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):
April 21, 1998
CONTINENTAL AIRLINES, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-09781 74-2099724
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
2929 Allen Parkway, Suite 2010, Houston, Texas 77019
(Address of principal executive offices) (Zip Code)
(713) 834-2950
(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. 333-34545) of
Continental Airlines, Inc. The Registration Statement and the Prospectus
Supplement, dated April 15, 1998, to the Prospectus, dated September 4, 1997,
relate to the offering of Continental Airlines, Inc. Pass Through Certificates,
Series 1998-2.
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.
By /s/ Jeffery A. Smisek
---------------------
Jeffery A. Smisek
Executive Vice President
and General Counsel
May 4, 1998
EXHIBIT INDEX
4.1 Revolving Credit Agreement (1998-2A), dated April 21, 1998,
between Wilmington Trust Company, as Subordination Agent, as
Borrower, and Westdeutsche Landesbank Girozentrale, as
Liquidity Provider
4.2 Revolving Credit Agreement (1998-2B), dated April 21, 1998,
between Wilmington Trust Company, as Subordination Agent, as
Borrower, and Westdeutsche Landesbank Girozentrale, as
Liquidity Provider
4.3 Revolving Credit Agreement (1998-2C), dated April 21, 1998,
between Wilmington Trust Company, as Subordination Agent, as
Borrower, and Westdeutsche Landesbank Girozentrale, as
Liquidity Provider
4.4 Trust Supplement No. 1998-2A, dated April 21, 1998, between
Wilmington Trust Company, as Trustee, and Continental
Airlines, Inc. to Pass Through Trust Agreement, dated
September 25, 1997
4.5 Trust Supplement No. 1998-2B, dated April 21, 1998, between
Wilmington Trust Company, as Trustee, and Continental
Airlines, Inc. to Pass Through Trust Agreement, dated
September 25, 1997
4.6 Trust Supplement No. 1998-2C, dated April 21, 1998, between
Wilmington Trust Company, as Trustee, and Continental
Airlines, Inc. to Pass Through Trust Agreement, dated
September 25, 1997
4.7 Intercreditor Agreement, dated April 21, 1998, among
Wilmington Trust Company, as Trustee, Westdeutsche
Landesbank Girozentrale, as Liquidity Provider, and
Wilmington Trust Company, as Subordination Agent and Trustee
4.8 Form of Participation Agreement (Participation Agreement,
dated as of April 21, 1998, among Continental Airlines,
Inc., Lessee, Caljet LLC, Owner Participant, First Security
Bank, National Association, Owner Trustee, and Wilmington
Trust Company, Mortgagee and Loan Participant -- separate
agreement for each of 14 aircraft, each of which is
substantially the same)
4.9 Form of Lease (Lease Agreement, dated as of April 21, 1998,
between First Security Bank, National Association, Lessor,
and Continental Airlines, Inc., Lessee -- separate agreement
for each of 14 aircraft, each of which is substantially the
same)
4.10 Form of Indenture (Trust Indenture and Mortgage, dated as of
April 21, 1998, between First Security Bank, National
Association, Owner Trustee, and Wilmington Trust Company,
Mortgagee -- separate agreement for each of 14 aircraft,
each of which is substantially the same)
4.11 Form of Trust Agreement (Trust Agreement, dated as of April
21, 1998, between Caljet LLC and First Security Bank,
National Association -- separate agreement for each of 14
aircraft, each of which is substantially the same)
4.12 Form of Equipment Note, Series A (separate Equipment Note
relating to each of 14 aircraft, each of which is
substantially the same)
4.13 Form of Equipment Note, Series B (separate Equipment Note
relating to each of 14 aircraft, each of which is
substantially the same)
4.14 Form of Equipment Note, Series C (separate Equipment Note
relating to each of 14 aircraft, each of which is
substantially the same)
4.15 6.410% Continental Airlines Pass Through Certificate
1998-2A, Certificate No. 1
4.16 6.465% Continental Airlines Pass Through Certificate
1998-2B, Certificate No. 1
4.17 6.331% Continental Airlines Pass Through Certificate
1998-2C, Certificate No. 1
23.1 Consent of Aircraft Information Services, Inc., dated April
10, 1998
23.2 Consent of BK Associates, Inc., dated April 10, 1998
23.3 Consent of Morten Beyer and Agnew, Inc., dated April 10,
1998
EXECUTION
================================================================================
REVOLVING CREDIT AGREEMENT
(1998-2A)
DATED AS OF APRIL 21, 1998
BETWEEN
WILMINGTON TRUST COMPANY,
AS SUBORDINATION AGENT,
AS AGENT AND TRUSTEE FOR THE
CONTINENTAL AIRLINES PASS THROUGH TRUST 1998-2A
AS BORROWER
AND
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
ACTING THROUGH ITS NEW YORK BRANCH
AS LIQUIDITY PROVIDER
================================================================================
RELATING TO
CONTINENTAL AIRLINES PASS THROUGH TRUST 1998-2A
6.410% CONTINENTAL AIRLINES PASS THROUGH CERTIFICATES,
SERIES 1998-2A
TABLE OF CONTENTS
PAGE
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ARTICLE I - DEFINITIONS
Section 1.01. Certain Defined Terms.................................. 1
ARTICLE II - AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01. The Advances........................................... 7
Section 2.02. Making the Advances.................................... 7
Section 2.03. Fees................................................... 9
Section 2.04. Reductions or Termination of the Maximum Commitment.... 9
Section 2.05. Repayments of Interest Advances or the Final Advance... 9
Section 2.06. Repayments of Provider Advances........................ 10
Section 2.07. Payments to the Liquidity Provider Under the
Intercreditor Agreement................................ 11
Section 2.08. Book Entries........................................... 11
Section 2.09. Payments from Available Funds Only..................... 11
Section 2.10. Extension of the Expiry Date; Non-Extension Advance.... 11
ARTICLE III - OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs........................................ 12
Section 3.02. Capital Adequacy....................................... 13
Section 3.03. Payments Free of Deductions............................ 13
Section 3.04. Payments............................................... 14
Section 3.05. Computations........................................... 14
Section 3.06. Payment on Non-Business Days........................... 14
Section 3.07. Interest............................................... 15
Section 3.08. Replacement of Borrower................................ 16
Section 3.09. Funding Loss Indemnification........................... 16
Section 3.10. Illegality............................................. 17
ARTICLE IV - CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to Effectiveness of Section 2.01.. 17
Section 4.02. Conditions Precedent to Borrowing...................... 19
ARTICLE V - COVENANTS
Section 5.01. Affirmative Covenants of the Borrower.................. 19
Section 5.02. Negative Covenants of the Borrower..................... 19
ARTICLE VI - LIQUIDITY EVENTS OF DEFAULT
Section 6.01. Liquidity Events of Default............................ 20
ARTICLE VII - MISCELLANEOUS
Section 7.01. Amendments, Etc........................................ 20
Section 7.02. Notices, Etc........................................... 20
TABLE OF CONTENTS
(Continued)
PAGE
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Section 7.03. No Waiver; Remedies.................................... 21
Section 7.04. Further Assurances..................................... 21
Section 7.05. Indemnification; Survival of Certain Provisions........ 21
Section 7.06. Liability of the Liquidity Provider.................... 22
Section 7.07. Costs, Expenses and Taxes.............................. 22
Section 7.08. Binding Effect; Participations......................... 23
Section 7.09. Severability........................................... 24
Section 7.10. GOVERNING LAW.......................................... 24
Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity..................................... 24
Section 7.12. Execution in Counterparts.............................. 25
Section 7.13. Entirety............................................... 25
Section 7.14. Headings............................................... 26
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES....... 26
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
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of April 21, 1998, between WILMINGTON
TRUST COMPANY, a Delaware corporation, not in its individual capacity but solely
as Subordination Agent under the Intercreditor Agreement (each as defined
below), as agent and trustee for the Class A Trust (as defined below) (the
"BORROWER"), and WESTDEUTSCHE LANDESBANK GIROZENTRALE, a bank organized under
the laws of the State of North Rhine-Westphalia, Germany, acting through its New
York branch (the "LIQUIDITY PROVIDER").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the Class A Trust Agreement (such term and all
other capitalized terms used in these recitals having the meanings set forth or
referred to in Section 1.01), the Class A Trust is issuing the Class A
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment of a
portion of the interest on the Class A Certificates in accordance with their
terms, has requested the Liquidity Provider to enter into this Agreement,
providing in part for the Borrower to request in specified circumstances that
Advances be made hereunder.
NOW, THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. CERTAIN DEFINED TERMS. (a) DEFINITIONS. As used in this
Agreement and unless otherwise expressly indicated, or unless the context
clearly requires otherwise, the following capitalized terms shall have the
following respective meanings for all purposes of this Agreement:
"ADDITIONAL COST" has the meaning assigned to such term in Section
3.01.
"ADVANCE" means an Interest Advance, a Final Advance, a Provider
Advance, an Applied Provider Advance or an Unpaid Advance, as the case may
be.
"APPLICABLE LIQUIDITY RATE" has the meaning assigned to such term in
Section 3.07(g).
"APPLICABLE MARGIN" means (y) with respect to any Unpaid Advance or
Applied Provider Advance, 1.75%, or (z) with respect to any Unapplied
Provider Advance, .40%.
"APPLIED DOWNGRADE ADVANCE" has the meaning assigned to such term in
Section 2.06(a).
"APPLIED NON-EXTENSION ADVANCE" has the meaning assigned to such term
in Section 2.06(a).
"APPLIED PROVIDER ADVANCE" has the meaning assigned to such term in
Section 2.06(a).
"BASE RATE" means a fluctuating interest rate per annum in effect from
time to time, which rate per annum shall at all times be equal to (a) the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or if such
rate is not so published for any day that is a Business Day, the average of
the quotations for such day for such transactions received by the 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 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 Class A Certificate is
outstanding, the city and state in which the Class A 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.
"DOWNGRADE ADVANCE" means an Advance made pursuant to Section 2.02(c).
"EFFECTIVE DATE" has the meaning specified 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 the overall net income of
the Liquidity Provider or of its Lending Office by the jurisdiction where
such Liquidity Provider's principal office or such Lending Office is
located, and (ii) Excluded Withholding Taxes.
"EXCLUDED WITHHOLDING TAXES" means (i) withholding Taxes imposed by
the United States except to the extent that such United States withholding
Taxes are imposed as a result of any change in applicable law (excluding
from change in applicable law for this purpose a change in an applicable
treaty or other change in law affecting the applicability of a treaty)
after the date hereof, or in the case of a successor Liquidity Provider
(including a transferee of an Advance) or Lending Office, after the date on
which such successor Liquidity Provider obtains its interest or on which
the Lending Office is changed, and (ii) any withholding Taxes imposed by
the United States which are imposed or increased as a result of the
Liquidity Provider failing to deliver to the Borrower any certificate or
document (which certificate or document in the good faith judgment of the
Liquidity Provider it is legally entitled to provide) which is reasonably
requested by the Borrower to establish that payments under this Agreement
are exempt from (or entitled to a reduced rate of) withholding Tax.
"EXPENSES" means liabilities, obligations, damages, settlements,
penalties, claims, actions, suits, costs, expenses, and disbursements
(including, without limitation, reasonable fees and disbursements of legal
counsel and costs of investigation), provided that Expenses shall not
include any Taxes.
"EXPIRY DATE" means April 19, 1999, 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).
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement dated the
date hereof, among the Trustees, the Liquidity Provider, the liquidity
provider under each Liquidity Facility (other than this Agreement) and the
Subordination Agent, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"INTEREST ADVANCE" means an Advance made pursuant to Section 2.02(a).
"INTEREST PERIOD" means, with respect to any LIBOR Advance, each of
the following periods:
(i) the period beginning on the third Business Day following either
(x) the Liquidity Provider's receipt of the Notice of Borrowing
for such LIBOR Advance (or, in the case of an Unapplied Downgrade
Advance, the period beginning on the Expiry Date) or (y) the
withdrawal of funds from the Class A Cash Collateral Account for
the purpose of paying interest on the Class A Certificates as
contemplated by Section 2.06(a) hereof and, in either case,
ending on the next Regular Distribution Date (or ending, in the
case of an Interest Period applicable to any Unapplied Provider
Advance, on the numerically corresponding day in the first or
sixth calendar month after the first day of the applicable
Interest Period and/or on the next Regular Distribution Date, as
Continental may select by providing notice thereof to the
Borrower and the Liquidity Provider no later than three Business
Days prior to the commencement of such Interest Period, provided
that if Continental shall not provide such a notice at least
three Business Days prior to the commencement of such Interest
Period, then Continental shall be deemed to have selected an
Interest Period 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 (or ending, in the case of an Interest
Period applicable to any Unapplied Provider Advance, on the
numerically corresponding day in the first or sixth calendar
month after the first day of the applicable Interest Period
and/or on the next Regular Distribution Date, as Continental may
select by providing notice thereof to the Borrower and the
Liquidity Provider no later than three Business Days prior to the
commencement of such Interest Period, provided that if
Continental shall not provide such a notice at least three
Business Days prior to the commencement of such Interest Period,
then Continental shall be deemed to have selected an Interest
Period ending on the next Regular Distribution Date);
PROVIDED, HOWEVER, that (I) if an Unapplied Provider Advance which is a
LIBOR Advance becomes an Applied Provider Advance, the Interest Period then
applicable to such Unapplied Provider Advance shall be applicable to such
Applied Provider Advance and (II) if (x) the Final Advance shall have been
made, or (y) other outstanding Advances shall have been converted into the
Final Advance, then the Interest Periods shall be successive periods of one
month beginning on the third Business Day following the Liquidity
Provider's receipt of the Notice of Borrowing for such Final Advance (in
the case of clause (x) above) or the last day of the Interest Period then
applicable to such outstanding Advances (in the case of clause (y) above).
"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 a Lending Office outside the United States of
America except in accordance with Section 3.01, 3.02 or 3.03 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, the average
(rounded upward, if necessary, to the next higher 1/16 of 1%) of the rates
per annum at which deposits in dollars are offered to major banks in the
London interbank market at approximately 11:00 A.M. (London time) two
Business Days before the first day of such Interest Period in an amount
approximately equal to the principal amount of the Advance to which such
Interest Period is to apply and for a period of time comparable to such
Interest Period.
"LIQUIDITY EVENT OF DEFAULT" means the occurrence of either (a) the
Acceleration of all of the Equipment Notes or (b) a Continental Bankruptcy
Event.
"LIQUIDITY INDEMNITEE" means (i) the Liquidity Provider, (ii) the
directors, officers, employees and agents of the Liquidity Provider, and
(iii) the successors and permitted assigns of the persons described in
clauses (i) and (ii), inclusive.
"LIQUIDITY PROVIDER" has the meaning assigned to such term in the
recital of parties to this Agreement.
"MAXIMUM AVAILABLE COMMITMENT" shall mean, 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 $10,172,382, 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 specified in Section 2.02(e).
"NOTICE OF REPLACEMENT SUBORDINATION AGENT" has the meaning specified
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 Prospectus Supplement dated April
15, 1998 relating to the Certificates, as such Prospectus Supplement may be
amended or supplemented.
"PROVIDER ADVANCE" means a Downgrade Advance or a Non-Extension
Advance.
"REGULATORY CHANGE" has the meaning assigned to such term in Section
3.01.
"REPLENISHMENT AMOUNT" has the meaning assigned to such term in
Section 2.06(b).
"REQUIRED AMOUNT" means, for any day, the sum of the aggregate amount
of interest, calculated at the rate per annum equal to the Stated Interest
Rate for the Class A Certificates, that would be payable on the Class A
Certificates on each of the three successive semiannual Regular
Distribution Dates immediately following such day or, if such day is a
Regular Distribution Date, on such day and the succeeding two semiannual
Regular Distribution Dates, in each case calculated on the basis of the
Pool Balance of the Class A Certificates on such day and without regard to
expected future payments of principal on the Class A Certificates.
"TAX LETTER" means the letter dated the date hereof between the
Liquidity Provider and Continental pertaining to this Agreement.
"TERMINATION DATE" means the earliest to occur of the following: (i)
the Expiry Date; (ii) the date on which the Borrower delivers to the
Liquidity Provider a certificate, signed by a Responsible Officer of the
Borrower, certifying that all of the Class A Certificates have been paid in
full (or provision has been made for such payment in accordance with the
Intercreditor Agreement and the Trust Agreements) or are otherwise no
longer entitled to the benefits of this Agreement; (iii) the date on which
the Borrower delivers to the Liquidity Provider a certificate, signed by a
Responsible Officer of the Borrower, certifying that a Replacement
Liquidity Facility has been substituted for this Agreement in full pursuant
to Section 3.6(e) of the Intercreditor Agreement; (iv) the fifth Business
Day following the receipt by the Borrower of a Termination Notice from the
Liquidity Provider pursuant to Section 6.01 hereof; and (v) the date on
which no Advance is or may (including by reason of reinstatement as herein
provided) become available for a Borrowing hereunder.
"TERMINATION NOTICE" means the Notice of Termination substantially in
the form of Annex V to this Agreement.
"TRANSFEREE" has the meaning assigned to such term in Section 7.08(b).
"UNAPPLIED DOWNGRADE ADVANCE" means any Downgrade Advance other than
an Applied Downgrade Advance.
"UNAPPLIED NON-EXTENSION ADVANCE" means any Non-Extension Advance
other than an Applied Non-Extension Advance.
"UNAPPLIED PROVIDER ADVANCE" means any Provider Advance other than an
Applied Provider Advance.
"UNPAID ADVANCE" has the meaning assigned to such term in Section
2.05.
(b) TERMS DEFINED IN THE INTERCREDITOR AGREEMENT. For all purposes of
this Agreement, the following terms shall have the respective meanings assigned
to such terms in the Intercreditor Agreement:
"ACCELERATION", "CERTIFICATES", "CLASS A CASH COLLATERAL ACCOUNT",
"CLASS A CERTIFICATEHOLDERS", "CLASS A CERTIFICATES", "CLASS A TRUST",
"CLASS A TRUST AGREEMENT", "CLASS A TRUSTEE", "CLASS B CERTIFICATES",
"CLASS C Certificates", "CLOSING DATE", "CONTINENTAL", "CONTINENTAL
BANKRUPTCY EVENT", "CONTROLLING PARTY", "CORPORATE TRUST Office",
"DISTRIBUTION DATE", "DOWNGRADED FACILITY", "EQUIPMENT NOTES", "FEE
LETTER", "FINAL LEGAL DISTRIBUTION DATE", "INTEREST PAYMENT DATE",
"INVESTMENT EARNINGS", "LIQUIDITY FACILITY", "LIQUIDITY OBLIGATIONS", "LOAN
TRUSTEE", "MOODY'S", "NON-EXTENDED FACILITY", "OPERATIVE AGREEMENTS",
"PARTICIPATION AGREEMENT", "PERFORMING EQUIPMENT NOTE", "PERSON", "POOL
BALANCE", "RATING AGENCY", "RATINGS CONFIRMATION", "REGULAR DISTRIBUTION
DATE", "REPLACEMENT LIQUIDITY FACILITY", "RESPONSIBLE OFFICER", "SCHEDULED
PAYMENT", "SPECIAL PAYMENT", "STANDARD & POOR'S", "STATED INTEREST RATE",
"SUBORDINATION AGENT", "TAXES", "THRESHOLD RATING", "TRANSFER", "TRUST
AGREEMENTS", "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 12:00 Noon (New York City time) on the Expiry Date (unless
the obligations of the Liquidity Provider shall be earlier terminated in
accordance with the terms of Section 2.04(b)) in an aggregate amount at any time
outstanding not to exceed the 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 on the Class A Certificates at the
Stated Interest Rate therefor in accordance with Section 3.6(a) of the
Intercreditor Agreement. Each Interest Advance made hereunder shall
automatically reduce the 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 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 the amount of such repaid Interest Advance, but not to exceed the
Maximum Commitment; PROVIDED, HOWEVER, that the Maximum Available Commitment
shall not be so reinstated at any time if (i) a Liquidity Event of Default shall
have occurred and be continuing and (ii) there is a Performing Note Deficiency.
(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) 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) within the time period specified in such Section) 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 Class A Cash Collateral Account in
accordance with said Section 3.6(d) and Section 3.6(f) of the Intercreditor
Agreement.
(c) A Downgrade Advance shall be made in a single Borrowing upon a
downgrading of the Liquidity Provider's short-term unsecured debt rating issued
by either Rating Agency below the applicable Threshold Rating (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 said Section 3.6(c), by delivery to the Liquidity
Provider of a written and completed Notice of Borrowing in substantially the
form of Annex 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 Class A Cash Collateral Account in accordance with
said Section 3.6(c) and Section 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 Class A Cash Collateral Account (in accordance with Section 3.6(i) of
the Intercreditor Agreement) and Section 3.6(f) of the Intercreditor Agreement.
(e) Each Borrowing shall be made on notice in writing (a "NOTICE OF
BORROWING") in substantially the form required by Section 2.02(a), 2.02(b),
2.02(c) or 2.02(d), as the case may be, given by the Borrower to the Liquidity
Provider. If a Notice of Borrowing is delivered by the Borrower in respect of
any Borrowing no later than 12:00 Noon (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 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 in such
Notice of Borrowing. If a Notice of Borrowing is delivered by the Borrower in
respect of any Borrowing after 12:00 Noon (New York City time) on a Business
Day, 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 second 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.
(f) 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. Following the making of any
Advance pursuant to Section 2.02(b), (c) or (d) hereof to fund the Class A Cash
Collateral Account, the Liquidity Provider shall have no interest in or rights
to the Class A Cash Collateral Account, such Advance or any other amounts from
time to time on deposit in the Class A Cash Collateral Account; PROVIDED that
the foregoing shall not affect or impair the obligations of the Subordination
Agent to make the distributions contemplated by Section 3.6(e) or (f) of the
Intercreditor Agreement. By paying to the Borrower proceeds of Advances
requested by the Borrower in accordance with the provisions of this Agreement,
the Liquidity Provider makes no representation as to, and assumes no
responsibility for, the correctness or sufficiency for any purpose of the amount
of the Advances so made and requested.
Section 2.03. FEES. The Borrower agrees to pay to the Liquidity
Provider the fees set forth in the Fee Letter.
Section 2.04. REDUCTIONS OR TERMINATION OF THE MAXIMUM
COMMITMENT.
(a) AUTOMATIC REDUCTION. Promptly following each date on which the
Required Amount is reduced as a result of a reduction in the Pool Balance of the
Class A Certificates or otherwise, the Maximum Commitment shall automatically be
reduced to an amount equal to such reduced Required Amount (as calculated by the
Borrower). The Borrower shall give notice of any such automatic reduction of the
Maximum Commitment to the 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
or 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)). 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 Class A
Cash Collateral Account, invested and withdrawn from the Class A Cash Collateral
Account as set forth in Sections 3.6(c), (d) and (f) of the Intercreditor
Agreement. The Borrower agrees to pay to the Liquidity Provider, on each Regular
Distribution Date, commencing on the first Regular Distribution Date after the
making of a Provider Advance, interest on the principal amount of any such
Provider Advance as provided in Section 3.07; PROVIDED, HOWEVER, that amounts in
respect of a Provider Advance withdrawn from the Class A Cash Collateral Account
for the purpose of paying interest on the Class A Certificates in accordance
with Section 3.6(f) of the Intercreditor Agreement (the amount of any such
withdrawal being (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
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. Subject to Sections 2.07 and 2.09 hereof,
immediately upon the withdrawal of any amounts from the Class A Cash Collateral
Account on account of a reduction in the Required Amount, the Borrower shall
repay 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 Class A 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 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 Class A Cash
Collateral Account after giving effect to any Applied Provider Advance on the
date of such replacement shall be reimbursed to the Liquidity Provider, but only
to the extent such amounts are necessary to repay in full to the Liquidity
Provider all amounts owing to it hereunder.
Section 2.07. PAYMENTS TO THE LIQUIDITY PROVIDER UNDER THE
INTERCREDITOR AGREEMENT. In order to provide for payment or repayment to the
Liquidity Provider of any amounts hereunder, the Intercreditor Agreement
provides that amounts available and referred to in Articles II and III of the
Intercreditor Agreement, to the extent payable to the Liquidity Provider
pursuant to the terms of the Intercreditor Agreement (including, without
limitation, Section 3.6(f) of the Intercreditor Agreement), shall be paid to the
Liquidity Provider in accordance with the terms thereof. Amounts so paid to the
Liquidity Provider shall be applied by the Liquidity Provider to Liquidity
Obligations then due and payable in accordance with the Intercreditor Agreement
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 Section 9
of the Participation Agreements and only to the extent that the Borrower shall
have sufficient income or proceeds therefrom to enable the Borrower to make
payments in accordance with the terms hereof after giving effect to the priority
of payments provisions set forth in the Intercreditor Agreement. The Liquidity
Provider agrees that it will look solely to such amounts to the extent available
for distribution to it as provided in the Intercreditor Agreement and this
Agreement and that the Borrower, in its individual capacity, is not personally
liable to it for any amounts payable or liability under this Agreement except as
expressly provided in this Agreement, the Intercreditor Agreement or any
Participation Agreement. Amounts on deposit in the Class A Cash Collateral
Account shall be available to the Borrower to make payments under this Agreement
only to the extent and for the purposes expressly contemplated in Section 3.6(f)
of the Intercreditor Agreement.
Section 2.10. EXTENSION OF THE EXPIRY DATE; NON-EXTENSION ADVANCE. No
earlier than the 60th day and no later than the 40th day prior to the then
effective Expiry Date (unless such Expiry Date is on or after the date that is
15 days after the Final Legal Distribution Date for the Class A Certificates),
the Borrower shall request that the Liquidity Provider extend the Expiry Date
for a period of 364 days after the then effective Expiry Date (unless the
obligations of the Liquidity Provider are earlier terminated in accordance with
the terms hereof). The Liquidity Provider shall advise the Borrower, no earlier
than 40 days and no later than 25 days prior to the then effective Expiry Date,
whether, in its sole discretion, it agrees to so extend the Expiry Date. If the
Liquidity Provider advises the Borrower on or before the 25th day prior to the
Expiry Date then in effect that such Expiry Date shall not be so extended, or
fails to irrevocably and unconditionally advise the Borrower on or before the
25th day prior to the Expiry Date then in effect 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 such 25th day (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) 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 (other than 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 any deposits referred
to in the definition of LIBOR Rate or related definitions). The Liquidity
Provider agrees to use reasonable efforts (consistent with applicable legal and
regulatory restrictions) to change the jurisdiction of its Lending Office if
making such change would avoid the need for, or reduce the amount of, any amount
payable under this Section that may thereafter accrue and would not, in the
reasonable judgment of the Liquidity Provider, be otherwise disadvantageous to
the Liquidity Provider.
The Liquidity Provider will notify the Borrower of any event occurring
after the date of this Agreement that will entitle the Liquidity Provider to
compensation pursuant to this Section 3.01 as promptly as practicable after it
obtains knowledge thereof and determines to request such compensation, which
notice shall describe in reasonable detail the calculation of the amounts owed
under this Section. Determinations by the Liquidity Provider for purposes of
this Section 3.01 of the effect of any Regulatory Change on its costs of making
or maintaining Advances or on amounts receivable by it in respect of Advances,
and of the additional amounts required to compensate the Liquidity Provider in
respect of any Additional Costs, shall be prima facie evidence of the amount
owed under this Section.
Section 3.02. CAPITAL ADEQUACY. If (1) 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 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 agrees to use reasonable efforts (consistent with applicable
legal and regulatory restrictions) to change the jurisdiction of its Lending
Office if making such change would avoid the need for, or reduce the amount of,
any amount payable under this Section that may thereafter accrue and would not,
in the reasonable judgment of the Liquidity Provider, be otherwise materially
disadvantageous to the Liquidity Provider.
The Liquidity Provider will notify the Borrower of any event occurring
after the date of this Agreement that will entitle the Liquidity Provider to
compensation pursuant to this Section 3.02 as promptly as practicable after it
obtains knowledge thereof and determines to request such compensation, which
notice shall describe in reasonable detail the calculation of the amounts owed
under this Section. Determinations by the Liquidity Provider for purposes of
this Section 3.02 of the effect of any increase in the amount of capital
required to be maintained by the 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.
