgagee at such address or addresses as the Mortgagee
shall specify, for application as provided in this Trust Indenture. The Owner
Trustee agrees that promptly upon receipt thereof, it will transfer to the
Mortgagee any and all monies from time to time received by it constituting part
of the Trust Indenture Estate, for distribution by the Mortgagee 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 Mortgagee under this Trust Indenture.
The Owner Trustee agrees that at any time and from time to time,
upon the written request of the Mortgagee, 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 Mortgagee 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 Mortgagee 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 Mortgagee,
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.
The Owner Trustee does hereby agree that it will not without the
written consent of the Mortgagee:
(a) receive or collect or agree to the receipt or collection of
any payment (other than Excluded Payments) 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 Mortgagee 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 Mortgagee 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 Mortgagee, 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.
Notwithstanding the Granting Clause or any of the preceding
paragraphs, all Excluded Payments are hereby excluded from the foregoing sale,
transfer, assignment, grant, pledge and security interest. Further, nothing in
the Granting Clause or the preceding paragraphs shall impair any of the rights
of the Owner Trustee or the Owner Participant under Section 2.13, 4.03, 4.04,
4.08, 5.02 or 5.03 hereof.
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 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.
WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
AS OWNER TRUSTEE UNDER [AMENDED AND RESTATED](1) TRUST AGREEMENT [TN]
DATED AS OF [DDC].
LIMITED RECOURSE EQUIPMENT NOTE DUE [____] ISSUED IN CONNECTION WITH
THE EMBRAER MODEL EMB-145 XR AIRCRAFT BEARING UNITED STATES
REGISTRATION NUMBER N[REG].
No. Date:[ ]
---- -------------, -----
$
---------------------------
INTEREST RATE MATURITY DATE
[ ] [ ]
---------- ------------
WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not in its
individual capacity but solely as Owner Trustee (herein in such capacity called
- ---------------
(1) Delete for New Aircraft.
the "Owner Trustee") under that certain [Amended and Restated](2) Trust
Agreement [TN], dated as of [DD], between the Owner Participant named therein
and Wells Fargo Bank Northwest, 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 WILMINGTON TRUST COMPANY, 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 monthly installments commencing on [__________, 200_], and
thereafter on the first day of each month, 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 Trust
Indenture and Mortgage [TN], dated as of [DD], between the Owner Trustee and
Wilmington Trust Company (the "Mortgagee"), 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).
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 Mortgagee 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
- ---------------
(2) Delete for New Aircraft.
the Mortgagee 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 Mortgagee, 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 as provided
under the Trust Indenture.
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 Mortgagee 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 Mortgagee, 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 to the Mortgagee for cancellation.
The holder hereof, by its acceptance of this Equipment Note, agrees
that, except as provided in the Trust Indenture, each payment of the Original
Amount, Make-Whole Amount, if any, and interest 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 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 Mortgagee 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 Mortgagee 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 the Owner
Trustee nor the Mortgagee shall be affected by notice to the contrary.
This Equipment Note is subject to redemption as provided in Sections
2.10 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 2.13 of the Trust Indenture but not otherwise. In
addition, this Equipment Note may be accelerated as provided in Section 4.04 of
the Trust Indenture.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Mortgagee 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.
WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION, not in its individual
capacity but solely as Owner Trustee
By:
------------------------------------
Name:
Title:
MORTGAGEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the
within-mentioned Trust Indenture.
WILMINGTON TRUST COMPANY, as Mortgagee
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 and
shall have the maturity date and shall bear interest as specified in Schedule I
hereto. On the date of the consummation of the Transactions, the initial
Equipment Note shall be issued in the initial Original Amount set forth in
Schedule I hereto to the Subordination Agent on behalf of the Pass Through
Trustee under the Pass Through Trust Agreement. 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 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 [_________, 200_], and on the first day of each month 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 Mortgagee for distribution in
accordance with Section 3.04 hereof: (i) to the extent not payable (whether or
not in fact paid) under Section 6(a) of the Note Purchase Agreement (as
originally in effect or amended with the consent of the Owner Participant), an
amount or amounts equal to the fees payable to the Liquidity Providers 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 Equipment Notes
and the denominator of which shall be the then outstanding aggregate principal
amount of all "Equipment Notes" (as defined in the Intercreditor Agreement);
(ii) (x) the amount equal to interest on any Downgrade Advance (other than any
Applied Downgrade Advance) payable under Section 3.07 of each Liquidity Facility
minus Investment Earnings from such Downgrade Advance multiplied by (y) the
fraction specified in the foregoing clause (i); (iii) (x) the amount equal to
interest on any CNAI Special Termination Advance (other than any Applied CNAI
Special Termination Advance) payable under Section 3.07 of the CNAI Liquidity
Facility minus Investment Earnings from such CNAI Special Termination Advance
multiplied by (y) the fraction specified in the foregoing clause (i); (iv) (x)
the amount equal to interest on any WestLB Expiration Advance (other than an
Applied WestLB Expiration Advance) payable under Section 3.07 of the WestLB
Liquidity Facility minus Investment Earnings from such WestLB Expiration Advance
multiplied by (y) the fraction specified in the foregoing clause (i); (v) (x)
the amount equal to interest on any Non-Extension Advance (other than any
Applied Non-Extension Advance) payable under Section 3.07 of the CNAI Liquidity
Facility minus Investment Earnings from such Non-Extension Advance multiplied by
(y) the fraction specified in the foregoing clause (i); (vi) (x) the amount
equal to interest on any WestLB Early Termination Advance (other than any
Applied WestLB Early Termination Advance) payable under Section 3.07 of the
WestLB Liquidity Facility minus Investment Earnings from such WestLB Early
Termination Advance multiplied by (y) the fraction specified in the foregoing
clause (i); and (vii) if any payment default shall have occurred and be
continuing with respect to interest on any Equipment Notes, (x) the excess, if
any, of (1) an amount equal to interest on any Unpaid Advance, Applied Downgrade
Advance, Applied CNAI Special Termination Advance, Applied WestLB Early
Termination Advance, Applied WestLB Expiration Advance or Applied Non-Extension
Advance payable under Section 3.07 of the applicable Liquidity Facility over (2)
the sum of Investment Earnings from any Final Advance plus any amount of
interest at the Payment Due Rate actually payable (whether or not in fact paid)
by Owner Trustee on the overdue scheduled interest on the Equipment Notes in
respect of which such Unpaid Advance, Applied Downgrade Advance, Applied CNAI
Special Termination Advance, Applied WestLB Early Termination Advance, Applied
WestLB Expiration Advance or Applied Non-Extension Advance was made multiplied
by (y) a fraction the numerator of which shall be the then aggregate overdue
amounts of interest on the 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 "Equipment Notes" (as defined in the Intercreditor Agreement) (other than
interest becoming due and payable solely as a result of acceleration of any such
"Equipment Notes"). For purposes of this paragraph, (i) 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, (ii) the terms "Applied WestLB Early
Termination Advance", "Applied WestLB Expiration Advance", "WestLB Expiration
Advance" and "WestLB Early Termination Advance" shall have the meanings
specified in the WestLB Liquidity Facility and (iii) the terms "Applied
Non-Extension Advance", "Applied CNAI Special Termination Advance",
"Non-Extension Advance" and "CNAI Special Termination Advance" shall have the
meanings specified in the CNAI 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 Mortgagee for
authentication upon original issue and such Equipment Notes shall thereupon be
authenticated and delivered by the Mortgagee 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 Mortgagee 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.
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 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 Mortgagee 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 Mortgagee 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, in the Lease 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.
(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 Mortgagee, directly or indirectly
(other than the recourse liability of the Owner Trustee (in its individual
capacity) or the Owner Participant under the Participation Agreement, the
Lease or this Trust Indenture or by separate agreement), to make payment
on account of any amount payable as Original Amount, Make-Whole Amount, if
any, interest or other amounts on the Equipment Notes and (iii) any Note
Holder or the Mortgagee 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 Mortgagee, 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 Mortgagee 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 Mortgagee 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, the Lease or this Trust Indenture (and any exhibits or annexes hereto
or thereto) or from retaining any amount paid by Owner Participant under Section
2.13 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 12:30 p.m., New York City time, on the due date of payment to
the Mortgagee 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 Mortgagee 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
Mortgagee 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 Mortgagee, 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 Mortgagee
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 Mortgagee for cancellation promptly after such payment.
Notwithstanding any other provision of this Trust Indenture to the
contrary, the Mortgagee 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 Mortgagee 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 12:30 p.m., 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 Mortgagee 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 Trustee
or the Mortgagee 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 Mortgagee consistent with this Section 2.04.
(b) The Mortgagee, 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
Mortgagee 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
Mortgagee a properly completed, accurate and currently effective U.S. Internal
Revenue Service Form W-8BEN (or such successor form or forms as may be required
by the United States Treasury Department) for each calendar year in which a
payment is made 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 Mortgagee of the withdrawal
or inaccuracy of such form prior to the date of such payment (and the Mortgagee
has no reason to believe that any information set forth in such form is
inaccurate), the Mortgagee 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 Mortgagee a properly
completed, accurate and currently effective U.S. Internal Revenue Service Form
W-8ECI 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 hereunder or under any Equipment Note
(but prior to the making of any payment for such year), and has not notified the
Mortgagee of the withdrawal or inaccuracy of such certificate or form prior to
the date of such payment (and the Mortgagee 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 Mortgagee 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 Mortgagee that any of the foregoing forms or
certificates is withdrawn or inaccurate, or if such holder has not filed a form
claiming an exemption or reduced withholding from United States withholding tax
or if the Code or the regulations thereunder or the administrative
interpretation thereof is at any time after the date hereof amended to require
such withholding of United States federal income taxes from payments hereunder
or under the Equipment Notes held by such holder, the Mortgagee 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.
Neither the Owner Trustee nor the Owner Participant shall have any
liability for the failure of the Mortgagee to withhold taxes in the manner
provided for herein or for any false, inaccurate or untrue evidence provided by
any Note Holder hereunder.
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 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
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 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.
No Note Holder nor any other Indenture Indemnitee shall, 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 due and payable to such Note Holder, such
Indenture Indemnitee or the Mortgagee hereunder (including, without limitation,
under the third paragraph of Section 2.02 hereof) and under the other Operative
Agreements by the Owner Trustee and the Lessee (collectively, the "Secured
Obligations") shall have been paid in full.
SECTION 2.07. REGISTRATION TRANSFER AND EXCHANGE OF EQUIPMENT
NOTES.
The Mortgagee shall keep a register (the "Equipment Note Register")
in which the Mortgagee 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
Mortgagee. The Mortgagee 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 Mortgagee 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
Trustee shall execute, and the Mortgagee 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. 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 Mortgagee at the Corporate Trust Office.
Whenever any Equipment Notes are so surrendered for exchange, the Owner Trustee
shall execute, and the Mortgagee 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 Mortgagee) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Mortgagee duly executed by the Note Holder
or such holder's attorney duly authorized in writing, and the Mortgagee 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
Mortgagee 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 Mortgagee
and such change is reflected on the Equipment Note Register. The Mortgagee 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, and shall be deemed to have covenanted to
the parties to the Participation Agreement as to the matters 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, Mortgagee and Owner Trustee 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.
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 Mortgagee 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 Mortgagee 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 Mortgagee such security or indemnity as may be required by them
to save the Owner Trustee and the Mortgagee harmless and evidence satisfactory
to the Owner Trustee and the Mortgagee 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") or the Subordination Agent is the
holder of any such destroyed, lost or stolen Equipment Note, then the written
indemnity of such QIB or the Subordination Agent, signed by an authorized
officer thereof, in favor of, delivered to and in form reasonably satisfactory
to Lessee, Owner Trustee and Mortgagee 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 with the requirements set forth in this Section
2.08, Mortgagee 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
Mortgagee, 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 Mortgagee 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 or then due and payable 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 then due and payable hereunder and under the Participation
Agreement and all other Operative Agreements to the Note Holders plus, if
such redemption is made prior to the Premium Termination Date, Make-Whole
Amount, if any.
SECTION 2.11. [RESERVED.]
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 Mortgagee.
(b) Notice of redemption with respect to the Equipment Notes shall
be given by the Mortgagee by first-class mail, postage prepaid, mailed not
less than 15 nor more than 60 days prior to the applicable redemption
date, to each Note Holder of such Equipment Notes to be redeemed, at such
Note Holder's address appearing in the Equipment Note Register; PROVIDED,
HOWEVER, that, in the case of a redemption to be made pursuant to Section
2.10(b), such notice shall be revocable and shall be deemed revoked in the
event that the Lease does not in fact terminate on the specified
termination 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 on
the redemption date shall not then be held in the Trust Indenture Estate,
deposit or cause to be deposited with the Mortgagee by 12:00 noon on the
redemption date in immediately available funds the redemption price of the
Equipment Notes to be redeemed.
(d) Notice of redemption 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 shall, on the redemption date, become due
and payable at the Corporate Trust Office of the Mortgagee 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 in accordance with said notice, such
Equipment Note shall be redeemed at the redemption price. If any Equipment
Note called for redemption 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. 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
2.13, 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.
Such option to purchase the Equipment Notes may be exercised by the
Owner Trustee or the Owner Participant at any time following the occurrence of
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, but not including, the
date of purchase and all other Secured Obligations owed, or then due and payable
hereunder, to the holder thereof (including under the third paragraph of Section
2.02 hereof). Such option to purchase the Equipment Notes may be exercised (x)
upon a Mortgagee Event or (y) in the event there shall have occurred and be
continuing a Lease Event of Default, PROVIDED, HOWEVER, that if such option is
exercised prior to the Premium Termination Date pursuant to 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 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 irrevocable written notice of its
election of such option to the Mortgagee, which notice shall specify a date for
such purchase at least 15 days but not more than 20 days from the date of such
notice. The Mortgagee 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 date of the giving of such notice until the
date on which such purchase is required to occur pursuant to the terms of the
preceding sentence.
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 2.14. PRIORITY OF DISTRIBUTIONS.
The Owner Trustee and, by acceptance of its Equipment Notes, each
Note Holder, hereby agree that no payment or distribution shall be made on or in
respect of the Secured Obligations owed to such Note Holder, 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.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. BASIC RENT DISTRIBUTION.
Except as otherwise provided in Sections 3.02 and 3.03 hereof, each
installment of Basic Rent, any payment of interest on overdue installments of
Basic Rent and any payment received by the Mortgagee pursuant to Section 4.03
hereof shall be promptly distributed in the following order of priority:
FIRST, 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 (as well as any interest on any
overdue Original Amount and, to the extent permitted by Law, on
any overdue interest) then due under all Equipment Notes shall be
distributed to the Note Holders ratably, without priority of one
over the other, in the proportion that the amount of such payment
or payments then due under each Equipment Note bears to the
aggregate amount of the payments then due under all Equipment
Notes;
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 Mortgagee 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 Mortgagee (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 a
voluntary termination of the Lease pursuant to Section 9 thereof 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 Mortgagee 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 Secured Obligations then due to the Mortgagee,
the Note Holders and the other Indenture Indemnitees under this
Trust Indenture, the Participation Agreement or the Equipment
Notes (other than amounts specified in clause Second below);
SECOND, to pay the amounts specified in clause "Third" of Section 3.03
hereof plus Make-Whole Amount, if any, then due and payable in
respect of the Equipment Notes;
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 Mortgagee shall be held by the Mortgagee 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.