Section 3.03. PAYMENTS FREE OF DEDUCTIONS. (a) All payments made by
the Borrower under this Agreement shall be made free and clear of, and without
reduction for or on account of, any present or future stamp or other taxes,
levies, imposts, duties, charges, fees, deductions, withholdings, restrictions
or conditions of any nature whatsoever now or hereafter imposed, levied,
collected, withheld or assessed, excluding Excluded Taxes (such non-excluded
taxes being referred to herein, collectively, as "NON-EXCLUDED TAXES" and,
individually, as a "NON-EXCLUDED TAX"). If any Non-Excluded Taxes are required
to be withheld from any amounts payable to the Liquidity Provider under this
Agreement, the amounts so payable to the Liquidity Provider shall be increased
to the extent necessary to yield to the Liquidity Provider (after payment of all
Non-Excluded Taxes) interest or any other such amounts payable under this
Agreement at the rates or in the amounts specified in this Agreement. The
Liquidity Provider agrees to use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would avoid the need
for, or reduce the amount of, any such additional amounts that may thereafter
accrue and would not, in the reasonable judgment of the Liquidity Provider, be
otherwise disadvantageous to the Liquidity Provider. From time to time upon the
reasonable request of the Borrower, the Liquidity Provider agrees to provide to
the Borrower two original Internal Revenue Service Form 1001 or 4224, 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.
(b) All payments (including, without limitation, 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. If any Taxes are required to
be withheld or deducted from any amounts payable to the Borrower under this
Agreement, 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
payment required 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) will be sufficient to yield to the Borrower the
full amount which would have been received by it had no such withholding or
deduction been made. Within 30 days after the date of each payment hereunder,
the Liquidity Provider shall furnish to the Borrower the original or a certified
copy of (or other documentary evidence of) the payment of the Taxes applicable
to such payment.
Section 3.04. PAYMENTS. The Borrower shall make or cause to be made
each payment to the Liquidity Provider under this Agreement so as to cause the
same to be received by the Liquidity Provider not later than 1:00 P.M. (New York
City time) on the day when due. The Borrower shall make all such payments in
lawful money of the United States of America, to the Liquidity Provider in
immediately available funds, by wire transfer to The Chase Manhattan Bank, One
Chase Manhattan Plaza, New York, New York 10081, ABA No. 021-000-021, for
account of Westdeutsche Landesbank Girozentrale, New York branch, Account No.
920-1-060663, Reference: Continental Airlines Liquidity Facility 1998-2A.
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 Class A Cash Collateral
Account to pay interest on the Class A Certificates) to but excluding the date
such principal amount shall be paid in full (or, in the case of an Applied
Provider Advance, the date on which the Class A 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)
which is not paid when due (whether at stated maturity, by acceleration or
otherwise) from and including the due date thereof to but excluding the date
such amount is paid in full, in each such case, at a fluctuating interest rate
per annum for each day equal to the Applicable Liquidity Rate (as defined below)
for such Advance or such other amount as in effect for such day, but in no event
at a rate per annum greater than the maximum rate permitted by applicable law;
PROVIDED, HOWEVER, that, if at any time the otherwise applicable interest rate
as set forth in this Section 3.07 shall exceed the maximum rate permitted by
applicable law, then any subsequent reduction in such interest rate will not
reduce the rate of interest payable pursuant to this Section 3.07 below the
maximum rate permitted by applicable law until the total amount of interest
accrued equals the amount of interest that would have accrued if such otherwise
applicable interest rate as set forth in this Section 3.07 had at all times been
in effect.
(b) Except as provided in clause (e) below, each Advance will be
either a Base Rate Advance or a LIBOR Advance as provided in this Section. 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. 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 outstanding Unapplied Downgrade Advance (i) during the period
from and including the date of the making of such Unapplied Downgrade Advance
through but excluding the Expiry Date (or, if earlier, the date of repayment
thereof or of conversion thereof into a Final Advance), shall bear interest in
an amount equal to the Investment Earnings on amounts on deposit in the Class A
Cash Collateral Account for such period plus .325% per annum (through and
including the first anniversary of the date of this Agreement) or .35% per annum
(after the first anniversary of the date of this Agreement) on the amount of
such Unapplied Downgrade Advance from time to time during such period, payable
in arrears on each Regular Distribution Date, and (ii) thereafter, shall be a
LIBOR Advance and shall bear interest in accordance with clause (c) above.
(f) 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.
(g) 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 as the Borrower for all purposes hereunder.
Section 3.09. FUNDING LOSS INDEMNIFICATION. The Borrower shall pay to
the Liquidity Provider, upon the request of the Liquidity Provider, such amount
or amounts as shall be sufficient (in the reasonable opinion of the Liquidity
Provider) to compensate it for any loss, cost, or expense incurred 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.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. CONDITIONS PRECEDENT TO EFFECTIVENESS OF SECTION 2.01.
Section 2.01 of this Agreement shall become effective on and as of the first
date (the "EFFECTIVE DATE") on which the following conditions precedent have
been satisfied or waived:
(a) The Liquidity Provider shall have received on or before the
Closing Date each of the following, and in the case of each document
delivered pursuant to paragraphs (i), (ii) and (iii), each in form and
substance satisfactory to the Liquidity Provider:
(i) This Agreement duly executed on behalf of the Borrower;
(ii) The Intercreditor Agreement duly executed on behalf of each
of the parties thereto;
(iii) Fully executed copies of each of the Operative Agreements
executed and delivered on or before the Closing Date (other than this
Agreement and the Intercreditor Agreement);
(iv) A copy of the Prospectus Supplement and specimen copies of
the Class A Certificates;
(v) An executed copy of each document, instrument, certificate
and opinion delivered on or before the Closing Date pursuant to the
Class A 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 Trustees, 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 Agreements shall have been satisfied or waived, all conditions
precedent to the effectiveness of the other Liquidity Facilities 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 (unless any of such conditions precedent shall have
been waived by the Underwriters).
(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, prior to the date of such Borrowing, the Borrower shall have delivered a
Notice of Borrowing which conforms to the terms and conditions of this Agreement
and has been completed as may be required by the relevant form of the Notice of
Borrowing for the type of Advances requested.
ARTICLE V
COVENANTS
Section 5.01. AFFIRMATIVE COVENANTS OF THE BORROWER. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any 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 (a) any Liquidity Event
of Default has occurred and is continuing and (b) there is a Performing Note
Deficiency, the Liquidity Provider may, in its discretion, deliver to the
Borrower a Termination Notice, the effect of which shall be to cause (i) 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, (ii) 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, (iii) all other
outstanding Advances to be automatically converted into Final Advances for
purposes of determining the Applicable Liquidity Rate for interest payable
thereon, and (iv) subject to Sections 2.07 and 2.09 hereof, all Advances
(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 Square
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telephone: (302) 651-1000
Telecopy: (302) 651-8882
Liquidity Provider: WESTDEUTSCHE LANDESBANK GIROZENTRALE
Global Structured Finance
1211 Avenue of the Americas
New York, NY 10036
Attention: Alfred Heynen
Telephone: (212) 852-6115
Telecopy: (212) 869-7634
with a copy to: WESTDEUTSCHE LANDESBANK GIROZENTRALE
Loan Administration
1211 Avenue of the Americas
New York, NY 10036
Attention: Cheryl Wilson
Telephone: (212) 852-6152
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 Articles II and III hereof
shall not be effective until received by the Liquidity Provider. A copy of all
notices delivered hereunder to either party shall in addition be delivered to
each of the parties to the Participation Agreements at their respective
addresses set forth therein.
Section 7.03. NO WAIVER; REMEDIES. No failure on the part of the
Liquidity Provider to exercise, and no delay in exercising, any right under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under this Agreement preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 7.04. FURTHER ASSURANCES. The Borrower agrees to do such
further acts and things and to execute and deliver to the Liquidity Provider
such additional assignments, agreements, powers and instruments as the Liquidity
Provider may reasonably require or deem advisable to carry into effect the
purposes of this Agreement and the other Operative Agreements or to better
assure and confirm unto the Liquidity Provider its rights, powers and remedies
hereunder and under the other Operative Agreements.
Section 7.05. INDEMNIFICATION; SURVIVAL OF CERTAIN PROVISIONS. The
Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Section 9 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 Sections 3.01, 3.02 or 7.07 hereof or in the Fee Letter (regardless
of whether indemnified against pursuant to said Sections or in such Fee
Letter)), that may be imposed, incurred by or asserted against any Liquidity
Indemnitee, in any way relating to, resulting from, or arising out of or in
connection with any action, suit or proceeding by any third party against such
Liquidity Indemnitee and relating to this Agreement, the Fee Letter, the
Intercreditor Agreement or any Participation 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, or
(iii) attributable to the failure by such Liquidity Indemnitee or any other
Liquidity Indemnitee to perform or observe any agreement, covenant or condition
on its part to be performed or observed in this Agreement, the Intercreditor
Agreement, the Fee Letter, the Tax Letter or any other Operative Agreement to
which it is a party. The indemnities contained in Section 9 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 negligence in
determining whether documents presented hereunder comply with the terms hereof,
or (B) any breach by the Liquidity Provider of any of the terms of this
Agreement, including, but not limited to, the Liquidity Provider's failure to
make lawful payment hereunder after the delivery to it by the Borrower of a
Notice of Borrowing strictly complying with the terms and conditions hereof.
(b) 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
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 (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 Class A Cash
Collateral Accounts. In addition, the Borrower shall pay any and all recording,
stamp and other similar taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this Agreement,
any other Operative Agreement and such other documents, and agrees to save the
Liquidity Provider harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes
or fees.
Section 7.08. BINDING EFFECT; PARTICIPATIONS. (a) This Agreement shall
be binding upon and inure to the benefit of the Borrower and the Liquidity
Provider and their respective successors and assigns, except that neither the
Liquidity Provider (except as otherwise provided in this Section 7.08) nor
(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 as the Liquidity Provider may in its
sole discretion select, subject to the requirements of Section 7.08(b). No such
participation by the Liquidity Provider, however, will relieve the Liquidity
Provider of its obligations hereunder. In connection with any participation or
any proposed participation, the Liquidity Provider may disclose to the
participant or the proposed participant any information that the Borrower is
required to deliver or to disclose to the Liquidity Provider pursuant to this
Agreement. The Borrower acknowledges and agrees that the Liquidity Provider's
source of funds may derive in part from its participants (other than
Continental). Accordingly, references in this Agreement and the other Operative
Agreements to determinations, reserve and capital adequacy requirements,
increased costs, reduced receipts, 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 (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 4224 or Form 1001, as appropriate,
or other applicable form, certificate or document prescribed by the Internal
Revenue Service certifying, in each case, such Transferee's entitlement to a
complete exemption from United States federal withholding tax in respect to any
and all payments to be made hereunder, and (iii) agree (for the benefit of the
Liquidity Provider and the Borrower) to provide the Liquidity Provider and the
Borrower a new Form 4224 or Form 1001, as appropriate, (A) on or before the date
that any such form expires or becomes obsolete or (B) after the occurrence of
any event requiring a change in the most recent form previously delivered by it
and prior to the immediately following due date of any payment by the Borrower
hereunder, certifying in the case of a Form 1001 or Form 4224 that such
Transferee is entitled to a complete exemption from United States federal
withholding tax on payments under this Agreement. Unless the Borrower has
received forms or other documents reasonably satisfactory to it (and required by
applicable law) indicating that payments hereunder are not subject to United
States federal withholding tax, the Borrower will withhold taxes as required by
law from such payments at the applicable statutory rate.
(c) Notwithstanding the other provisions of this Section 7.08, the
Liquidity Provider may assign and pledge all or any portion of the Advances
owing to it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank, provided that any payment in respect of such assigned Advances made by the
Borrower to the Liquidity Provider in accordance with the terms of this
Agreement shall satisfy the Borrower's obligations hereunder in respect of such
assigned Advance to the extent of such payment. No such assignment shall release
the Liquidity Provider from its obligations hereunder.
Section 7.09. SEVERABILITY. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 7.10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 7.11. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; WAIVER
OF IMMUNITY. (a) Each of the parties hereto hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any other Operative
Agreement, or for recognition and enforcement of any judgment in
respect hereof or thereof, to the 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 and mail), postage
prepaid, to each party hereto at its address set forth in Section 7.02
hereof, or at such other address of which the Liquidity Provider shall
have been notified pursuant thereto; and(iv)agrees that nothing herein
shall affect the right to effect service of process in any other
manner permitted by law or shall limit the right to sue in any other
jurisdiction.
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS BEING
ESTABLISHED, including, without limitation, contract claims, tort claims, breach
of duty claims and all other common law and statutory claims. The Borrower and
the Liquidity Provider each warrant and represent that it has reviewed this
waiver with its legal counsel, and that it knowingly and voluntarily waives its
jury trial rights following consultation with such legal counsel. THIS WAIVER IS
IRREVOCABLE, AND CANNOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT.
(c) The Liquidity Provider hereby waives any immunity it may have from
the jurisdiction of the courts of the United States or of any State and waives
any immunity any of its properties located in the United States may have from
attachment or execution upon a 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 Class A Trust, as
Borrower
By:_____________________________________
Name:
Title:
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
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 WESTDEUTSCHE LANDESBANK
GIROZENTRALE, acting through its New York Branch (the "LIQUIDITY PROVIDER"),
with reference to the Revolving Credit Agreement (1998-2A) dated as of April 21,
1998, 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 Class A
Certificates which was payable on ____________, ____ (the "DISTRIBUTION
DATE") in accordance with the terms and provisions of the Class A Trust
Agreement and the Class A Certificates, which Advance is requested to be
made on ____________, ____.
(3) The amount of the Interest Advance requested hereby (i) is
$_______________.__, to be applied in respect of the payment of interest
which was due and payable on the Class A Certificates on the Distribution
Date, (ii) does not include any amount with respect to the payment of
principal of, or premium on, the Class A Certificates, the Class B
Certificates or the Class C Certificates, or interest on the Class B
Certificates or the Class C Certificates, (iii) was computed in accordance
with the provisions of the Class A Certificates, the Class A Trust
Agreement and the Intercreditor Agreement (a copy of which computation is
attached hereto as Schedule I), (iv) does not exceed the Maximum Available
Commitment on the date hereof and (v) has not been and is not the subject
of a prior or contemporaneous Notice of Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will apply the same in accordance with
the terms of Section 3.6(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 Certificate and such
reduction shall automatically result in corresponding reductions in the amounts
available to be borrowed pursuant to a subsequent Advance.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ____ day of _____________, ____.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Subordination Agent, as Borrower
By:_____________________________________
Name:
Title:
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with Interest Advance
Notice of Borrowing]
Annex II to
Revolving Credit Agreement
NON-EXTENSION ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "BORROWER"), hereby certifies to WESTDEUTSCHE
LANDESBANK GIROZENTRALE, acting through its New York Branch (the "LIQUIDITY
PROVIDER"), with reference to the Revolving Credit Agreement (1998-2A) dated as
of April 21, 1998, 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 Class A Cash Collateral Account in accordance with Section
3.6(d) of the Intercreditor Agreement, which Advance is requested to be
made on __________, ____.
(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 Class A
Cash Collateral Account in accordance with Section 3.6(d) of the
Intercreditor Agreement, (ii) does not include any amount with respect to
the payment of the principal of, or premium on, the Class A Certificates,
or principal of, or interest or premium on, the Class B Certificates or the
Class C Certificates, (iii) was computed in accordance with the provisions
of the Class A Certificates, the Class A Trust Agreement and the
Intercreditor Agreement (a copy of which computation is attached hereto as
Schedule I), and (iv) has not been and is not the subject of a prior or
contemporaneous Notice of Borrowing under the Liquidity Agreement.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the Class A
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(d) 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
subordination agent (the "BORROWER"), hereby certifies to WESTDEUTSCHE
LANDESBANK GIROZENTRALE, acting through its New York Branch (the "LIQUIDITY
PROVIDER"), with reference to the Revolving Credit Agreement (1998-2A) dated as
of April 21, 1998, between the Borrower and the Liquidity Provider (the
"LIQUIDITY AGREEMENT"; the terms defined therein and not otherwise defined
herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the making
of the Downgrade Advance by the Liquidity Provider to be used for the
funding of the Class A Cash Collateral Account in accordance with Section
3.6(c) of the Intercreditor Agreement by reason of the downgrading of the
short-term unsecured debt rating of the Liquidity Provider issued by either
Rating Agency below the Threshold Rating, which Advance is requested to be
made on __________, ____.
(3) The amount of the Downgrade Advance requested hereby (i) is
$_______________.__, which equals the Maximum Available Commitment on the
date hereof and is to be applied in respect of the funding of the Class A
Cash Collateral Account in accordance with Section 3.6(c) of the
Intercreditor Agreement, (ii) does not include any amount with respect to
the payment of the principal of, or premium on, the Class A Certificates,
or principal of, or interest or premium on, the Class B Certificates or the
Class C Certificates, (iii) was computed in accordance with the provisions
of the Class A Certificates, the Class A Trust Agreement and the
Intercreditor Agreement (a copy of which computation is attached hereto as
Schedule I), and (iv) has not been and is not the subject of a prior or
contemporaneous Notice of Borrowing under the Liquidity Agreement.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the Class A
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(c) of the Intercreditor Agreement, (b) no portion of such
amount shall be applied by the Borrower for any other purpose and (c) no
portion of such amount until so applied shall be commingled with other
funds held by the Borrower.
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Downgrade Advance as requested by this Notice
of Borrowing shall automatically and irrevocably terminate the obligation of the
Liquidity Provider to make further Advances under the Liquidity Agreement; and
(B) following the making by the Liquidity Provider of the Downgrade Advance
requested by this Notice of Borrowing, the Borrower shall not be entitled to
request any further Advances under the Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ____ day of ___________, ____.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Subordination Agent, as Borrower
By:_____________________________________
Name:
Title:
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with Downgrade Advance
Notice of Borrowing]
Annex 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 WESTDEUTSCHE LANDESBANK
GIROZENTRALE, acting through its New York Branch (the "LIQUIDITY PROVIDER"),
with reference to the Revolving Credit Agreement (1998-2A) dated as of April 21,
1998, between the Borrower and the Liquidity Provider (the "LIQUIDITY
AGREEMENT"; the terms defined therein and not otherwise defined herein being
used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the making
of the Final Advance by the Liquidity Provider to be used for the funding
of the Class A Cash Collateral Account in accordance with Section 3.6(i) of
the Intercreditor Agreement by reason of the receipt by the Borrower of a
Termination Notice from the Liquidity Provider with respect to the
Liquidity Agreement, which Advance is requested to be made on ____________,
____.
(3) The amount of the Final Advance requested hereby (i) is
$_________________.__, which equals the Maximum Available Commitment on the
date hereof and is to be applied in respect of the funding of the Class A
Cash Collateral Account in accordance with Section 3.6(i) of the
Intercreditor Agreement, (ii) does not include any amount with respect to
the payment of principal of, or premium on, the Class A Certificates, or
principal of, or interest or premium on, the Class B Certificates or the
Class C Certificates, (iii) was computed in accordance with the provisions
of the Class A Certificates, the Class A Trust Agreement and the
Intercreditor Agreement (a copy of which computation is attached hereto as
Schedule I), and (iv) has not been and is not the subject of a prior or
contemporaneous Notice of Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the Class A
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(i) of the Intercreditor Agreement, (b) no portion of such
amount shall be applied by the Borrower for any other purpose and (c) no
portion of such amount until so applied shall be commingled with other
funds held by the Borrower.
(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.]
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:
- -----------------
Bracketed language may be included at Borrower's option.
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 Square
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Revolving Credit Agreement dated as of April 21, 1998, between Wilmington Trust
Company, as Subordination Agent, as agent and trustee for the Continental
Airlines Pass Through Trust, 1998-2A, as Borrower, and Westdeutsche
Landesbank Girozentrale, 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.
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,
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
acting through its New York Branch, as
Liquidity Provider
By:_____________________________________
Name:
Title:
cc: Wilmington Trust Company,
as Class A Trustee
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of April 21, 1998, between Wilmington
Trust Company, as Subordination Agent, as agent and trustee for the
Continental Airlines Pass Through Trust, 1998-2A, as Borrower, and
Westdeutsche Landesbank Girozentrale, 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.
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:
EXECUTION
================================================================================
REVOLVING CREDIT AGREEMENT
(1998-2B)
DATED AS OF APRIL 21, 1998
BETWEEN
WILMINGTON TRUST COMPANY,
AS SUBORDINATION AGENT,
AS AGENT AND TRUSTEE FOR THE
CONTINENTAL AIRLINES PASS THROUGH TRUST 1998-2B
AS BORROWER
AND
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
ACTING THROUGH ITS NEW YORK BRANCH
AS LIQUIDITY PROVIDER
================================================================================
RELATING TO
CONTINENTAL AIRLINES PASS THROUGH TRUST 1998-2B
6.465% CONTINENTAL AIRLINES PASS THROUGH CERTIFICATES,
SERIES 1998-2B
TABLE OF CONTENTS
PAGE
----
ARTICLE I - DEFINITIONS
Section 1.01. Certain Defined Terms.................................. 1
ARTICLE II - AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01. The Advances........................................... 7
Section 2.02. Making the Advances.................................... 7
Section 2.03. Fees................................................... 9
Section 2.04. Reductions or Termination of the Maximum Commitment.... 9
Section 2.05. Repayments of Interest Advances or the Final Advance... 9
Section 2.06. Repayments of Provider Advances........................ 10
Section 2.07. Payments to the Liquidity Provider Under the
Intercreditor Agreement................................ 11
Section 2.08. Book Entries........................................... 11
Section 2.09. Payments from Available Funds Only..................... 11
Section 2.10. Extension of the Expiry Date; Non-Extension Advance.... 12
ARTICLE III - OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs........................................ 12
Section 3.02. Capital Adequacy....................................... 13
Section 3.03. Payments Free of Deductions............................ 13
Section 3.04. Payments............................................... 14
Section 3.05. Computations........................................... 15
Section 3.06. Payment on Non-Business Days........................... 15
Section 3.07. Interest............................................... 15
Section 3.08. Replacement of Borrower................................ 16
Section 3.09. Funding Loss Indemnification........................... 17
Section 3.10. Illegality............................................. 17
ARTICLE IV - CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to Effectiveness of Section 2.01.. 17
Section 4.02. Conditions Precedent to Borrowing...................... 19
ARTICLE V - COVENANTS
Section 5.01. Affirmative Covenants of the Borrower.................. 19
Section 5.02. Negative Covenants of the Borrower..................... 20
ARTICLE VI - LIQUIDITY EVENTS OF DEFAULT
Section 6.01. Liquidity Events of Default............................ 20
ARTICLE VII - MISCELLANEOUS
Section 7.01. Amendments, Etc........................................ 20
Section 7.02. Notices, Etc........................................... 21
TABLE OF CONTENTS
(Continued)
PAGE
----
Section 7.03. No Waiver; Remedies.................................... 22
Section 7.04. Further Assurances..................................... 22
Section 7.05. Indemnification; Survival of Certain Provisions........ 22
Section 7.06. Liability of the Liquidity Provider.................... 22
Section 7.07. Costs, Expenses and Taxes.............................. 23
Section 7.08. Binding Effect; Participations......................... 23
Section 7.09. Severability........................................... 25
Section 7.10. GOVERNING LAW.......................................... 25
Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity..................................... 25
Section 7.12. Execution in Counterparts.............................. 26
Section 7.13. Entirety............................................... 26
Section 7.14. Headings............................................... 26
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES....... 26
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
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of April 21, 1998, between WILMINGTON
TRUST COMPANY, a Delaware corporation, not in its individual capacity but solely
as Subordination Agent under the Intercreditor Agreement (each as defined
below), as agent and trustee for the Class B Trust (as defined below) (the
"BORROWER"), and WESTDEUTSCHE LANDESBANK GIROZENTRALE, a bank organized under
the laws of the State of North Rhine-Westphalia, Germany, acting through its New
York branch (the "LIQUIDITY PROVIDER").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the Class B Trust Agreement (such term and all
other capitalized terms used in these recitals having the meanings set forth or
referred to in Section 1.01), the Class B Trust is issuing the Class B
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment of a
portion of the interest on the Class B Certificates in accordance with their
terms, has requested the Liquidity Provider to enter into this Agreement,
providing in part for the Borrower to request in specified circumstances that
Advances be made hereunder.
NOW, THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. CERTAIN DEFINED TERMS. (a) DEFINITIONS. As used in this
Agreement and unless otherwise expressly indicated, or unless the context
clearly requires otherwise, the following capitalized terms shall have the
following respective meanings for all purposes of this Agreement:
"ADDITIONAL COST" has the meaning assigned to such term in Section
3.01.
"ADVANCE" means an Interest Advance, a Final Advance, a Provider
Advance, an Applied Provider Advance or an Unpaid Advance, as the case may
be.
"APPLICABLE LIQUIDITY RATE" has the meaning assigned to such term in
Section 3.07(g).
"APPLICABLE MARGIN" means (y) with respect to any Unpaid Advance or
Applied Provider Advance, 1.75%, or (z) with respect to any Unapplied
Provider Advance, .40%.
"APPLIED DOWNGRADE ADVANCE" has the meaning assigned to such term in
Section 2.06(a).
"APPLIED NON-EXTENSION ADVANCE" has the meaning assigned to such term
in Section 2.06(a).
"APPLIED PROVIDER ADVANCE" has the meaning assigned to such term in
Section 2.06(a).
"BASE RATE" means a fluctuating interest rate per annum in effect from
time to time, which rate per annum shall at all times be equal to (a) the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or if such
rate is not so published for any day that is a Business Day, the average of
the quotations for such day for such transactions received by the 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 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 Class B Certificate is
outstanding, the city and state in which the Class B 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.
"DOWNGRADE ADVANCE" means an Advance made pursuant to Section 2.02(c).
"EFFECTIVE DATE" has the meaning specified 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 the overall net income of
the Liquidity Provider or of its Lending Office by the jurisdiction where
such Liquidity Provider's principal office or such Lending Office is
located, and (ii) Excluded Withholding Taxes.
"EXCLUDED WITHHOLDING TAXES" means (i) withholding Taxes imposed by
the United States except to the extent that such United States withholding
Taxes are imposed as a result of any change in applicable law (excluding
from change in applicable law for this purpose a change in an applicable
treaty or other change in law affecting the applicability of a treaty)
after the date hereof, or in the case of a successor Liquidity Provider
(including a transferee of an Advance) or Lending Office, after the date on
which such successor Liquidity Provider obtains its interest or on which
the Lending Office is changed, and (ii) any withholding Taxes imposed by
the United States which are imposed or increased as a result of the
Liquidity Provider failing to deliver to the Borrower any certificate or
document (which certificate or document in the good faith judgment of the
Liquidity Provider it is legally entitled to provide) which is reasonably
requested by the Borrower to establish that payments under this Agreement
are exempt from (or entitled to a reduced rate of) withholding Tax.
"EXPENSES" means liabilities, obligations, damages, settlements,
penalties, claims, actions, suits, costs, expenses, and disbursements
(including, without limitation, reasonable fees and disbursements of legal
counsel and costs of investigation), provided that Expenses shall not
include any Taxes.
"EXPIRY DATE" means April 19, 1999, 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).
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement dated the
date hereof, among the Trustees, the Liquidity Provider, the liquidity
provider under each Liquidity Facility (other than this Agreement) and the
Subordination Agent, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"INTEREST ADVANCE" means an Advance made pursuant to Section 2.02(a).
"INTEREST PERIOD" means, with respect to any LIBOR Advance, each of
the following periods:
(i) the period beginning on the third Business Day following either
(x) the Liquidity Provider's receipt of the Notice of Borrowing
for such LIBOR Advance (or, in the case of an Unapplied Downgrade
Advance, the period beginning on the Expiry Date) or (y) the
withdrawal of funds from the Class B Cash Collateral Account for
the purpose of paying interest on the Class B Certificates as
contemplated by Section 2.06(a) hereof and, in either case,
ending on the next Regular Distribution Date (or ending, in the
case of an Interest Period applicable to any Unapplied Provider
Advance, on the numerically corresponding day in the first or
sixth calendar month after the first day of the applicable
Interest Period and/or on the next Regular Distribution Date, as
Continental may select by providing notice thereof to the
Borrower and the Liquidity Provider no later than three Business
Days prior to the commencement of such Interest Period, provided
that if Continental shall not provide such a notice at least
three Business Days prior to the commencement of such Interest
Period, then Continental shall be deemed to have selected an
Interest Period 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 (or ending, in the case of an Interest
Period applicable to any Unapplied Provider Advance, on the
numerically corresponding day in the first or sixth calendar
month after the first day of the applicable Interest Period
and/or on the next Regular Distribution Date, as Continental may
select by providing notice thereof to the Borrower and the
Liquidity Provider no later than three Business Days prior to the
commencement of such Interest Period, provided that if
Continental shall not provide such a notice at least three
Business Days prior to the commencement of such Interest Period,
then Continental shall be deemed to have selected an Interest
Period ending on the next Regular Distribution Date);
PROVIDED, HOWEVER, that (I) if an Unapplied Provider Advance which is a
LIBOR Advance becomes an Applied Provider Advance, the Interest Period then
applicable to such Unapplied Provider Advance shall be applicable to such
Applied Provider Advance and (II) if (x) the Final Advance shall have been
made, or (y) other outstanding Advances shall have been converted into the
Final Advance, then the Interest Periods shall be successive periods of one
month beginning on the third Business Day following the Liquidity
Provider's receipt of the Notice of Borrowing for such Final Advance (in
the case of clause (x) above) or the last day of the Interest Period then
applicable to such outstanding Advances (in the case of clause (y) above).
"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 a Lending Office outside the United States of
America except in accordance with Section 3.01, 3.02 or 3.03 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, the average
(rounded upward, if necessary, to the next higher 1/16 of 1%) of the rates
per annum at which deposits in dollars are offered to major banks in the
London interbank market at approximately 11:00 A.M. (London time) two
Business Days before the first day of such Interest Period in an amount
approximately equal to the principal amount of the Advance to which such
Interest Period is to apply and for a period of time comparable to such
Interest Period.
"LIQUIDITY EVENT OF DEFAULT" means the occurrence of either (a) the
Acceleration of all of the Equipment Notes or (b) a Continental Bankruptcy
Event.
"LIQUIDITY INDEMNITEE" means (i) the Liquidity Provider, (ii) the
directors, officers, employees and agents of the Liquidity Provider, and
(iii) the successors and permitted assigns of the persons described in
clauses (i) and (ii), inclusive.
"LIQUIDITY PROVIDER" has the meaning assigned to such term in the
recital of parties to this Agreement.
"MAXIMUM AVAILABLE COMMITMENT" shall mean, 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 $3,779,892, 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 specified in Section 2.02(e).
"NOTICE OF REPLACEMENT SUBORDINATION AGENT" has the meaning specified
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 Prospectus Supplement dated April
15, 1998 relating to the Certificates, as such Prospectus Supplement may be
amended or supplemented.
"PROVIDER ADVANCE" means a Downgrade Advance or a Non-Extension
Advance.
"REGULATORY CHANGE" has the meaning assigned to such term in Section
3.01.
"REPLENISHMENT AMOUNT" has the meaning assigned to such term in
Section 2.06(b).
"REQUIRED AMOUNT" means, for any day, the sum of the aggregate amount
of interest, calculated at the rate per annum equal to the Stated Interest
Rate for the Class B Certificates, that would be payable on the Class B
Certificates on each of the three successive semiannual Regular
Distribution Dates immediately following such day or, if such day is a
Regular Distribution Date, on such day and the succeeding two semiannual
Regular Distribution Dates, in each case calculated on the basis of the
Pool Balance of the Class B Certificates on such day and without regard to
expected future payments of principal on the Class B Certificates.
"TAX LETTER" means the letter dated the date hereof between the
Liquidity Provider and Continental pertaining to this Agreement.
"TERMINATION DATE" means the earliest to occur of the following: (i)
the Expiry Date; (ii) the date on which the Borrower delivers to the
Liquidity Provider a certificate, signed by a Responsible Officer of the
Borrower, certifying that all of the Class B Certificates have been paid in
full (or provision has been made for such payment in accordance with the
Intercreditor Agreement and the Trust Agreements) or are otherwise no
longer entitled to the benefits of this Agreement; (iii) the date on which
the Borrower delivers to the Liquidity Provider a certificate, signed by a
Responsible Officer of the Borrower, certifying that a Replacement
Liquidity Facility has been substituted for this Agreement in full pursuant
to Section 3.6(e) of the Intercreditor Agreement; (iv) the fifth Business
Day following the receipt by the Borrower of a Termination Notice from the
Liquidity Provider pursuant to Section 6.01 hereof; and (v) the date on
which no Advance is or may (including by reason of reinstatement as herein
provided) become available for a Borrowing hereunder.
"TERMINATION NOTICE" means the Notice of Termination substantially in
the form of Annex V to this Agreement.
"TRANSFEREE" has the meaning assigned to such term in Section 7.08(b).
"UNAPPLIED DOWNGRADE ADVANCE" means any Downgrade Advance other than
an Applied Downgrade Advance.
"UNAPPLIED NON-EXTENSION ADVANCE" means any Non-Extension Advance
other than an Applied Non-Extension Advance.
"UNAPPLIED PROVIDER ADVANCE" means any Provider Advance other than an
Applied Provider Advance.
"UNPAID ADVANCE" has the meaning assigned to such term in Section
2.05.
(b) TERMS DEFINED IN THE INTERCREDITOR AGREEMENT. For all purposes of
this Agreement, the following terms shall have the respective meanings assigned
to such terms in the Intercreditor Agreement:
"ACCELERATION", "CERTIFICATES", "CLASS A CERTIFICATES", "CLASS B CASH
COLLATERAL ACCOUNT", "CLASS B CERTIFICATEHOLDERS", "CLASS B CERTIFICATES",
"CLASS B TRUST", "CLASS B TRUST AGREEMENT", "CLASS B TRUSTEE", "CLASS C
CERTIFICATES", "CLOSING DATE", "CONTINENTAL", "CONTINENTAL BANKRUPTCY
EVENT", "CONTROLLING PARTY", "CORPORATE TRUST Office", "DISTRIBUTION DATE",
"DOWNGRADED FACILITY", "EQUIPMENT NOTES", "FEE LETTER", "FINAL LEGAL
DISTRIBUTION DATE", "INTEREST PAYMENT DATE", "INVESTMENT EARNINGS",
"LIQUIDITY FACILITY", "LIQUIDITY OBLIGATIONS", "LOAN TRUSTEE", "MOODY'S",
"NON-EXTENDED FACILITY", "OPERATIVE AGREEMENTS", "PARTICIPATION AGREEMENT",
"PERFORMING EQUIPMENT NOTE", "PERSON", "POOL BALANCE", "RATING AGENCY",
"RATINGS CONFIRMATION", "REGULAR DISTRIBUTION DATE", "REPLACEMENT LIQUIDITY
FACILITY", "RESPONSIBLE OFFICER", "SCHEDULED PAYMENT", "SPECIAL PAYMENT",
"STANDARD & POOR'S", "STATED INTEREST RATE", "SUBORDINATION AGENT",
"TAXES", "THRESHOLD RATING", "TRANSFER", "TRUST AGREEMENTS", "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 12:00 Noon (New York City time) on the Expiry Date (unless
the obligations of the Liquidity Provider shall be earlier terminated in
accordance with the terms of Section 2.04(b)) in an aggregate amount at any time
outstanding not to exceed the 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 on the Class B Certificates at the
Stated Interest Rate therefor in accordance with Section 3.6(a) of the
Intercreditor Agreement. Each Interest Advance made hereunder shall
automatically reduce the 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 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 the amount of such repaid Interest Advance, but not to exceed the
Maximum Commitment; PROVIDED, HOWEVER, that the Maximum Available Commitment
shall not be so reinstated at any time if (i) a Liquidity Event of Default shall
have occurred and be continuing and (ii) there is a Performing Note Deficiency.
(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) 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) within the time period specified in such Section) 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 Class B Cash Collateral Account in
accordance with said Section 3.6(d) and Section 3.6(f) of the Intercreditor
Agreement.
(c) A Downgrade Advance shall be made in a single Borrowing upon a
downgrading of the Liquidity Provider's short-term unsecured debt rating issued
by either Rating Agency below the applicable Threshold Rating (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 said Section 3.6(c), by delivery to the Liquidity
Provider of a written and completed Notice of Borrowing in substantially the
form of Annex 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 Class B Cash Collateral Account in accordance with
said Section 3.6(c) and Section 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 Class B Cash Collateral Account (in accordance with Section 3.6(i) of
the Intercreditor Agreement) and Section 3.6(f) of the Intercreditor Agreement.
(e) Each Borrowing shall be made on notice in writing (a "NOTICE OF
BORROWING") in substantially the form required by Section 2.02(a), 2.02(b),
2.02(c) or 2.02(d), as the case may be, given by the Borrower to the Liquidity
Provider. If a Notice of Borrowing is delivered by the Borrower in respect of
any Borrowing no later than 12:00 Noon (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 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 in such
Notice of Borrowing. If a Notice of Borrowing is delivered by the Borrower in
respect of any Borrowing after 12:00 Noon (New York City time) on a Business
Day, 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 second 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.
(f) 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. Following the making of any
Advance pursuant to Section 2.02(b), (c) or (d) hereof to fund the Class B Cash
Collateral Account, the Liquidity Provider shall have no interest in or rights
to the Class B Cash Collateral Account, such Advance or any other amounts from
time to time on deposit in the Class B Cash Collateral Account; PROVIDED that
the foregoing shall not affect or impair the obligations of the Subordination
Agent to make the distributions contemplated by Section 3.6(e) or (f) of the
Intercreditor Agreement. By paying to the Borrower proceeds of Advances
requested by the Borrower in accordance with the provisions of this Agreement,
the Liquidity Provider makes no representation as to, and assumes no
responsibility for, the correctness or sufficiency for any purpose of the amount
of the Advances so made and requested.
Section 2.03. FEES. The Borrower agrees to pay to the Liquidity
Provider the fees set forth in the Fee Letter.
Section 2.04. REDUCTIONS OR TERMINATION OF THE MAXIMUM
COMMITMENT.
(a) AUTOMATIC REDUCTION. Promptly following each date on which the
Required Amount is reduced as a result of a reduction in the Pool Balance of the
Class B Certificates or otherwise, the Maximum Commitment shall automatically be
reduced to an amount equal to such reduced Required Amount (as calculated by the
Borrower). The Borrower shall give notice of any such automatic reduction of the
Maximum Commitment to the 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
or 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)). 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 Class B
Cash Collateral Account, invested and withdrawn from the Class B Cash Collateral
Account as set forth in Sections 3.6(c), (d) and (f) of the Intercreditor
Agreement. The Borrower agrees to pay to the Liquidity Provider, on each Regular
Distribution Date, commencing on the first Regular Distribution Date after the
making of a Provider Advance, interest on the principal amount of any such
Provider Advance as provided in Section 3.07; PROVIDED, HOWEVER, that amounts in
respect of a Provider Advance withdrawn from the Class B Cash Collateral Account
for the purpose of paying interest on the Class B Certificates in accordance
with Section 3.6(f) of the Intercreditor Agreement (the amount of any such
withdrawal being (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
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. Subject to Sections 2.07 and 2.09 hereof,
immediately upon the withdrawal of any amounts from the Class B Cash Collateral
Account on account of a reduction in the Required Amount, the Borrower shall
repay 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 Class B 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 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 Class B Cash
Collateral Account after giving effect to any Applied Provider Advance on the
date of such replacement shall be reimbursed to the Liquidity Provider, but only
to the extent such amounts are necessary to repay in full to the Liquidity
Provider all amounts owing to it hereunder.
Section 2.07. PAYMENTS TO THE LIQUIDITY PROVIDER UNDER THE
INTERCREDITOR AGREEMENT. In order to provide for payment or repayment to the
Liquidity Provider of any amounts hereunder, the Intercreditor Agreement
provides that amounts available and referred to in Articles II and III of the
Intercreditor Agreement, to the extent payable to the Liquidity Provider
pursuant to the terms of the Intercreditor Agreement (including, without
limitation, Section 3.6(f) of the Intercreditor Agreement), shall be paid to the
Liquidity Provider in accordance with the terms thereof. Amounts so paid to the
Liquidity Provider shall be applied by the Liquidity Provider to Liquidity
Obligations then due and payable in accordance with the Intercreditor Agreement
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 Section 9
of the Participation Agreements and only to the extent that the Borrower shall
have sufficient income or proceeds therefrom to enable the Borrower to make
payments in accordance with the terms hereof after giving effect to the priority
of payments provisions set forth in the Intercreditor Agreement. The Liquidity
Provider agrees that it will look solely to such amounts to the extent available
for distribution to it as provided in the Intercreditor Agreement and this
Agreement and that the Borrower, in its individual capacity, is not personally
liable to it for any amounts payable or liability under this Agreement except as
expressly provided in this Agreement, the Intercreditor Agreement or any
Participation Agreement. Amounts on deposit in the Class B Cash Collateral
Account shall be available to the Borrower to make payments under this Agreement
only to the extent and for the purposes expressly contemplated in Section 3.6(f)
of the Intercreditor Agreement.
Section 2.10. EXTENSION OF THE EXPIRY DATE; NON-EXTENSION ADVANCE. No
earlier than the 60th day and no later than the 40th day prior to the then
effective Expiry Date (unless such Expiry Date is on or after the date that is
15 days after the Final Legal Distribution Date for the Class B Certificates),
the Borrower shall request that the Liquidity Provider extend the Expiry Date
for a period of 364 days after the then effective Expiry Date (unless the
obligations of the Liquidity Provider are earlier terminated in accordance with
the terms hereof). The Liquidity Provider shall advise the Borrower, no earlier
than 40 days and no later than 25 days prior to the then effective Expiry Date,
whether, in its sole discretion, it agrees to so extend the Expiry Date. If the
Liquidity Provider advises the Borrower on or before the 25th day prior to the
Expiry Date then in effect that such Expiry Date shall not be so extended, or
fails to irrevocably and unconditionally advise the Borrower on or before the
25th day prior to the Expiry Date then in effect 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 such 25th day (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) 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 (other than 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 any deposits referred
to in the definition of LIBOR Rate or related definitions). The Liquidity
Provider agrees to use reasonable efforts (consistent with applicable legal and
regulatory restrictions) to change the jurisdiction of its Lending Office if
making such change would avoid the need for, or reduce the amount of, any amount
payable under this Section that may thereafter accrue and would not, in the
reasonable judgment of the Liquidity Provider, be otherwise disadvantageous to
the Liquidity Provider.
The Liquidity Provider will notify the Borrower of any event occurring
after the date of this Agreement that will entitle the Liquidity Provider to
compensation pursuant to this Section 3.01 as promptly as practicable after it
obtains knowledge thereof and determines to request such compensation, which
notice shall describe in reasonable detail the calculation of the amounts owed
under this Section. Determinations by the Liquidity Provider for purposes of
this Section 3.01 of the effect of any Regulatory Change on its costs of making
or maintaining Advances or on amounts receivable by it in respect of Advances,
and of the additional amounts required to compensate the Liquidity Provider in
respect of any Additional Costs, shall be prima facie evidence of the amount
owed under this Section.
Section 3.02. CAPITAL ADEQUACY. If (1) 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 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 agrees to use reasonable efforts (consistent with applicable
legal and regulatory restrictions) to change the jurisdiction of its Lending
Office if making such change would avoid the need for, or reduce the amount of,
any amount payable under this Section that may thereafter accrue and would not,
in the reasonable judgment of the Liquidity Provider, be otherwise materially
disadvantageous to the Liquidity Provider.
The Liquidity Provider will notify the Borrower of any event occurring
after the date of this Agreement that will entitle the Liquidity Provider to
compensation pursuant to this Section 3.02 as promptly as practicable after it
obtains knowledge thereof and determines to request such compensation, which
notice shall describe in reasonable detail the calculation of the amounts owed
under this Section. Determinations by the Liquidity Provider for purposes of
this Section 3.02 of the effect of any increase in the amount of capital
required to be maintained by the 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.
Section 3.03. PAYMENTS FREE OF DEDUCTIONS. (a) All payments made by
the Borrower under this Agreement shall be made free and clear of, and without
reduction for or on account of, any present or future stamp or other taxes,
levies, imposts, duties, charges, fees, deductions, withholdings, restrictions
or conditions of any nature whatsoever now or hereafter imposed, levied,
collected, withheld or assessed, excluding Excluded Taxes (such non-excluded
taxes being referred to herein, collectively, as "NON-EXCLUDED TAXES" and,
individually, as a "NON-EXCLUDED TAX"). If any Non-Excluded Taxes are required
to be withheld from any amounts payable to the Liquidity Provider under this
Agreement, the amounts so payable to the Liquidity Provider shall be increased
to the extent necessary to yield to the Liquidity Provider (after payment of all
Non-Excluded Taxes) interest or any other such amounts payable under this
Agreement at the rates or in the amounts specified in this Agreement. The
Liquidity Provider agrees to use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would avoid the need
for, or reduce the amount of, any such additional amounts that may thereafter
accrue and would not, in the reasonable judgment of the Liquidity Provider, be
otherwise disadvantageous to the Liquidity Provider. From time to time upon the
reasonable request of the Borrower, the Liquidity Provider agrees to provide to
the Borrower two original Internal Revenue Service Form 1001 or 4224, 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.
(b) All payments (including, without limitation, 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. If any Taxes are required to
be withheld or deducted from any amounts payable to the Borrower under this
Agreement, 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
payment required 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) will be sufficient to yield to the Borrower the
full amount which would have been received by it had no such withholding or
deduction been made. Within 30 days after the date of each payment hereunder,
the Liquidity Provider shall furnish to the Borrower the original or a certified
copy of (or other documentary evidence of) the payment of the Taxes applicable
to such payment.
Section 3.04. PAYMENTS. The Borrower shall make or cause to be made
each payment to the Liquidity Provider under this Agreement so as to cause the
same to be received by the Liquidity Provider not later than 1:00 P.M. (New York
City time) on the day when due. The Borrower shall make all such payments in
lawful money of the United States of America, to the Liquidity Provider in
immediately available funds, by wire transfer to The Chase Manhattan Bank, One
Chase Manhattan Plaza, New York, New York 10081, ABA No. 021-000-021, for
account of Westdeutsche Landesbank Girozentrale, New York branch, Account No.
920-1-060663, Reference: Continental Airlines Liquidity Facility 1998-2B.
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 Class B Cash Collateral
Account to pay interest on the Class B Certificates) to but excluding the date
such principal amount shall be paid in full (or, in the case of an Applied
Provider Advance, the date on which the Class B 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)
which is not paid when due (whether at stated maturity, by acceleration or
otherwise) from and including the due date thereof to but excluding the date
such amount is paid in full, in each such case, at a fluctuating interest rate
per annum for each day equal to the Applicable Liquidity Rate (as defined below)
for such Advance or such other amount as in effect for such day, but in no event
at a rate per annum greater than the maximum rate permitted by applicable law;
PROVIDED, HOWEVER, that, if at any time the otherwise applicable interest rate
as set forth in this Section 3.07 shall exceed the maximum rate permitted by
applicable law, then any subsequent reduction in such interest rate will not
reduce the rate of interest payable pursuant to this Section 3.07 below the
maximum rate permitted by applicable law until the total amount of interest
accrued equals the amount of interest that would have accrued if such otherwise
applicable interest rate as set forth in this Section 3.07 had at all times been
in effect.
(b) Except as provided in clause (e) below, each Advance will be
either a Base Rate Advance or a LIBOR Advance as provided in this Section. 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. 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 outstanding Unapplied Downgrade Advance (i) during the period
from and including the date of the making of such Unapplied Downgrade Advance
through but excluding the Expiry Date (or, if earlier, the date of repayment
thereof or of conversion thereof into a Final Advance), shall bear interest in
an amount equal to the Investment Earnings on amounts on deposit in the Class B
Cash Collateral Account for such period plus .325% per annum (through and
including the first anniversary of the date of this Agreement) or .35% per annum
(after the first anniversary of the date of this Agreement) on the amount of
such Unapplied Downgrade Advance from time to time during such period, payable
in arrears on each Regular Distribution Date, and (ii) thereafter, shall be a
LIBOR Advance and shall bear interest in accordance with clause (c) above.
(f) 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.
(g) 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 as the Borrower for all purposes hereunder.
Section 3.09. FUNDING LOSS INDEMNIFICATION. The Borrower shall pay to
the Liquidity Provider, upon the request of the Liquidity Provider, such amount
or amounts as shall be sufficient (in the reasonable opinion of the Liquidity
Provider) to compensate it for any loss, cost, or expense incurred 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.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. CONDITIONS PRECEDENT TO EFFECTIVENESS OF SECTION 2.01.
Section 2.01 of this Agreement shall become effective on and as of the first
date (the "EFFECTIVE DATE") on which the following conditions precedent have
been satisfied or waived:
(a) The Liquidity Provider shall have received on or before the
Closing Date each of the following, and in the case of each document
delivered pursuant to paragraphs (i), (ii) and (iii), each in form and
substance satisfactory to the Liquidity Provider:
(i) This Agreement duly executed on behalf of the Borrower;
(ii) The Intercreditor Agreement duly executed on behalf of each
of the parties thereto;
(iii) Fully executed copies of each of the Operative Agreements
executed and delivered on or before the Closing Date (other than this
Agreement and the Intercreditor Agreement);
(iv) A copy of the Prospectus Supplement and specimen copies of
the Class B Certificates;
(v) An executed copy of each document, instrument, certificate
and opinion delivered on or before the Closing Date pursuant to the
Class B 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 Trustees, 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 Agreements shall have been satisfied or waived, all conditions
precedent to the effectiveness of the other Liquidity Facilities 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 (unless any of such conditions precedent shall have
been waived by the Underwriters).
(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, prior to the date of such Borrowing, the Borrower shall have delivered a
Notice of Borrowing which conforms to the terms and conditions of this Agreement
and has been completed as may be required by the relevant form of the Notice of
Borrowing for the type of Advances requested.
ARTICLE V
COVENANTS
Section 5.01. AFFIRMATIVE COVENANTS OF THE BORROWER. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any 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 (a) any Liquidity Event
of Default has occurred and is continuing and (b) there is a Performing Note
Deficiency, the Liquidity Provider may, in its discretion, deliver to the
Borrower a Termination Notice, the effect of which shall be to cause (i) 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, (ii) 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, (iii) all other
outstanding Advances to be automatically converted into Final Advances for
purposes of determining the Applicable Liquidity Rate for interest payable
thereon, and (iv) subject to Sections 2.07 and 2.09 hereof, all Advances
(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 Square
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Telephone: (302) 651-1000
Telecopy: (302) 651-8882
Liquidity Provider: WESTDEUTSCHE LANDESBANK GIROZENTRALE
Global Structured Finance
1211 Avenue of the Americas
New York, NY 10036
Attention: Alfred Heynen
Telephone: (212) 852-6115
Telecopy: (212) 869-7634
with a copy to: WESTDEUTSCHE LANDESBANK GIROZENTRALE
Loan Administration
1211 Avenue of the Americas
New York, NY 10036
Attention: Cheryl Wilson
Telephone: (212) 852-6152
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 Articles II and III hereof
shall not be effective until received by the Liquidity Provider. A copy of all
notices delivered hereunder to either party shall in addition be delivered to
each of the parties to the Participation Agreements at their respective
addresses set forth therein.
Section 7.03. NO WAIVER; REMEDIES. No failure on the part of the
Liquidity Provider to exercise, and no delay in exercising, any right under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under this Agreement preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 7.04. FURTHER ASSURANCES. The Borrower agrees to do such
further acts and things and to execute and deliver to the Liquidity Provider
such additional assignments, agreements, powers and instruments as the Liquidity
Provider may reasonably require or deem advisable to carry into effect the
purposes of this Agreement and the other Operative Agreements or to better
assure and confirm unto the Liquidity Provider its rights, powers and remedies
hereunder and under the other Operative Agreements.
Section 7.05. INDEMNIFICATION; SURVIVAL OF CERTAIN PROVISIONS. The
Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Section 9 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 Sections 3.01, 3.02 or 7.07 hereof or in the Fee Letter (regardless
of whether indemnified against pursuant to said Sections or in such Fee
Letter)), that may be imposed, incurred by or asserted against any Liquidity
Indemnitee, in any way relating to, resulting from, or arising out of or in
connection with any action, suit or proceeding by any third party against such
Liquidity Indemnitee and relating to this Agreement, the Fee Letter, the
Intercreditor Agreement or any Participation 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, or
(iii) attributable to the failure by such Liquidity Indemnitee or any other
Liquidity Indemnitee to perform or observe any agreement, covenant or condition
on its part to be performed or observed in this Agreement, the Intercreditor
Agreement, the Fee Letter, the Tax Letter or any other Operative Agreement to
which it is a party. The indemnities contained in Section 9 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 negligence in
determining whether documents presented hereunder comply with the terms hereof,
or (B) any breach by the Liquidity Provider of any of the terms of this
Agreement, including, but not limited to, the Liquidity Provider's failure to
make lawful payment hereunder after the delivery to it by the Borrower of a
Notice of Borrowing strictly complying with the terms and conditions hereof.
(b) 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
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 (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 Class B Cash
Collateral Accounts. In addition, the Borrower shall pay any and all recording,
stamp and other similar taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this Agreement,
any other Operative Agreement and such other documents, and agrees to save the
Liquidity Provider harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes
or fees.
Section 7.08. BINDING EFFECT; PARTICIPATIONS. (a) This Agreement shall
be binding upon and inure to the benefit of the Borrower and the Liquidity
Provider and their respective successors and assigns, except that neither the
Liquidity Provider (except as otherwise provided in this Section 7.08) nor
(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 as the Liquidity Provider may in its
sole discretion select, subject to the requirements of Section 7.08(b). No such
participation by the Liquidity Provider, however, will relieve the Liquidity
Provider of its obligations hereunder. In connection with any participation or
any proposed participation, the Liquidity Provider may disclose to the
participant or the proposed participant any information that the Borrower is
required to deliver or to disclose to the Liquidity Provider pursuant to this
Agreement. The Borrower acknowledges and agrees that the Liquidity Provider's
source of funds may derive in part from its participants (other than
Continental). Accordingly, references in this Agreement and the other Operative
Agreements to determinations, reserve and capital adequacy requirements,
increased costs, reduced receipts, 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 (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 4224 or Form 1001, as appropriate,
or other applicable form, certificate or document prescribed by the Internal
Revenue Service certifying, in each case, such Transferee's entitlement to a
complete exemption from United States federal withholding tax in respect to any
and all payments to be made hereunder, and (iii) agree (for the benefit of the
Liquidity Provider and the Borrower) to provide the Liquidity Provider and the
Borrower a new Form 4224 or Form 1001, as appropriate, (A) on or before the date
that any such form expires or becomes obsolete or (B) after the occurrence of
any event requiring a change in the most recent form previously delivered by it
and prior to the immediately following due date of any payment by the Borrower
hereunder, certifying in the case of a Form 1001 or Form 4224 that such
Transferee is entitled to a complete exemption from United States federal
withholding tax on payments under this Agreement. Unless the Borrower has
received forms or other documents reasonably satisfactory to it (and required by
applicable law) indicating that payments hereunder are not subject to United
States federal withholding tax, the Borrower will withhold taxes as required by
law from such payments at the applicable statutory rate.
(c) Notwithstanding the other provisions of this Section 7.08, the
Liquidity Provider may assign and pledge all or any portion of the Advances
owing to it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank, provided that any payment in respect of such assigned Advances made by the
Borrower to the Liquidity Provider in accordance with the terms of this
Agreement shall satisfy the Borrower's obligations hereunder in respect of such
assigned Advance to the extent of such payment. No such assignment shall release
the Liquidity Provider from its obligations hereunder.
Section 7.09. SEVERABILITY. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 7.10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 7.11. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL; WAIVER
OF IMMUNITY. (a) Each of the parties hereto hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any other Operative
Agreement, or for recognition and enforcement of any judgment in
respect hereof or thereof, to the 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 and mail), postage
prepaid, to each party hereto at its address set forth in Section 7.02
hereof, or at such other address of which the Liquidity Provider shall
have been notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction.
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS BEING
ESTABLISHED, including, without limitation, contract claims, tort claims, breach
of duty claims and all other common law and statutory claims. The Borrower and
the Liquidity Provider each warrant and represent that it has reviewed this
waiver with its legal counsel, and that it knowingly and voluntarily waives its
jury trial rights following consultation with such legal counsel. THIS WAIVER IS
IRREVOCABLE, AND CANNOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS
TO THIS AGREEMENT.