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 Mortgagee (including any amounts
realized by the Mortgagee from the exercise of any remedies pursuant to Section
15 of the Lease or Article IV hereof) after an Event of Default shall have
occurred and be continuing and after the declaration or other acceleration of
the Equipment Notes specified in Section 4.04(b) hereof, as well as all payments
or amounts then held by the Mortgagee as part of the Trust Indenture Estate,
shall be promptly distributed by the Mortgagee in the following order of
priority:
FIRST, so much of such payments or amounts as shall be required to (i)
reimburse the Mortgagee or WTC for any tax (except to the extent
resulting from a failure of the Mortgagee 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
Mortgagee 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 Mortgagee, WTC
or the Note Holders in the protection, exercise or enforcement of
any right, power or remedy or any damages sustained by the
Mortgagee, WTC or any Note Holder, liquidated or otherwise, upon
such Event of Default shall be applied by the Mortgagee as
between itself, WTC and the Note Holders in reimbursement of such
expenses and any other expenses for which the Mortgagee, WTC or
the Note Holders are entitled to reimbursement under any
Operative Agreement and (ii) pay all Secured Obligations payable
to the other Indenture Indemnitees hereunder and under the
Participation Agreement and the Lease (other than amounts
specified in clauses Second and Third below); and in the case the
aggregate amount to be so distributed is insufficient to pay as
aforesaid in clauses (i) and (ii), 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;
THIRD, so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid Original Amount of
all 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 Equipment Notes (other than Make-Whole Amount)
to the date of distribution, shall be distributed to the Note
Holders, 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 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 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; 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 Mortgagee 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 or the Participation Agreement
shall be applied forthwith to the purpose for which such payment was made
in accordance with the terms of the Lease or the Participation Agreement,
as the case may be.
(b) Notwithstanding anything to the contrary contained in this
Article III, the Mortgagee will distribute promptly upon receipt any
indemnity payment received by it from the Owner Trustee or Lessee in
respect of the Mortgagee in its individual capacity, any Note Holder or
any other Indenture Indemnitee, in each case whether pursuant to Section 9
of the Participation Agreement or as Supplemental Rent, directly to the
Person entitled thereto. Any payment received by the Mortgagee 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) Notwithstanding anything to the contrary contained in this
Article III, any payments received by the Mortgagee which constitute
Excluded Payments shall be distributed promptly upon receipt by the
Mortgagee directly to the Person or Persons entitled thereto.
(d) Notwithstanding any provision of this Trust Indenture to the
contrary, any amounts held by Mortgagee pursuant to the terms of the Lease
shall be held by the Mortgagee 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.
SECTION 3.05. OTHER PAYMENTS.
Any payments received by the Mortgagee for which no provision as to
the application thereof is made in the Lease, the Participation Agreement,
elsewhere in this Trust Indenture or in any other Operative Agreement shall be
distributed by the Mortgagee 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, 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 Mortgagee 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 Mortgagee 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 Mortgagee 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
Mortgagee 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
Mortgagee from time to time. The Mortgagee shall not pay an amount due to Owner
Trustee hereunder to any Person other than Owner Trustee, unless the Lessee
shall have given its written consent thereto.
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; EVENTS OF
DEFAULT; REMEDIES OF MORTGAGEE
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 or
Section 9 of the Lease;
(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, subject to
the proviso in Section 7.3.1 of the Participation Agreement, 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 Indenture 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 Mortgagee, each Note Holder, Lessee and the Owner Participant;
(d) the Owner Trustee will furnish to the Note Holders and the
Mortgagee, 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 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 or is not required to be furnished by the
Lessee to the Note Holders or the Mortgagee pursuant to the Lease;
(e) except with the consent of the Mortgagee (acting pursuant to
instructions given in accordance with Section 9.01 hereof) or as provided
in Section 2 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 Mortgagee 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 Mortgagee 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 7.3.1 of the
Participation Agreement, or by the Owner Participant pursuant to Section
7.2.1 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 Mortgagee 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 this Trust
Indenture or in any certificate furnished by the Owner Participant or the
Owner Trustee to the Mortgagee 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 adverse to the interests of the Mortgagee or the Note
Holders; 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
6.3.6 or 6.2.6 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 Mortgagee 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 Mortgagee or the Note Holders
contained in the Participation Agreement, Section 4.2.1 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 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 30 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
(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 final 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 Mortgagee shall give the Note Holders, the Owner Trustee and the
Owner Participant prompt written notice of any Event of Default of which the
Mortgagee 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 Mortgagee 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. Without limiting the generality of the foregoing, the Mortgagee shall
give the Owner Trustee, the Owner Participant and the Lessee at least ten
Business Days' prior written notice (which may be given concurrently with notice
of the Enforcement Date) 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 Mortgagee
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 Mortgagee 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 18 immediately
preceding Basic Rent payment dates, or the Owner Trustee has cured 36 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 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 Mortgagee 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 Mortgagee 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
(so long as the application thereof shall not give rise to an Event of Default
hereunder) to receive such overdue Basic Rent or Supplemental Rent, as the case
may be, and interest thereon upon receipt thereof by the Mortgagee; 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 Mortgagee, the Note Holders and the
Indenture Indemnitees in respect of such payment of overdue Basic Rent,
Supplemental Rent and such interest and (ii) the Owner Trustee shall not
otherwise attempt to recover any such amount paid by it on behalf of the Lessee
pursuant to this Section 4.03 except by demanding of the Lessee payment of such
amount, or by commencing an action at law against the Lessee and obtaining and
enforcing a judgment against the Lessee for the payment of such amount or taking
appropriate action in a pending action at law against the Lessee (PROVIDED,
HOWEVER, that at no time while an Event of Default shall have occurred and be
continuing shall any such demand be made or shall any such action be commenced
(or continued) and any amounts nevertheless received by the Owner Trustee in
respect thereof shall be held in trust for the benefit of, and promptly paid to,
the Mortgagee for distribution as provided in Section 3.03 hereof).
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 Mortgagee 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
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, HOWEVER, that the Mortgagee shall give the Owner Trustee and the
Owner Participant twenty days' prior written notice of its intention to
sell the Aircraft. 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
Mortgagee 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 Mortgagee 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 Mortgagee 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 Mortgagee is, and has been, involuntarily
stayed or prohibited by applicable law or court order for a continuous period (a
"Continuous Stay Period") in excess of 60 days subsequent to an entry of an
order for relief pursuant to Chapter 11 of the Bankruptcy Code (such 60 day
period, the "Section 1110 Period"); PROVIDED FURTHER, HOWEVER that the
requirement to exercise one or more of such remedies under the Lease shall
nonetheless be applicable during a Continuous Stay Period subsequent to the
expiration of the Section 1110 Period to the extent that the continuation of
such Continuous Stay Period subsequent to the expiration of the Section 1110
Period (A) results from an agreement by the trustee or the debtor-in-possession
in such proceeding during the Section 1110 Period with the approval of the
relevant court to perform the Lease in accordance with Section 1110(a)(2)(A) of
the Bankruptcy Code and continues to perform as required by Section 1110(a)(2)
of the Bankruptcy Code and cures any default (other than a default of the kind
specified in Section 365(b)(2) of the Bankruptcy Code) within the applicable
time period specified in Section 1110(a)(2)(B) of the Bankruptcy Code or (B) is
an extension of the Section 1110 Period with the consent of the Mortgagee
pursuant to Section 1110(b) of the Bankruptcy Code or (C) is the consequence of
the Mortgagee's own failure to give any requisite notice or demand to any
person. In the event that the applicability of Section 1110 of the Bankruptcy
Code to the Aircraft is being contested by Lessee in judicial proceedings, both
of the Mortgagee and the Owner Trustee shall have the right to participate in
such proceedings; PROVIDED, HOWEVER, that any such participation by the Owner
Trustee shall not affect in any way any rights or remedy of the Mortgagee
hereunder.
It is expressly understood and agreed that, subject only to the two
preceding paragraphs, the inability, described in such paragraphs, of the
Mortgagee to exercise any right or remedy under the Lease shall in no event and
under no circumstances prevent the Mortgagee 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 Mortgagee 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,
HOWEVER, that if an Event of Default referred to in clause (g) of Section
4.02 hereof shall have occurred or a Lease Event of Default under Section
14.5 of the Lease shall have occurred, then and in every such case the
unpaid Original Amount then outstanding, together with accrued but unpaid
interest and all other amounts due thereunder and hereunder shall
immediately and without further act become due and payable without
presentment, demand, protest or notice, all of which are hereby waived;
PROVIDED FURTHER 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 14.3 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 Mortgagee, rescind and annul the Mortgagee'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.
Any acceleration pursuant to this Section 4.04(b) shall be
automatically rescinded and any related declaration of an Event of Default
annulled in the event that the Owner Trustee shall have cured, in accordance
with Section 4.03 hereof, the Event of Default that resulted in such
acceleration or declaration.
(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) Notwithstanding anything contained herein, so long as the Pass
Through Trustee under the Pass Through Trust Agreement (or its designee)
is a Note Holder, the Mortgagee 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
and the Equipment Notes have been accelerated, subject to Section 4.03
hereof and unless the Owner Trustee or the Owner Participant shall have
elected to purchase the Equipment Notes, at the request of the Mortgagee,
the Owner Trustee shall promptly execute and deliver to the Mortgagee such
instruments of title and other documents as the Mortgagee may deem
necessary or advisable to enable the Mortgagee or an agent or
representative designated by the Mortgagee, at such time or times and
place or places as the Mortgagee may specify, to obtain possession of all
or any part of the Mortgaged Property included in the Trust Indenture
Estate to which the Mortgagee 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 Mortgagee, the
Mortgagee may (i) obtain a judgment conferring on the Mortgagee the right
to immediate possession and requiring the Owner Trustee to execute and
deliver such instruments and documents to the Mortgagee, 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 Mortgagee 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
Mortgagee 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 Mortgagee 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 Mortgagee may determine, and the Mortgagee 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 Mortgagee under any provision of this Trust Indenture to
collect and receive all cash held by, or required to be deposited with,
the Mortgagee hereunder other than Excluded Payments. 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 Mortgagee 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 Mortgagee 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 Mortgagee, and of
all persons properly engaged and employed by the Mortgagee with respect
hereto.
SECTION 4.06. REMEDIES CUMULATIVE.
Each and every right, power and remedy given to the Mortgagee
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 Mortgagee, 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 Mortgagee 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 Mortgagee 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
Mortgagee, then and in every such case the Owner Trustee, the Mortgagee 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
Mortgagee 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 Mortgagee 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,
HOWEVER, that in the absence of written instructions from all the Note Holders,
the Mortgagee 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.
SECTION 4.09. APPOINTMENT OF RECEIVER.
The Mortgagee shall, as a matter of right, be entitled to the
appointment of a receiver (who may be the Mortgagee 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 Mortgagee with respect to
the Mortgaged Property.
SECTION 4.10. MORTGAGEE AUTHORIZED TO EXECUTE BILLS OF SALE, ETC.
Subject to the provisions of this Trust Indenture, the Owner Trustee
irrevocably appoints the Mortgagee the true and lawful attorney-in-fact of the
Owner Trustee (which appointment is coupled with an interest) 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 Mortgagee or any purchaser, the Owner
Trustee shall ratify and confirm any such sale, assignment, transfer or
delivery, by executing and delivering to the Mortgagee 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
(including, without limitation, Make-Whole Amount), 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 V
DUTIES OF THE MORTGAGEE
SECTION 5.01. NOTICE OF EVENT OF DEFAULT.
If the Mortgagee shall have Actual Knowledge of an Event of Default
or of a Default arising from a failure to pay Rent, the Mortgagee shall give
prompt written notice thereof to the Owner Trustee, the Owner Participant,
Lessee, and each Note Holder. Subject to the terms of Sections 2.13, 4.03, 4.04,
4.08, 5.02 and 5.03 hereof, the Mortgagee 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 Mortgagee shall be instructed in writing by a Majority in Interest of Note
Holders. Subject to the provisions of Section 5.03, if the Mortgagee shall not
have received instructions as above provided within 20 days after mailing notice
of such Event of Default to the Note Holders, the Mortgagee 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 Mortgagee 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 Mortgagee, the Owner Trustee or the Owner
Participant, the Mortgagee, 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 Mortgagee, 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
Mortgagee, 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 2.13, 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 Mortgagee
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 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
Mortgagee 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
Mortgagee shall not approve any such matter as satisfactory to the
Mortgagee; PROVIDED, HOWEVER, 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 Mortgagee, 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, HOWEVER, 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 or for specific performance of any other term of
the Lease;
(2) (A) so long as the Mortgagee has not foreclosed the Lien of
the Trust Indenture, the Mortgagee shall not, without the consent of the
Owner Trustee, enter into, execute or deliver amendments or modifications
in respect of any of the provisions of the Lease, and (B) unless a
Mortgagee Event shall have occurred and be continuing, the Mortgagee 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 or deliver 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 whether
or not any Mortgagee Event has occurred and is continuing, the Owner
Trustee's consent shall be required with respect to any waivers or
consents in respect of any of the provisions of Section 5, 7 or 11 of the
Lease, or of any other Section of the Lease to the extent such action
shall affect (y) the amount or timing of, or the right to enforce payment
of any Excluded Payment or (z) the amount or timing of any amounts payable
by the Lessee under the Lease as originally executed (or as subsequently
modified with the consent of the Owner Trustee) which, absent the
occurrence and continuance of an Event of Default hereunder, would be
distributable to the Owner Trustee under Article III hereof;
(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 Mortgagee, (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) so long as no Mortgagee Event has occurred and is continuing,
the Owner Trustee shall have the right, to the exclusion of the Mortgagee,
to adjust Stipulated Loss Values and Termination Values as provided in
Section 3.2 of the Lease or to adjust 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;
(5) 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 Mortgagee, (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 Mortgagee Event pursuant to
Section 15 of the Lease, (iii) make an election pursuant to and in
accordance with the provisions of Sections 9.1(b), 9.2 and 9.3 of the
Lease, and (iv) obtain insurance for its own account in accordance with
Section 11.2 of the Lease; and
(6) so long as no Mortgagee 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 Mortgagee
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, HOWEVER, that the foregoing shall not (x) limit
(A) any rights separately granted to the Mortgagee under the Operative
Agreements or (B) the right of the Mortgagee to receive any funds to be
delivered to the "Lessor" under the Lease (except with respect to Excluded
Payments) and under the Purchase Agreement or (y) confer upon the Owner
Trustee the right to adversely affect the validity or enforceability of
the lien of this Trust Indenture.
Notwithstanding anything to the contrary contained herein (including
this Section 5.02), the Mortgagee 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 and (B) subject only to the provisions of
Sections 4.03, 4.04(a) and (b) and 2.13 hereof, exercise the remedies set forth
in such Section 15 (other than in connection with Excluded Payments and provided
that each of the Owner Trustee, Owner Participant and Mortgagee 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. Further and for the avoidance of doubt, and anything to the contrary
contained herein (including this Section 5.02), in no event may the Owner
Trustee amend or otherwise modify the provisions of Section 3.2.1(b) of the
Lease or of the final sentence of the definition of Stipulated Loss Value or
Termination Value, in any such case, without the prior written consent of the
Mortgagee.
The Mortgagee 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 Mortgagee will
furnish to each Note Holder (and, during the continuation of a Mortgagee 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 Mortgagee under the Lease, under the
Participation Agreement or hereunder, including, without limitation, 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 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 Mortgagee shall
declare the Lease to be in default pursuant to Section 15 thereof and
exercise those remedies specified by such Note Holders. The Mortgagee
agrees to provide to the Note Holders, the Owner Trustee and the Owner
Participant concurrently with such declaration by the Mortgagee, notice of
such declaration by the Mortgagee.
SECTION 5.03. INDEMNIFICATION.
The Mortgagee 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 Mortgagee 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 Mortgagee
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
Mortgagee 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 Mortgagee 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 Mortgagee shall be accepted as reasonable assurance of
adequate indemnity). The Mortgagee 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 Mortgagee to take any
action, if the Mortgagee 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.
SECTION 5.04. NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE OR
INSTRUCTIONS.
The Mortgagee 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 Mortgagee. The Mortgagee 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 Mortgagee 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 Mortgagee
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 Mortgagee 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 Mortgagee 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.
If a Replacement Airframe or Replacement Engine is being substituted
as contemplated by Section 10 of the Lease, the Owner Trustee and the Mortgagee
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 Lease 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 a Replacement 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 MORTGAGEE.
Any amounts held by the Mortgagee as assignee of the Owner Trustee's
rights to hold monies for security pursuant to Section 4.4 of the Lease shall be
held in accordance with the terms of such Section and the Mortgagee agrees, for
the benefit of Lessee, to perform the duties of the Owner Trustee under such
Section. Any amounts held by the Mortgagee pursuant to the proviso in Clause
"Second" of 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 Mortgagee which are not distributed pursuant to the other
provisions of Article III hereof shall be invested by the Mortgagee from time to
time in Cash Equivalents as directed by the Owner Trustee so long as the
Mortgagee may acquire the same using its best efforts. All Cash Equivalents held
by the Mortgagee pursuant to Section 4.4 of the Lease or this Section 5.09 shall
either be (a) registered in the name of, payable to the order of, or specially
endorsed to, the Mortgagee, or (b) held in an Eligible Account. Unless otherwise
expressly provided in this Trust Indenture, any income realized as a result of
any such investment, net of the Mortgagee's reasonable fees and expenses in
making such investment, shall be held and applied by the Mortgagee 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 Mortgagee 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
Mortgagee without instructions whenever such sale is necessary to make a
distribution required by this Trust Indenture.
ARTICLE VI
THE OWNER TRUSTEE AND THE MORTGAGEE
SECTION 6.01. ACCEPTANCE OF TRUSTS AND DUTIES.
The Mortgagee 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 Mortgagee, 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 Mortgagee, as provided in the third
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 in
Section 4.01(b) or 6.03 hereof (or in any certificate furnished to the Mortgagee
or any Note Holder in connection with the transactions contemplated by the
Operative Agreements) or, in the case of the Mortgagee (in its individual
capacity), from the inaccuracy of any representation or warranty of the
Mortgagee (in its individual capacity) in the Participation Agreement or
expressly made hereunder. Neither the Owner Trustee nor the Mortgagee 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 Mortgagee, 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, 5.04 and
6.08 hereof and, in the case of the Owner Trustee, except as provided in Section
4.01(b) hereof, the Owner Trustee and the Mortgagee 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 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, HOWEVER, 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 MORTGAGEE 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 Mortgagee, 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, the Equipment Notes, the Lease, the Purchase Agreement
or the Purchase Agreement Assignment with the 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 Mortgagee in
its individual capacity, in each case expressly made in this Trust Indenture or
in the Participation Agreement. The Loan Participant, the Note Holders 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 Mortgagee 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 4.4 of
the Lease and Section 5.09 hereof, and may be deposited under such general
conditions as may be prescribed by Law, and the Mortgagee shall not be liable
for any interest thereon (except that the Mortgagee 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 Mortgagee shall be accounted for
by the Mortgagee 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 Mortgagee 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 Mortgagee 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 Mortgagee. As to any fact or matter
relating to Lessee the manner of ascertainment of which is not specifically
described herein, the Owner Trustee and the Mortgagee 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 Mortgagee for any action taken or omitted to be taken
by them in good faith in reliance thereon. The Mortgagee 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 with respect thereto. In the administration
of the trusts hereunder, the Owner Trustee and the Mortgagee 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 Mortgagee 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 Mortgagee 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 Mortgagee
agrees that it shall have no right against the Loan Participant, 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 Mortgagee
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 Mortgagee's duties or obligations hereunder
be unclear, and the Mortgagee shall incur no liability in refraining from acting
until it receives such instructions. The Mortgagee shall be fully protected for
acting in accordance with any instructions received under this Section 6.08.
ARTICLE VII
INDEMNIFICATION OF MORTGAGEE 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 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 Mortgagee (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 Mortgagee on or
measured by any compensation received by the Mortgagee 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 Mortgagee (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 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 Mortgagee hereunder
except only in the case of willful misconduct or gross negligence (or negligence
in the case of handling funds) of the Mortgagee in the performance of its duties
hereunder or resulting from the inaccuracy of any representation or warranty of
the Mortgagee (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 9.1 or 9.3 of the
Participation Agreement from Lessee's indemnities under such Sections. In
addition, if necessary, the Mortgagee 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 the same the Mortgagee shall have a prior Lien on the Trust
Indenture Estate. Without limiting the foregoing, the Mortgagee 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 Mortgagee 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 Mortgagee, Lessee and the Note
Holders.
SECTION 8.02. RESIGNATION OF MORTGAGEE; APPOINTMENT OF SUCCESSOR.
(a) The Mortgagee 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 Mortgagee. In addition, a Majority in Interest of Note Holders
may at any time (but only with the consent of the 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 Mortgagee
without cause by an instrument in writing delivered to the Owner Trustee,
Lessee, the Owner Participant and the Mortgagee, and the Mortgagee shall
promptly notify each Note Holder thereof in writing, such removal to be
effective upon the acceptance of the trusteeship by a successor Mortgagee.
In the case of the resignation or removal of the Mortgagee, a Majority in
Interest of Note Holders may appoint a successor Mortgagee 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 Mortgagee shall not have
been appointed within 30 days after such notice of resignation or removal,
the Mortgagee, the Owner Trustee, the Owner Participant or any Note Holder
may apply to any court of competent jurisdiction to appoint a successor
Mortgagee to act until such time, if any, as a successor shall have been
appointed as above provided. The successor Mortgagee so appointed by such
court shall immediately and without further act be superseded by any
successor Mortgagee appointed as above provided.
(b) Any successor Mortgagee, however appointed, shall execute and
deliver to the Owner Trustee, the predecessor Mortgagee and the Lessee an
instrument accepting such appointment and assuming the obligations of the
Mortgagee under this Trust Indenture and the Participation Agreement
arising from and after the time of such appointment, and thereupon such
successor Mortgagee, without further act, shall become vested with all the
estates, properties, rights, powers and duties of the predecessor
Mortgagee hereunder in the trust hereunder applicable to it with like
effect as if originally named the Mortgagee herein; but nevertheless upon
the written request of such successor Mortgagee, such predecessor
Mortgagee shall execute and deliver an instrument transferring to such
successor Mortgagee, upon the trusts herein expressed applicable to it,
all the estates, properties, rights and powers of such predecessor
Mortgagee, and such predecessor Mortgagee shall duly assign, transfer,
deliver and pay over to such successor Mortgagee all monies or other
property then held by such predecessor Mortgagee hereunder.
(c) Any successor Mortgagee, 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 Mortgagee hereunder upon reasonable
or customary terms.
(d) Any corporation into which the Mortgagee 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
Mortgagee shall be a party, or any corporation to which substantially all
the corporate trust business of the Mortgagee may be transferred, shall,
subject to the terms of paragraph (c) of this Section 8.02, be a successor
Mortgagee and the Mortgagee under this Trust Indenture without further
act.
SECTION 8.03. APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES.
(a) Whenever (i) the Mortgagee 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, this Trust Indenture, any other Indenture Agreement, the
Equipment Notes or any of the transactions contemplated by the
Participation Agreement, (ii) the Mortgagee shall be advised by counsel
satisfactory to it that it is so necessary or prudent in the interests of
the Note Holders (and the Mortgagee shall so advise the Owner Trustee and
Lessee), or (iii) the Mortgagee shall have been requested to do so by a
Majority in Interest of Note Holders, then in any such case, the Mortgagee
and, upon the written request of the Mortgagee, 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 Mortgagee, either to act jointly with the Mortgagee 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 Mortgagee 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 Mortgagee so to do,
or if an Event of Default shall have occurred and be continuing, the
Mortgagee 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
Mortgagee, 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 Mortgagee 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
Mortgagee 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 Mortgagee 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 Trust Indenture Estate or otherwise payable under
any Operative Agreement to the Mortgagee shall be promptly paid over by it
to the Mortgagee. All other rights, powers, duties and obligations
conferred or imposed upon any additional or separate trustee shall be
exercised or performed by the Mortgagee 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
Mortgagee 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 Mortgagee 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 Mortgagee shall be liable for the consequences
of its lack of reasonable care in selecting, and the Mortgagee'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 Mortgagee. The
powers of any additional or separate trustee appointed pursuant to this
Section 8.03 shall not in any case exceed those of the Mortgagee
hereunder.
(c) If at any time the Mortgagee shall deem it no longer necessary
or 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 Mortgagee shall
have been requested to do so in writing by a Majority in Interest of Note
Holders, the Mortgagee and, upon the written request of the Mortgagee, 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 Mortgagee 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
TRUST INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. INSTRUCTIONS OF MAJORITY; LIMITATIONS.
(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 or the
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 or the Consent and Agreement,
unless such supplement, amendment, waiver, modification or consent is
consented to in writing by the Mortgagee 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
Mortgagee, (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, (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
(except to the extent expressly permitted by Section 5.02 hereof) until
after the payment in full of all Secured Obligations or otherwise
adversely affect the Note Holders and (iii) the Owner Trustee may enter
into a Lease Supplement (x) to evidence the succession of another party as
the Owner Trustee in accordance with the terms of the Trust Agreement or
(y) to provide for subjecting any Replacement Airframe or Replacement
Engine to the Lease in accordance with the terms of the Lease.
(b) Without limiting the provisions of Section 9.01 hereof, the
Mortgagee agrees with the Note Holders that it shall not consent to or
enter into any amendment, waiver or modification of or supplement or
consent to this Trust Indenture, the Lease, the Purchase Agreement, the
Purchase Agreement Assignment, the 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 Mortgagee 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 and of each Liquidity
Provider, no such amendment of or supplement to this Trust Indenture, the
Lease, the Purchase Agreement, the Purchase Agreement Assignment, the
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) or 16 of the Lease, Section 15.1 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, (iii) reduce, modify or amend
any indemnities in favor of the Owner Trustee, the Mortgagee or the Note
Holders (except that the Owner Trustee (in its individual capacity) or the
Mortgagee, as the case may be, may consent to any waiver or reduction of
an indemnity payable to it) or the other Indenture Indemnitees, (iv)
consent to any change in the Trust Indenture or the Lease which would
permit redemption of Equipment Notes earlier than permitted under Section
2.10 hereof or the purchase or exchange of the Equipment Notes other than
as permitted by Section 2.13 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
Mortgagee 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 or pledge any
property to or with the Mortgagee 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 Mortgagee 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 the 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 Mortgagee 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 Mortgagee
of any document entered into pursuant to Section 9.01 hereof, the Mortgagee
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 Mortgagee to mail such copies shall not impair
or affect the validity of such document.
SECTION 9.04. NO REQUEST NECESSARY FOR LEASE SUPPLEMENT OR TRUST
INDENTURE SUPPLEMENT.
No written request or consent of the Mortgagee, 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 Indenture Indemnitees, the Note Holders and the Mortgagee
hereunder or under the Participation Agreement or other Operative Agreement, the
Owner Trustee shall direct the Mortgagee 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 attached thereto from the assignment and pledge thereof
hereunder and the Mortgagee 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 Mortgagee of all property constituting part of
the Trust Indenture Estate and the final distribution by the Mortgagee 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 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 MORTGAGEE 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 Mortgagee
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 Mortgagee.
SECTION 10.04. TRUST INDENTURE FOR BENEFIT OF OWNER TRUSTEE,
MORTGAGEE, OWNER PARTICIPANT, NOTE HOLDERS AND THE OTHER INDENTURE INDEMNITEES.
Nothing in this Trust Indenture, whether express or implied, shall
be construed to give any person other than the Owner Trustee, the Mortgagee, the
Owner Participant, the Note Holders and the other Indenture Indemnitees, 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 MAC: U1228-120, 299 South Main Street,
12th Floor, Salt Lake City, Utah 84111 with a copy to the Owner Participant
addressed as provided in clause (iii) below, (ii) if to Mortgagee, 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, any Note Holder or any
other Indenture Indemnitee, addressed to such party at such address as such
party shall have furnished by notice to the Owner Trustee and the Mortgagee, 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 Mortgagee 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 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 Mortgagee, 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.
SECTION 10.10. NORMAL COMMERCIAL RELATIONS.
Anything contained in this Trust Indenture to the contrary
notwithstanding, Owner Trustee, Mortgagee, 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 Mortgagee 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 and to enforce any
of its other rights or remedies 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.
[This space intentionally left blank.]
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.
WELLS FARGO BANK NORTHWEST, 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 Mortgagee
By:
---------------------------------------
Name:
Title:
EXHIBIT A
TO TRUST INDENTURE AND MORTGAGE [TN]
TRUST INDENTURE AND MORTGAGE [TN] SUPPLEMENT
This TRUST INDENTURE AND MORTGAGE [TN] SUPPLEMENT NO. 1, dated
__________ (herein called this "Trust Indenture Supplement") of WELLS FARGO BANK
NORTHWEST, NATIONAL ASSOCIATION, not in its individual capacity, but solely as
Owner Trustee (herein called the "Owner Trustee") under that certain [Amended
and Restated](3) Trust Agreement [TN] dated as of [DD] (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 Trust Indenture and Mortgage [TN], dated as of [DD] (as
amended and supplemented to the date hereof, the "Trust Indenture") between the
Owner Trustee and Wilmington Trust Company, as Mortgagee (the "Mortgagee"),
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 Mortgagee; 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
Embraer-Empresa EMB-145 XR
Brasileira de
Aeronautica S.A.