(c) The Liquidity Provider hereby waives any immunity it may have from
the jurisdiction of the courts of the United States or of any State and waives
any immunity any of its properties located in the United States may have from
attachment or execution upon a 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 Class B Trust, as
Borrower
By:_____________________________________
Name:
Title:
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
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 WESTDEUTSCHE LANDESBANK
GIROZENTRALE, acting through its New York Branch (the "LIQUIDITY PROVIDER"),
with reference to the Revolving Credit Agreement (1998-2B) dated as of April 21,
1998, 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 Class B
Certificates which was payable on ____________, ____ (the "DISTRIBUTION
DATE") in accordance with the terms and provisions of the Class B Trust
Agreement and the Class B Certificates, which Advance is requested to be
made on ____________, ____.
(3) The amount of the Interest Advance requested hereby (i) is
$_______________.__, to be applied in respect of the payment of interest
which was due and payable on the Class B Certificates on the Distribution
Date, (ii) does not include any amount with respect to the payment of
principal of, or premium on, the Class A Certificates, the Class B
Certificates or the Class C Certificates, or interest on the Class A
Certificates or the Class C Certificates, (iii) was computed in accordance
with the provisions of the Class B Certificates, the Class B Trust
Agreement and the Intercreditor Agreement (a copy of which computation is
attached hereto as Schedule I), (iv) does not exceed the Maximum Available
Commitment on the date hereof and (v) has not been and is not the subject
of a prior or contemporaneous Notice of Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will apply the same in accordance with
the terms of Section 3.6(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 Certificate and such
reduction shall automatically result in corresponding reductions in the amounts
available to be borrowed pursuant to a subsequent Advance.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ____ day of ____________, ____.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Subordination Agent, as Borrower
By:_____________________________________
Name:
Title:
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with Interest Advance
Notice of Borrowing]
Annex II to
Revolving Credit Agreement
NON-EXTENSION ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "BORROWER"), hereby certifies to WESTDEUTSCHE
LANDESBANK GIROZENTRALE, acting through its New York Branch (the "LIQUIDITY
PROVIDER"), with reference to the Revolving Credit Agreement (1998-2B) dated as
of April 21, 1998, 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 Class B Cash Collateral Account in accordance with Section
3.6(d) of the Intercreditor Agreement, which Advance is requested to be
made on __________, ____.
(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 Class B
Cash Collateral Account in accordance with Section 3.6(d) of the
Intercreditor Agreement, (ii) does not include any amount with respect to
the payment of the principal of, or premium on, the Class B Certificates,
or principal of, or interest or premium on, the Class A Certificates or the
Class C Certificates, (iii) was computed in accordance with the provisions
of the Class B Certificates, the Class B Trust Agreement and the
Intercreditor Agreement (a copy of which computation is attached hereto as
Schedule I), and (iv) has not been and is not the subject of a prior or
contemporaneous Notice of Borrowing under the Liquidity Agreement.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the Class B
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(d) 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
subordination agent (the "BORROWER"), hereby certifies to WESTDEUTSCHE
LANDESBANK GIROZENTRALE, acting through its New York Branch (the "LIQUIDITY
PROVIDER"), with reference to the Revolving Credit Agreement (1998-2B) dated as
of April 21, 1998, between the Borrower and the Liquidity Provider (the
"LIQUIDITY AGREEMENT"; the terms defined therein and not otherwise defined
herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the making
of the Downgrade Advance by the Liquidity Provider to be used for the
funding of the Class B Cash Collateral Account in accordance with Section
3.6(c) of the Intercreditor Agreement by reason of the downgrading of the
short-term unsecured debt rating of the Liquidity Provider issued by either
Rating Agency below the Threshold Rating, which Advance is requested to be
made on __________, ____.
(3) The amount of the Downgrade Advance requested hereby (i) is
$_______________.__, which equals the Maximum Available Commitment on the
date hereof and is to be applied in respect of the funding of the Class B
Cash Collateral Account in accordance with Section 3.6(c) of the
Intercreditor Agreement, (ii) does not include any amount with respect to
the payment of the principal of, or premium on, the Class B Certificates,
or principal of, or interest or premium on, the Class A Certificates or the
Class C Certificates, (iii) was computed in accordance with the provisions
of the Class B Certificates, the Class B Trust Agreement and the
Intercreditor Agreement (a copy of which computation is attached hereto as
Schedule I), and (iv) has not been and is not the subject of a prior or
contemporaneous Notice of Borrowing under the Liquidity Agreement.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the Class B
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(c) of the Intercreditor Agreement, (b) no portion of such
amount shall be applied by the Borrower for any other purpose and (c) no
portion of such amount until so applied shall be commingled with other
funds held by the Borrower.
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Downgrade Advance as requested by this Notice
of Borrowing shall 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 WESTDEUTSCHE LANDESBANK
GIROZENTRALE, acting through its New York Branch (the "LIQUIDITY PROVIDER"),
with reference to the Revolving Credit Agreement (1998-2B) dated as of April 21,
1998, between the Borrower and the Liquidity Provider (the "LIQUIDITY
AGREEMENT"; the terms defined therein and not otherwise defined herein being
used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the making
of the Final Advance by the Liquidity Provider to be used for the funding
of the Class B Cash Collateral Account in accordance with Section 3.6(i) of
the Intercreditor Agreement by reason of the receipt by the Borrower of a
Termination Notice from the Liquidity Provider with respect to the
Liquidity Agreement, which Advance is requested to be made on ____________,
____.
(3) The amount of the Final Advance requested hereby (i) is
$_________________.__, which equals the Maximum Available Commitment on the
date hereof and is to be applied in respect of the funding of the Class B
Cash Collateral Account in accordance with Section 3.6(i) of the
Intercreditor Agreement, (ii) does not include any amount with respect to
the payment of principal of, or premium on, the Class B Certificates, or
principal of, or interest or premium on, the Class A Certificates or the
Class C Certificates, (iii) was computed in accordance with the provisions
of the Class B Certificates, the Class B Trust Agreement and the
Intercreditor Agreement (a copy of which computation is attached hereto as
Schedule I), and (iv) has not been and is not the subject of a prior or
contemporaneous Notice of Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the Class B
Cash Collateral Account and apply the same in accordance with the terms of
Section 3.6(i) of the Intercreditor Agreement, (b) no portion of such
amount shall be applied by the Borrower for any other purpose and (c) no
portion of such amount until so applied shall be commingled with other
funds held by the Borrower.
(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.]
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:
- --------------------
Bracketed language may be included at Borrower's option.
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 Square
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Revolving Credit Agreement dated as of April 21, 1998, between Wilmington
Trust Company, as Subordination Agent, as agent and trustee for the
Continental Airlines Pass Through Trust, 1998-2B, as Borrower, and
Westdeutsche Landesbank Girozentrale, 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.
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,
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
acting through its New York Branch, as
Liquidity Provider
By:_____________________________________
Name:
Title:
cc: Wilmington Trust Company,
as Class B Trustee
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of April 21, 1998, between Wilmington
Trust Company, as Subordination Agent, as agent and trustee for the
Continental Airlines Pass Through Trust, 1998-2B, as Borrower, and
Westdeutsche Landesbank Girozentrale, 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.
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:
EXECUTION
================================================================================
REVOLVING CREDIT AGREEMENT
(1998-2C)
DATED AS OF APRIL 21, 1998
BETWEEN
WILMINGTON TRUST COMPANY,
AS SUBORDINATION AGENT,
AS AGENT AND TRUSTEE FOR THE
CONTINENTAL AIRLINES PASS THROUGH TRUST 1998-2C
AS BORROWER
AND
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
ACTING THROUGH ITS NEW YORK BRANCH
AS LIQUIDITY PROVIDER
================================================================================
RELATING TO
CONTINENTAL AIRLINES PASS THROUGH TRUST 1998-2C
6.331% CONTINENTAL AIRLINES PASS THROUGH CERTIFICATES,
SERIES 1998-2C
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS
Section 1.01. Certain Defined Terms................................... 1
ARTICLE II AMOUNT AND TERMS OF THE COMMITMENT
Section 2.01. The Advances............................................ 7
Section 2.02. Making the Advances..................................... 7
Section 2.03. Fees.................................................... 9
Section 2.04. Reductions or Termination of the Maximum Commitment..... 9
Section 2.05. Repayments of Interest Advances or the Final Advance.... 9
Section 2.06. Repayments of Provider Advances......................... 10
Section 2.07. Payments to the Liquidity Provider Under the
Intercreditor Agreement................................. 11
Section 2.08. Book Entries............................................ 11
Section 2.09. Payments from Available Funds Only...................... 11
Section 2.10. Extension of the Expiry Date; Non-Extension Advance..... 11
ARTICLE III OBLIGATIONS OF THE BORROWER
Section 3.01. Increased Costs......................................... 12
Section 3.02. Capital Adequacy........................................ 13
Section 3.03. Payments Free of Deductions............................. 13
Section 3.04. Payments................................................ 14
Section 3.05. Computations............................................ 14
Section 3.06. Payment on Non-Business Days............................ 14
Section 3.07. Interest................................................ 15
Section 3.08. Replacement of Borrower................................. 16
Section 3.09. Funding Loss Indemnification............................ 16
Section 3.10. Illegality.............................................. 17
ARTICLE IV CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to Effectiveness of Section 2.01... 17
Section 4.02. Conditions Precedent to Borrowing....................... 19
ARTICLE V COVENANTS
Section 5.01. Affirmative Covenants of the Borrower................... 19
Section 5.02. Negative Covenants of the Borrower...................... 19
ARTICLE VI LIQUIDITY EVENTS OF DEFAULT
Section 6.01. Liquidity Events of Default............................. 20
ARTICLE VII MISCELLANEOUS
Section 7.01. Amendments, Etc......................................... 20
Section 7.02. Notices, Etc............................................ 20
TABLE OF CONTENTS
(Continued)
Page
----
Section 7.03. No Waiver; Remedies..................................... 21
Section 7.04. Further Assurances...................................... 21
Section 7.05. Indemnification; Survival of Certain Provisions......... 21
Section 7.06. Liability of the Liquidity Provider..................... 22
Section 7.07 Costs, Expenses and Taxes............................. 23
Section 7.08. Binding Effect; Participations.......................... 23
Section 7.09. Severability............................................ 25
Section 7.10. GOVERNING LAW........................................... 25
Section 7.11. Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity...................................... 25
Section 7.12. Execution in Counterparts............................... 26
Section 7.13. Entirety................................................ 26
Section 7.14. Headings................................................ 26
Section 7.15. LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES........ 26
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
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT dated as of April 21, 1998, between WILMINGTON
TRUST COMPANY, a Delaware corporation, not in its individual capacity but solely
as Subordination Agent under the Intercreditor Agreement (each as defined
below), as agent and trustee for the Class C Trust (as defined below) (the
"BORROWER"), and WESTDEUTSCHE LANDESBANK GIROZENTRALE, a bank organized under
the laws of the State of North Rhine-Westphalia, Germany, acting through its New
York branch (the "LIQUIDITY PROVIDER").
W I T N E S S E T H:
WHEREAS, pursuant to the Class C Trust Agreement (such term and all
other capitalized terms used in these recitals having the meanings set forth or
referred to in Section 1.01), the Class C Trust is issuing the Class C
Certificates; and
WHEREAS, the Borrower, in order to support the timely payment of a
portion of the interest on the Class C Certificates in accordance with their
terms, has requested the Liquidity Provider to enter into this Agreement,
providing in part for the Borrower to request in specified circumstances that
Advances be made hereunder.
NOW, THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. CERTAIN DEFINED TERMS. (a) DEFINITIONS. As used in this
Agreement and unless otherwise expressly indicated, or unless the context
clearly requires otherwise, the following capitalized terms shall have the
following respective meanings for all purposes of this Agreement:
"ADDITIONAL COST" has the meaning assigned to such term in Section
3.01.
"ADVANCE" means an Interest Advance, a Final Advance, a Provider
Advance, an Applied Provider Advance or an Unpaid Advance, as the case may
be.
"APPLICABLE LIQUIDITY RATE" has the meaning assigned to such term in
Section 3.07(g).
"APPLICABLE MARGIN" means (y) with respect to any Unpaid Advance or
Applied Provider Advance, 1.75%, or (z) with respect to any Unapplied
Provider Advance, .40%.
"APPLIED DOWNGRADE ADVANCE" has the meaning assigned to such term in
Section 2.06(a).
"APPLIED NON-EXTENSION ADVANCE" has the meaning assigned to such term
in Section 2.06(a).
"APPLIED PROVIDER ADVANCE" has the meaning assigned to such term in
Section 2.06(a).
"BASE RATE" means a fluctuating interest rate per annum in effect
from time to time, which rate per annum shall at all times be equal to (a)
the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New
York, or if such rate is not so published for any day that is a Business
Day, the average of the quotations for such day for such transactions
received by the 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 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 Class C Certificate is
outstanding, the city and state in which the Class C 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.
"DOWNGRADE ADVANCE" means an Advance made pursuant to Section
2.02(c).
"EFFECTIVE DATE" has the meaning specified 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 the overall net income of
the Liquidity Provider or of its Lending Office by the jurisdiction where
such Liquidity Provider's principal office or such Lending Office is
located, and (ii) Excluded Withholding Taxes.
"EXCLUDED WITHHOLDING TAXES" means (i) withholding Taxes imposed by
the United States except to the extent that such United States withholding
Taxes are imposed as a result of any change in applicable law (excluding
from change in applicable law for this purpose a change in an applicable
treaty or other change in law affecting the applicability of a treaty)
after the date hereof, or in the case of a successor Liquidity Provider
(including a transferee of an Advance) or Lending Office, after the date
on which such successor Liquidity Provider obtains its interest or on
which the Lending Office is changed, and (ii) any withholding Taxes
imposed by the United States which are imposed or increased as a result of
the Liquidity Provider failing to deliver to the Borrower any certificate
or document (which certificate or document in the good faith judgment of
the Liquidity Provider it is legally entitled to provide) which is
reasonably requested by the Borrower to establish that payments under this
Agreement are exempt from (or entitled to a reduced rate of) withholding
Tax.
"EXPENSES" means liabilities, obligations, damages, settlements,
penalties, claims, actions, suits, costs, expenses, and disbursements
(including, without limitation, reasonable fees and disbursements of legal
counsel and costs of investigation), provided that Expenses shall not
include any Taxes.
"EXPIRY DATE" means April 19, 1999, 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).
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement dated the
date hereof, among the Trustees, the Liquidity Provider, the liquidity
provider under each Liquidity Facility (other than this Agreement) and the
Subordination Agent, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"INTEREST ADVANCE" means an Advance made pursuant to Section 2.02(a).
"INTEREST PERIOD" means, with respect to any LIBOR Advance, each of
the following periods:
(i) the period beginning on the third Business Day following either
(x) the Liquidity Provider's receipt of the Notice of Borrowing
for such LIBOR Advance (or, in the case of an Unapplied
Downgrade Advance, the period beginning on the Expiry Date) or
(y) the withdrawal of funds from the Class C Cash Collateral
Account for the purpose of paying interest on the Class C
Certificates as contemplated by Section 2.06(a) hereof and, in
either case, ending on the next Regular Distribution Date (or
ending, in the case of an Interest Period applicable to any
Unapplied Provider Advance, on the numerically corresponding day
in the first or sixth calendar month after the first day of the
applicable Interest Period and/or on the next Regular
Distribution Date, as Continental may select by providing notice
thereof to the Borrower and the Liquidity Provider no later than
three Business Days prior to the commencement of such Interest
Period, provided that if Continental shall not provide such a
notice at least three Business Days prior to the commencement of
such Interest Period, then Continental shall be deemed to have
selected an Interest Period 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 (or ending, in the case of an Interest
Period applicable to any Unapplied Provider Advance, on the
numerically corresponding day in the first or sixth calendar
month after the first day of the applicable Interest Period
and/or on the next Regular Distribution Date, as Continental may
select by providing notice thereof to the Borrower and the
Liquidity Provider no later than three Business Days prior to
the commencement of such Interest Period, provided that if
Continental shall not provide such a notice at least three
Business Days prior to the commencement of such Interest Period,
then Continental shall be deemed to have selected an Interest
Period ending on the next Regular Distribution Date);
PROVIDED, HOWEVER, that (I) if an Unapplied Provider Advance which is a
LIBOR Advance becomes an Applied Provider Advance, the Interest Period
then applicable to such Unapplied Provider Advance shall be applicable to
such Applied Provider Advance and (II) if (x) the Final Advance shall have
been made, or (y) other outstanding Advances shall have been converted
into the Final Advance, then the Interest Periods shall be successive
periods of one month beginning on the third Business Day following the
Liquidity Provider's receipt of the Notice of Borrowing for such Final
Advance (in the case of clause (x) above) or the last day of the Interest
Period then applicable to such outstanding Advances (in the case of clause
(y) above).
"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 a Lending Office outside the United States of
America except in accordance with Section 3.01, 3.02 or 3.03 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, the average
(rounded upward, if necessary, to the next higher 1/16 of 1%) of the rates
per annum at which deposits in dollars are offered to major banks in the
London interbank market at approximately 11:00 A.M. (London time) two
Business Days before the first day of such Interest Period in an amount
approximately equal to the principal amount of the Advance to which such
Interest Period is to apply and for a period of time comparable to such
Interest Period.
"LIQUIDITY EVENT OF DEFAULT" means the occurrence of either (a) the
Acceleration of all of the Equipment Notes or (b) a Continental Bankruptcy
Event.
"LIQUIDITY INDEMNITEE" means (i) the Liquidity Provider, (ii) the
directors, officers, employees and agents of the Liquidity Provider, and
(iii) the successors and permitted assigns of the persons described in
clauses (i) and (ii), inclusive.
"LIQUIDITY PROVIDER" has the meaning assigned to such term in the
recital of parties to this Agreement.
"MAXIMUM AVAILABLE COMMITMENT" shall mean, 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 $4,028,890, 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 specified in Section 2.02(e).
"NOTICE OF REPLACEMENT SUBORDINATION AGENT" has the meaning specified
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 Prospectus Supplement dated April
15, 1998 relating to the Certificates, as such Prospectus Supplement may
be amended or supplemented.
"PROVIDER ADVANCE" means a Downgrade Advance or a Non-Extension
Advance.
"REGULATORY CHANGE" has the meaning assigned to such term in Section
3.01.
"REPLENISHMENT AMOUNT" has the meaning assigned to such term in
Section 2.06(b).
"REQUIRED AMOUNT" means, for any day, the sum of the aggregate amount
of interest, calculated at the rate per annum equal to the Stated Interest
Rate for the Class C Certificates, that would be payable on the Class C
Certificates on each of the three successive semiannual Regular
Distribution Dates immediately following such day or, if such day is a
Regular Distribution Date, on such day and the succeeding two semiannual
Regular Distribution Dates, in each case calculated on the basis of the
Pool Balance of the Class C Certificates on such day and without regard to
expected future payments of principal on the Class C Certificates.
"TAX LETTER" means the letter dated the date hereof between the
Liquidity Provider and Continental pertaining to this Agreement.
"TERMINATION DATE" means the earliest to occur of the following: (i)
the Expiry Date; (ii) the date on which the Borrower delivers to the
Liquidity Provider a certificate, signed by a Responsible Officer of the
Borrower, certifying that all of the Class C Certificates have been paid
in full (or provision has been made for such payment in accordance with
the Intercreditor Agreement and the Trust Agreements) or are otherwise no
longer entitled to the benefits of this Agreement; (iii) the date on which
the Borrower delivers to the Liquidity Provider a certificate, signed by a
Responsible Officer of the Borrower, certifying that a Replacement
Liquidity Facility has been substituted for this Agreement in full
pursuant to Section 3.6(e) of the Intercreditor Agreement; (iv) the fifth
Business Day following the receipt by the Borrower of a Termination Notice
from the Liquidity Provider pursuant to Section 6.01 hereof; and (v) the
date on which no Advance is or may (including by reason of reinstatement
as herein provided) become available for a Borrowing hereunder.
"TERMINATION NOTICE" means the Notice of Termination substantially in
the form of Annex V to this Agreement.
"TRANSFEREE" has the meaning assigned to such term in Section
7.08(b).
"UNAPPLIED DOWNGRADE ADVANCE" means any Downgrade Advance other than
an Applied Downgrade Advance.
"UNAPPLIED NON-EXTENSION ADVANCE" means any Non-Extension Advance
other than an Applied Non-Extension Advance.
"UNAPPLIED PROVIDER ADVANCE" means any Provider Advance other than an
Applied Provider Advance.
"UNPAID ADVANCE" has the meaning assigned to such term in Section
2.05.
(b) TERMS DEFINED IN THE INTERCREDITOR AGREEMENT. For all purposes of
this Agreement, the following terms shall have the respective meanings assigned
to such terms in the Intercreditor Agreement:
"ACCELERATION", "CERTIFICATES", "CLASS A CERTIFICATES", "CLASS B
CERTIFICATES", "CLASS C CASH COLLATERAL ACCOUNT", "CLASS C
CERTIFICATEHOLDERS", "CLASS C CERTIFICATES", "CLASS C TRUST", "CLASS C
TRUST AGREEMENT", "CLASS C TRUSTEE", "CLOSING DATE", "CONTINENTAL",
"CONTINENTAL BANKRUPTCY EVENT", "CONTROLLING PARTY", "CORPORATE TRUST
OFFICE", "DISTRIBUTION DATE", "DOWNGRADED FACILITY", "EQUIPMENT NOTES",
"FEE LETTER", "FINAL LEGAL DISTRIBUTION DATE", "INTEREST PAYMENT DATE",
"INVESTMENT EARNINGS", "LIQUIDITY FACILITY", "LIQUIDITY OBLIGATIONS",
"LOAN TRUSTEE", "MOODY'S", "NON-EXTENDED FACILITY", "OPERATIVE
AGREEMENTS", "PARTICIPATION AGREEMENT", "PERFORMING EQUIPMENT NOTE",
"PERSON", "POOL BALANCE", "RATING AGENCY", "RATINGS CONFIRMATION",
"REGULAR DISTRIBUTION DATE", "REPLACEMENT LIQUIDITY FACILITY",
"RESPONSIBLE OFFICER", "SCHEDULED PAYMENT", "SPECIAL PAYMENT", "STANDARD &
POOR'S", "STATED INTEREST RATE", "SUBORDINATION AGENT", "TAXES",
"THRESHOLD RATING", "TRANSFER", "TRUST AGREEMENTS", "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 12:00 Noon (New York City time) on the Expiry Date (unless
the obligations of the Liquidity Provider shall be earlier terminated in
accordance with the terms of Section 2.04(b)) in an aggregate amount at any time
outstanding not to exceed the 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 on the Class C Certificates at
the Stated Interest Rate therefor in accordance with Section 3.6(a) of the
Intercreditor Agreement. Each Interest Advance made hereunder shall
automatically reduce the 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 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 the amount of such repaid Interest Advance, but not to exceed the
Maximum Commitment; PROVIDED, HOWEVER, that the Maximum Available Commitment
shall not be so reinstated at any time if (i) a Liquidity Event of Default shall
have occurred and be continuing and (ii) there is a Performing Note Deficiency.
(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) 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) within the time period specified in such Section) 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 Class C Cash Collateral Account in
accordance with said Section 3.6(d) and Section 3.6(f) of the Intercreditor
Agreement.
(c) A Downgrade Advance shall be made in a single Borrowing upon a
downgrading of the Liquidity Provider's short-term unsecured debt rating issued
by either Rating Agency below the applicable Threshold Rating (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 said Section 3.6(c), by delivery to the Liquidity
Provider of a written and completed Notice of Borrowing in substantially the
form of Annex 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 Class C Cash Collateral Account in accordance with
said Section 3.6(c) and Section 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 Class C Cash Collateral Account (in accordance with Section 3.6(i) of
the Intercreditor Agreement) and Section 3.6(f) of the Intercreditor Agreement.
(e) Each Borrowing shall be made on notice in writing (a "NOTICE OF
BORROWING") in substantially the form required by Section 2.02(a), 2.02(b),
2.02(c) or 2.02(d), as the case may be, given by the Borrower to the Liquidity
Provider. If a Notice of Borrowing is delivered by the Borrower in respect of
any Borrowing no later than 12:00 Noon (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 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 in such
Notice of Borrowing. If a Notice of Borrowing is delivered by the Borrower in
respect of any Borrowing after 12:00 Noon (New York City time) on a Business
Day, 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 second 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.
(f) 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. Following the making of any
Advance pursuant to Section 2.02(b), (c) or (d) hereof to fund the Class C Cash
Collateral Account, the Liquidity Provider shall have no interest in or rights
to the Class C Cash Collateral Account, such Advance or any other amounts from
time to time on deposit in the Class C Cash Collateral Account; PROVIDED that
the foregoing shall not affect or impair the obligations of the Subordination
Agent to make the distributions contemplated by Section 3.6(e) or (f) of the
Intercreditor Agreement. By paying to the Borrower proceeds of Advances
requested by the Borrower in accordance with the provisions of this Agreement,
the Liquidity Provider makes no representation as to, and assumes no
responsibility for, the correctness or sufficiency for any purpose of the amount
of the Advances so made and requested.
Section 2.03. FEES. The Borrower agrees to pay to the Liquidity
Provider the fees set forth in the Fee Letter.
Section 2.04. REDUCTIONS OR TERMINATION OF THE MAXIMUM COMMITMENT.
(a) AUTOMATIC REDUCTION. Promptly following each date on which the Required
Amount is reduced as a result of a reduction in the Pool Balance of the Class C
Certificates or otherwise, the Maximum Commitment shall automatically be reduced
to an amount equal to such reduced Required Amount (as calculated by the
Borrower). The Borrower shall give notice of any such automatic reduction of the
Maximum Commitment to the 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
or 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)). 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 Class C
Cash Collateral Account, invested and withdrawn from the Class C Cash Collateral
Account as set forth in Sections 3.6(c), (d) and (f) of the Intercreditor
Agreement. The Borrower agrees to pay to the Liquidity Provider, on each Regular
Distribution Date, commencing on the first Regular Distribution Date after the
making of a Provider Advance, interest on the principal amount of any such
Provider Advance as provided in Section 3.07; PROVIDED, HOWEVER, that amounts in
respect of a Provider Advance withdrawn from the Class C Cash Collateral Account
for the purpose of paying interest on the Class C Certificates in accordance
with Section 3.6(f) of the Intercreditor Agreement (the amount of any such
withdrawal being (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
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. Subject to Sections 2.07 and 2.09 hereof,
immediately upon the withdrawal of any amounts from the Class C Cash Collateral
Account on account of a reduction in the Required Amount, the Borrower shall
repay 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 Class C 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 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 Class C Cash
Collateral Account after giving effect to any Applied Provider Advance on the
date of such replacement shall be reimbursed to the Liquidity Provider, but only
to the extent such amounts are necessary to repay in full to the Liquidity
Provider all amounts owing to it hereunder.
Section 2.07. PAYMENTS TO THE LIQUIDITY PROVIDER UNDER THE
INTERCREDITOR AGREEMENT. In order to provide for payment or repayment to the
Liquidity Provider of any amounts hereunder, the Intercreditor Agreement
provides that amounts available and referred to in Articles II and III of the
Intercreditor Agreement, to the extent payable to the Liquidity Provider
pursuant to the terms of the Intercreditor Agreement (including, without
limitation, Section 3.6(f) of the Intercreditor Agreement), shall be paid to the
Liquidity Provider in accordance with the terms thereof. Amounts so paid to the
Liquidity Provider shall be applied by the Liquidity Provider to Liquidity
Obligations then due and payable in accordance with the Intercreditor Agreement
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 Section 9
of the Participation Agreements and only to the extent that the Borrower shall
have sufficient income or proceeds therefrom to enable the Borrower to make
payments in accordance with the terms hereof after giving effect to the priority
of payments provisions set forth in the Intercreditor Agreement. The Liquidity
Provider agrees that it will look solely to such amounts to the extent available
for distribution to it as provided in the Intercreditor Agreement and this
Agreement and that the Borrower, in its individual capacity, is not personally
liable to it for any amounts payable or liability under this Agreement except as
expressly provided in this Agreement, the Intercreditor Agreement or any
Participation Agreement. Amounts on deposit in the Class C Cash Collateral
Account shall be available to the Borrower to make payments under this Agreement
only to the extent and for the purposes expressly contemplated in Section 3.6(f)
of the Intercreditor Agreement.