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.
- ---------------
(3) Delete for New Aircraft.
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
------------ -------------------- -------------
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, 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.
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 Mortgagee, its successors and assigns,
for the security and benefit of the Loan Participant, the Note Holders and the
Indenture Indemnitees, in the trust created by the Trust Indenture, all of 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
Mortgagee, its successors and assigns, in trust for the equal and proportionate
benefit and security of the Loan Participant, the Note Holders and the Indenture
Indemnitees, except as provided in Section 2.14 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.
WELLS FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION, not in its individual
capacity, but solely as Owner Trustee,
Owner Trustee
By:
-------------------------------------
Name:
Title:
TRUST INDENTURE AND MORTGAGE
SCHEDULE I
ORIGINAL AMOUNT INTEREST RATE
- --------------- -------------
TRUST INDENTURE AND MORTGAGE
EQUIPMENT NOTE AMORTIZATION
PERCENTAGE OF
ORIGINAL AMOUNT
PAYMENT DATE TO BE PAID
- ------------ ---------------
==============================================================================
[AMENDED AND RESTATED](1)
TRUST AGREEMENT [TN]
Dated as of [DD]
Between
[OP]
and
WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION
One Embraer Model EMB-145 XR Aircraft
Bearing Manufacturer's Serial No. [MSN]
and U.S. Registration No. N[REG]
with Two Allison Model AE3007A1E Engines
Bearing Engine Manufacturer's Serial Nos. CAE[E1] and CAE[E2]
==============================================================================
- ---------------
(1) Delete for New Aircraft.
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS.......................................................1
SECTION 2. DECLARATION OF TRUST..............................................1
SECTION 3. AUTHORIZATION; CONDITIONS PRECEDENT...............................2
3.1 Authorization......................................................2
3.2 Conditions Precedent...............................................3
SECTION 4. RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME
FROM THE TRUST ESTATE.............................................3
4.1 Payments from Trust Estate Only....................................3
4.2 Distribution of Payments...........................................4
4.2.1 Payments to Mortgagee......................................4
4.2.2 Payments to Owner Trustee, Other Parties...................4
4.2.3 Certain Distributions to Owner Participant.................4
4.2.4 Excluded Payments..........................................5
4.2.5 Payments to the Lessee.....................................5
4.3 Method of Payments.................................................5
SECTION 5. DUTIES OF OWNER TRUSTEE...........................................5
5.1 Notice of Event of Default.........................................5
5.2 Action upon Instructions...........................................6
5.3 Limitations on Duties..............................................6
5.4 No Duties except as Specified; No Action except as
Specified.........................................................7
5.4.1 No Duties except as Specified..............................7
5.4.2 No Action except as Specified..............................7
5.5 Satisfaction of Conditions Precedent...............................7
5.6 Fixed Investment Trust.............................................7
SECTION 6. OWNER TRUSTEE.....................................................7
6.1 Acceptance of Trusts and Duties....................................7
6.2 Absence of Certain Duties..........................................8
6.3 No Representations or Warranties as to Certain Matters.............9
6.4 No Segregation of Monies; Interest.................................9
6.5 Reliance upon Certificates, Counsel and Agents....................10
6.6 Not Acting in Individual Capacity.................................10
TABLE OF CONTENTS
(Continued)
PAGE
6.7 Fees; Compensation................................................10
6.8 Tax Returns.......................................................11
SECTION 7. INDEMNIFICATION OF FIRST SECURITY BY OWNER
PARTICIPANT......................................................11
SECTION 8. TRANSFER OF OWNER PARTICIPANT'S INTEREST.........................12
8.1 Transfer of Interest..............................................12
SECTION 9. SUCCESSOR OWNER TRUSTEES; CO-TRUSTEES............................13
9.1 Resignation of Owner Trustee; Appointment of
Successor........................................................13
9.1.1 Resignation or Removal....................................13
9.1.2 Execution and Delivery of Documents, Etc..................13
9.1.3 Qualifications............................................14
9.1.4 Merger, Etc...............................................14
9.2 Co-Trustees and Separate Trustees.................................14
SECTION 10. SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT
AND OTHER DOCUMENTS..............................................16
10.1 Supplements and Amendments and Delivery Thereof..................16
10.1.1 Supplements and Amendments...............................16
10.1.2 Delivery of Amendments and Supplements
to Certain Parties......................................16
10.2 Discretion as to Execution of Documents..........................16
10.3 Absence of Requirements as to Form...............................17
10.4 Distribution of Documents........................................17
10.5 No Request Needed as to Lease Supplement and
Trust Indenture Supplement......................................17
SECTION 11. MISCELLANEOUS...................................................17
11.1 Termination of Trust Agreement...................................17
11.2 Termination at Option of the Owner Participant...................18
11.3 Owner Participant Has No Legal Title in Trust Estate.............18
11.4 Assignment, Sale, etc. of Aircraft...............................18
11.5 Trust Agreement for Benefit of Certain Parties Only..............18
11.6 Citizenship of Owner Participant.................................18
11.7 Notices..........................................................19
11.8 Severability.....................................................19
11.9 Waivers, Etc.....................................................19
TABLE OF CONTENTS
(Continued)
PAGE
11.10 Counterparts....................................................19
11.11 Binding Effect, Etc.............................................19
11.12 Headings; References............................................20
11.13 Name of the Trust...............................................20
11.14 Governing Law...................................................20
SECTION 12. CERTAIN LIMITATIONS.............................................20
12.1 Limitations on Control; Exceptions...............................20
[AMENDED AND RESTATED](2) TRUST AGREEMENT [TN]
This [AMENDED AND RESTATED](3) TRUST AGREEMENT [TN], dated as of
[DD], between [OP], a corporation organized under the laws of the OP
Jurisdiction ("Owner Participant"), and WELLS FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION, a national banking association (in its individual capacity, "Wells
Fargo" and otherwise not in its individual capacity but solely as trustee
hereunder, "Owner Trustee")[, which amends and restates in its entirety the
Trust Agreement [TN], dated as of [EPD], between the Owner Participant and Wells
Fargo (the "Original Trust Agreement").](4)
In connection with the issuance of the Equipment Notes on a
non-recourse basis by the Owner Trustee in accordance with the Participation
Agreement [TN], dated as of the date hereof, among Continental Airlines, Inc.,
Owner Participant, Owner Trustee, Wilmington Trust Company and Embraer-Empresa
Brasileira de Aeronautica S.A., Owner Participant and Wells Fargo wish to [amend
and restate the Original Trust Agreement in its entirety as](5) [enter into this
agreement on the terms](6) set forth below.
Accordingly, the parties hereto agree as follows:
W I T N E S S E T H:
- - - - - - - - - -
SECTION 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 to the Lease
Agreement [TN], dated as of the date hereof, between Owner Trustee and
Continental Airlines, Inc, as Lessee.
SECTION 2. DECLARATION OF TRUST
Wells Fargo hereby declares that it will hold the Trust Estate as
Owner Trustee upon the trusts hereinafter set forth for the use and benefit of
Owner Participant, subject, however, to the provisions of and the Lien created
by the Trust Indenture and to the provisions of the Lease and the Participation
Agreement.
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(2) Delete for New Aircraft.
(3) Delete for New Aircraft.
(4) Delete for New Aircraft.
(5) Delete for New Aircraft.
(6) Delete for New Aircraft.
SECTION 3. AUTHORIZATION; CONDITIONS PRECEDENT
3.1 Authorization
In respect of the Aircraft, Owner Participant hereby authorizes and
directs Owner Trustee to, and Owner Trustee agrees for the benefit of Owner
Participant that it will, on and after the Closing Date, subject (except with
respect to Section 3.1(a)) to due compliance with the terms of Section 3.2:
(a) execute and deliver the Participation Agreement, the Trust
Indenture, the Lease and the other Owner Trustee Agreements (in the respective
forms in which they are delivered from time to time by Owner Participant to
Owner Trustee);
(b) subject to the terms of this Trust Agreement, exercise (i) its
rights and perform its duties under the Participation Agreement, (ii) the rights
and perform the duties of Lessor under the Lease and (iii) its rights and
perform its duties under the Trust Indenture and the other Owner Trustee
Agreements;
(c) execute, issue and deliver to Mortgagee for authentication and
further delivery to the Subordination Agent the Equipment Notes in the amount
and as provided in Section 2 of the Participation Agreement;
[(d) purchase the Aircraft pursuant to the Purchase Agreement as
assigned to Owner Trustee pursuant to the Purchase Agreement Assignment;](7)
[(e) accept from Seller the delivery of the Aircraft Bill of Sale,
the FAA Bill of Sale and the invoice with respect to such Aircraft;](8)
[(f) effect the registration of the Aircraft with the FAA in the
name of Owner Trustee by filing or causing to be filed with the FAA: (i) the FAA
Bill of Sale; (ii) an Aircraft Registration Application in the name of Owner
Trustee (including, without limitation, an affidavit from Owner Trustee in
compliance with the provisions of Section 47.7(c)(2) of the FAA Regulations);
and (iii) this Trust Agreement;](9)
(g) execute and deliver all agreements, documents and instruments
referred to in Section 5 of the Participation Agreement to which Owner Trustee
is to be a party;
(h) execute and deliver Lease Supplement No. 1 covering the
Aircraft;
(i) execute and deliver a Trust Indenture Supplement covering the
Aircraft;
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(7) Insert for New Aircraft.
(8) Insert for New Aircraft.
(9) Insert for New Aircraft.
(j) [make payment to the Owner Participant of the proceeds from
the sale of the Equipment Notes received by it;](10) [make payment of Lessor's
Cost for the Aircraft from the aggregate amount of the Commitments for the
Aircraft of Owner Participant and Loan Participant, to the extent available to
Owner Trustee, in the manner provided in the Participation Agreement;](11) and
(k) execute and deliver all such other instruments, documents or
certificates and take all such other actions in accordance with the direction of
Owner Participant, as Owner Participant may deem necessary or advisable in
connection with the transactions contemplated by this Trust Agreement and the
other Operative Agreements.
3.2 Conditions Precedent
The rights and obligations of Owner Trustee to take the
actions required by Section 3.1 shall be subject to the following conditions
precedent:
(a) Owner Trustee shall have received the notice described in
Section 5.1.1 of the Participation Agreement, when and as required thereby, or
shall have been deemed to have waived such notice in accordance with Section
5.1.1 of the Participation Agreement;
[(b) Each Participant shall have made the full amount of its
Commitment specified in Section 2.1 of the Participation Agreement available to
Owner Trustee, in immediately available funds, in accordance with Sections 2 and
4 of the Participation Agreement; and](12)
(c) Owner Participant shall have notified Owner Trustee that the
terms and conditions of Section 5 of the Participation Agreement, insofar as
they relate to conditions precedent to performance by Owner Participant of its
obligations thereunder, have been either fulfilled to the satisfaction of, or
waived by, Owner Participant. Owner Participant shall, by instructing Owner
Trustee to release for filing with the FAA the FAA Filed Documents be deemed to
have found satisfactory to it, or waived, all such conditions precedent.
SECTION 4. RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM
THE TRUST ESTATE
4.1 Payments from Trust Estate Only
Except as provided in Section 7, all payments to be made by Owner
Trustee under this Trust Agreement shall be made only from [(a) in the case of
funds made available in accordance with Section 4 of the Participation
Agreement, the Commitments (except as otherwise provided in Section 14 of the
- ---------------
(10) Delete for New Aircraft.
(11) Delete for New Aircraft.
(12) Delete for New Aircraft.
(13) Delete for New Aircraft.
Participation Agreement) and (b) in the case of all other payments,](13) the
income from and proceeds of the Trust Estate to the extent that Owner Trustee
shall have received sufficient income or proceeds from the Trust Estate to make
such payments. Owner Participant agrees that it will look solely to the income
from and proceeds of the Trust Estate (except as otherwise provided in Section
14 of the Participation Agreement) to the extent available for distribution to
Owner Participant as provided in this Trust Agreement. Except as provided in
Section 7, Owner Participant agrees that Wells Fargo is neither personally
liable to Owner Participant for any amounts payable nor subject to any other
liability under this Trust Agreement.
4.2 Distribution of Payments
4.2.1 Payments to Mortgagee
Until the Trust Indenture shall have been discharged pursuant to
Section 10.01 thereof, all Rent, insurance proceeds and requisition or other
payments of any kind included in the Trust Estate (other than Excluded Payments)
payable to Owner Trustee shall be payable directly to Mortgagee (and, if any of
the same are received by Owner Trustee, shall upon receipt be paid over to
Mortgagee without deduction, set-off or adjustment of any kind) for distribution
in accordance with the provisions of Article III of the Trust Indenture;
PROVIDED, that any payments received by Owner Trustee from (a) Airframe
Manufacturer with respect to Owner Trustee's fees and disbursements or (b) Owner
Participant pursuant to Section 7 shall not be paid over to Mortgagee but shall
be retained by Owner Trustee and applied toward the purpose for which such
payments were made.
4.2.2 Payments to Owner Trustee, Other Parties
After the Trust Indenture shall have been discharged pursuant to
Section 10.01 thereof, any payment of the type referred to in Section 4.2.1
(other than Excluded Payments) received by Owner Trustee, any payment received
from Mortgagee (other than Excluded Payments) and any other amount received as
part of the Trust Estate and for the application or distribution of which no
provision is made in this Trust Agreement shall be distributed forthwith upon
receipt by Owner Trustee in the following order of priority: FIRST, so much of
such payment as shall be required to reimburse Owner Trustee for any expenses
not otherwise reimbursed as to which Owner Trustee is entitled to be so
reimbursed pursuant to the provisions hereof shall be retained by Owner Trustee;
SECOND, the balance, if any, shall be paid to Owner Participant.
4.2.3 Certain Distributions to Owner Participant
All amounts from time to time distributable by Mortgagee to Owner
Participant pursuant to the Trust Indenture shall, if paid to Owner Trustee, be
distributed by Owner Trustee to Owner Participant in accordance with the
provisions of Article III of the Trust Indenture; PROVIDED, that any payments
received by Owner Trustee from (a) Lessee with respect to Owner Trustee's fees
and disbursements or (b) Owner Participant pursuant to Section 7 shall not be
paid over to Owner Participant but shall be retained by Owner Trustee and
applied toward the purpose for which such payments were made.
- ---------------
(13) Delete for New Aircraft.
4.2.4 Excluded Payments
Any Excluded Payments received by Owner Trustee shall be paid by
Owner Trustee to the Person to whom such Excluded Payments are payable under the
provisions of the Participation Agreement, the Tax Indemnity Agreement or the
Lease.
4.2.5 Payments to the Lessee
Notwithstanding any other provision of any Operative Agreement to
the contrary, if Lessee shall have given to Owner Trustee written notice that an
amount is due to Lessee and unpaid under the Indemnity Agreement, all amounts
that would otherwise be paid to Owner Participant under this Agreement shall
instead be paid to Lessee until such amount owed to Lessee shall have been paid
in full, PROVIDED that Lessee shall not be entitled to payment of a Primary
Amount (as defined in the Indemnity Agreement) under this Section 4.2.5 if at
the time Lessee gives such notice to Owner Trustee the Owner Participant is not
the Airframe Manufacturer or an Affiliate of Airframe Manufacturer.
4.3 Method of Payments
Owner Trustee shall make distributions or cause distributions to be
made to Owner Participant pursuant to this Section 4 by transferring the amount
to be distributed by wire transfer in immediately available funds on the day
received (or on the next succeeding Business Day if the funds to be so
distributed shall not have been received by Owner Trustee by 12:00 noon, New
York City time, and which funds Owner Trustee shall not have been reasonably
able to distribute to Owner Participant on the day received) to Owner
Participant's account set forth in Schedule 1 to the Participation Agreement or
to such other account or accounts of Owner Participant as Owner Participant may
designate from time to time in writing to Owner Trustee; PROVIDED, that Owner
Trustee shall use reasonable efforts to invest overnight, in investments that
would be permitted under Section 4.4 of the Lease, all funds received by it at
or later than 12:00 noon, New York City time, and which funds Owner Trustee
shall not have been reasonably able to distribute to Owner Participant on the
day received).
SECTION 5. DUTIES OF OWNER TRUSTEE
5.1 Notice of Event of Default
(a) If Owner Trustee shall have knowledge of a Lease Default or a
Lease Event of Default or an Indenture Default or an Indenture Event of Default,
Owner Trustee shall give to Owner Participant, Mortgagee and Lessee prompt
telephonic or telex notice thereof followed by prompt confirmation thereof by
certified mail, postage prepaid, PROVIDED, that (i) in the case of an event
which with the passage of time would constitute an Indenture Event of Default of
the type referred to in paragraph (c) or (e) of Section 4.02 of the Trust
Indenture, such notice shall in no event be furnished later than ten days after
Owner Trustee shall first have knowledge of such event and (ii) in the case of a
misrepresentation by Owner Trustee which with the passage of time would
constitute an Indenture Event of Default of the type referred to in paragraph
(d) of Section 4.02 of the Trust Indenture, such notice shall in no event be
furnished later than ten days after Owner Trustee shall first have knowledge of
such event.
(b) Subject to the terms of Section 5.3, Owner Trustee shall take
such action or shall refrain from taking such action, not inconsistent with the
provisions of the Trust Indenture, with respect to such Lease Default, Lease
Event of Default, Indenture Default or Indenture Event of Default or other event
as Owner Trustee shall be directed in writing by Owner Participant. For all
purposes of this Trust Agreement, the Lease and the other Operative Agreements,
in the absence of Actual Knowledge of Owner Trustee, Owner Trustee shall not be
deemed to have knowledge of a Lease Default, Lease Event of Default, Indenture
Default or Indenture Event of Default unless notified in writing by Mortgagee,
Owner Participant or Lessee.
5.2 Action upon Instructions
Subject to the terms of Sections 5.1 and 5.3, upon the written
instructions at any time and from time to time of Owner Participant, Owner
Trustee will take such of the following actions, not inconsistent with the
provisions of the Lease and the Trust Indenture, as may be specified in such
instructions: (a) give such notice or direction or exercise such right, remedy
or power under this Trust Agreement or any of the other Owner Trustee Agreements
or in respect of all or any part of the Trust Estate, or take such other action,
as shall be specified in such instructions (including entering into such
agreements and instruments as shall be necessary under Section 10); (b) take
such action to preserve or protect the Trust Estate (including the discharge of
Liens) as may be specified in such instructions; (c) approve as satisfactory to
it all matters required by the terms of the Lease or the other Operative
Agreements to be satisfactory to Owner Trustee, it being understood that without
written instructions of Owner Participant, Owner Trustee shall not approve any
such matter as satisfactory to it; (d) subject to the rights of Lessee under the
Operative Agreements, after the expiration or earlier termination of the Lease,
convey all of Owner Trustee's right, title and interest in and to the Aircraft
for such amount, on such terms and to such purchaser or purchasers as shall be
designated in such instructions, or retain, lease or otherwise dispose of, or
from time to time take such other action with respect to, the Aircraft on such
terms as shall be designated in such instructions; and (e) take or refrain from
taking such other action or actions as may be specified in such instructions.
5.3 Limitations on Duties
Owner Trustee shall not be required to take any action under Section
5.1 (other than the giving of the notices referred to therein) or 5.2 if Owner
Trustee shall reasonably believe such action is not adequately indemnified by
Owner Participant under Section 7, unless Lessee or Owner Participant agrees to
furnish such additional indemnity as shall reasonably be required, in manner and
form satisfactory to Owner Trustee, and, in addition to the extent not otherwise
paid pursuant to the provisions of the Lease or of the Participation Agreement,
to pay the reasonable compensation of Owner Trustee for the services performed
or to be performed by it pursuant to such direction and any reasonable fees and
disbursements of counsel or agents employed by Owner Trustee in connection
therewith. Owner Trustee shall not be required to take any action under Section
5.1 or 5.2 (other than the giving of the notices referred to therein) if Owner
Trustee shall have been advised by counsel that such action is contrary to the
terms of any of the Owner Trustee Agreements or is otherwise contrary to Law and
Owner Trustee has delivered to Owner Participant written notice of the basis for
its refusal to act.
5.4 No Duties except as Specified; No Action except as Specified
5.4.1 No Duties except as Specified
Owner Trustee shall not have any duty or obligation to manage,
control, use, sell, dispose of or otherwise deal with the Aircraft or any other
part of the Trust Estate or to otherwise take or refrain from taking any action
under, or in connection with, any of the Owner Trustee Agreements, except as
expressly required by the terms of any of the Owner Trustee Agreements, or (to
the extent not inconsistent with the provisions of the Trust Indenture) as
expressly provided by the terms hereof or in a written instruction from Owner
Participant received pursuant to the terms of Section 5.1 or 5.2, and no implied
duties or obligations shall be read into this Trust Agreement against Owner
Trustee. Wells Fargo agrees that it will, in its individual capacity and at its
own cost or expense (but without any right of indemnity in respect of any such
cost or expense hereunder or under the Participation Agreement), promptly take
such action as may be necessary to duly discharge and satisfy in full all Lessor
Liens attributable to it in its individual capacity which it is required to
discharge pursuant to Section 7.3.1 of the Participation Agreement and otherwise
comply with the terms of said Section binding upon it.
5.4.2 No Action except as Specified
Owner Trustee shall have no power, right or authority to, and agrees
that it will not, manage, control, use, sell, dispose of or otherwise deal with
the Aircraft or any other part of the Trust Estate except (a) as expressly
required by the terms of any of the Owner Trustee Agreements, (b) as expressly
provided by the terms hereof or (c) as expressly provided in written
instructions from Owner Participant pursuant to Section 5.1 or 5.2.
5.5 Satisfaction of Conditions Precedent
Anything in this Trust Agreement to the contrary notwithstanding,
Owner Trustee shall, subject to the satisfaction of special counsel for Owner
Trustee of the occurrence of all the applicable conditions precedent specified
in Section 3.2, comply with the provisions of Section 3.1.
5.6 Fixed Investment Trust
Notwithstanding anything in this Trust Agreement to the contrary,
Owner Trustee shall not be authorized and shall have no power to "vary the
investment" of Owner Participant within the meaning of Treasury Regulations
Section 301.7701-4(c)(1), it being understood that Owner Trustee shall have the
power and authority to fulfill its obligations under Section 4.3 hereof, Section
4.3.3 of the Participation Agreement and Section 4.4 of the Lease.
SECTION 6. OWNER TRUSTEE
6.1 Acceptance of Trusts and Duties
Wells Fargo accepts the trusts hereby created and agrees to perform
the same as Owner Trustee but only upon the terms hereof and the Trust Indenture
applicable to it. Owner Trustee also agrees to receive and disburse all monies
received by it constituting part of the Trust Estate pursuant to the terms
hereof. Wells Fargo shall not be answerable or accountable under any
circumstances, except for (a) its own willful misconduct or gross negligence
(including, without limitation, in connection with any activities of Owner
Trustee in violation of Section 5.4.2), (b) its failure (in its individual
capacity) to perform its obligations under Section 5.4.1, (c) its or Owner
Trustee's failure to use ordinary care to receive or disburse funds or to comply
with the first sentence of Section 6.8, (d) liabilities that may result from the
inaccuracy of any representation or breach of warranty of it in its individual
capacity (or from the failure by it in its individual capacity to perform any
covenant) in this Trust Agreement, the Trust Indenture, the Lease or the
Participation Agreement or elsewhere in any of the other Operative Agreements,
(e) taxes, fees or other charges on, based on or measured by any fees,
commissions or compensation received by Wells Fargo in connection with the
transactions contemplated by this Trust Agreement and the other Operative
Agreements to which it (in its individual capacity or as Owner Trustee) is a
party, (f) its or Owner Trustee's failure to use ordinary care in receiving or
disbursing funds or in connection with its obligation to invest funds pursuant
to Section 4 of the Participation Agreement, Section 4.4 of the Lease or Section
4.3 hereof, (g) any liability on the part of Owner Trustee arising out of its
negligence or willful or negligent misconduct in connection with its obligations
under Section 5.1 (other than the first sentence thereof), 6.8 or 9.2 hereof or
Section 4.01 of the Trust Indenture. Wells Fargo shall have no obligation to
advance its individual funds for any purpose, and Owner Trustee shall have no
obligation to distribute to Owner Participant, Lessee or any third party any
amounts to be paid to Owner Trustee until such amounts are collected by Owner
Trustee.
6.2 Absence of Certain Duties
(a) Except in accordance with written instructions furnished
pursuant to Section 5.1 or 5.2 and except as provided in, and without limiting
the generality of, Sections 3.1 and 5.4.1 and the last sentence of Section
9.1.2, and subject to Section 4.01 of the Trust Indenture, neither Owner Trustee
nor Wells Fargo shall have any duty (i) to see to any recording or filing of any
Operative Agreement or of any supplement to any thereof or to see to the
maintenance of any such recording or filing or any other filing of reports with
the FAA or other governmental agencies, except that of Wells Fargo to comply
with the FAA reporting requirements set forth in 14 C.F.R. ss. 47.45 and 14
C.F.R. ss. 47.51, and Owner Trustee shall, to the extent that information for
that purpose is timely supplied by Lessee pursuant to any of the Operative
Agreements, complete and timely submit (and furnish Owner Participant with a
copy of) any and all reports relating to the Aircraft that may from time to time
be required by the FAA or any government or governmental authority having
jurisdiction, (ii) to see to any insurance on the Aircraft or to effect or
maintain any such insurance, whether or not Lessee shall be in default with
respect thereto, other than to forward to Owner Participant copies of all
reports and other written information which Owner Trustee receives from Lessee
pursuant to Section 11 of the Lease, (iii) except as provided in Section 7.3.1
or 7.3.2 of the Participation Agreement, Section 4.01 of the Trust Indenture or
Section 5.4 or 6.1 hereof, to see to the payment or discharge of any tax,
assessment or other governmental charge or any lien or encumbrance of any kind
owing with respect to or assessed or levied against any part of the Trust
Indenture Estate or the Trust Estate, except as provided in Section 6.3.9 of the
Participation Agreement or (iv) to inspect Lessee's books and records with
respect to the Aircraft at any time permitted pursuant to the Lease.
(b) Notwithstanding clause (a), Owner Trustee will furnish to
Mortgagee and Owner Participant, promptly upon receipt thereof, duplicates or
copies of all reports, notices, requests, demands, certificates, financial
statements and other instruments furnished to Owner Trustee under the Lease or
any other Operative Agreement except to the extent to which a responsible
officer of Owner Trustee reasonably believes (and confirms by telephone call
with Owner Participant) that duplicates or copies thereof have already been
furnished to Owner Participant by some other person.
6.3 No Representations or Warranties as to Certain Matters
NEITHER WELLS FARGO NOR OWNER TRUSTEE MAKES OR SHALL BE DEEMED TO
HAVE MADE (a) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE
TITLE, AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR
FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY PART THEREOF, 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, THE
ABSENCE OF ANY STRICT LIABILITY OBLIGATION OR ANY OTHER REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF
WHATSOEVER, except that Wells Fargo warrants to Owner Participant that on the
Delivery Date Owner Trustee shall have received whatever title to the Aircraft
that was conveyed to it and that the Aircraft shall, on the Closing Date and
during the Term, be free of Lessor Liens attributable to Wells Fargo or (b) any
representation or warranty as to the validity, legality or enforceability of
this Trust Agreement or any other Operative Agreement to which Wells Fargo, in
its individual capacity or as Owner Trustee, is a party, or any other document
or instrument, or as to the correctness of any statement contained in any
thereof except to the extent that any such statement is expressly made herein or
therein by such party as a representation by Wells Fargo, in its individual
capacity or as Owner Trustee, as the case may be, and except that Wells Fargo
hereby represents and warrants that it has all corporate power and authority to
execute, deliver and perform this Trust Agreement and that this Trust Agreement
has been, and (assuming due authorization, execution and delivery by Owner
Participant of this Trust Agreement) the other Operative Agreements to which it
or Owner Trustee is a party have been (or at the time of execution and delivery
of any such instrument by it or Owner Trustee under this Trust Agreement or
pursuant to the terms of the Participation Agreement that such an instrument
will be) duly executed and delivered by one of its officers who is or will be,
as the case may be, duly authorized to execute and deliver such instruments on
behalf of itself or Owner Trustee, as the case may be, and that this Trust
Agreement constitutes the legal, valid and binding obligation of Wells Fargo or
Owner Trustee, as the case may be, enforceable against Wells Fargo or Owner
Trustee, as the case may be, in accordance with its terms.
6.4 No Segregation of Monies; Interest
Monies received by Owner Trustee under this Trust Agreement need not
be segregated in any manner except to the extent required by Law, or except as
provided in written instructions from Owner Participant, and shall be invested
as provided in Section 4.3 hereof or Section 4.4 of the Lease.
6.5 Reliance upon Certificates, Counsel and Agents
Owner Trustee shall incur no liability to anyone in acting in good
faith in reliance upon and in accordance with any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other
document or paper reasonably believed by it to be genuine and reasonably
believed by it to be signed by the proper party or parties. Unless other
evidence in respect thereof is specifically prescribed in this Trust Agreement,
any request, direction, order or demand of Owner Participant or Lessee mentioned
in this Trust Agreement or in any of the other Owner Trustee Agreements shall be
sufficiently evidenced by written instruments signed by the Chairman of the
Board, the President, any Vice President or any other officer and in the name of
Owner Participant or Lessee, as the case may be. Owner Trustee may accept a copy
of a resolution of the Board of Directors or Executive Committee of Lessee,
certified by the Secretary or an Assistant Secretary of Lessee as duly adopted
and in full force and effect, as conclusive evidence that such resolution has
been duly adopted by said Board of Directors or Executive Committee and that the
same is in full force and effect. As to any fact or matter the manner of
ascertainment of which is not specifically described in this Trust Agreement,
Owner Trustee may, absent Actual Knowledge to the contrary, for all purposes
rely on a certificate signed by the Chairman of the Board, the President, any
Vice President or any other officer of Lessee, and the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of Lessee, as to such fact
or matter, and such certificate shall constitute full protection to Owner
Trustee for any action taken or omitted to be taken by it in good faith in
reliance thereon and in accordance therewith. In the administration of trusts
under this Trust Agreement, Owner Trustee may execute any of the trusts or
powers and perform its powers and duties under this Trust Agreement directly or
through agents or attorneys and may, at the expense of the Trust Estate, consult
with counsel, accountants and other skilled persons to be selected and employed
by it. Owner Trustee shall not be liable for anything done, suffered or omitted
in good faith by it in accordance with the advice or opinion of any such
counsel, accountants or other skilled persons.