Section 2.10. EXTENSION OF THE EXPIRY DATE; NON-EXTENSION ADVANCE. No
earlier than the 60th day and no later than the 40th day prior to the then
effective Expiry Date (unless such Expiry Date is on or after the date that is
15 days after the Final Legal Distribution Date for the Class C Certificates),
the Borrower shall request that the Liquidity Provider extend the Expiry Date
for a period of 364 days after the then effective Expiry Date (unless the
obligations of the Liquidity Provider are earlier terminated in accordance with
the terms hereof). The Liquidity Provider shall advise the Borrower, no earlier
than 40 days and no later than 25 days prior to the then effective Expiry Date,
whether, in its sole discretion, it agrees to so extend the Expiry Date. If the
Liquidity Provider advises the Borrower on or before the 25th day prior to the
Expiry Date then in effect that such Expiry Date shall not be so extended, or
fails to irrevocably and unconditionally advise the Borrower on or before the
25th day prior to the Expiry Date then in effect 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 such 25th day (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) 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 (other than 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 any
deposits referred to in the definition of LIBOR Rate or related definitions).
The Liquidity Provider agrees to use reasonable efforts (consistent with
applicable legal and regulatory restrictions) to change the jurisdiction of its
Lending Office if making such change would avoid the need for, or reduce the
amount of, any amount payable under this Section that may thereafter accrue and
would not, in the reasonable judgment of the Liquidity Provider, be otherwise
disadvantageous to the Liquidity Provider.
The Liquidity Provider will notify the Borrower of any event
occurring after the date of this Agreement that will entitle the Liquidity
Provider to compensation pursuant to this Section 3.01 as promptly as
practicable after it obtains knowledge thereof and determines to request such
compensation, which notice shall describe in reasonable detail the calculation
of the amounts owed under this Section. Determinations by the Liquidity Provider
for purposes of this Section 3.01 of the effect of any Regulatory Change on its
costs of making or maintaining Advances or on amounts receivable by it in
respect of Advances, and of the additional amounts required to compensate the
Liquidity Provider in respect of any Additional Costs, shall be prima facie
evidence of the amount owed under this Section.
Section 3.02. CAPITAL ADEQUACY. If (1) 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 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 agrees to use reasonable efforts (consistent with applicable
legal and regulatory restrictions) to change the jurisdiction of its Lending
Office if making such change would avoid the need for, or reduce the amount of,
any amount payable under this Section that may thereafter accrue and would not,
in the reasonable judgment of the Liquidity Provider, be otherwise materially
disadvantageous to the Liquidity Provider.
The Liquidity Provider will notify the Borrower of any event
occurring after the date of this Agreement that will entitle the Liquidity
Provider to compensation pursuant to this Section 3.02 as promptly as
practicable after it obtains knowledge thereof and determines to request such
compensation, which notice shall describe in reasonable detail the calculation
of the amounts owed under this Section. Determinations by the Liquidity Provider
for purposes of this Section 3.02 of the effect of any increase in the amount of
capital required to be maintained by the 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.
Section 3.03. PAYMENTS FREE OF DEDUCTIONS. (a) All payments made by
the Borrower under this Agreement shall be made free and clear of, and without
reduction for or on account of, any present or future stamp or other taxes,
levies, imposts, duties, charges, fees, deductions, withholdings, restrictions
or conditions of any nature whatsoever now or hereafter imposed, levied,
collected, withheld or assessed, excluding Excluded Taxes (such non-excluded
taxes being referred to herein, collectively, as "NON-EXCLUDED TAXES" and,
individually, as a "NON-EXCLUDED TAX"). If any Non-Excluded Taxes are required
to be withheld from any amounts payable to the Liquidity Provider under this
Agreement, the amounts so payable to the Liquidity Provider shall be increased
to the extent necessary to yield to the Liquidity Provider (after payment of all
Non-Excluded Taxes) interest or any other such amounts payable under this
Agreement at the rates or in the amounts specified in this Agreement. The
Liquidity Provider agrees to use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would avoid the need
for, or reduce the amount of, any such additional amounts that may thereafter
accrue and would not, in the reasonable judgment of the Liquidity Provider, be
otherwise disadvantageous to the Liquidity Provider. From time to time upon the
reasonable request of the Borrower, the Liquidity Provider agrees to provide to
the Borrower two original Internal Revenue Service Form 1001 or 4224, 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.
(b) All payments (including, without limitation, 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. If any Taxes are required to
be withheld or deducted from any amounts payable to the Borrower under this
Agreement, 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
payment required 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) will be sufficient to yield to the Borrower the
full amount which would have been received by it had no such withholding or
deduction been made. Within 30 days after the date of each payment hereunder,
the Liquidity Provider shall furnish to the Borrower the original or a certified
copy of (or other documentary evidence of) the payment of the Taxes applicable
to such payment.
Section 3.04. PAYMENTS. The Borrower shall make or cause to be made
each payment to the Liquidity Provider under this Agreement so as to cause the
same to be received by the Liquidity Provider not later than 1:00 P.M. (New York
City time) on the day when due. The Borrower shall make all such payments in
lawful money of the United States of America, to the Liquidity Provider in
immediately available funds, by wire transfer to The Chase Manhattan Bank, One
Chase Manhattan Plaza, New York, New York 10081, ABA No. 021-000-021, for
account of Westdeutsche Landesbank Girozentrale, New York branch, Account No.
920-1-060663, Reference: Continental Airlines Liquidity Facility 1998-2C.
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 Class C Cash Collateral
Account to pay interest on the Class C Certificates) to but excluding the date
such principal amount shall be paid in full (or, in the case of an Applied
Provider Advance, the date on which the Class C 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)
which is not paid when due (whether at stated maturity, by acceleration or
otherwise) from and including the due date thereof to but excluding the date
such amount is paid in full, in each such case, at a fluctuating interest rate
per annum for each day equal to the Applicable Liquidity Rate (as defined below)
for such Advance or such other amount as in effect for such day, but in no event
at a rate per annum greater than the maximum rate permitted by applicable law;
PROVIDED, HOWEVER, that, if at any time the otherwise applicable interest rate
as set forth in this Section 3.07 shall exceed the maximum rate permitted by
applicable law, then any subsequent reduction in such interest rate will not
reduce the rate of interest payable pursuant to this Section 3.07 below the
maximum rate permitted by applicable law until the total amount of interest
accrued equals the amount of interest that would have accrued if such otherwise
applicable interest rate as set forth in this Section 3.07 had at all times been
in effect.
(b) Except as provided in clause (e) below, each Advance will be
either a Base Rate Advance or a LIBOR Advance as provided in this Section. 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. 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 outstanding Unapplied Downgrade Advance (i) during the
period from and including the date of the making of such Unapplied Downgrade
Advance through but excluding the Expiry Date (or, if earlier, the date of
repayment thereof or of conversion thereof into a Final Advance), shall bear
interest in an amount equal to the Investment Earnings on amounts on deposit in
the Class C Cash Collateral Account for such period plus .325% per annum
(through and including the first anniversary of the date of this Agreement) or
.35% per annum (after the first anniversary of the date of this Agreement) on
the amount of such Unapplied Downgrade Advance from time to time during such
period, payable in arrears on each Regular Distribution Date, and (ii)
thereafter, shall be a LIBOR Advance and shall bear interest in accordance with
clause (c) above.
(f) 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.
(g) 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 as the Borrower for all purposes hereunder.
Section 3.09. FUNDING LOSS INDEMNIFICATION. The Borrower shall pay to
the Liquidity Provider, upon the request of the Liquidity Provider, such amount
or amounts as shall be sufficient (in the reasonable opinion of the Liquidity
Provider) to compensate it for any loss, cost, or expense incurred 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.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.01. CONDITIONS PRECEDENT TO EFFECTIVENESS OF SECTION 2.01.
Section 2.01 of this Agreement shall become effective on and as of the first
date (the "EFFECTIVE DATE") on which the following conditions precedent have
been satisfied or waived:
(a) The Liquidity Provider shall have received on or before the
Closing Date each of the following, and in the case of each document
delivered pursuant to paragraphs (i), (ii) and (iii), each in form and
substance satisfactory to the Liquidity Provider:
(i) This Agreement duly executed on behalf of the Borrower;
(ii) The Intercreditor Agreement duly executed on behalf of each
of the parties thereto;
(iii) Fully executed copies of each of the Operative Agreements
executed and delivered on or before the Closing Date (other than this
Agreement and the Intercreditor Agreement);
(iv) A copy of the Prospectus Supplement and specimen copies of
the Class C Certificates;
(v) An executed copy of each document, instrument, certificate
and opinion delivered on or before the Closing Date pursuant to the
Class C 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 Trustees, 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 Agreements shall have been satisfied or waived, all
conditions precedent to the effectiveness of the other Liquidity
Facilities 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 (unless any of such
conditions precedent shall have been waived by the Underwriters).
(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, prior to the date of such Borrowing, the Borrower shall have
delivered a Notice of Borrowing which conforms to the terms and conditions of
this Agreement and has been completed as may be required by the relevant form of
the Notice of Borrowing for the type of Advances requested.
ARTICLE V
COVENANTS
Section 5.01. AFFIRMATIVE COVENANTS OF THE BORROWER. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any 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 (a) any Liquidity Event
of Default has occurred and is continuing and (b) there is a Performing Note
Deficiency, the Liquidity Provider may, in its discretion, deliver to the
Borrower a Termination Notice, the effect of which shall be to cause (i) 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, (ii) 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, (iii) all other
outstanding Advances to be automatically converted into Final Advances for
purposes of determining the Applicable Liquidity Rate for interest payable
thereon, and (iv) subject to Sections 2.07 and 2.09 hereof, all Advances
(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 Square
Wilmington, DE 19890-0001
Attention: Corporate Trust
Administration
Telephone: (302) 651-1000
Telecopy: (302) 651-8882
Liquidity Provider: WESTDEUTSCHE LANDESBANK GIROZENTRALE
Global Structured Finance
1211 Avenue of the Americas
New York, NY 10036
Attention: Alfred Heynen
Telephone: (212) 852-6115
Telecopy: (212) 869-7634
with a copy to: WESTDEUTSCHE LANDESBANK GIROZENTRALE
Loan Administration
1211 Avenue of the Americas
New York, NY 10036
Attention: Cheryl Wilson
Telephone: (212) 852-6152
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 Articles II and III hereof
shall not be effective until received by the Liquidity Provider. A copy of all
notices delivered hereunder to either party shall in addition be delivered to
each of the parties to the Participation Agreements at their respective
addresses set forth therein.
Section 7.03. NO WAIVER; REMEDIES. No failure on the part of the
Liquidity Provider to exercise, and no delay in exercising, any right under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right under this Agreement preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
Section 7.04. FURTHER ASSURANCES. The Borrower agrees to do such
further acts and things and to execute and deliver to the Liquidity Provider
such additional assignments, agreements, powers and instruments as the Liquidity
Provider may reasonably require or deem advisable to carry into effect the
purposes of this Agreement and the other Operative Agreements or to better
assure and confirm unto the Liquidity Provider its rights, powers and remedies
hereunder and under the other Operative Agreements.
Section 7.05. INDEMNIFICATION; SURVIVAL OF CERTAIN PROVISIONS. The
Liquidity Provider shall be indemnified hereunder to the extent and in the
manner described in Section 9 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 Sections 3.01, 3.02 or 7.07 hereof or in the Fee Letter (regardless
of whether indemnified against pursuant to said Sections or in such Fee
Letter)), that may be imposed, incurred by or asserted against any Liquidity
Indemnitee, in any way relating to, resulting from, or arising out of or in
connection with any action, suit or proceeding by any third party against such
Liquidity Indemnitee and relating to this Agreement, the Fee Letter, the
Intercreditor Agreement or any Participation 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, or
(iii) attributable to the failure by such Liquidity Indemnitee or any other
Liquidity Indemnitee to perform or observe any agreement, covenant or condition
on its part to be performed or observed in this Agreement, the Intercreditor
Agreement, the Fee Letter, the Tax Letter or any other Operative Agreement to
which it is a party. The indemnities contained in Section 9 of the Participation
Agreements, an 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 negligence in
determining whether documents presented hereunder comply with the terms hereof,
or (B) any breach by the Liquidity Provider of any of the terms of this
Agreement, including, but not limited to, the Liquidity Provider's failure to
make lawful payment hereunder after the delivery to it by the Borrower of a
Notice of Borrowing strictly complying with the terms and conditions hereof.
(b) 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 negligence (in which event the extent of t 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 (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 Class C Cash Collateral Accounts. In addition,
the Borrower shall pay any and all recording, stamp and other similar taxes and
fees payable or determined to be payable in connection with the execution,
delivery, filing and recording of this Agreement, any other Operative Agreement
and such other documents, and agrees to save the Liquidity Provider harmless
from and against any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes or fees.
Section 7.07 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 (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 Class C Cash
Collateral Accounts. In addition, the Borrower shall pay any and all recording,
stamp and other similar taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this Agreement,
any other Operative Agreement and such other documents, and agrees to save the
Liquidity Provider harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes
or fees.
Section 7.08. BINDING EFFECT; PARTICIPATIONS. (a) This Agreement
shall be binding upon and inure to the benefit of the Borrower and the Liquidity
Provider and their respective successors and assigns, except that neither the
Liquidity Provider (except as otherwise provided in this Section 7.08) nor
(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 as the Liquidity Provider may in its
sole discretion select, subject to the requirements of Section 7.08(b). No such
participation by the Liquidity Provider, however, will relieve the Liquidity
Provider of its obligations hereunder. In connection with any participation or
any proposed participation, the Liquidity Provider may disclose to the
participant or the proposed participant any information that the Borrower is
required to deliver or to disclose to the Liquidity Provider pursuant to this
Agreement. The Borrower acknowledges and agrees that the Liquidity Provider's
source of funds may derive in part from its participants (other than
Continental). Accordingly, references in this Agreement and the other Operative
Agreements to determinations, reserve and capital adequacy requirements,
increased costs, reduced receipts, 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 (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 4224 or Form 1001, as appropriate,
or other applicable form, certificate or document prescribed by the Internal
Revenue Service certifying, in each case, such Transferee's entitlement to a
complete exemption from United States federal withholding tax in respect to any
and all payments to be made hereunder, and (iii) agree (for the benefit of the
Liquidity Provider and the Borrower) to provide the Liquidity Provider and the
Borrower a new Form 4224 or Form 1001, as appropriate, (A) on or before the date
that any such form expires or becomes obsolete or (B) after the occurrence of
any event requiring a change in the most recent form previously delivered by it
and prior to the immediately following due date of any payment by the Borrower
hereunder, certifying in the case of a Form 1001 or Form 4224 that such
Transferee is entitled to a complete exemption from United States federal
withholding tax on payments under this Agreement. Unless the Borrower has
received forms or other documents reasonably satisfactory to it (and required by
applicable law) indicating that payments hereunder are not subject to United
States federal withholding tax, the Borrower will withhold taxes as required by
law from such payments at the applicable statutory rate.
(c) Notwithstanding the other provisions of this Section 7.08, the
Liquidity Provider may assign and pledge all or any portion of the Advances
owing to it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank, provided that any payment in respect of such assigned Advances made by the
Borrower to the Liquidity Provider in accordance with the terms of this
Agreement shall satisfy the Borrower's obligations hereunder in respect of such
assigned Advance to the extent of such payment. No such assignment shall release
the Liquidity Provider from its obligations hereunder.
Section 7.09. SEVERABILITY. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 7.10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 7.11. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL;
WAIVER OF IMMUNITY. (a) Each of the parties hereto hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any other Operative
Agreement, or for recognition and enforcement of any judgment in
respect hereof or thereof, to the 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 and mail), postage
prepaid, to each party hereto at its address set forth in Section
7.02 hereof, or at such other address of which the Liquidity Provider
shall have been notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction.
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS
BEING ESTABLISHED, including, without limitation, contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. The
Borrower and the Liquidity Provider each warrant and represent that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER IS IRREVOCABLE, AND CANNOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
(c) The Liquidity Provider hereby waives any immunity it may have
from the jurisdiction of the courts of the United States or of any State and
waives any immunity any of its properties located in the United States may have
from attachment or execution upon a 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 Class C
Trust, as Borrower
By:_____________________________________
Name:
Title:
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
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 WESTDEUTSCHE LANDESBANK
GIROZENTRALE, acting through its New York Branch (the "LIQUIDITY PROVIDER"),
with reference to the Revolving Credit Agreement (1998-2C) dated as of April 21,
1998, 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
Class C Certificates which was payable on ____________, ____ (the
"DISTRIBUTION DATE") in accordance with the terms and provisions of
the Class C Trust Agreement and the Class C Certificates, which
Advance is requested to be made on ____________, ____.
(3) The amount of the Interest Advance requested hereby (i) is
$_______________.__, to be applied in respect of the payment of
interest which was due and payable on the Class C Certificates on the
Distribution Date, (ii) does not include any amount with respect to
the payment of principal of, or premium on, the Class A Certificates,
the Class B Certificates or the Class C Certificates, or interest on
the Class A Certificates or the Class B Certificates, (iii) was
computed in accordance with the provisions of the Class C
Certificates, the Class C Trust Agreement and the Intercreditor
Agreement (a copy of which computation is attached hereto as Schedule
I), (iv) does not exceed the Maximum Available Commitment on the date
hereof and (v) has not been and is not the subject of a prior or
contemporaneous Notice of Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will apply the same in accordance
with the terms of Section 3.6(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 Certificate and such
reduction shall automatically result in corresponding reductions in the amounts
available to be borrowed pursuant to a subsequent Advance.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ____ day of _________, ____.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Subordination Agent, as Borrower
By:_____________________________________
Name:
Title:
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with Interest
Advance Notice of Borrowing]
Annex II to
Revolving Credit Agreement
NON-EXTENSION ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "BORROWER"), hereby certifies to WESTDEUTSCHE
LANDESBANK GIROZENTRALE, acting through its New York Branch (the "LIQUIDITY
PROVIDER"), with reference to the Revolving Credit Agreement (1998-2C) dated as
of April 21, 1998, 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 Class C Cash Collateral Account in
accordance with Section 3.6(d) of the Intercreditor Agreement, which
Advance is requested to be made on __________, ____.
(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 Class C Cash Collateral Account in accordance with Section 3.6(d)
of the Intercreditor Agreement, (ii) does not include any amount with
respect to the payment of the principal of, or premium on, the Class
C Certificates, or principal of, or interest or premium on, the Class
A Certificates or the Class B Certificates, (iii) was computed in
accordance with the provisions of the Class C Certificates, the Class
C Trust Agreement and the Intercreditor Agreement (a copy of which
computation is attached hereto as Schedule I), and (iv) has not been
and is not the subject of a prior or contemporaneous Notice of
Borrowing under the Liquidity Agreement.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the
Class C Cash Collateral Account and apply the same in accordance with
the terms of Section 3.6(d) 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
subordination agent (the "BORROWER"), hereby certifies to WESTDEUTSCHE
LANDESBANK GIROZENTRALE, acting through its New York Branch (the "LIQUIDITY
PROVIDER"), with reference to the Revolving Credit Agreement (1998-2C) dated as
of April 21, 1998, between the Borrower and the Liquidity Provider (the
"LIQUIDITY AGREEMENT"; the terms defined therein and not otherwise defined
herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the
Intercreditor Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of the Downgrade Advance by the Liquidity Provider to be used
for the funding of the Class C Cash Collateral Account in accordance
with Section 3.6(c) of the Intercreditor Agreement by reason of the
downgrading of the short-term unsecured debt rating of the Liquidity
Provider issued by either Rating Agency below the Threshold Rating,
which Advance is requested to be made on __________, ____.
(3) The amount of the Downgrade Advance requested hereby (i) is
$_______________.__, which equals the Maximum Available Commitment on
the date hereof and is to be applied in respect of the funding of the
Class C Cash Collateral Account in accordance with Section 3.6(c) of
the Intercreditor Agreement, (ii) does not include any amount with
respect to the payment of the principal of, or premium on, the Class
C Certificates, or principal of, or interest or premium on, the Class
A Certificates or the Class B Certificates, (iii) was computed in
accordance with the provisions of the Class C Certificates, the Class
C Trust Agreement and the Intercreditor Agreement (a copy of which
computation is attached hereto as Schedule I), and (iv) has not been
and is not the subject of a prior or contemporaneous Notice of
Borrowing under the Liquidity Agreement.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the
Class C Cash Collateral Account and apply the same in accordance with
the terms of Section 3.6(c) of the Intercreditor Agreement, (b) no
portion of such amount shall be applied by the Borrower for any other
purpose and (c) no portion of such amount until so applied shall be
commingled with other funds held by the Borrower.
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Downgrade Advance as requested by this Notice
of Borrowing shall automatically and irrevocably terminate the obligation of the
Liquidity Provider to make further Advances under the Liquidity Agreement; and
(B) following the making by the Liquidity Provider of the Downgrade Advance
requested by this Notice of Borrowing, the Borrower shall not be entitled to
request any further Advances under the Liquidity Agreement.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the ____ day of _________, ____.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Subordination Agent, as Borrower
By:_____________________________________
Name:
Title:
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with Downgrade
Advance Notice of Borrowing]
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 WESTDEUTSCHE LANDESBANK
GIROZENTRALE, acting through its New York Branch (the "LIQUIDITY PROVIDER"),
with reference to the Revolving Credit Agreement (1998-2C) dated as of April 21,
1998, between the Borrower and the Liquidity Provider (the "LIQUIDITY
AGREEMENT"; the terms defined therein and not otherwise defined herein being
used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the
Intercreditor Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of the Final Advance by the Liquidity Provider to be used for
the funding of the Class C Cash Collateral Account in accordance with
Section 3.6(i) of the Intercreditor Agreement by reason of the
receipt by the Borrower of a Termination Notice from the Liquidity
Provider with respect to the Liquidity Agreement, which Advance is
requested to be made on ____________, ____.
(3) The amount of the Final Advance requested hereby (i) is
$_________________.__, which equals the Maximum Available Commitment
on the date hereof and is to be applied in respect of the funding of
the Class C Cash Collateral Account in accordance with Section 3.6(i)
of the Intercreditor Agreement, (ii) does not include any amount with
respect to the payment of principal of, or premium on, the Class C
Certificates, or principal of, or interest or premium on, the Class A
Certificates or the Class B Certificates, (iii) was computed in
accordance with the provisions of the Class C Certificates, the Class
C Trust Agreement and the Intercreditor Agreement (a copy of which
computation is attached hereto as Schedule I), and (iv) has not been
and is not the subject of a prior or contemporaneous Notice of
Borrowing.
(4) Upon receipt by or on behalf of the Borrower of the amount
requested hereby, (a) the Borrower will deposit such amount in the
Class C Cash Collateral Account and apply the same in accordance with
the terms of Section 3.6(i) of the Intercreditor Agreement, (b) no
portion of such amount shall be applied by the Borrower for any other
purpose and (c) no portion of such amount until so applied shall be
commingled with other funds held by the Borrower.
(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
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:
- --------------------------------
1 Bracketed language may be included at Borrower's option.
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 Square
Wilmington, DE 19890-0001
Attention: Corporate Trust Administration
Revolving Credit Agreement dated as of April 21, 1998, between
Wilmington Trust Company, as Subordination Agent, as agent and
trustee for the Continental Airlines Pass Through Trust, 1998-2C, as
Borrower, and Westdeutsche Landesbank Girozentrale, 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.
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,
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
acting through its New York Branch,
as Liquidity Provider
By:_____________________________________
Name:
Title:
cc: Wilmington Trust Company,
as Class C Trustee
Annex VI to
Revolving Credit Agreement
NOTICE OF REPLACEMENT SUBORDINATION AGENT
[Date]
Attention:
Revolving Credit Agreement dated as of April 21, 1998, between
Wilmington Trust Company, as Subordination Agent, as agent and
trustee for the Continental Airlines Pass Through Trust, 1998-2C, as
Borrower, and Westdeutsche Landesbank Girozentrale, 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.
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:
EXECUTION COPY
TRUST SUPPLEMENT No. 1998-2A
Dated April 21, 1998
between
WILMINGTON TRUST COMPANY
as Trustee,
and
CONTINENTAL AIRLINES, INC.
to
PASS THROUGH TRUST AGREEMENT
Dated as of September 25, 1997
$105,797,000
Continental Airlines Pass Through Trust 1998-2A
6.410% Continental Airlines
Pass Through Certificates,
Series 1998-2A
This Trust Supplement No. 1998-2A, dated as of April 21, 1998 (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 the eight Boeing 737-3T0 aircraft
and six McDonnell Douglas MD-82 aircraft listed in Schedule I hereto (the
"AIRCRAFT") from the Owner Trustee, who intends to purchase such Aircraft from
the Company;
WHEREAS, in the case of each Aircraft, the Owner Trustee, acting on
behalf of the Owner Participant, will issue pursuant to an Indenture, on a
non-recourse basis, Equipment Notes in order to finance a portion of its
purchase price of such Aircraft;
WHEREAS, the Trustee hereby declares the creation of this Continental
Airlines Pass Through Trust 1998-2A (the "APPLICABLE TRUST") for the benefit of
the Applicable Certificateholders, and the initial Applicable Certificateholders
as the grantors of the Applicable Trust, by their respective acceptances of the
Applicable Certificates, join in the creation of the Applicable Trust with the
Trustee;
WHEREAS, all Certificates to be issued by the Applicable Trust will
evidence fractional undivided interests in the Applicable Trust and will convey
no rights, benefits or interests in respect of any property other than the Trust
Property;
WHEREAS, pursuant to the terms and conditions of the Basic Agreement
as supplemented by this Trust Supplement (the "AGREEMENT"), the Trustee, on
behalf of the Applicable Trust, 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, subject to the Intercreditor Agreement, 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;
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
"6.410% Continental Airlines Pass Through Certificates, Series 1998-2A"
(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
and 3.06 of the Basic Agreement) is $105,797,000.
(b) The Cut-off Date is April 27, 1998.
(c) The Regular Distribution Dates with respect to any payment of
Scheduled Payments means April 15 and October 15 of each year, commencing
on October 15, 1998, until payment of all of the Scheduled Payments to be
made under the Equipment Notes has been made.
(d) 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.
(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 the 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 Equipment Notes to be acquired and held in the Applicable
Trust are the Equipment Notes described in each of the Indentures bearing
interest at a rate that is the same as the designated rates for the
Applicable Certificates, the related Aircraft are as described in Schedule
I to this Trust Supplement, the "Participation Agreements" as defined in
this Trust Supplement are the "Note Purchase Agreements" referred to in the
Basic Agreement, and the "Indentures" and "Leases" are, collectively, the
"Trust Indenture" and "Lease" (as defined in each of the Participation
Agreements), respectively.
(g) The Applicable Certificates are subject to the Intercreditor
Agreement.
(h) The Applicable Certificates will have the benefit of the Liquidity
Facility.
(i) Except as contemplated by Section 2.02(b) of the Basic Agreement,
there will be no deposit agreement or other arrangement prior to the
delivery of the Aircraft.
(j) The Responsible Party is the Company.
(k) The "final expiration date" for the Applicable Trust is one
hundred (110) years following the Issuance Date, and the "minimum" and
"maximum" number of days for purposes of Section 11.01 of the Basic
Agreement are 15 and 60 days, respectively.
(l) 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.
(m) The particular "sections of the Note Purchase Agreements," for
purposes of clause (3) of Section 7.07 of the Basic Agreement, are Section
9.1 of each Participation Agreement.
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: Has the meaning specified in the recitals hereto.
APPLICABLE CERTIFICATE: Has the meaning specified in Section 1.01 of
this Trust Supplement.
APPLICABLE CERTIFICATEHOLDER: Means the Person in whose name an
Applicable Certificate is registered on the Register for the Applicable
Certificates.
APPLICABLE TRUST: Has the meaning specified in the recitals hereto.
BASIC AGREEMENT: Has the meaning specified in the first paragraph of
this Trust Supplement.
BOEING: Means The Boeing Company.
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.
DISTRIBUTION DATE: Means any Regular Distribution Date or Special
Distribution Date as the context requires.
FINAL MATURITY DATE: Means October 15, 2008.
INTERCREDITOR AGREEMENT: Means the Intercreditor Agreement dated as of
April 21, 1998 among the Trustee, the Other Trustees, the Liquidity
Provider, the liquidity providers relating to the Certificates issued under
(and as defined in) each of the Other Agreements, 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.
ISSUANCE DATE: Means April 21, 1998.
LIQUIDITY FACILITY: Means, initially, the Revolving Credit Agreement
dated as of April 21, 1998 relating to the Applicable Certificates, between
the Liquidity Provider and Wilmington Trust Company as Subordination Agent,
as agent and trustee for the Applicable Trust, and, from and after the
replacement of 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 PROVIDER: Means, initially, Westdeutsche Landesbank
Girozentrale, acting through its New York Branch, and any replacements or
successors therefor appointed in accordance with the Intercreditor
Agreement.
OTHER TRUSTEES: Means the trustees under the Other Agreements, and any
successor or other trustee appointed as provided therein.
OTHER TRUSTS: Means the Continental Airlines Pass Through Trust
1998-2B and the Continental Airlines Pass Through Trust 1998-2C, each
created on the date hereof.
OWNER TRUSTEE'S PURCHASE AGREEMENTS: Means the Participation
Agreements.
PARTICIPATION AGREEMENTS: Means each of the fourteen separate
Participation Agreements relating to the Aircraft dated the date hereof,
among the Company, the Trustee, the Other Trustees, the relevant Loan
Trustee and the Subordination Agent providing for, among other things, the
purchase of Equipment Notes by the Trustee on behalf of the Trust, as the
same may be amended, supplemented or otherwise modified in accordance with
its terms.
TRUST SUPPLEMENT: Has the meaning specified in the first paragraph of
this trust supplement.
ARTICLE III
DEFAULT
Section 3.01. PURCHASE RIGHTS OF CERTIFICATEHOLDERS. (a) By acceptance
of its Applicable Certificate, each Applicable Certificateholder agrees that at
any time after the occurrence and during the continuation of a Triggering Event,
(i) each Class B Certificateholder shall have the right to
purchase all, but not less than all, of the Applicable Certificates
upon ten days' written notice to the Trustee and each other Class B
Certificateholder, PROVIDED that (A) if prior to the end of such
ten-day period any other Class B Certificateholder notifies such
purchasing Class B Certificateholder that such other Class B
Certificateholder wants to participate in such purchase, then such
other Class B Certificateholder may join with the purchasing Class B
Certificateholder to purchase all, but not less than all, of the
Applicable Certificates pro rata based on the Fractional Undivided
Interest in the Class B Trust held by each such Class B
Certificateholder and (B) if prior to the end of such ten-day period
any other Class B Certificateholder fails to notify the purchasing
Class B Certificateholder of such other Class B Certificateholder's
desire to participate in such a purchase, then such other Class B
Certificateholder shall lose its right to purchase the Applicable
Certificates pursuant to this Section 3.01(a); and
(ii) each Class C Certificateholder shall have the right (which
shall not expire upon any purchase of the Applicable Certificates
pursuant to clause (i) above) to purchase all, but not less than all,
of the Applicable Certificates and the Class B Certificates upon ten
days' written notice to the Trustee, the Class B Trustee and each
other Class C Certificateholder, PROVIDED that (A) if prior to the end
of such ten-day period any other Class C Certificateholder notifies
such purchasing Class C Certificateholder that such other Class C
Certificateholder wants to participate in such purchase, then such
other Class C Certificateholder may join with the purchasing Class C
Certificateholder to purchase all, but not less than all, of the
Applicable Certificates and the Class B Certificates pro rata based on
the Fractional Undivided Interest in the Class C Trust held by each
such Class C Certificateholder and (B) if prior to the end of such
ten-day period any other Class C Certificateholder fails to notify the
purchasing Class C Certificateholder of such other Class C
Certificateholder's desire to participate in such a purchase, then
such other Class C Certificateholder shall lose its right to purchase
the Applicable Certificates pursuant to this Section 3.01(a).
As used in this Section 3.01(a) and elsewhere in this Trust
Supplement, the terms "Class B Certificate", "Class B Certificateholder", "Class
B Trust", "Class B Trustee", "Class C Certificate", "Class C Certificateholder",
"Class C Trust" and "Class C Trustee", shall have the respective meanings
assigned to such terms in the Intercreditor Agreement.
(b) For purposes of the Agreement, the following sentence supersedes
and replaces the fourth sentence of Section 6.01(b) of the Basic Agreement:
By acceptance of its Certificate, each Certificateholder (each, a
"SELLING CERTIFICATEHOLDER" and, collectively, the "SELLING
CERTIFICATEHOLDERS") of a series that is subject to purchase by
Potential Purchasers, all as set forth in the Trust Supplement
applicable to the Certificates held by the Selling Certificateholders,
agrees that, at any time after the occurrence and during the
continuance of a Triggering Event, it will, upon payment of the
purchase price specified herein by one or more Purchasing
Certificateholders, forthwith sell, assign, transfer and convey to
such Purchasing Certificateholder (without recourse, representation or
warranty of any kind except for its own acts), all of the right,
title, interest and obligation of such Selling Certificateholder in
this Agreement, any related Intercreditor Agreement, the related
Liquidity Facility, the related Note Documents and all Certificates of
such series held by such Selling Certificateholder (subject to the
first proviso in the second sentence of this paragraph and excluding
all right, title and interest under any of the foregoing to the extent
such right, title or interest is with respect to an obligation not
then due and payable as respects any action or inaction or state of
affairs occurring prior to such sale) and the Purchasing
Certificateholder shall assume all of such Selling Certificateholder's
obligations under this Agreement, any related Intercreditor Agreement,
the related Liquidity Facility and the related Note Documents.
ARTICLE IV
THE TRUSTEE
Section 4.01. DELIVERY OF DOCUMENTS; DELIVERY DATES. (a) The Trustee
is hereby directed (i) to execute and deliver the Intercreditor Agreement and
each of the Participation Agreements 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. The provisions
of this Section 4.01(a) supplement and do not supersede the provisions of
Section 2.02(a) of the Basic Agreement.
(b) The Trustee acknowledges its acceptance of all right, title and
interest in and to the Trust Property to be acquired pursuant to Section 2.02 of
the Basic Agreement, Section 4.01(a) of this Trust Supplement and each
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 this 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.
Section 4.02. THE TRUSTEE. (a) Subject to Section 4.03 of this Trust
Supplement and Section 7.15 of the Basic Agreement, the Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Trust Supplement or the due execution hereof by the Company
(other than the Trustee), or for or in respect of the recitals and statements
contained herein, 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 and the
Intercreditor 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
continuance 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 4.03. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE. The
Trustee hereby represents and warrants that:
(a) the Trustee has full power, authority and legal right to execute,
deliver and perform this Trust Supplement and has taken all necessary
action to authorize the execution, delivery and performance by it of this
Trust Supplement;
(b) the execution, delivery and performance by the Trustee of this
Trust Supplement (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 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 has been duly executed and delivered by the
Trustee and constitutes the legal, valid and binding agreement of the
Trustee, enforceable against it in accordance with its 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 4.04. TRUSTEE LIENS. The Trustee in its individual capacity
agrees, in addition to the agreements contained in Section 7.17 of the Basic
Agreement, that it will at its own cost and expense promptly take any action as
may be necessary to duly discharge and satisfy in full any Trustee's Liens on or
with respect to the Trust Property which is attributable to the Trustee in its
individual capacity and which is unrelated to the transactions contemplated by
the Intercreditor Agreement.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01. 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.
SECTION 5.02. GOVERNING LAW. THIS AGREEMENT AND THE APPLICABLE
CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
Section 5.03. 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 5.04. 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: Gerald Laderman
Title: Vice President
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 1998-2A
6.410% Continental Airlines Pass Through Certificate, Series 1998-2A
Issuance Date: April 21, 1998
Final Maturity Date: October 15, 2008
Evidencing A Fractional Undivided Interest In The
Continental Airlines Pass Through Trust 1998-2A, The
Property Of Which Includes Certain Equipment Notes Each
Secured By An Aircraft Leased To Or Owned By Continental
Airlines, Inc.
$__________ Fractional Undivided Interest
representing .000945206% 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 1998-2A (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. 1998-2A thereto, dated as of
- -------------------
* This legend to appear on Book-Entry Certificates to be deposited with the
Depository Trust Company.
April 21, 1998 (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 "6.410% Continental Airlines Pass Through
Certificates, Series 1998-2A" (herein called the "CERTIFICATES"). This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement. By virtue of its acceptance hereof, the 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
any 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 each April 15 and October 15 (a "REGULAR DISTRIBUTION DATE")
commencing October 15, 1998, 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, proceeds, and duties evidenced hereby. A copy of the Agreement may
be examined during normal business hours at the principal office of the Trustee,
and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any time
by the Company and the Trustee with the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust. Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations 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 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
1998-2A
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]
SCHEDULE I
----------
AIRCRAFT
--------
AIRCRAFT TYPE REGISTRATION NUMBER
- ------------- -------------------
Boeing 737-3T0 N14336
Boeing 737-3T0 N14337
Boeing 737-3T0 N59338
Boeing 737-3T0 N14341
Boeing 737-3T0 N14342
Boeing 737-3T0 N39343
Boeing 737-3T0 N17344
Boeing 737-3T0 N17345
McDonnell Douglas MD-82 N72821
McDonnell Douglas MD-82 N76823
McDonnell Douglas MD-82 N72829
McDonnell Douglas MD-82 N72830
McDonnell Douglas MD-82 N57837
McDonnell Douglas MD-82 N34838
EXECUTION COPY
TRUST SUPPLEMENT No. 1998-2B
Dated April 21, 1998
between
WILMINGTON TRUST COMPANY
as Trustee,
and
CONTINENTAL AIRLINES, INC.
to
PASS THROUGH TRUST AGREEMENT
Dated as of September 25, 1997
$38,978,000
Continental Airlines Pass Through Trust 1998-2B
6.465% Continental Airlines
Pass Through Certificates,
Series 1998-2B
This Trust Supplement No. 1998-2B, dated as of April 21, 1998 (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 the eight Boeing 737-3T0
aircraft and six McDonnell Douglas MD-82 aircraft listed in Schedule I hereto
(the "AIRCRAFT") from the Owner Trustee, who intends to purchase such Aircraft
from the Company;
WHEREAS, in the case of each Aircraft, the Owner Trustee, acting on
behalf of the Owner Participant, will issue pursuant to an Indenture, on a
non-recourse basis, Equipment Notes in order to finance a portion of its
purchase price of such Aircraft;
WHEREAS, the Trustee hereby declares the creation of this Continental
Airlines Pass Through Trust 1998-2B (the "APPLICABLE TRUST") for the benefit of
the Applicable Certificateholders, and the initial Applicable Certificateholders
as the grantors of the Applicable Trust, by their respective acceptances of the
Applicable Certificates, join in the creation of the Applicable Trust with the
Trustee;
WHEREAS, all Certificates to be issued by the Applicable Trust will
evidence fractional undivided interests in the Applicable Trust and will convey
no rights, benefits or interests in respect of any property other than the Trust
Property;
WHEREAS, pursuant to the terms and conditions of the Basic Agreement
as supplemented by this Trust Supplement (the "AGREEMENT"), the Trustee, on
behalf of the Applicable Trust, 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, subject to the Intercreditor Agreement, 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;
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
"6.465% Continental Airlines Pass Through Certificates, Series 1998-2B"
(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
and 3.06 of the Basic Agreement) is $38,978,000.
(b) The Cut-off Date is April 27, 1998.
(c) The Regular Distribution Dates with respect to any payment of
Scheduled Payments means April 15 and October 15 of each year, commencing
on October 15, 1998, until payment of all of the Scheduled Payments to be
made under the Equipment Notes has been made.
(d) 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.
(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 the 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 Equipment Notes to be acquired and held in the Applicable
Trust are the Equipment Notes described in each of the Indentures bearing
interest at a rate that is the same as the designated rates for the
Applicable Certificates, the related Aircraft are as described in Schedule
I to this Trust Supplement, the "Participation Agreements" as defined in
this Trust Supplement are the "Note Purchase Agreements" referred to in
the Basic Agreement, and the "Indentures" and "Leases" are, collectively,
the "Trust Indenture" and "Lease" (as defined in each of the Participation
Agreements), respectively.
(g) The Applicable Certificates are subject to the Intercreditor
Agreement.
(h) The Applicable Certificates will have the benefit of the
Liquidity Facility.
(i) Except as contemplated by Section 2.02(b) of the Basic Agreement,
there will be no deposit agreement or other arrangement prior to the
delivery of the Aircraft.
(j) The Responsible Party is the Company.
(k) The "final expiration date" for the Applicable Trust is one
hundred (110) years following the Issuance Date, and the "minimum" and
"maximum" number of days for purposes of Section 11.01 of the Basic
Agreement are 15 and 60 days, respectively.
(l) 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.
(m) The particular "sections of the Note Purchase Agreements," for
purposes of clause (3) of Section 7.07 of the Basic Agreement, are Section
9.1 of each Participation Agreement.
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: Has the meaning specified in the recitals hereto.
APPLICABLE CERTIFICATE: Has the meaning specified in Section 1.01 of
this Trust Supplement.
APPLICABLE CERTIFICATEHOLDER: Means the Person in whose name an
Applicable Certificate is registered on the Register for the Applicable
Certificates.
APPLICABLE TRUST: Has the meaning specified in the recitals hereto.
BASIC AGREEMENT: Has the meaning specified in the first paragraph of
this Trust Supplement.
BOEING: Means The Boeing Company.
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.
DISTRIBUTION DATE: Means any Regular Distribution Date or Special
Distribution Date as the context requires.
FINAL MATURITY DATE: Means April 15, 2006.
INTERCREDITOR AGREEMENT: Means the Intercreditor Agreement dated as
of April 21, 1998 among the Trustee, the Other Trustees, the Liquidity
Provider, the liquidity providers relating to the Certificates issued
under (and as defined in) each of the Other Agreements, 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.
ISSUANCE DATE: Means April 21, 1998.
LIQUIDITY FACILITY: Means, initially, the Revolving Credit Agreement
dated as of April 21, 1998 relating to the Applicable Certificates,
between the Liquidity Provider and Wilmington Trust Company as
Subordination Agent, as agent and trustee for the Applicable Trust, and,
from and after the replacement of 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 PROVIDER: Means, initially, Westdeutsche Landesbank
Girozentrale, acting through its New York Branch, and any replacements or
successors therefor appointed in accordance with the Intercreditor
Agreement.
OTHER TRUSTEES: Means the trustees under the Other Agreements, and
any successor or other trustee appointed as provided therein.
OTHER TRUSTS: Means the Continental Airlines Pass Through Trust
1998-2A and the Continental Airlines Pass Through Trust 1998-2C, each
created on the date hereof.
OWNER TRUSTEE'S PURCHASE AGREEMENTS: Means the Participation
Agreements.
PARTICIPATION AGREEMENTS: Means each of the fourteen separate
Participation Agreements relating to the Aircraft dated the date hereof,
among the Company, the Trustee, the Other Trustees, the relevant Loan
Trustee and the Subordination Agent providing for, among other things, the
purchase of Equipment Notes by the Trustee on behalf of the Trust, as the
same may be amended, supplemented or otherwise modified in accordance with
its terms.
TRUST SUPPLEMENT: Has the meaning specified in the first paragraph of
this trust supplement.
ARTICLE III
DEFAULT
Section 3.01. PURCHASE RIGHTS OF CERTIFICATES. (a) At any time after
the occurrence and during the continuance of a Triggering Event, each Applicable
Certificateholder shall have the right to purchase, for the purchase price set
forth in the Class A Trust Agreement, all, but not less than all, of the Class A
Certificates upon ten days' written notice to the Class A Trustee and each other
Applicable Certificateholder, provided that (i) if prior to the end of such
ten-day period any other Applicable Certificateholder notifies such purchasing
Applicable Certificateholder that such other Applicable Certificateholder wants
to participate in such purchase, then such other Applicable Certificateholder
may join with the purchasing Applicable Certificateholder to purchase all, but
not less than all, of the Class A Certificates pro rata based on the Fractional
Undivided Interest in the Applicable Trust held by each such Applicable
Certificateholder and (ii) if prior to the end of such ten-day period any other
Applicable Certificateholder fails to notify the purchasing Applicable
Certificateholder of such other Applicable Certificateholder's desire to
participate in such a purchase, then such other Applicable Certificateholder
shall lose its right to purchase the Class A Certificates pursuant to this
Section 3.01(a); and
(b) By acceptance of its Applicable Certificate, each Applicable
Certificateholder agrees that at any time after the occurrence and during the
continuation of a Triggering Event, each Class C Certificateholder shall have
the right (which shall not expire upon any purchase of the Class A Certificates
pursuant to clause (a) above) to purchase all, but not less than all, of the
Applicable Certificates and the Class A Certificates upon ten days' written
notice to the Trustee, the Class A Trustee and each other Class C
Certificateholder, PROVIDED that (A) if prior to the end of such ten-day period
any other Class C Certificateholder notifies such purchasing Class C
Certificateholder that such other Class C Certificateholder wants to participate
in such purchase, then such other Class C Certificateholder may join with the
purchasing Class C Certificateholder to purchase all, but not less than all, of
the Applicable Certificates and the Class A Certificates pro rata based on the
Fractional Undivided Interest in the Class C Trust held by each such Class C
Certificateholder and (B) if prior to the end of such ten-day period any other
Class C Certificateholder fails to notify the purchasing Class C
Certificateholder of such other Class C Certificateholder's desire to
participate in such a purchase, then such other Class C Certificateholder shall
lose its right to purchase the Applicable Certificates pursuant to this Section
3.01(b).
As used in this Section 3.01 and elsewhere in this Trust Supplement,
the terms "Class A Certificate", "Class A Certificateholder", "Class A Trust",
"Class A Trustee", "Class A Trust Agreement", "Class C Certificate", "Class C
Certificateholder", "Class C Trust" and "Class C Trustee", shall have the
respective meanings assigned to such terms in the Intercreditor Agreement.
(c) For purposes of the Agreement, the following sentence supersedes
and replaces the fourth sentence of Section 6.01(b) of the Basic Agreement:
By acceptance of its Certificate, each Certificateholder (each, a
"SELLING CERTIFICATEHOLDER" and, collectively, the "SELLING
CERTIFICATEHOLDERS") of a series that is subject to purchase by
Potential Purchasers, all as set forth in the Trust Supplement
applicable to the Certificates held by the Selling
Certificateholders, agrees that, at any time after the occurrence and
during the continuance of a Triggering Event, it will, upon payment
of the purchase price specified herein by one or more Purchasing
Certificateholders, forthwith sell, assign, transfer and convey to
such Purchasing Certificateholder (without recourse, representation
or warranty of any kind except for its own acts), all of the right,
title, interest and obligation of such Selling Certificateholder in
this Agreement, any related Intercreditor Agreement, the related
Liquidity Facility, the related Note Documents and all Certificates
of such series held by such Selling Certificateholder (subject to the
first proviso in the second sentence of this paragraph and excluding
all right, title and interest under any of the foregoing to the
extent such right, title or interest is with respect to an obligation
not then due and payable as respects any action or inaction or state
of affairs occurring prior to such sale) and the Purchasing
Certificateholder shall assume all of such Selling
Certificateholder's obligations under this Agreement, any related
Intercreditor Agreement, the related Liquidity Facility and the
related Note Documents.
ARTICLE IV
THE TRUSTEE
Section 4.01. DELIVERY OF DOCUMENTS; DELIVERY DATES. (a) The Trustee
is hereby directed (i) to execute and deliver the Intercreditor Agreement and
each of the Participation Agreements 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. The provisions
of this Section 4.01(a) supplement and do not supersede the provisions of
Section 2.02(a) of the Basic Agreement.
(b) The Trustee acknowledges its acceptance of all right, title and
interest in and to the Trust Property to be acquired pursuant to Section 2.02 of
the Basic Agreement, Section 4.01(a) of this Trust Supplement and each
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 this 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.
Section 4.02. THE TRUSTEE. (a) Subject to Section 4.03 of this Trust
Supplement and Section 7.15 of the Basic Agreement, the Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Trust Supplement or the due execution hereof by the Company
(other than the Trustee), or for or in respect of the recitals and statements
contained herein, 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 and the
Intercreditor 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
continuance 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 4.03. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE. The
Trustee hereby represents and warrants that:
(a) the Trustee has full power, authority and legal right to execute,
deliver and perform this Trust Supplement and has taken all necessary
action to authorize the execution, delivery and performance by it of this
Trust Supplement;
(b) the execution, delivery and performance by the Trustee of this
Trust Supplement (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 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 has been duly executed and delivered by the
Trustee and constitutes the legal, valid and binding agreement of the
Trustee, enforceable against it in accordance with its 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 4.04. TRUSTEE LIENS. The Trustee in its individual capacity
agrees, in addition to the agreements contained in Section 7.17 of the Basic
Agreement, that it will at its own cost and expense promptly take any action as
may be necessary to duly discharge and satisfy in full any Trustee's Liens on or
with respect to the Trust Property which is attributable to the Trustee in its
individual capacity and which is unrelated to the transactions contemplated by
the Intercreditor Agreement.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01. 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.
SECTION 5.02. GOVERNING LAW. THIS AGREEMENT AND THE APPLICABLE
CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
Section 5.03. 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 5.04. 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: Gerald Laderman
Title: Vice President
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 1998-2B
6.465% Continental Airlines Pass Through Certificate, Series 1998-2B
Issuance Date: April 21, 1998
Final Maturity Date: April 15, 2006
Evidencing A Fractional Undivided Interest In The Continental
Airlines Pass Through Trust 1998-2B, The Property Of Which
Includes Certain Equipment Notes Each Secured By An Aircraft
Leased To Or Owned By Continental Airlines, Inc.
$__________ Fractional Undivided Interest
representing .002565550% 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
1998-2B (the "TRUST") created by Wilmington Trust Company, as trustee (the
- ------------------------------
* This legend to appear on Book-Entry Certificates to be deposited with the
Depository Trust Company.
"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. 1998-2B thereto, dated as of April 21, 1998 (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 "6.465% Continental Airlines Pass Through Certificates, Series
1998-2B" (herein called the "CERTIFICATES"). This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement. By
virtue of its acceptance hereof, the 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 any 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 each April 15 and October 15 (a "REGULAR DISTRIBUTION DATE")
commencing October 15, 1998, 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, proceeds, and duties evidenced hereby. A copy of the Agreement may
be examined during normal business hours at the principal office of the Trustee,
and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any time
by the Company and the Trustee with the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust. Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations 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 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
1998-2B
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]
SCHEDULE I
AIRCRAFT
AIRCRAFT TYPE REGISTRATION NUMBER
- ------------- -------------------
Boeing 737-3T0 N14336
Boeing 737-3T0 N14337
Boeing 737-3T0 N59338
Boeing 737-3T0 N14341
Boeing 737-3T0 N14342
Boeing 737-3T0 N39343
Boeing 737-3T0 N17344
Boeing 737-3T0 N17345
McDonnell Douglas MD-82 N72821
McDonnell Douglas MD-82 N76823
McDonnell Douglas MD-82 N72829
McDonnell Douglas MD-82 N72830
McDonnell Douglas MD-82 N57837
McDonnell Douglas MD-82 N34838
EXECUTION COPY
TRUST SUPPLEMENT No. 1998-2C
Dated April 21, 1998
between
WILMINGTON TRUST COMPANY
as Trustee,
and
CONTINENTAL AIRLINES, INC.
to
PASS THROUGH TRUST AGREEMENT
Dated as of September 25, 1997
$42,425,000
Continental Airlines Pass Through Trust 1998-2C
6.331% Continental Airlines
Pass Through Certificates,
Series 1998-2C
This Trust Supplement No. 1998-2C, dated as of April 21, 1998 (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 the eight Boeing 737-3T0
aircraft and six McDonnell Douglas MD-82 aircraft listed in Schedule I hereto
(the "AIRCRAFT") from the Owner Trustee, who intends to purchase such Aircraft
from the Company;
WHEREAS, in the case of each Aircraft, the Owner Trustee, acting on
behalf of the Owner Participant, will issue pursuant to an Indenture, on a
non-recourse basis, Equipment Notes in order to finance a portion of its
purchase price of such Aircraft;
WHEREAS, the Trustee hereby declares the creation of this Continental
Airlines Pass Through Trust 1998-2C (the "APPLICABLE TRUST") for the benefit of
the Applicable Certificateholders, and the initial Applicable Certificateholders
as the grantors of the Applicable Trust, by their respective acceptances of the
Applicable Certificates, join in the creation of the Applicable Trust with the
Trustee;
WHEREAS, all Certificates to be issued by the Applicable Trust will
evidence fractional undivided interests in the Applicable Trust and will convey
no rights, benefits or interests in respect of any property other than the Trust
Property;
WHEREAS, pursuant to the terms and conditions of the Basic Agreement
as supplemented by this Trust Supplement (the "AGREEMENT"), the Trustee, on
behalf of the Applicable Trust, 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, subject to the Intercreditor Agreement, 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;
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
"6.331% Continental Airlines Pass Through Certificates, Series 1998-2C"
(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
and 3.06 of the Basic Agreement) is $42,425,000.
(b) The Cut-off Date is April 27, 1998.
(c) The Regular Distribution Dates with respect to any payment of
Scheduled Payments means April 15 and October 15 of each year, commencing
on October 15, 1998, until payment of all of the Scheduled Payments to be
made under the Equipment Notes has been made.
(d) 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.
(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 the 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 Equipment Notes to be acquired and held in the Applicable
Trust are the Equipment Notes described in each of the Indentures bearing
interest at a rate that is the same as the designated rates for the
Applicable Certificates, the related Aircraft are as described in Schedule
I to this Trust Supplement, the "Participation Agreements" as defined in
this Trust Supplement are the "Note Purchase Agreements" referred to in
the Basic Agreement, and the "Indentures" and "Leases" are, collectively,
the "Trust Indenture" and "Lease" (as defined in each of the Participation
Agreements), respectively.
(g) The Applicable Certificates are subject to the Intercreditor
Agreement.
(h) The Applicable Certificates will have the benefit of the
Liquidity Facility.
(i) Except as contemplated by Section 2.02(b) of the Basic Agreement,
there will be no deposit agreement or other arrangement prior to the
delivery of the Aircraft.
(j) The Responsible Party is the Company.
(k) The "final expiration date" for the Applicable Trust is one
hundred (110) years following the Issuance Date, and the "minimum" and
"maximum" number of days for purposes of Section 11.01 of the Basic
Agreement are 15 and 60 days, respectively.
(l) 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.
(m) The particular "sections of the Note Purchase Agreements," for
purposes of clause (3) of Section 7.07 of the Basic Agreement, are Section
9.1 of each Participation Agreement.
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: Has the meaning specified in the recitals hereto.
APPLICABLE CERTIFICATE: Has the meaning specified in Section 1.01 of
this Trust Supplement.
APPLICABLE CERTIFICATEHOLDER: Means the Person in whose name an
Applicable Certificate is registered on the Register for the Applicable
Certificates.
APPLICABLE TRUST: Has the meaning specified in the recitals hereto.
BASIC AGREEMENT: Has the meaning specified in the first paragraph of
this Trust Supplement.
BOEING: Means The Boeing Company.
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.
DISTRIBUTION DATE: Means any Regular Distribution Date or Special
Distribution Date as the context requires.
FINAL MATURITY DATE: Means April 15, 2004.
INTERCREDITOR AGREEMENT: Means the Intercreditor Agreement dated as
of April 21, 1998 among the Trustee, the Other Trustees, the Liquidity
Provider, the liquidity providers relating to the Certificates issued
under (and as defined in) each of the Other Agreements, 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.
ISSUANCE DATE: Means April 21, 1998.
LIQUIDITY FACILITY: Means, initially, the Revolving Credit Agreement
dated as of April 21, 1998 relating to the Applicable Certificates,
between the Liquidity Provider and Wilmington Trust Company as
Subordination Agent, as agent and trustee for the Applicable Trust, and,
from and after the replacement of 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 PROVIDER: Means, initially, Westdeutsche Landesbank
Girozentrale, acting through its New York Branch, and any replacements or
successors therefor appointed in accordance with the Intercreditor
Agreement.
OTHER TRUSTEES: Means the trustees under the Other Agreements, and
any successor or other trustee appointed as provided therein.
OTHER TRUSTS: Means the Continental Airlines Pass Through Trust
1998-2A and the Continental Airlines Pass Through Trust 1998-2B, each
created on the date hereof.