6.6 Not Acting in Individual Capacity
In acting under this Trust Agreement, Wells Fargo acts solely as
Owner Trustee and not in its individual capacity except as otherwise expressly
provided in this Trust Agreement or in the other Operative Agreements to which
it is a party; and, except as may be otherwise expressly provided in this Trust
Agreement, the Lease, the Participation Agreement and the Trust Indenture, all
persons, other than the Owner Participant as provided in this Trust Agreement or
the Trust Indenture, having any claim against Owner Trustee by reason of the
transactions contemplated hereby shall look only to the Trust Estate for payment
or satisfaction thereof except to the extent provided in Section 6.1 or
otherwise as Owner Trustee shall expressly agree otherwise in writing.
6.7 Fees; Compensation
Airframe Manufacturer shall pay the Transaction Expenses and ongoing
fees of Owner Trustee throughout the Term pursuant to Section 9.2 of the
Participation Agreement. The Trust Estate shall not have any liability for any
such fees and expenses; PROVIDED, that the foregoing shall not limit the
obligations of Owner Participant under Sections 5.3 and 7; PROVIDED, that Owner
Trustee shall have a Lien upon the Trust Estate for any such fee not paid by
Airframe Manufacturer as contemplated by Section 9.2 of the Participation
Agreement and such Lien shall entitle Owner Trustee to priority as to payment
thereof over payment to any other Person under this Trust Agreement; PROVIDED,
that such Lien shall be subject and subordinate in all events to the Lien of the
Trust Indenture; and PROVIDED, FURTHER, that Owner Trustee shall have no right
to exercise, and shall not exercise, any rights or remedies Owner Trustee may
have with respect to such Lien unless and until the Secured Obligations have
been paid and performed in full.
6.8 Tax Returns
Owner Trustee shall be responsible for the keeping of all
appropriate books and records relating to the receipt and disbursement of all
monies under this Trust Agreement or any agreement contemplated hereby. Owner
Participant shall be responsible for causing to be prepared and filed all income
tax returns required to be filed by Owner Participant. Owner Trustee shall be
responsible for causing to be prepared, at the expense of Airframe Manufacturer,
all income tax returns required to be filed with respect to the trust created
hereby and shall execute and file such returns; PROVIDED, that Owner Trustee
shall send promptly a completed copy of such return to Owner Participant not
more than sixty nor less than fifteen days prior to the due date of the return,
PROVIDED, that Owner Trustee shall have timely received all necessary
information to complete and deliver to Owner Participant such return. Owner
Participant, upon request, will furnish Owner Trustee with all such information
as may be reasonably required from Owner Participant in connection with the
preparation of such income tax returns. Owner Trustee shall keep copies of all
returns delivered to or filed by it.
SECTION 7. INDEMNIFICATION OF WELLS FARGO BY OWNER PARTICIPANT
Owner Participant hereby agrees, whether or not any of the
transactions contemplated hereby shall be consummated, to assume liability for,
and hereby indemnifies, protects, saves and keeps harmless, Wells Fargo and its
successors, assigns, agents and servants, from and against any and all
liabilities, obligations, losses, damages, penalties, taxes (excluding any Taxes
which are not required to be indemnified by Lessee pursuant to Section 9.1 or
9.3 of the Participation Agreement and excluding any taxes payable by Wells
Fargo on or measured by any compensation received by Wells Fargo for its
services under this Trust Agreement), claims, actions, suits, costs, expenses or
disbursements (including, without limitation, reasonable legal fees and
expenses, but excluding internal costs and expenses such as salaries and
overhead, and including, without limitation, any liability of an owner, any
strict liability and any liability without fault) of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against Wells Fargo
(whether or not also indemnified against by Lessee under the Lease or under the
Participation Agreement or also indemnified against by any other Person;
PROVIDED, that Owner Participant shall be subrogated to the rights of Owner
Trustee against Lessee or any other indemnitor) in any way relating to or
arising out of this Trust Agreement or any of the other Operative Agreements 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, nonacceptance, rejection,
ownership, delivery, lease, possession, use, operation, condition, sale, return
or other disposition of the Aircraft (including, without limitation, latent and
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 Estate or the action or inaction of Owner Trustee,
under this Trust Agreement, except (a) in the case of gross negligence or
willful misconduct on the part of Wells Fargo, in its individual capacity or as
Owner Trustee, in the performance or nonperformance of its duties under this
Trust Agreement or under any of the other Owner Trustee Agreements or (b) those
Claims resulting from the inaccuracy of any representation or warranty of Wells
Fargo (or from the failure of Wells Fargo to perform any of its covenants) in
Section 6.3 of this Trust Agreement, in Section 6.03 of the Trust Indenture, in
Section 4 of the Lease, in Section 6.3 and Section 7.3 of the Participation
Agreement or elsewhere in any of the other Operative Agreements or (c) as may
result from a breach by Wells Fargo of its covenant in the last sentence of
Section 5.4.1 or (d) in the case of the failure to use ordinary care on the part
of Wells Fargo, in its individual capacity or as Owner Trustee, in the receipt
or disbursement of funds or in connection with its obligation to invest funds
pursuant to Section 4 of the Participation Agreement, Section 4.4 of the Lease
or Section 4.3 hereof or in compliance with the provisions of the first sentence
of Section 6.8 or (e) any liability on the part of Owner Trustee arising out of
its negligence or willful or negligent misconduct in connection with its
obligations under Section 5.1, 6.8 or 9.2 hereof or Section 4.01 of the Trust
Indenture, or (f) those claims arising under any circumstances or upon any terms
where Lessee would not have been required to indemnify Wells Fargo pursuant to
Section 9.1 or 9.3 of the Participation Agreement (disregarding for purposes of
this paragraph Sections 9.1.2(b) and 9.3.2(j)); PROVIDED, that before asserting
its right to indemnification, if any, pursuant to this Section 7, Wells Fargo
shall first demand its corresponding right to indemnification pursuant to
Section 9 of the Participation Agreement (but need not exhaust any or all
remedies available thereunder). The indemnities contained in this Section 7
extend to Wells Fargo only in its individual capacity and shall not be construed
as indemnities of the Trust Indenture Estate or the Trust Estate (except to the
extent, if any, that Wells Fargo has been reimbursed by the Trust Indenture
Estate or the Trust Estate for amounts covered by the indemnities contained in
this Section 7). The indemnities contained in this Section 7 shall survive the
termination of this Trust Agreement. In addition, if necessary, Wells Fargo
shall be entitled to indemnification from the Trust Estate, subject to the Lien
of the Trust Indenture, for any liability, obligation, loss, damage, penalty,
tax, claim, action, suit, cost, expense or disbursement indemnified against
pursuant to this Section 7 to the extent not reimbursed by Lessee, Owner
Participant or others, but without releasing any of them from their respective
agreements of reimbursement; and, to secure the same Wells Fargo shall have a
lien on the Trust Estate, subject to the lien of the Trust Indenture and subject
further to the provisions of Section 6.7, which shall be prior to any interest
therein of Owner Participant. The payor of any indemnity under this Section 7
shall be subrogated to any right of the person indemnified in respect of the
matter as to which such indemnity was paid.
SECTION 8. TRANSFER OF OWNER PARTICIPANT'S INTEREST
8.1 Transfer of Interest
All provisions of Section 10 of the Participation Agreement shall
(with the same force and effect as if set forth in full in this Section 8.1) be
applicable to any assignment, conveyance or other transfer by Owner Participant
of any of its right, title or interest in and to the Participation Agreement,
the Trust Estate or this Trust Agreement.
SECTION 9. SUCCESSOR OWNER TRUSTEES; CO-TRUSTEES
9.1 Resignation of Owner Trustee; Appointment of Successor
9.1.1 Resignation or Removal
Owner Trustee or any successor Owner Trustee (a) shall resign if
required to do so pursuant to Section 13.3 of the Participation Agreement or
upon obtaining Actual Knowledge of any facts that would cast doubt upon its
continuing status as a Citizen of the United States and (b) may resign at any
time without cause by giving at least 60 days' prior written notice to Owner
Participant, Mortgagee and Lessee, such resignation to be effective upon the
assumption of the trusts hereunder by the successor Owner Trustee under Section
9.1.2. In addition, [subject to Section 12.1(b), Owner Participant may at any
time remove Owner Trustee, but only with](14) [Owner Participant may at any time
remove Owner Trustee with or without](15) cause by a notice in writing delivered
to Owner Trustee, Mortgagee and Lessee, such removal to be effective upon the
assumption of the trusts hereunder by the successor Owner Trustee under Section
9.1.2 [, PROVIDED, that, in the case of a removal without cause, unless a Lease
Event of Default shall have occurred and be continuing, such removal shall be
subject to the consent of Lessee (which consent shall not be unreasonably
withheld)](16). In the case of the resignation or removal of Owner Trustee,
Owner Participant may appoint a successor Owner Trustee by an instrument signed
by Owner Participant, with, unless a Lease Event of Default shall have occurred
and be continuing, the consent of Lessee (which consent shall not be
unreasonably withheld). If a successor Owner Trustee shall not have been
appointed within 30 days after such notice of resignation or removal, Owner
Trustee, Owner Participant, Lessee or Mortgagee may apply to any court of
competent jurisdiction to appoint a successor Owner Trustee to act until such
time, if any, as a successor shall have been appointed as above provided. Any
successor Owner Trustee so appointed by such court shall immediately and without
further act be superseded by any successor Owner Trustee appointed as above
provided within one year from the date of the appointment by such court.
9.1.2 Execution and Delivery of Documents, Etc.
Any successor Owner Trustee, however appointed, shall execute and
deliver to the predecessor Owner Trustee, with a copy to Owner Participant,
Lessee and Mortgagee, an instrument accepting such appointment and assuming the
obligations of Owner Trustee, in its individual capacity and as Owner Trustee,
under the Owner Trustee Agreements, and thereupon such successor Owner Trustee,
without further act, shall become vested with all the estates, properties,
rights, powers, duties and trusts of the predecessor Owner Trustee in the trusts
under this Trust Agreement with like effect as if originally named Owner Trustee
in this Trust Agreement; but nevertheless, upon the written request of such
successor Owner Trustee, such predecessor Owner Trustee shall execute and
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(14) Include if OP not a Citizen of the U.S.
(15) Include if OP not a Citizen of the U.S.
(16) Delete if OP not a Citizen of the U.S.
deliver an instrument transferring to such successor Owner Trustee, upon the
trusts herein expressed, all the estates, properties, rights, powers and trusts
of such predecessor Owner Trustee, and such predecessor Owner Trustee shall duly
assign, transfer, deliver and pay over to such successor Owner Trustee all
monies or other property then held by such predecessor Owner Trustee upon the
trusts herein expressed. Upon the appointment of any successor Owner Trustee
under this Section 9.1, the predecessor Owner Trustee will execute such
documents as are provided to it by such successor Owner Trustee and will take
such further actions as are requested of it by such successor Owner Trustee as
are required to cause registration of the Aircraft included in the Trust Estate
to be transferred upon the records of the FAA, or other governmental authority
having jurisdiction, into the name of the successor Owner Trustee.
9.1.3 Qualifications
Any successor Owner Trustee, however appointed, shall be a Citizen
of the United States and shall also be a bank or trust company organized under
the Laws of the United States or any state thereof 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 Owner Trustee under this Trust
Agreement upon reasonable or customary terms. No such successor Owner Trustee
shall be located in a jurisdiction which creates material adverse consequences
for Lessee (unless such material adverse consequences would be created by
substantially all jurisdictions where major banking or trust institutions are
located).
9.1.4 Merger, Etc.
Any corporation into which Wells Fargo may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which Wells Fargo shall be a party, or any
corporation to which substantially all the corporate trust business of Wells
Fargo may be transferred, shall, subject to the terms of Section 9.1.3, be Owner
Trustee under this Trust Agreement without further act, PROVIDED, that such
corporation shall not also be the Mortgagee.
9.2 Co-Trustees and Separate Trustees
(a) If at any time it shall be necessary or prudent in order to
conform to any Law of any jurisdiction in which all or any part of the Trust
Estate is located, or Owner Trustee being advised by counsel shall determine
that it is so necessary or prudent in the interest of Owner Participant or Owner
Trustee, or Owner Trustee shall have been directed to do so by Owner
Participant, Owner Trustee and Owner Participant shall execute and deliver an
agreement supplemental hereto and all other instruments and agreements necessary
or proper to constitute another bank or trust company or one or more persons
(any or all of which shall be a Citizen of the United States) approved by Owner
Trustee and Owner Participant, either to act as co-trustee, jointly with Owner
Trustee, or to act as separate trustee under this Trust Agreement (any such
co-trustee or separate trustee being herein sometimes referred to as an
"additional trustee"). In the event Owner Participant shall not have joined in
the execution of such agreements' supplemental hereto within ten days after the
receipt of a written request from Owner Trustee so to do, or in case a Lease
Event of Default or Indenture Event of Default shall occur and be continuing,
Owner Trustee may act under the foregoing provisions of this Section 9.2 without
the concurrence of Owner Participant; and Owner Participant hereby appoints
Owner Trustee its agent and attorney-in-fact to act for it under the foregoing
provisions of this Section 9.2 in either of such contingencies.
(b) Every additional trustee under this Trust Agreement shall, to
the extent permitted by Law, be appointed and act, and Owner Trustee and its
successors shall act, subject to the following provisions and conditions:
(i) All powers, duties, obligations and rights conferred upon
Owner Trustee in respect of the custody, control and management of monies,
the Aircraft or documents authorized to be delivered under this Trust
Agreement or under the Participation Agreement shall be exercised solely
by Owner Trustee;
(ii) All other rights, powers, duties and obligations conferred or
imposed upon Owner Trustee shall be conferred or imposed upon and
exercised or performed by Owner Trustee and such additional trustee
jointly, except to the extent that under any Law of any jurisdiction in
which any particular act or acts are to be performed (including the
holding of title to the Trust Estate) Owner Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights,
powers, duties and obligations shall be exercised and performed by such
additional trustee;
(iii) No power given to, or which it is provided hereby may be
exercised by, any such additional trustee shall be exercised under this
Trust Agreement by such additional trustee, except jointly with, or with
the consent in writing of, Owner Trustee;
(iv) No trustee under this Trust Agreement shall be personally
liable by reason of any action or omission of any other trustee under this
Trust Agreement;
(v) Owner Participant, at any time, by an instrument in writing
may remove any such additional trustee. In the event that Owner
Participant shall not have joined in the execution of any such instrument
within ten days after the receipt of a written request from Owner Trustee
so to do, Owner Trustee shall have the power to remove any such additional
trustee without the concurrence of Owner Participant; and Owner
Participant hereby appoints Owner Trustee its agent and attorney-in-fact
to act for it in such connection in such contingency; and
(vi) No appointment of, or action by, any additional trustee will
relieve Owner Trustee of any of its obligations under, or otherwise affect
any of the terms of, the Trust Indenture or affect the interests of
Mortgagee or the Note Holders in the Trust Indenture Estate.
(c) In case any separate trustee under this Section 9.2 shall die,
become incapable of acting, resign or be removed, the title to the Trust Estate
and all rights and duties of such separate trustee shall, so far as permitted by
Law, vest in and be exercised by Owner Trustee, without the appointment of a
successor to such separate trustee.
SECTION 10. SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT AND
OTHER DOCUMENTS
10.1 Supplements and Amendments and Delivery Thereof
10.1.1 Supplements and Amendments
Subject to Section 7.2.2 of the Participation Agreement, this Trust
Agreement may not be amended, supplemented or otherwise modified except by an
instrument in writing signed by Owner Trustee and Owner Participant. Subject to
Section 10.2, Section 9.01 of the Trust Indenture and Section 7.6.7 of the
Participation Agreement, Owner Trustee will execute any amendment, supplement or
other modification of this Trust Agreement or of any other Owner Trustee
Agreement which it is requested in writing to execute by Owner Participant,
except that Owner Trustee shall not execute any such amendment, supplement or
other modification which, by the express provisions of any of the above
documents, requires the consent of any other party unless such consent shall
have been obtained; and PROVIDED, that, without the prior written consent of
Owner Participant, (a) no such supplement, amendment or modification shall (i)
modify any of the provisions of Section 4 or this Section 10.1, (ii) reduce,
modify or amend any indemnities in favor of Owner Participant as set forth in
Section 9 of the Participation Agreement or in the Tax Indemnity Agreement,
(iii) reduce the amount or extend the time of payment of Basic Rent,
Supplemental Rent, Stipulated Loss Value or Termination Value as set forth in
the Lease (except in accordance with Section 3 of the Lease) or (iv) modify any
of the rights of Owner Participant under the Trust Indenture and (b) no such
supplement, amendment or modification shall require Owner Participant to invest
or advance funds or shall entail any additional personal liability or the
surrender of any indemnification, claim or individual right on the part of Owner
Participant with respect to any agreement or obligation.
10.1.2 Delivery of Amendments and Supplements to Certain
Parties
A signed copy of each amendment or supplement referred to in Section
10.1.1 to which Lessee is not a party shall be delivered promptly by Owner
Trustee to Lessee, and a signed copy of each amendment or supplement referred to
in Section 10.1.1 shall be delivered promptly by Owner Trustee to Mortgagee.
10.2 Discretion as to Execution of Documents
Prior to executing any document required to be executed by it
pursuant to the terms of Section 10.1, Owner Trustee shall be entitled to
receive an opinion of its counsel to the effect that the execution of such
document is authorized under this Trust Agreement. If in the opinion of Owner
Trustee any such document adversely affects any right, duty, immunity or
indemnity in favor of Owner Trustee under this Trust Agreement or under any
other Owner Trustee Agreement, Owner Trustee may in its discretion decline to
execute such document unless Owner Trustee is furnished with indemnification
from Lessee or any other party upon terms and in amounts reasonably satisfactory
to Owner Trustee to protect the Trust Estate and the Owner Trustee against any
and all liabilities, costs and expenses arising out of the execution of such
documents.
10.3 Absence of Requirements as to Form
It shall not be necessary for any written request furnished pursuant
to Section 10.1 to specify the particular form of the proposed documents to be
executed pursuant to such Section 10.1, but it shall be sufficient if such
request shall indicate the substance thereof.
10.4 Distribution of Documents
Promptly after the execution by Owner Trustee of any document
entered into pursuant to Section 10.1, Owner Trustee shall mail, by certified
mail, postage prepaid, a conformed copy thereof to Owner Participant, but the
failure of Owner Trustee to mail such conformed copy shall not impair or affect
the validity of such document.
10.5 No Request Needed as to Lease Supplement and Trust
Indenture Supplement
No written request pursuant to Section 10.1 shall be required to
enable Owner Trustee to enter into, pursuant to Section 3.1 and the Lease or the
Trust Indenture, as the case may be, the Lease Supplement with Lessee and the
Trust Indenture Supplement.
SECTION 11. MISCELLANEOUS
11.1 Termination of Trust Agreement
This Trust Agreement and the trusts created hereby shall be of no
further force or effect upon the earlier of (a) both the final discharge of the
Trust Indenture pursuant to Section 10.01 thereof and the sale or other final
disposition by Owner Trustee of all property constituting part of the Trust
Estate and the final distribution by Owner Trustee of all monies or other
property or proceeds constituting part of the Trust Estate in accordance with
Section 4, PROVIDED, that at such time Lessee shall have fully complied with all
of the terms of the Lease and the Participation Agreement or (b) 21 years less
one day after the death of the last survivor of all of the descendants of the
grandparents of David C. Rockefeller living on the date of the earliest
execution of this Trust Agreement by any party hereto, but if this Trust
Agreement and the trusts created hereby shall be or become authorized under
applicable Law to be valid for a period commencing on the 21st anniversary of
the death of such last survivor (or, without limiting the generality of the
foregoing, if legislation shall become effective providing for the validity of
this Trust Agreement and the trusts created hereby for a period in gross
exceeding the period for which this Trust Agreement and the trusts created
hereby are hereinabove stated to extend and be valid), then this Trust Agreement
and the trusts created hereby shall not terminate under this clause (b) but
shall extend to and continue in effect, but only if such nontermination and
extension shall then be valid under applicable Law, until the day preceding such
date as the same shall, under applicable Law, cease to be valid; otherwise this
Trust Agreement and the trusts created hereby shall continue in full force and
effect in accordance with the terms hereof. Except as expressly set forth in
Section 11.2, this Trust Agreement and the trusts created hereby may not be
revoked by Owner Participant.
11.2 Termination at Option of the Owner Participant
Notwithstanding Section 11.1 hereof, this Agreement and trust
created hereby shall terminate and the Trust Estate shall be distributed to the
Owner Participant, and this Agreement shall be of no further force and effect,
upon the election of the Owner Participant by notice to the Owner Trustee, if
such notice shall be accompanied by the written agreement (in form and substance
satisfactory to the Owner Trustee) of the Owner Participant assuming all
obligations of the Owner Trustee under or contemplated by the Operative
Agreements or incurred by it as trustee hereunder and releasing the Owner
Trustee therefrom; provided, however, that such notice may be given only after
the time the Lien of the Trust Indenture is discharged under Section 10.01 of
the Trust Indenture and after the Lease shall no longer be in effect.
11.3 Owner Participant Has No Legal Title in Trust Estate
Owner Participant shall not have legal title to any part of the
Trust Estate. No transfer, by operation of Law or otherwise, of any right, title
and interest of Owner Participant in and to the Trust Estate under this Trust
Agreement shall operate to terminate this Trust Agreement or the trusts under
this Trust Agreement or entitle any successors or transferees of Owner
Participant to an accounting or to the transfer of legal title to any part of
the Trust Estate.
11.4 Assignment, Sale, etc. of Aircraft
Any assignment, sale, transfer or other conveyance of the Aircraft
by Owner Trustee made pursuant to the terms of this Trust Agreement or of the
Lease or the Participation Agreement 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 assignment, sale, transfer or conveyance or as to the
application of any sale or other proceeds with respect thereto by Owner Trustee.
11.5 Trust Agreement for Benefit of Certain Parties Only
Except for the terms of Section 10 of the Participation Agreement
incorporated in Section 8 and except as otherwise provided in Sections 4.2.5,
5.1, 6.7, 9, 10.1, 11.1 and 11.2, nothing in this Trust Agreement, whether
express or implied, shall be construed to give any person other than Owner
Trustee and Owner Participant any legal or equitable right, remedy or claim
under or in respect of this Trust Agreement; and this Trust Agreement shall be
held to be for the sole and exclusive benefit of Owner Trustee and Owner
Participant.
11.6 Citizenship of Owner Participant
If at any time there shall be more than one Owner Participant, then
any Owner Participant who shall cease to be a Citizen of the United States shall
have no voting or similar rights under this Trust Agreement and shall have no
right to direct, influence or limit the exercise of, or to prevent the direction
or influence of, or place any limitation on the exercise of, Owner Trustee's
authority or to remove Owner Trustee.
11.7 Notices
Unless otherwise expressly permitted by the terms of this Trust
Agreement, all notices, requests, demands, authorizations, directions, consents,
waivers and other communications required or permitted to be made, given,
furnished or filed under this Trust Agreement shall be in writing, shall refer
specifically to this Trust Agreement and shall be personally delivered, sent by
telecopy, telex or other means of electronic facsimile or telecommunication
transmission, sent by registered mail or certified mail, return receipt
requested, postage prepaid, or sent by overnight courier service, in each case
to the respective telex, telecopy or other number or address set forth for such
party in Schedule 1 to the Participation Agreement, or to such other telex,
telecopy or other number or address 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 telecopy
or other means of electronic facsimile or telecommunication transmission, when
confirmed, or (b) by registered or certified mail, three Business Days after
being deposited, properly addressed, in the U.S. mail.
11.8 Severability
If any provision of this Trust Agreement 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 Trust Agreement shall be deemed to be a valid and binding
agreement in all respects, enforceable in accordance with its terms.
11.9 Waivers, Etc.
No term or provision hereof may be changed, waived, discharged or
terminated orally, but only by an instrument in writing entered into in
compliance with the terms of Section 10; and any waiver of the terms hereof
shall be effective only in the specific instance and for the specific purpose
given.
11.10 Counterparts
This Trust Agreement and any amendments, waivers, consents or
supplements hereto may be executed in any number of 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.
11.11 Binding Effect, Etc.
All covenants and agreements contained in this Trust Agreement shall
be binding upon, and inure to the benefit of, Owner Trustee and its successors
and assigns, and Owner Participant and its successors and, to the extent
permitted by Section 8, assigns. Any request, notice, direction, consent, waiver
or other instrument or action by Owner Participant shall bind its successors and
assigns.
11.12 Headings; References
The headings and the table of contents used in this Trust Agreement
are for convenience of reference only and shall not define or limit any of the
terms or provisions hereof and shall not in any way affect the construction of,
or be taken into consideration in interpreting, this Trust Agreement.
11.13 Name of the Trust
The name of the trust created hereby shall be "XJT Owner Trust [TN]"
and such name may (but need not) be used in any correspondence and filings made
with respect to the security interest granted under the Trust Indenture or
otherwise by the Owner Trustee in connection with the trust created hereby.
11.14 Governing Law
THIS TRUST AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS
OF THE STATE OF UTAH, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS.
[SECTION 12. CERTAIN LIMITATIONS
12.1 Limitations on Control; Exceptions
(a) Notwithstanding any other provision of this Agreement, at any
time that the Owner Participant is not a citizen of the United States as defined
in 49 U.S.C. Section 40102(a)(15) (a "Citizen"), the Owner Participant shall
have no rights or powers to direct, influence, or control the Owner Trustee in
the performance of the Owner Trustee's duties under this Agreement in connection
with matters involving the ownership and operation of the Aircraft by the Owner
Trustee. In all matters involving the ownership and operation of the Aircraft by
the Owner Trustee, the Owner Trustee shall have absolute and complete discretion
in connection therewith and shall be free of any kind of influence or control
whatsoever by the Owner Participant at any time that the Owner Participant is
not a Citizen, and the Owner Trustee shall exercise its duties under this
Agreement in connection with all matters involving the ownership and operation
of the Aircraft by the Owner Trustee as it, in its discretion, shall deem
necessary to protect the interests of the United States, notwithstanding any
countervailing interest of any foreign power that, or whose citizens, may have a
direct or indirect interest in the Owner Participant and any such action by the
Owner Trustee shall not be considered malfeasance or in breach of any obligation
that the Owner Trustee might otherwise have to the Owner Participant; PROVIDED,
HOWEVER, that subject to the foregoing limitations, the Owner Trustee shall
exercise its discretion in all matters involving the ownership and operation of
the Aircraft by the Owner Trustee with due regard for the interests of the Owner
Participant. In exercising any of its rights and duties under this Agreement in
connection with matters that may arise not relating to the ownership and
operation of the Aircraft, the Owner Trustee shall be permitted to seek the
advice of the Owner Participant before taking, or refraining from taking, any
action with respect thereto. The Owner Trustee shall notify the Owner
Participant of its exercise of rights and duties under the Trust Agreement in
connection with matters involving the ownership and operation of the Aircraft by
the Owner Trustee.
(b) At any time the Owner Participant is not a Citizen of the United
States, the Owner Participant shall have no rights or powers to remove the Owner
Trustee except with cause, including without limitation for gross negligence,
willful misconduct, misfeasance, malfeasance, or nonfeasance in, or material
breach of, its duties under the Trust Agreement or applicable law.
(c) Subject to the requirements of subsection (a) above, the Owner
Trustee will not, without the prior written consent of the Owner Participant,
(a) sell, mortgage, pledge, or otherwise dispose of the Aircraft or other assets
held in the trust estate relating thereto, except as otherwise provided for in
this Agreement, or (b) amend the Lease or other Operative Documents or give any
consents thereunder.
(d) Notwithstanding any other provision of this Section 12.1, the
Owner Participant shall be entitled to receive from the Owner Trustee, or
otherwise, and the Owner Trustee shall not be entitled to retain, all rent,
payment, and insurance proceeds, and other payments of any kind or nature
whatsoever payable to the Owner Participant pursuant to the Trust Agreement or
any other Operative Agreements in the same manner as if the power of management
and control had not been transferred to the Owner Trustee as provided in this
Section 12.1.
(e) The purpose of this Section 12.1 is to give the Owner Trustee
the power to manage and control the Aircraft with respect to matters involving
the ownership and operation of the Aircraft by the Owner Trustee so as to assure
that (a) the Aircraft shall be controlled with respect to such matters by a
Citizen of the United States, (b) if the Owner Participant is not a Citizen of
the United States, the Owner Participant shall have no power to influence or
control the exercise of the Owner Trustee's authority with respect to such
matters, and (c) the Owner Trustee shall be able to give the affidavit required
by Section 47.7(c)(2)(iii) of the Federal Aviation Regulations, 14 C.F.R.
47.7(c)(2)(iii). The restrictions and requirements of this Section 12.1 shall be
construed in furtherance of such purpose.