OWNER TRUSTEE'S PURCHASE AGREEMENTS: Means the Participation
Agreements.
PARTICIPATION AGREEMENTS: Means each of the fourteen separate
Participation Agreements relating to the Aircraft dated the date hereof,
among the Company, the Trustee, the Other Trustees, the relevant Loan
Trustee and the Subordination Agent providing for, among other things, the
purchase of Equipment Notes by the Trustee on behalf of the Trust, as the
same may be amended, supplemented or otherwise modified in accordance with
its terms.
TRUST SUPPLEMENT: Has the meaning specified in the first paragraph of
this trust supplement.
ARTICLE III
DEFAULT
Section 3.01. PURCHASE RIGHTS OF CERTIFICATEHOLDERS. (a) At any time
after the occurrence and during the continuance of a Triggering Event, each
Applicable Certificateholder shall have the right (which shall not expire upon
any purchase of the Class A Certificates pursuant to the Class B Trust
Agreement) to purchase, for the purchase prices set forth in the Class A Trust
Agreement and the Class B Trust Agreement, respectively, all, but not less than
all, of the Class A Certificates and the Class B Certificates upon ten days'
written notice to the Class A Trustee, the Class B Trustee and each other
Applicable Certificateholder, provided that (i) if prior to the end of such
ten-day period any other Applicable Certificateholder notifies such purchasing
Applicable Certificateholder that such other Applicable Certificateholder wants
to participate in such purchase, then such other Applicable Certificateholder
may join with the purchasing Applicable Certificateholder to purchase all, but
not less than all, of the Class A Certificates and the Class B Certificates pro
rata based on the Fractional Undivided Interest in the Applicable Trust held by
each such Applicable Certificateholder and (ii) if prior to the end of such
ten-day period any other Applicable Certificateholder fails to notify the
purchasing Applicable Certificateholder of such other Applicable
Certificateholder's desire to participate in such a purchase, then such other
Applicable Certificateholder shall lose its right to purchase the Class A
Certificates and the Class B Certificates pursuant to this Section 3.01(a).
As used in this Section 3.01(a) and elsewhere in this Trust
Supplement, the terms "Class A Certificate", "Class A Certificateholder", "Class
A Trust", "Class A Trustee", "Class A Trust Agreement", "Class B Certificate",
"Class B Certificateholder", "Class B Trust", "Class B Trustee" and "Class B
Trust Agreement", shall have the respective meanings assigned to such terms in
the Intercreditor Agreement.
(b) For purposes of the Agreement, the following sentence supersedes
and replaces the fourth sentence of Section 6.01(b) of the Basic Agreement:
By acceptance of its Certificate, each Certificateholder (each, a
"SELLING CERTIFICATEHOLDER" and, collectively, the "SELLING
CERTIFICATEHOLDERS") of a series that is subject to purchase by
Potential Purchasers, all as set forth in the Trust Supplement
applicable to the Certificates held by the Selling
Certificateholders, agrees that, at any time after the occurrence and
during the continuance of a Triggering Event, it will, upon payment
of the purchase price specified herein by one or more Purchasing
Certificateholders, forthwith sell, assign, transfer and convey to
such Purchasing Certificateholder (without recourse, representation
or warranty of any kind except for its own acts), all of the right,
title, interest and obligation of such Selling Certificateholder in
this Agreement, any related Intercreditor Agreement, the related
Liquidity Facility, the related Note Documents and all Certificates
of such series held by such Selling Certificateholder (subject to the
first proviso in the second sentence of this paragraph and excluding
all right, title and interest under any of the foregoing to the
extent such right, title or interest is with respect to an obligation
not then due and payable as respects any action or inaction or state
of affairs occurring prior to such sale) and the Purchasing
Certificateholder shall assume all of such Selling
Certificateholder's obligations under this Agreement, any related
Intercreditor Agreement, the related Liquidity Facility and the
related Note Documents.
ARTICLE IV
THE TRUSTEE
Section 4.01. DELIVERY OF DOCUMENTS; DELIVERY DATES. (a) The Trustee
is hereby directed (i) to execute and deliver the Intercreditor Agreement and
each of the Participation Agreements 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. The provisions
of this Section 4.01(a) supplement and do not supersede the provisions of
Section 2.02(a) of the Basic Agreement.
(b) The Trustee acknowledges its acceptance of all right, title and
interest in and to the Trust Property to be acquired pursuant to Section 2.02 of
the Basic Agreement, Section 4.01(a) of this Trust Supplement and each
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 this 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.
Section 4.02. THE TRUSTEE. (a) Subject to Section 4.03 of this Trust
Supplement and Section 7.15 of the Basic Agreement, the Trustee shall not be
responsible in any manner whatsoever for or in respect of the validity or
sufficiency of this Trust Supplement or the due execution hereof by the Company
(other than the Trustee), or for or in respect of the recitals and statements
contained herein, 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 and the
Intercreditor 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
continuance 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 4.03. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE. The
Trustee hereby represents and warrants that:
(a) the Trustee has full power, authority and legal right to execute,
deliver and perform this Trust Supplement and has taken all necessary
action to authorize the execution, delivery and performance by it of this
Trust Supplement;
(b) the execution, delivery and performance by the Trustee of this
Trust Supplement (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 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 has been duly executed and delivered by the
Trustee and constitutes the legal, valid and binding agreement of the
Trustee, enforceable against it in accordance with its 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 4.04. TRUSTEE LIENS. The Trustee in its individual capacity
agrees, in addition to the agreements contained in Section 7.17 of the Basic
Agreement, that it will at its own cost and expense promptly take any action as
may be necessary to duly discharge and satisfy in full any Trustee's Liens on or
with respect to the Trust Property which is attributable to the Trustee in its
individual capacity and which is unrelated to the transactions contemplated by
the Intercreditor Agreement.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.01. 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.
SECTION 5.02. GOVERNING LAW. THIS AGREEMENT AND THE APPLICABLE
CERTIFICATES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
Section 5.03. 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 5.04. 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: Gerald Laderman
Title: Vice President
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 1998-2C
6.331% Continental Airlines Pass Through Certificate, Series 1998-2C
Issuance Date: April 21, 1998
Final Maturity Date: April 15, 2004
Evidencing A Fractional Undivided Interest In The
Continental Airlines Pass Through Trust 1998-2C,
The Property Of Which Includes Certain Equipment
Notes Each Secured By An Aircraft Leased To Or
Owned By Continental Airlines, Inc.
$__________ Fractional Undivided Interest
representing .002357101% 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
1998-2C (the "TRUST") created by Wilmington Trust Company, as trustee (the
- -------------------------------
* This legend to appear on Book-Entry Certificates to be deposited with the
Depository Trust Company.
"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. 1998-2C thereto, dated as of April 21, 1998 (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 "6.331% Continental Airlines Pass Through Certificates, Series
1998-2C" (herein called the "CERTIFICATES"). This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement. By
virtue of its acceptance hereof, the 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 any 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 each April 15 and October 15 (a "REGULAR DISTRIBUTION DATE")
commencing October 15, 1998, 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, proceeds, and duties evidenced hereby. A copy of the Agreement may
be examined during normal business hours at the principal office of the Trustee,
and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any time
by the Company and the Trustee with the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust. Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations 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 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
1998-2C
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]
SCHEDULE I
AIRCRAFT
AIRCRAFT TYPE REGISTRATION NUMBER
- ------------- -------------------
Boeing 737-3T0 N14336
Boeing 737-3T0 N14337
Boeing 737-3T0 N59338
Boeing 737-3T0 N14341
Boeing 737-3T0 N14342
Boeing 737-3T0 N39343
Boeing 737-3T0 N17344
Boeing 737-3T0 N17345
McDonnell Douglas MD-82 N72821
McDonnell Douglas MD-82 N76823
McDonnell Douglas MD-82 N72829
McDonnell Douglas MD-82 N72830
McDonnell Douglas MD-82 N57837
McDonnell Douglas MD-82 N34838
EXECUTION
================================================================================
INTERCREDITOR AGREEMENT
DATED AS OF April 21, 1998
AMONG
WILMINGTON TRUST COMPANY,
NOT IN ITS INDIVIDUAL CAPACITY
BUT SOLELY AS TRUSTEE UNDER THE
CONTINENTAL AIRLINES PASS THROUGH TRUST 1998-2A,
CONTINENTAL AIRLINES PASS THROUGH TRUST 1998-2B
AND
CONTINENTAL AIRLINES PASS THROUGH TRUST 1998-2C
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
ACTING THROUGH ITS NEW YORK BRANCH
AS CLASS A LIQUIDITY PROVIDER,
AS CLASS B LIQUIDITY PROVIDER
AND
AS CLASS C LIQUIDITY PROVIDER,
AND
WILMINGTON TRUST COMPANY,
NOT IN ITS INDIVIDUAL CAPACITY EXCEPT
AS EXPRESSLY SET FORTH HEREIN BUT
SOLELY AS SUBORDINATION AGENT AND TRUSTEE
================================================================================
TABLE OF CONTENTS
PAGE
----
ARTICLE I - DEFINITIONS
SECTION 1.1. Definitions........................................... 2
ARTICLE II - TRUST ACCOUNTS; CONTROLLING PARTY
SECTION 2.1. Agreement to Terms of Subordination; Payments from
Monies Received Only.................................. 19
SECTION 2.2. Trust Accounts........................................ 19
SECTION 2.3. Deposits to the Collection Account and Special
Payments Account...................................... 21
SECTION 2.4. Distributions of Special Payments..................... 21
SECTION 2.5. Designated Representatives............................ 24
SECTION 2.6. Controlling Party..................................... 24
ARTICLE III - RECEIPT, DISTRIBUTION AND APPLICATION OF AMOUNTS RECEIVED
SECTION 3.1. Written Notice of Distribution........................ 26
SECTION 3.2. Distribution of Amounts on Deposit in the
Collection Account.................................... 28
SECTION 3.3. Distribution of Amounts on Deposit Following a
Triggering Event...................................... 29
SECTION 3.4. Other Payments........................................ 31
SECTION 3.5. Payments to the Trustees and the Liquidity
Providers............................................. 32
SECTION 3.6. Liquidity Facilities.................................. 32
ARTICLE IV - EXERCISE OF REMEDIES
SECTION 4.1. Directions from the Controlling Party................. 39
SECTION 4.2. Remedies Cumulative................................... 40
SECTION 4.3. Discontinuance of Proceedings......................... 40
SECTION 4.4. Right of Certificateholders to Receive Payments
Not to Be Impaired.................................... 41
SECTION 4.5. Undertaking for Costs................................. 41
ARTICLE V - DUTIES OF THE SUBORDINATION AGENT; AGREEMENTS OF TRUSTEES, ETC.
SECTION 5.1. Notice of Indenture Default or Triggering Event....... 41
TABLE OF CONTENTS
(Continued)
Page
----
SECTION 5.2. Indemnification....................................... 42
SECTION 5.3. No Duties Except as Specified in Intercreditor
Agreement............................................. 42
SECTION 5.4. Notice from the Liquidity Providers and Trustees...... 42
ARTICLE VI - THE SUBORDINATION AGENT
SECTION 6.1. Authorization; Acceptance of Trusts and Duties........ 43
SECTION 6.2. Absence of Duties..................................... 43
SECTION 6.3. No Representations or Warranties as to Documents...... 43
SECTION 6.4. No Segregation of Monies; No Interest................. 43
SECTION 6.5. Reliance; Agents; Advice of Counsel................... 44
SECTION 6.6. Capacity in Which Acting.............................. 44
SECTION 6.7. Compensation.......................................... 44
SECTION 6.8. May Become Certificateholder.......................... 44
SECTION 6.9. Subordination Agent Required; Eligibility............. 45
SECTION 6.10. Money to Be Held in Trust............................. 45
ARTICLE VII - INDEMNIFICATION OF SUBORDINATION AGENT
SECTION 7.1. Scope of Indemnification.............................. 45
ARTICLE VIII - SUCCESSOR SUBORDINATION AGENT
SECTION 8.1. Replacement of Subordination Agent; Appointment
of Successor.......................................... 46
ARTICLE IX - SUPPLEMENTS AND AMENDMENTS
SECTION 9.1. Amendments, Waivers, etc.............................. 47
SECTION 9.2. Subordination Agent Protected......................... 48
SECTION 9.3. Effect of Supplemental Agreements..................... 48
SECTION 9.4. Notice to Rating Agencies............................. 48
ARTICLE X - MISCELLANEOUS
SECTION 10.1. Termination of Intercreditor Agreement................ 48
SECTION 10.2. Intercreditor Agreement for Benefit of Trustees,
Liquidity Providers and Subordination Agent........... 49
SECTION 10.3. Notices............................................... 49
SECTION 10.4. Severability.......................................... 50
SECTION 10.5. No Oral Modifications or Continuing Waivers........... 50
TABLE OF CONTENTS
(Continued)
Page
----
SECTION 10.6. Successors and Assigns................................ 50
SECTION 10.7. Headings.............................................. 51
SECTION 10.8. Counterpart Form...................................... 51
SECTION 10.9. Subordination......................................... 51
SECTION 10.10. Governing Law......................................... 52
SECTION 10.11. Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity.................................... 52
INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT dated as of April 21, 1998, among WILMINGTON
TRUST COMPANY, a Delaware corporation ("WTC"), not in its individual capacity
but solely as Trustee of each Trust (each as defined below); WESTDEUTSCHE
LANDESBANK GIROZENTRALE ("WESTLB"), a bank organized under the laws of the State
of North Rhine-Westphalia, Germany, acting through its New York Branch, as Class
A Liquidity Provider, as Class B Liquidity Provider and as Class C Liquidity
Provider; and WILMINGTON TRUST COMPANY, not in its individual capacity except as
expressly set forth herein, but solely as Subordination Agent and trustee
hereunder (in such capacity, together with any successor appointed pursuant to
Article VIII hereof, the "SUBORDINATION AGENT").
WHEREAS, all capitalized terms used herein shall have the respective
meanings referred to in Article I hereof;
WHEREAS, pursuant to each Indenture, the related Owner Trustee will
issue on a nonrecourse basis three series of Equipment Notes to finance the
purchase of the Aircraft;
WHEREAS, pursuant to the Participation Agreements, each Trust will
acquire Equipment Notes having an interest rate equal to the interest rate
applicable to the Certificates to be issued by such Trust;
WHEREAS, pursuant to each Trust Agreement, the Trust created thereby
proposes to issue a single class of Certificates (a "CLASS") bearing the
interest rate and having the final distribution date described in such Trust
Agreement on the terms and subject to the conditions set forth therein;
WHEREAS, pursuant to the Underwriting Agreement, the Underwriters
propose to purchase the Certificates issued by each Trust in the aggregate face
amount set forth opposite the name of such Trust on Schedule I thereto on the
terms and subject to the conditions set forth therein;
WHEREAS, the Liquidity Provider proposes to enter into three separate
revolving credit agreements (each, a "Liquidity Facility") with the
Subordination Agent, as agent for the Trustee of each Trust, respectively, for
the benefit of the Certificateholders of such Trust; and
WHEREAS, it is a condition precedent to the obligations of the
Underwriters under the Underwriting Agreement that the Subordination Agent, the
Trustees and the Liquidity Provider agree to the terms of subordination set
forth in this Agreement in respect of each Class of Certificates, and the
Subordination Agent, the Trustees and the Liquidity Provider, 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.
"ADJUSTED EXPECTED DISTRIBUTIONS" means, with respect to the
Certificates of any Trust on any Current Distribution Date, the sum of (x)
accrued and unpaid interest on such Certificates (after giving effect to any
Escrowed Funds Interest Distribution to be made on such Current Distribution
Date with respect to such Certificates) and (y) the greater of:
(A) the difference between (x) the Pool Balance of such Certificates
as of the immediately preceding Distribution Date (or, if the Current
Distribution Date is the first Distribution Date, the original aggregate
face amount of the Certificates of such Trust) less (if applicable) the
aggregate amount of Escrowed Funds (as defined in the Trust Agreement for
such Trust) for such Class of Certificates as of such immediately
preceding Distribution Date (or, if the Current Distribution Date is the
first Distribution Date, as of the Issuance Date) thereafter distributed
to the Certificateholders of such Class in accordance with Section 2.02(b)
of the Trust Agreement for such Trust (excluding the interest component of
any such distribution) and (y) the Pool Balance of such Certificates as of
the Current Distribution Date calculated on the basis that (i) the
principal of the Non-Performing Equipment Notes held in such Trust has
been paid in full and such payments have been distributed to the holders
of such Certificates, (ii) the principal of the Performing Equipment Notes
held in such Trust has been paid when due (but without giving effect to
any Acceleration of Performing Equipment Notes) and such payments have
been distributed to the holders of such Certificates and (iii) the
principal of any Equipment Notes formerly held in such Trust that have
been sold pursuant to the terms hereof has been paid in full and such
payments have been distributed to the holders of such Certificates, and
(B) the amount of the excess, if any, of (i) the amount described in
sub-clause (A)(x) above, over (ii) the Aggregate LTV Collateral Amount for
such Class of Certificates for the Current Distribution Date;
PROVIDED that, until the date of the initial LTV Appraisals, clause (B) shall
not apply.
For purposes of calculating Adjusted Expected Distributions with
respect to the Certificates of any Trust, any premium paid on the Equipment
Notes held in such Trust that has not been distributed to the Certificateholders
of such Trust (other than such premium or a portion thereof applied to the
payment of interest on the Certificates of such Trust or the reduction of the
Pool Balance of such Trust) shall be added to the amount of Adjusted Expected
Distributions.
"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 LTV COLLATERAL AMOUNT" for any Class of Certificates for
any Distribution Date means the sum of the applicable LTV Collateral Amounts for
each Aircraft, minus the Pool Balance for each Class of Certificates, if any,
senior to such Class, after giving effect to any distribution of principal on
such Distribution Date with respect to such senior Class or Classes.
"AIRCRAFT" means, with respect to each Indenture, the "Aircraft"
referred to therein.
"APPRAISAL" means a fair market value appraisal (which may be a
"desktop" appraisal) performed by any Appraiser or any other nationally
recognized appraiser on the basis of an arm's-length transaction between an
informed and willing purchaser under no compulsion to buy and an informed and
willing seller under no compulsion to sell and both having knowledge of all
relevant facts.
"APPRAISED CURRENT MARKET VALUE" of any Aircraft means the lower of
the average and the median of the three most recent Appraisals of such Aircraft.
"APPRAISERS" means Aircraft Information Services, Inc., BK
Associates, Inc. and Morten Beyer and Agnew, Inc.
"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 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 any 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 the Class A Cash Collateral Account,
the Class B Cash Collateral Account or the Class C Cash Collateral Account, as
applicable. "Certificate" means a Class A Certificate, a Class B Certificate or
a Class C Certificate, as applicable.
"CERTIFICATEHOLDER" means any holder of one or more Certificates.
"Class" has the meaning assigned to such term in the preliminary statements to
this Agreement. "Class A Cash Collateral Account" means an Eligible Deposit
Account in the name of the Subordination Agent maintained at an Eligible
Institution, which shall be the Subordination Agent if it shall so qualify, into
which all amounts drawn under the Class A Liquidity Facility pursuant to Section
3.6(c), 3.6(d) or 3.6(i) shall be deposited.
"CLASS A CERTIFICATEHOLDER" means, at any time, any holder of one or
more Class A Certificates.
"CLASS A CERTIFICATES" means the certificates issued by the Class A
Trust, substantially in the form of Exhibit A to the Class A Trust Agreement,
and authenticated by the Class A Trustee, representing fractional undivided
interests in the Class A Trust, and any certificates issued in exchange therefor
or replacement thereof pursuant to the terms of the Class A Trust Agreement.
"CLASS A LIQUIDITY FACILITY" means, initially, the Revolving Credit
Agreement dated as of the date hereof, between the Subordination Agent, as agent
and trustee for the Class A Trustee, and the initial Class A Liquidity Provider,
and, from and after the replacement of such agreement pursuant hereto, the
Replacement Liquidity Facility therefor, if any, in each case as amended,
supplemented or otherwise modified from time to time in accordance with its
terms. "Class A Liquidity Provider" means WestLB, together with any Replacement
Liquidity Provider which has issued a Replacement Liquidity Facility to replace
any Class A Liquidity Facility pursuant to Section 3.6(e).
"CLASS A TRUST" means the Continental Airlines Pass Through Trust
1998-2A created and administered pursuant to the Class A Trust Agreement.
"CLASS A TRUST AGREEMENT" means the Basic Agreement, as supplemented
by the Trust Supplement No. 1998-2A thereto dated as of the date hereof,
governing the creation and administration of the Continental Airlines Pass
Through Trust 1998-2A and the issuance of the Class A Certificates, as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"CLASS A TRUSTEE" means WTC, not in its individual capacity except as
expressly set forth in the Class A Trust Agreement, but solely as trustee under
the Class A Trust Agreement, together with any successor trustee appointed
pursuant thereto.
"CLASS B CASH COLLATERAL ACCOUNT" means an Eligible Deposit Account
in the name of the Subordination Agent maintained at an Eligible Institution,
which shall be the Subordination Agent if it shall so qualify, into which all
amounts drawn under the Class B Liquidity Facility pursuant to Section 3.6(c),
3.6(d) or 3.6(i) shall be deposited.
"CLASS B CERTIFICATEHOLDER" means, at any time, any holder of one or
more Class B Certificates.
"CLASS B CERTIFICATES" means the certificates issued by the Class B
Trust, substantially in the form of Exhibit A to the Class B Trust Agreement,
and authenticated by the Class B Trustee, representing fractional undivided
interests in the Class B Trust, and any certificates issued in exchange therefor
or replacement thereof pursuant to the terms of the Class B Trust Agreement.
"CLASS B LIQUIDITY FACILITY" means, initially, the Revolving Credit
Agreement dated as of the date hereof, between the Subordination Agent, as agent
and trustee for the Class B Trustee, and the initial Class B Liquidity Provider,
and, from and after the replacement of such Agreement pursuant hereto, the
Replacement Liquidity Facility therefor, if any, in each case as amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"CLASS B LIQUIDITY PROVIDER" means WestLB, together with any
Replacement Liquidity Provider which has issued a Replacement Liquidity Facility
to replace any Class B Liquidity Facility pursuant to Section 3.6(e).
"CLASS B TRUST" means the Continental Airlines Pass Through Trust
1998-2B created and administered pursuant to the Class B Trust Agreement.
"CLASS B TRUST AGREEMENT" means the Basic Agreement, as supplemented
by the Trust Supplement No. 1998-2B thereto dated as of the date hereof,
governing the creation and administration of the Continental Airlines Pass
Through Trust 1998-2B and the issuance of the Class B Certificates, as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"CLASS B TRUSTEE" means WTC, not in its individual capacity except as
expressly set forth in the Class B Trust Agreement, but solely as trustee under
the Class B Trust Agreement, together with any successor trustee appointed
pursuant thereto.
"CLASS C CASH COLLATERAL ACCOUNT" means an Eligible Deposit Account
in the name of the Subordination Agent and maintained at an Eligible
Institution, which shall be the Subordination Agent if it shall so qualify, into
which all amounts drawn under the Class C Liquidity Facility pursuant to Section
3.6(c), 3.6(d) or 3.6(i) shall be deposited.
"CLASS C CERTIFICATEHOLDER" means, at any time, any holder of one or
more Class C Certificates.
"CLASS C CERTIFICATES" means the certificates issued by the Class C
Trust, substantially in the form of Exhibit A to the Class C Trust Agreement,
and authenticated by the Class C Trustee, representing fractional undivided
interests in the Class C Trust, and any certificates issued in exchange therefor
or replacement thereof pursuant to the terms of the Class C Trust Agreement.
"CLASS C LIQUIDITY FACILITY" means, initially, the Revolving Credit
Agreement dated as of the date hereof, between the Subordination Agent, as agent
and trustee for the Class C Trustee, and the initial Class C Liquidity Provider,
and, from and after the replacement of such Agreement pursuant hereto, the
Replacement Liquidity Facility therefor, if any, in each case as amended,
supplemented or otherwise modified from time to time in accordance with its
terms.
"CLASS C LIQUIDITY PROVIDER" means WestLB, together with any
Replacement Liquidity Provider which has issued a Replacement Liquidity Facility
to replace any Class C Liquidity Facility pursuant to Section 3.6(e).
"CLASS C TRUST" means the Continental Airlines Pass Through Trust
1998-2C created and administered pursuant to the Class C Trust Agreement.
"CLASS C TRUST AGREEMENT" means the Basic Agreement, as supplemented
by the Trust Supplement No. 1998-2C thereto dated as of the date hereof,
governing the creation and administration of the Continental Airlines Pass
Through Trust 1998-2C and the issuance of the Class C Certificates, as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"CLASS C TRUSTEE" means WTC, not in its individual capacity except as
expressly set forth in the Class C Trust Agreement, but solely as trustee under
the Class C Trust Agreement, together with any successor trustee appointed
pursuant thereto.
"CLOSING DATE" means April 21, 1998.
"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.
"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 any Trustee, the
Subordination Agent or any Loan Trustee, the office of such Person in the city
at which, at any particular time, its corporate trust business shall be
principally administered.
"CURRENT DISTRIBUTION DATE" means a Distribution Date specified as a
reference date for calculating the Expected Distributions or the Adjusted
Expected Distributions with respect to the Certificates of any Trust as of such
Distribution Date.
"DESIGNATED REPRESENTATIVES" means the 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).
"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 or a Downgrade Drawing, as the case may be.
"ELIGIBLE DEPOSIT ACCOUNT" means either (a) a segregated account with
an Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia (or any U.S. branch of a foreign bank), having corporate trust powers
and acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution has a long-term unsecured debt rating
from each Rating Agency of at least A-3 or its equivalent. An Eligible Deposit
Account may be maintained with a Liquidity Provider so long as such Liquidity
Provider is an Eligible Institution; PROVIDED that such Liquidity Provider shall
have waived all rights of set-off and counterclaim with respect to such account;
and PROVIDED FURTHER that no Cash Collateral Account may be maintained with a
Liquidity Provider at any time Continental holds any participation in the
related Liquidity Facility unless written confirmation shall have been received
from each Rating Agency prior to such time to the effect that such maintenance
of the Cash Collateral Account with the Liquidity Provider will not result in a
withdrawal or downgrading of the ratings of the Certificates.
"ELIGIBLE INSTITUTION" means (a) the corporate trust department of
the Subordination Agent or any Trustee, as applicable, or (b) a depository
institution organized under the laws of the United States of America or any one
of the states thereof or the District of Columbia (or any U.S. branch of a
foreign bank), which has a long-term unsecured debt rating from each Rating
Agency of at least A-3 or its equivalent; PROVIDED that a Liquidity Provider
shall not qualify as an Eligible Institution at any time Continental holds any
participation in the related Liquidity Facility unless written confirmation
shall have been received from each Rating Agency to the effect that such
Liquidity Provider's status as an Eligible Institution will not result in a
withdrawal or downgrading of the ratings of the Certificates.
"ELIGIBLE INVESTMENTS" means (a) investments in obligations of, or
guaranteed by, the United States Government having maturities no later than 90
days following the date of such investment, (b) investments in open market
commercial paper of any corporation incorporated under the laws of the United
States of America or any state thereof with a short-term unsecured debt rating
issued by Moody's and Standard & Poor's of at least A-1 and P-1, respectively,
having maturities no later than 90 days following the date of such investment or
(c) investments in negotiable certificates of deposit, time deposits, banker's
acceptances, commercial paper or other direct obligations of, or obligations
guaranteed by, commercial banks organized under the laws of the United States or
of any political subdivision thereof (or any U.S. branch of a foreign bank) with
issuer ratings of at least B/C by Thomson Bankwatch, having maturities no later
than 90 days following the date of such investment; PROVIDED, HOWEVER, that (x)
all Eligible Investments that are bank obligations shall be denominated in U.S.
dollars; and (y) the aggregate amount of Eligible Investments at any one time
that are bank obligations issued by any one bank shall not be in excess of 5% of
such bank's capital surplus; PROVIDED FURTHER that (1) any investment of the
types described in clauses (a), (b) and (c) above may be made through a
repurchase agreement in commercially reasonable form with a bank or other
financial institution qualifying as an Eligible Institution so long as such
investment is held by a third party custodian also qualifying as an Eligible
Institution, and (2) all such investments set forth in clause (a), (b) or (c)
above mature no later than the Business Day immediately preceding the next
Regular Distribution Date; PROVIDED FURTHER, HOWEVER, that in the case of any
Eligible Investment issued by a domestic branch of a foreign bank, the income
from such investment shall be from sources within the United States for purposes
of the Code. Notwithstanding the foregoing, no investment of the types described
in clause (b) or (c) above which is issued or guaranteed by a Liquidity Provider
or Continental or any of their respective Affiliates, and no investment in the
obligations of any one bank in excess of $10,000,000, shall be an Eligible
Investment at any time Continental holds any participation in the related
Liquidity Facility unless written confirmation shall have been received from
each Rating Agency that the making of such investment will not result in a
withdrawal or downgrading of the ratings of the Certificates.