(f) If persons who are not "citizens of the United States" as
defined in 49 U.S.C. section 40102(a)(15) or resident aliens have the power to
direct or remove the Owner Trustee, either directly or indirectly through the
control of another person, those persons together may not have more than 25% of
the aggregate power to direct or remove the Owner Trustee. Nothing in this
paragraph prevents those Persons from having more than 25% of the beneficial
interest in the Trust Estate.](17)
[This space intentionally left blank.]
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(17) Include Section 12 if OP not a Citizen of the U.S.
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
[OP]
By _______________________________
Name:
Title:
WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION
By _______________________________
Name:
Title:
Certificate
No. 1
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to Issuer or
its agent for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch the registered owner hereof,
Cede & Co., has an interest herein.
CONTINENTAL AIRLINES PASS THROUGH TRUST 2004-ERJ1
9.558% Continental Airlines Pass Through Certificate, Series 2004-ERJ1
Issuance Date: June 29, 2004
Final Maturity Date: March 1, 2021
Evidencing A Fractional Undivided Interest In The Continental
Airlines Pass Through Trust 2004-ERJ1, The Property Of Which
Shall Include Certain Equipment Notes Each Secured By An Aircraft
Leased To Continental Airlines, Inc.
$173,629,000 Fractional Undivided Interest representing
0.000575940655% of the Trust per $1,000 face amount
THIS CERTIFIES THAT CEDE & CO., for value received, is the
registered owner of a $173,629,000 (ONE HUNDRED SEVENTY-THREE MILLION, SIX
HUNDRED TWENTY-NINE THOUSAND DOLLARS) Fractional Undivided Interest in the
Continental Airlines Pass Through Trust 2004-ERJ1 (the "TRUST") created by
Wilmington Trust Company, as trustee (the "TRUSTEE"), pursuant to a Pass Through
Trust Agreement, dated as of September 25, 1997 (the "BASIC AGREEMENT"), between
the Trustee and Continental Airlines, Inc., a Delaware corporation (the
"COMPANY"), as supplemented by Trust Supplement No. 2004-ERJ1 thereto, dated as
of June 29, 2004 (the "TRUST SUPPLEMENT" and, together with the Basic Agreement,
the "AGREEMENT"), between the Trustee and the Company, a summary of certain of
the pertinent provisions of which is set forth below. To the extent not
otherwise defined herein, the capitalized terms used herein have the meanings
assigned to them in the Agreement. This Certificate is one of the duly
authorized Certificates designated as "9.558% Continental Airlines Pass Through
Certificates, Series 2004-ERJ1"(herein called the "CERTIFICATES"). This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement. By virtue of its acceptance hereof, the holder of
this Certificate (the "CERTIFICATEHOLDER" and, together with all other holders
of Certificates issued by the Trust, the "CERTIFICATEHOLDERS") assents to and
agrees to be bound by the provisions of the Agreement and the Intercreditor
Agreement. The property of the Trust includes 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 an Aircraft
leased to the Company.
The Certificates represent Fractional Undivided Interests in the
Trust and the Trust Property and have no rights, benefits or interest in respect
of any other separate trust established pursuant to the terms of the Basic
Agreement for any other series of certificates issued pursuant thereto.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from funds then available to the Trustee, there will be
distributed on the 1st day of each month (a "REGULAR DISTRIBUTION DATE")
commencing August 1, 2004, 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.
Distributions on this Certificate will be made by the Trustee by
check mailed to the Person entitled thereto, without presentation or surrender
of this Certificate or the making of any notation hereon, except that with
respect to Certificates registered on the Record Date in the name of a Clearing
Agency (or its nominee), such distribution shall be made by wire transfer.
Except as otherwise provided in the Agreement and notwithstanding the above, the
final distribution on this Certificate will be made after notice mailed by the
Trustee of the pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency of the Trustee specified
in such notice.
The Certificates do not represent a direct obligation of, or an
obligation guaranteed by, or an interest in, the Company or the Trustee or any
affiliate thereof. The Certificates are limited in right of payment, all as more
specifically set forth on the face hereof and in the Agreement. All payments or
distributions made to Certificateholders under the Agreement shall be made only
from the Trust Property and only to the extent that the Trustee shall have
sufficient income or proceeds from the Trust Property to make such payments in
accordance with the terms of the Agreement. Each Certificateholder of this
Certificate, by its acceptance hereof, agrees that it will look solely to the
income and proceeds from the Trust Property to the extent available for
distribution to such Certificateholder as provided in the Agreement. This
Certificate does not purport to summarize the Agreement and reference is made to
the Agreement for information with respect to the interests, rights, benefits,
obligations, privileges, and duties evidenced hereby. A copy of the Agreement
may be examined during normal business hours at the principal office of the
Trustee, and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any time
by the Company and the Trustee with the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust. Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations set
forth therein, the transfer of this Certificate is registrable in the Register
upon surrender of this Certificate for registration of transfer at the offices
or agencies maintained by the Trustee in its capacity as Registrar, or by any
successor Registrar, duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Trustee and the Registrar, duly executed by
the Certificateholder hereof or such Certificateholder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate Fractional Undivided Interest in the
Trust will be issued to the designated transferee or transferees.
The Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $1,000 Fractional Undivided Interest
and integral multiples thereof except that one Certificate may be issued in a
different denomination. As provided in the Agreement and subject to certain
limitations therein set forth, the Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
Fractional Undivided Interest in the Trust, as requested by the
Certificateholder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee shall require payment of a sum sufficient to cover
any tax or governmental charge payable in connection therewith.
Each Certificateholder and Investor, by its acceptance of this
Certificate or a beneficial interest herein, agrees to treat the Trust as a
grantor trust for all U.S. federal, state and local income tax purposes.
The Trustee, the Registrar, and any agent of the Trustee or the
Registrar may treat the person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Trustee, the Registrar, nor
any such agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and
the Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be distributed to them pursuant to
the Agreement and the disposition of all property held as part of the Trust
Property.
Any Person acquiring or accepting this Certificate or an interest
herein will, by such acquisition or acceptance, be deemed to have represented
and warranted to and for the benefit of each Owner Participant and the Company
that either: (i) the assets of an employee benefit plan subject to Title I of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or of
a plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended
(the "CODE"), have not been used to purchase this Certificate or an interest
herein or (ii) the purchase and holding of this Certificate or an interest
herein are exempt from the prohibited transaction restrictions of ERISA and the
Code pursuant to one or more prohibited transaction statutory or administrative
exemptions.
THE AGREEMENT AND THIS CERTIFICATE HAVE BEEN DELIVERED IN THE STATE
OF NEW YORK AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
CONTINENTAL AIRLINES PASS THROUGH TRUST
2004-ERJ1
By: WILMINGTON TRUST COMPANY,
as Trustee
By:
-----------------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned
Agreement.
WILMINGTON TRUST COMPANY,
as Trustee
By:
-----------------------------------------
Name:
Title:
Aviation Specialists Group
1037 Sterling Road, Suite 203
Herndon, Virginia 20170
June 14, 2004
CONTINENTAL AIRLINES, INC.
1600 Smith Street
Houston, TX 77002
Re: PRELIMINARY PROSPECTUS SUPPLEMENT, DATED JUNE 15, 2004, TO
THE PROSPECTUS DATED AUGUST 23, 2001, INCLUDED IN
REGISTRATION STATEMENT NO. 333-67886 OF CONTINENTAL
AIRLINES, INC.
Ladies and Gentlemen:
We consent to the use of the report prepared by us with respect to
the aircraft referred to therein, to the summary of such report in the text
under the headings "Prospectus Supplement Summary--Equipment Notes and the
Aircraft," "Risk Factors--Risk Factors Relating to the Certificates and the
Offering--Appraisals and Realizable Value of Aircraft," "Description of the
Aircraft and the Appraisals--The Appraisals" and "Experts" in the
above-captioned Preliminary Prospectus Supplement and to the references to our
name under the headings "Description of the Aircraft and the Appraisals--The
Appraisals" and "Experts" in such Preliminary Prospectus Supplement. We also
consent to such use, summary and references in the Final Prospectus Supplement
relating to the offering described in such Preliminary Prospectus Supplement, to
the extent such use, summary and references are unchanged.
Sincerely,
Aviation Specialists Group
/s/ FRED J. KLEIN
--------------------------------------------
Name: Fred J. Klein
Title: President
AvSolutions
195 Church Street
8th Floor
New Haven, CT 06510
June 14, 2004
CONTINENTAL AIRLINES, INC.
1600 Smith Street
Houston, TX 77002
Re: PRELIMINARY PROSPECTUS SUPPLEMENT, DATED JUNE 15, 2004, TO
THE PROSPECTUS DATED AUGUST 23, 2001, INCLUDED IN
REGISTRATION STATEMENT NO. 333-67886 OF CONTINENTAL
AIRLINES, INC.
Ladies and Gentlemen:
We consent to the use of the report prepared by us with respect to
the aircraft referred to therein, to the summary of such report in the text
under the headings "Prospectus Supplement Summary--Equipment Notes and the
Aircraft," "Risk Factors--Risk Factors Relating to the Certificates and the
Offering--Appraisals and Realizable Value of Aircraft," "Description of the
Aircraft and the Appraisals--The Appraisals" and "Experts" in the
above-captioned Preliminary Prospectus Supplement and to the references to our
name under the headings "Description of the Aircraft and the Appraisals--The
Appraisals" and "Experts" in such Preliminary Prospectus Supplement. We also
consent to such use, summary and references in the Final Prospectus Supplement
relating to the offering described in such Preliminary Prospectus Supplement, to
the extent such use, summary and references are unchanged.
Sincerely,
AvSolutions
/s/ SCOTT E. DANIELS
--------------------------------------------
Name: Scott E. Daniels
Title: VP - Asset Management
BK Associates, Inc.
1295 Northern Boulevard
Manhasset, New York 11030
June 14, 2004
CONTINENTAL AIRLINES, INC.
1600 Smith Street
Houston, TX 77002
Re: PRELIMINARY PROSPECTUS SUPPLEMENT, DATED JUNE 15, 2004, TO
THE PROSPECTUS DATED AUGUST 23, 2001, INCLUDED IN
REGISTRATION STATEMENT NO. 333-67886 OF CONTINENTAL
AIRLINES, INC.
Ladies and Gentlemen:
We consent to the use of the report prepared by us with respect to
the aircraft referred to therein, to the summary of such report in the text
under the headings "Prospectus Supplement Summary--Equipment Notes and the
Aircraft," "Risk Factors--Risk Factors Relating to the Certificates and the
Offering--Appraisals and Realizable Value of Aircraft," "Description of the
Aircraft and the Appraisals--The Appraisals" and "Experts" in the above-
captioned Preliminary Prospectus Supplement and to the references to our name
under the headings "Description of the Aircraft and the Appraisals--The
Appraisals" and "Experts" in such Preliminary Prospectus Supplement. We also
consent to such use, summary and references in the Final Prospectus Supplement
relating to the offering described in such Preliminary Prospectus Supplement, to
the extent such use, summary and references are unchanged.
Sincerely,
BK Associates, Inc.
/s/ R.L. BRITTON
--------------------------------------------
R.L. Britton
Vice President
ISTAT Senior Certified Appraiser
RLB/kf
Aviation Specialists Group
1037 Sterling Road, Suite 203
Herndon, Virginia 20170
June 17, 2004
CONTINENTAL AIRLINES, INC.
1600 Smith Street
Houston, TX 77002
Re: FINAL PROSPECTUS SUPPLEMENT, DATED JUNE 18, 2004, TO THE
PROSPECTUS DATED AUGUST 23, 2001, INCLUDED IN REGISTRATION
STATEMENT NO. 333-67886 OF CONTINENTAL AIRLINES, INC.
Ladies and Gentlemen:
We consent to the use of the report prepared by us with respect to
the aircraft referred to therein, to the summary of such report in the text
under the headings "Prospectus Supplement Summary--Equipment Notes and the
Aircraft," "Risk Factors--Risk Factors Relating to the Certificates and the
Offering--Appraisals and Realizable Value of Aircraft," "Description of the
Aircraft and the Appraisals--The Appraisals" and "Experts" in the
above-captioned Final Prospectus Supplement and to the references to our name
under the headings "Description of the Aircraft and the Appraisals--The
Appraisals" and "Experts" in such Final Prospectus Supplement.
Sincerely,
Aviation Specialists Group
/s/ FRED J. KLEIN
--------------------------------------------
Name: Fred J. Klein
Title: President
AvSolutions
195 Church Street
8th Floor
New Haven, CT 06510
June 17, 2004
CONTINENTAL AIRLINES, INC.
1600 Smith Street
Houston, TX 77002
Re: FINAL PROSPECTUS SUPPLEMENT, DATED JUNE 18, 2004, TO THE
PROSPECTUS DATED AUGUST 23, 2001, INCLUDED IN REGISTRATION
STATEMENT NO. 333-67886 OF CONTINENTAL AIRLINES, INC.
Ladies and Gentlemen:
We consent to the use of the report prepared by us with respect to
the aircraft referred to therein, to the summary of such report in the text
under the headings "Prospectus Supplement Summary--Equipment Notes and the
Aircraft," "Risk Factors--Risk Factors Relating to the Certificates and the
Offering--Appraisals and Realizable Value of Aircraft," "Description of the
Aircraft and the Appraisals--The Appraisals" and "Experts" in the
above-captioned Final Prospectus Supplement and to the references to our name
under the headings "Description of the Aircraft and the Appraisals--The
Appraisals" and "Experts" in such Final Prospectus Supplement.
Sincerely,
AvSolutions
/s/ SCOTT E. DANIELS
--------------------------------------------
Name: Scott E. Daniels
Title: VP - Asset Management
BK Associates, Inc.
1295 Northern Boulevard
Manhasset, New York 11030
June 17, 2004
CONTINENTAL AIRLINES, INC.
1600 Smith Street
Houston, TX 77002
Re: FINAL PROSPECTUS SUPPLEMENT, DATED JUNE 18, 2004, TO THE
PROSPECTUS DATED AUGUST 23, 2001, INCLUDED IN REGISTRATION
STATEMENT NO. 333-67886 OF CONTINENTAL AIRLINES, INC.
Ladies and Gentlemen:
We consent to the use of the report prepared by us with respect to
the aircraft referred to therein, to the summary of such report in the text
under the headings "Prospectus Supplement Summary--Equipment Notes and the
Aircraft," "Risk Factors--Risk Factors Relating to the Certificates and the
Offering--Appraisals and Realizable Value of Aircraft," "Description of the
Aircraft and the Appraisals--The Appraisals" and "Experts" in the
above-captioned Final Prospectus Supplement and to the references to our name
under the headings "Description of the Aircraft and the Appraisals--The
Appraisals" and "Experts" in such Final Prospectus Supplement.
Sincerely,
BK Associates, Inc.
/s/ R.L. BRITTON
--------------------------------------------
R.L. Britton
Vice President
ISTAT Senior Certified Appraiser
RLB/kf