"EQUIPMENT NOTES" means, at any time, the Series A Equipment Notes,
the Series B Equipment Notes and the Series C Equipment Notes, collectively, and
in each case, any Equipment Notes issued in exchange therefor or replacement
thereof pursuant to the terms of the Indentures.
"ESCROWED FUNDS INTEREST DISTRIBUTION" means, with respect to the
Certificates of any Class, the interest component of any distribution to the
Certificateholders of such Class pursuant to Section 2.02(b) of the Trust
Agreement for such Class of Certificates.
"EXPECTED DISTRIBUTIONS" means, with respect to the Certificates of
any Trust on any Current Distribution Date, the sum of (x) accrued and unpaid
interest on such Certificates (after giving effect to any Escrowed Funds
Interest Distribution to be made on such Current Distribution Date with respect
to such Certificates) and (y) the difference between (A) the Pool Balance of
such Certificates 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 of such Trust) less (if applicable) the
aggregate amount of Escrowed Funds (as defined in the Trust Agreement for such
Trust) for such Class of Certificates as of such immediately preceding
Distribution Date (or, if the Current Distribution Date is the first
Distribution Date, as of the Issuance Date) thereafter distributed to the
holders of such Certificates (excluding the interest component of any such
distribution) in accordance with Section 2.02(b) of the Trust Agreement for such
Trust and (B) the Pool Balance of such Certificates as of the Current
Distribution Date calculated on the basis that (i) the principal of the
Equipment Notes held in such Trust has been paid when due (whether at stated
maturity or upon redemption, prepayment, purchase or Acceleration or otherwise)
and such payments have been distributed to the holders of such Certificates and
(ii) the principal of any Equipment Notes formerly held in such Trust that have
been sold pursuant to the terms hereof has been paid in full and such payments
have been distributed to the holders of such Certificates. For purposes of
calculating Expected Distributions with respect to the Certificates of any
Trust, any premium paid on the Equipment Notes held in such Trust which has not
been distributed to the Certificateholders of such Trust (other than such
premium or a portion thereof applied to the payment of interest on the
Certificates of such Trust or the reduction of the Pool Balance of such Trust)
shall be added to the amount of such Expected Distributions.
"EXPIRY DATE" with respect to any Liquidity Facility, shall have the
meaning set forth in such Liquidity Facility.
"FEE LETTER" means the Fee Letter dated April 21, 1998 between WestLB
and the Subordination Agent with respect to the initial Liquidity Facilities and
any fee letter entered into between the Subordination Agent and any Replacement
Liquidity Provider.
"FINAL DISTRIBUTIONS" means, with respect to the Certificates of any
Trust on any Distribution Date, the sum of (x) the aggregate amount of all
accrued and unpaid interest on such Certificates and (y) the Pool Balance of
such Certificates as of the immediately preceding Distribution Date. For
purposes of calculating Final Distributions with respect to the Certificates of
any Trust, any premium paid on the Equipment Notes held in such Trust which has
not been distributed to the Certificateholders of such Trust (other than such
premium or a portion thereof applied to the payment of interest on the
Certificates of such Trust or the reduction of the Pool Balance of such Trust)
shall be added to the amount of such Final Distributions.
"FINAL DRAWING" has the meaning assigned to such term in Section
3.6(i).
"FINAL LEGAL DISTRIBUTION DATE" means (i) with respect to the Class A
Certificates, October 15, 2008, (ii) with respect to the Class B Certificates,
April 15, 2006, and (iii) with respect to the Class C Certificates, April 15,
2004.
"INDENTURE" means each of the Trust Indentures entered into by the
Loan Trustee, and the Owner Trustee, 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, with respect to any Liquidity
Facility, each date on which interest is due and payable under such Liquidity
Facility on a Downgrade Drawing, Non-Extension Drawing or Final Drawing
thereunder, other than any such date on which interest is due and payable under
such Liquidity Facility only on an Applied Provider Advance (as such term is
defined in such Liquidity Facility).
"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 any Liquidity Facility, the
lending office of such Liquidity Provider thereunder, presently located at New
York, New York, or such other lending office as such Liquidity Provider from
time to time shall notify the applicable Trustee as its lending office under any
such Liquidity Facility; PROVIDED that such Liquidity Provider shall not change
its Lending Office to a Lending Office outside the United States of America
except in accordance with Section 3.01, 3.02 or 3.03 of any such 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 FACILITY" means, at any time, the Class A Liquidity
Facility, the Class B Liquidity Facility or the Class C Liquidity Facility.
"LIQUIDITY OBLIGATIONS" means all principal, interest, fees and other
amounts owing to the Liquidity Providers under the Liquidity Facilities, Section
9 of the Participation Agreements or the Fee Letter.
"LIQUIDITY PROVIDER" means, at any time, any Class A Liquidity
Provider, any Class B Liquidity Provider or any Class C Liquidity Provider, as
applicable.
"LOAN TRUSTEE" means, with respect to any Indenture, the indenture
trustee thereunder.
"LP INCUMBENCY CERTIFICATE" has the meaning assigned to such term in
Section 2.5(b).
"LP REPRESENTATIVES" has the meaning assigned to such term in Section
2.5(b).
"LTV APPRAISALS" has the meaning assigned to such term in Section
4.1(a).
"LTV COLLATERAL AMOUNT" of any Aircraft for any Class of Certificates
means, as of any Distribution Date, the lesser of (i) the LTV Ratio for such
Class of Certificates multiplied by the Appraised Current Market Value of such
Aircraft (or with respect to any such Aircraft which has suffered an Event of
Loss under and as defined in the relevant Lease, the amount of the insurance
proceeds paid to the related Loan Trustee in respect thereof to the extent then
held by such Loan Trustee (and/or on deposit in the Special Payments Account) or
payable to such Loan Trustee in respect thereof) and (ii) the outstanding
principal amount of the Equipment Notes secured by such Aircraft after giving
effect to any principal payments of such Equipment Notes on or before such
Distribution Date.
"LTV RATIO" means for the Class A Certificates 38.0%, for the Class B
Certificates 52.0% and for the Class C Certificates 67.2%.
"MINIMUM SALE PRICE" means, with respect to any Aircraft or the
Equipment Notes issued in respect of such Aircraft, at any time, the lesser of
(a) 75% of the Appraised Current Market Value of such Aircraft and (b) the
aggregate outstanding principal amount of such Equipment Notes, plus accrued and
unpaid interest thereon.
"MOODY'S" means Moody's Investors Service, Inc.
"NON-CONTROLLING PARTY" means, at any time, any Trustee or Liquidity
Provider which is not the Controlling Party at such time.
"NON-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.
"OFFICER'S CERTIFICATE" of any Person means a certification signed by
a Responsible Officer of such Person.
"OPERATIVE AGREEMENTS" means this Agreement, the Liquidity
Facilities, the Indentures, the Trust Agreements, the Underwriting Agreement,
the Participation Agreements, the Leases, the Fee Letter, the Equipment Notes
and the Certificates, together with all exhibits and schedules included with any
of the foregoing.
"OUTSTANDING" means, when used with respect to each Class of
Certificates, as of the date of determination, all Certificates of such Class
theretofore authenticated and delivered under the related Trust Agreement,
except:
(i) Certificates of such Class theretofore canceled by the Registrar
(as defined in such Trust Agreement) or delivered to the Trustee
thereunder or such Registrar for cancellation;
(ii) Certificates of such Class for which money in the full amount
required to make the final distribution with respect to such Certificates
pursuant to Section 11.01 of such Trust Agreement has been theretofore
deposited with the related Trustee in trust for the holders of such
Certificates as provided in Section 4.01 of such Trust Agreement pending
distribution of such money to such Certificateholders pursuant to such
final distribution payment; and
(iii) Certificates of such Class in exchange for or in lieu of which
other Certificates have been authenticated and delivered pursuant to such
Trust Agreement;
PROVIDED, HOWEVER, that in determining whether the holders of the requisite
Outstanding amount of such Certificates have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, any Certificates
owned by Continental or any of its Affiliates shall be disregarded and deemed
not to be Outstanding, except that, in determining whether such Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Certificates that such Trustee knows to be so
owned shall be so disregarded. Certificates so owned that have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the applicable Trustee the pledgee's right so to act with
respect to such Certificates and that the pledgee is not Continental or any of
its Affiliates.
"OVERDUE SCHEDULED PAYMENT" means any Scheduled Payment which is not
in fact received by the Subordination Agent within five days after the Scheduled
Payment Date relating thereto.
"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).
"PERFORMING EQUIPMENT NOTE" means an Equipment Note issued pursuant
to an Indenture 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 involving Continental under Title 11 of the
United States Code (the "Bankruptcy Code"), (i) any payment default existing
during the 60-day period under Section 1110(a)(1)(A) of the Bankruptcy Code (or
such longer period as may apply under Section 1110(b) of the Bankruptcy Code)
(the "Section 1110 Period") shall not be taken into consideration, unless during
the Section 1110 Period the trustee in such proceeding or Continental refuses to
assume or agree to perform its obligations under the Lease related to such
Equipment Note and (ii) any payment default occurring after the date of the
order of relief in such proceeding shall not be taken into consideration if such
payment default is cured under Section 1110(a)(1)(B) of the Bankruptcy Code
before the later of 30 days after the date of such default or the expiration of
the Section 1110 Period.
"PERFORMING NOTE DEFICIENCY" means any time that less than 65% of the
then aggregate outstanding principal amount of all Equipment Notes are
Performing Equipment Notes.
"PERSON" means any individual, corporation, partnership, joint
venture, association, limited liability company, joint-stock company, trust,
trustee, unincorporated organization or government or any agency or political
subdivision thereof.
"POOL BALANCE" means, with respect to each Trust or the Certificates
issued by any Trust, as of any date, (i) the original aggregate face amount of
the Certificates of such Trust less (ii) the aggregate amount of all payments
made in respect of the Certificates of such Trust other than payments made in
respect of interest or premium thereon or reimbursement of any costs and
expenses in connection therewith. The Pool Balance for each Trust or for the
Certificates issued by any Trust as of any Distribution Date shall be computed
after giving effect to the payment of principal of the Equipment Notes or
payment with respect to other Trust Property held in such Trust 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.
"PTC EVENT OF DEFAULT" means, with respect to each Trust Agreement,
the failure to pay within 10 Business Days of the due date thereof: (i) the
outstanding Pool Balance of the applicable Class of Certificates on the Final
Legal Distribution Date for such Class or (ii) interest due on such Certificates
on any Distribution Date (unless the Subordination Agent shall have made an
Interest Drawing, 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 entitled thereto).
"RATING AGENCIES" means, collectively, at any time, each nationally
recognized rating agency which shall have been requested to rate the
Certificates and which shall then be rating the Certificates. The initial Rating
Agencies will be Moody's and Standard & Poor's.
"RATINGS CONFIRMATION" means, with respect to any action proposed to
be taken, a written confirmation from each of the Rating Agencies that such
action would not result in (i) a reduction of the rating for any Class of
Certificates below the then current rating for such Class of Certificates or
(ii) a withdrawal or suspension of the rating of any Class of Certificates.
"REGULAR DISTRIBUTION DATES" means each April 15 and October 15,
commencing on October 15, 1998; 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,
one or more irrevocable revolving credit agreement or agreements issued by one
or more Persons in substantially the form of the initial Liquidity Facility for
the related Trust, including reinstatement provisions, or in such other form
(which may include a letter of credit) as shall permit the Rating Agencies to
confirm in writing their respective ratings then in effect for the related
Certificates (before downgrading of such ratings, if any, as a result of the
downgrading of the applicable Liquidity Provider), in a face amount (or in an
aggregate face amount) equal to the amount of interest payable on the
Certificates of such Trust (at the Stated Interest Rate for such Trust, and
without regard to expected future principal payments) on the three Regular
Distribution Dates following the date of replacement of such Liquidity Facility
and issued by a Person (or Persons) having unsecured short-term debt ratings
issued by both Rating Agencies which are equal to or higher than the Threshold
Rating. Without limitation of the form that a Replacement Liquidity Facility
otherwise may have pursuant to the preceding sentence, a Replacement Liquidity
Facility for any Class of Certificates may have a stated expiration date earlier
than 15 days after the Final Legal Distribution Date of such Class of
Certificates so long as such Replacement Liquidity Facility provides for a
Non-Extension Drawing as contemplated by Section 3.6(d) hereof.
"REPLACEMENT LIQUIDITY PROVIDER" means a Person who issues a
Replacement Liquidity Facility.
"REQUIRED AMOUNT" means, with respect to each Liquidity Facility, or
the Cash Collateral Account, for any Class, for any day, the sum of the
aggregate amount of interest, calculated at the rate per annum equal to the
Stated Interest Rate for the related Class of Certificates, that would be
payable on such Class of Certificates on each of the three successive Regular
Distribution Dates immediately following such day or, if such day is a Regular
Distribution Date, on such day and the succeeding two Regular Distribution
Dates, in each case calculated on the basis of the Pool Balance of such Class of
Certificates on such date and without regard to expected future payments of
principal on such Class of Certificates.
"RESPONSIBLE OFFICER" means (i) with respect to the Subordination
Agent and each of the Trustees, any officer in the corporate trust
administration department of the Subordination Agent or such Trustee or any
other officer customarily performing functions similar to those performed by the
Persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of his knowledge of and 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 or (ii) any payment of
interest on the corresponding Class of Certificates with funds drawn under any
Liquidity Facility, which payment represents the installment of principal at the
stated maturity of such installment of principal on such Equipment Note, the
payment of regularly scheduled interest accrued on the unpaid principal amount
of such Equipment Note, or both; provided that any payment of principal of,
premium, if any, or interest resulting from the redemption or purchase of any
Equipment Note shall not constitute a Scheduled Payment.
"SCHEDULED PAYMENT DATE" means, with respect to any Scheduled
Payment, the date on which such Scheduled Payment is scheduled to be made.
"SERIES A EQUIPMENT NOTES" means the 6.410% Series A Equipment Notes
issued pursuant to each 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.
"SERIES B EQUIPMENT NOTES" means the 6.465% Series B Equipment Notes
issued pursuant to each 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.
"SERIES C EQUIPMENT NOTES" means the 6.331% Series C Equipment Notes
issued pursuant to each 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.
"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" with respect to any Liquidity Facility, means 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).
"STATED INTEREST RATE" means (i) with respect to the Class A
Certificates, 6.410% per annum, (ii) with respect to the Class B Certificates,
6.465% per annum, and (iii) with respect to the Class C Certificates, 6.331% per
annum.
"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).
"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.
"TAX LETTER" means, collectively, each of the three Tax Letters,
dated as of April 21, 1998, between Continental and WestLB with respect to the
Liquidity Facilities and all tax letters entered into between Continental and
any Replacement Liquidity Provider.
"TERMINATION NOTICE" with respect to any Liquidity Facility has the
meaning assigned to such term in such Liquidity Facility.
"THRESHOLD RATING" means the short-term unsecured debt rating of P-1
by Moody's and A-1+ by Standard & Poor's, in the case of the Class A Liquidity
Provider and the Class B Liquidity Provider, and the short-term unsecured debt
rating of P-1 by Moody's and A-1 by Standard & Poor's, in the case of the Class
C Liquidity Provider.
"TREASURY REGULATIONS" means regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"TRIGGERING EVENT" means (x) the occurrence of an Indenture Default
under all of the Indentures resulting in a PTC Event of Default with respect to
the most senior Class of Certificates then Outstanding, (y) the Acceleration of
all of the outstanding Equipment Notes or (z) the occurrence of a Continental
Bankruptcy Event.
"TRUST" means any of the Class A Trust, the Class B Trust or the
Class C Trust.
"TRUST ACCOUNTS" has the meaning assigned to such term in Section
2.2(a).
"TRUST AGREEMENT" means any of the Class A Trust Agreement, the Class
B Trust Agreement or the Class C Trust Agreement.
"TRUST PROPERTY" with respect to any Trust, has the meaning set forth
in the Trust Agreement for such Trust.
"TRUSTEE" means any of the Class A Trustee, the Class B Trustee or
the Class C Trustee.
"TRUSTEE INCUMBENCY CERTIFICATE" has the meaning assigned to such
term in Section 2.5(a).
"TRUSTEE REPRESENTATIVES" has the meaning assigned to such term in
Section 2.5(a).
"UNDERWRITERS" means Chase Securities Inc., Morgan Stanley & Co.
Incorporated and Credit Suisse First Boston Corporation.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement dated April
15, 1998 among the Underwriters 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 the
parties to this Agreement.
"WRITTEN NOTICE" means, from the Subordination Agent, any Trustee or
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) Each Trustee hereby acknowledges and agrees to the
terms of subordination set forth in this Agreement in respect of each Class of
Certificates and agrees to enforce such provisions and cause all payments in
respect of the Equipment Notes and the Liquidity Facilities to be applied in
accordance with the terms of this Agreement. In addition, each Trustee hereby
agrees to cause the Equipment Notes purchased by the related Trust to be
registered in the name of the Subordination Agent or its nominee, as agent and
trustee for such Trustee, to be held in trust by the Subordination Agent solely
for the purpose of facilitating the enforcement of the subordination and other
provisions of this Agreement.
(b) Except as otherwise expressly provided in the next succeeding
sentence of this Section 2.1, all payments to be made by the Subordination Agent
hereunder shall be made only from amounts received by it that constitute
Scheduled Payments, Special Payments or payments under Section 9 of the
Participation Agreements, and only to the extent that the Subordination Agent
shall have received sufficient income or proceeds therefrom to enable it to make
such payments in accordance with the terms hereof. Each of the Trustees and the
Subordination Agent hereby agrees and, as provided in each Trust Agreement, each
Certificateholder, by its acceptance of a Certificate, and each Liquidity
Provider, by entering into the Liquidity Facility to which it is a party, has
agreed to look solely to such amounts to the extent available for distribution
to it as provided in this Agreement and that none of the Trustees, Owner
Trustees, Loan Trustees, Owner Participants nor the Subordination Agent is
personally liable to any of them for any amounts payable or any liability under
this Agreement, any Trust Agreement, any Liquidity Facility or such Certificate,
except (in the case of the Subordination Agent) as expressly provided herein or
(in the case of the Trustees) as expressly provided in each Trust Agreement or
(in the case of the Owner Trustees and the Loan Trustees) as expressly provided
in any Operative Agreement.
SECTION 2.2. TRUST ACCOUNTS. (a) Upon the execution of this
Agreement, the Subordination Agent shall establish and maintain in its name (i)
the Collection Account as an Eligible Deposit Account, bearing a designation
clearly indicating that the funds deposited therein are held in trust for the
benefit of the Trustees, the Certificateholders and the Liquidity Providers, and
(ii) as a sub-account in the Collection Account, the Special Payments Account as
an Eligible Deposit Account, bearing a designation clearly indicating that the
funds deposited therein are held in trust for the benefit of the Trustees, the
Certificateholders and the Liquidity Providers. The Subordination Agent shall
establish and maintain the Cash Collateral Accounts pursuant to and under the
circumstances set forth in Section 3.6(f) hereof. Upon such establishment and
maintenance under Section 3.6(f) hereof, the Cash Collateral Accounts shall,
together with the Collection Account, constitute the "TRUST ACCOUNTS" hereunder.
(b) Funds on deposit in the Trust Accounts shall be invested and
reinvested by the Subordination Agent in Eligible Investments selected by the
Subordination Agent if such investments are reasonably available and have
maturities no later than the earlier of (i) 90 days following the date of such
investment and (ii) the Business Day immediately preceding the Regular
Distribution Date or the date of the related distribution pursuant to Section
2.4 hereof, as the case may be, next following the date of such investment (or,
in the case of any amount on deposit in the Cash Collateral Account with respect
to any Liquidity Facility (with respect to such Liquidity Facility, the
"Relevant Amount"), (A) in the case of a portion of the Relevant Amount equal to
the amount scheduled to be paid to the Liquidity Provider with respect to such
Liquidity Facility on the Regular Distribution Date next following the date of
such investment in accordance with clause (iv), (v) or (vi) of Section 3.6(f),
the Business Day immediately preceding such Regular Distribution Date, or (B) in
the case of a portion of the Relevant Amount equal to the Relevant Amount minus
the amount described in clause (A) above, the Business Day immediately preceding
the scheduled Interest Payment Date with respect to such Liquidity Facility next
following the date of such investment); PROVIDED, HOWEVER, that following the
making of a Downgrade Drawing or a Non-Extension Drawing under any Liquidity
Facility, the Subordination Agent shall invest and reinvest such amounts in
Eligible Investments at the direction of Continental (or, if and to the extent
so specified to the Subordination Agent by Continental with respect to any
Liquidity Facility, the Liquidity Provider with respect to such Liquidity
Facility); PROVIDED further, HOWEVER, that following the making of a Downgrade
Drawing or Non-Extension Drawing under any initial Liquidity Facility, (i) the
Subordination Agent shall invest and reinvest the amounts in the Cash Collateral
Account with respect to such Liquidity Facility in Eligible Investments pursuant
to the written instructions of the Liquidity Provider funding such Drawing,
which instructions shall be reasonably acceptable to Continental, and (ii) if
the Subordination Agent shall be investing such amounts in the Cash Collateral
Account in Eligible Investments in accordance with the instructions of such
Liquidity Provider pursuant to clause (i) above, such Liquidity Provider shall
use reasonable efforts to cause the amounts in the Cash Collateral Account with
respect to such Liquidity Facility to be invested in Eligible Investments which
yield at least an amount equal to the interest (excluding the Applicable Margin
(as defined in the relevant Liquidity Facility)) that is payable to such
Liquidity Provider in respect of such Downgrade Drawing or Non-Extension Drawing
pursuant to Section 3.07 of such Liquidity Facility (it being understood that it
may not be feasible to obtain such a yield); 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 deposit in the Cash Collateral Accounts, 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 herein 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 Trustees,
the Certificateholders and the Liquidity Providers, as the case may be. If, at
any time, any of the Trust Accounts ceases to be an Eligible Deposit Account,
the Subordination Agent shall within 10 Business Days (or such longer period,
not to exceed 30 calendar days, to which each Rating Agency may consent)
establish a new Collection Account, Special Payments Account or Cash Collateral
Account, as the case may be, as an Eligible Deposit Account and shall transfer
any cash and/or any investments to such new Collection Account, Special Payments
Account or Cash Collateral Account, as the case may be. So long as WTC is an
Eligible Institution, the Trust Accounts shall be maintained with it as Eligible
Deposit Accounts.
SECTION 2.3. DEPOSITS TO THE COLLECTION ACCOUNT AND SPECIAL PAYMENTS
ACCOUNT. (a) The Subordination Agent shall, upon receipt thereof, deposit in the
Collection Account all Scheduled Payments received by it.
(b) The Subordination Agent shall, on each date when one or more
Special Payments are made to the Subordination Agent as holder of the Equipment
Notes, deposit in the Special Payments Account the aggregate amount of such
Special Payments.
SECTION 2.4. DISTRIBUTIONS OF SPECIAL PAYMENTS (a) Notice of Special
Payment. 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 each Trustee and the Liquidity Providers. The
Subordination Agent shall promptly calculate the amount of the redemption or
purchase of Equipment Notes or the amount of any Overdue Scheduled Payment, as
the case may be, comprising such Special Payment under the applicable Indenture
or Indentures and shall promptly send to each Trustee a Written Notice of such
amount and the amount allocable to each Trust. 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 Payment Date MULTIPLIED by (y) a fraction, the
numerator of which is the aggregate outstanding principal amount of
Equipment Notes being redeemed, purchased or prepaid on such Special
Payment Date and the denominator of which is the aggregate outstanding
principal amount of all Equipment Notes, shall be distributed to the
Liquidity Providers pari passu on the basis of the amount of Liquidity
Expenses owed to each Liquidity Provider;
SECOND, such amount as shall be required to pay (A) all accrued and
unpaid interest then in arrears on all Liquidity Obligations (including
interest accrued and unpaid on any Interest Drawing or any Applied
Provider Advance (as defined in any Liquidity Facility)) plus (B) the
product of (x) the aggregate amount of all accrued and unpaid interest on
all Liquidity Obligations not in arrears to such Special Payment Date (at
the rate provided in the applicable Liquidity Facility) MULTIPLIED BY (y)
a fraction, the numerator of which is the aggregate outstanding principal
amount of Equipment Notes being redeemed, purchased or prepaid on such
Special Payment Date and the denominator of which is the aggregate
outstanding principal amount of all Equipment Notes, shall be distributed
to the Liquidity Providers pari passu on the basis of the amount of such
Liquidity Obligations owed to each Liquidity Provider;
THIRD, such amount as shall be required (A) if any Cash Collateral
Account had been previously funded as provided in Section 3.6(f), to fund
such Cash Collateral Account up to its Required Amount shall be deposited
in such Cash Collateral Account, (B) if any Liquidity Facility shall
become a Downgraded Facility or a Non-Extended Facility at a time when
unreimbursed Interest Drawings under such Liquidity Facility have reduced
the Available Amount thereunder to zero, to deposit into the related Cash
Collateral Account an amount equal to such Cash Collateral Account's
Required Amount shall be deposited in such Cash Collateral 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 in an amount equal to the amount of any unreimbursed Interest
Drawings under such Liquidity Facility shall be distributed to such
Liquidity Provider, pari passu on the basis of the amounts of all such
deficiencies and/or unreimbursed Interest Drawings;
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) the Required Amount for the
relevant Class, pari passu 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 Class A Certificates on such Special
Distribution Date shall be distributed to the Class A Trustee;
SIXTH, such amount as shall be required to pay in full Expected
Distributions to the holders of Class B Certificates on such Special
Distribution Date shall be distributed to the Class B Trustee;
SEVENTH, such amount as shall be required to pay in full Expected
Distributions to the holders of Class C Certificates on such Special
Distribution Date shall be distributed to the Class C Trustee; and
EIGHTH, the balance, if any, of such Special Payment shall be
transferred to the Collection Account for distribution in accordance with
Section 3.2 hereof.
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 such Certificates (after giving effect to any Escrowed
Funds Interest Distribution to be made on such Current Distribution Date with
respect to such Certificates) together with (without duplication) accrued and
unpaid interest on a portion of such Certificates equal to the outstanding
principal amount of Equipment Notes being redeemed, purchased or prepaid
(immediately prior to such redemption, purchase or prepayment)".
(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. 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 any Trustee or
any Liquidity Provider (collectively, the "PAYEES") and (ii) any compensation
(including, without limitation, any fees payable to any Liquidity Provider under
Section 2.03 of any Liquidity Facility) 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 each Liquidity Provider
and each Trustee, and from time to time thereafter may furnish to each Liquidity
Provider and each 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 Liquidity
Provider and Trustee receives 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, each Trustee shall furnish
to the Subordination Agent, and from time to time thereafter may furnish to the
Subordination Agent, at such Trustee's discretion, or upon the Subordination
Agent's request (which request shall not be made more than one time in any
12-month period), a certificate (a "TRUSTEE INCUMBENCY Certificate") of a
Responsible Officer of such Trustee certifying as to the incumbency and specimen
signatures of the officers of such Trustee and the attorney-in-fact and agents
of such Trustee (the "TRUSTEE REPRESENTATIVES") authorized to give Written
Notices on behalf of such Trustee hereunder. Until the Subordination Agent
receives a subsequent Trustee Incumbency Certificate, it shall be entitled to
rely on the last Trustee Incumbency Certificate delivered to it hereunder.
(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 Trustees and the Liquidity
Providers hereby agree that, with respect to any Indenture at any given time,
the Loan Trustee thereunder will be directed (i) in taking, or refraining from
taking, any action under such Indenture or with respect to the Equipment Notes
issued thereunder, so long as no Indenture Default has occurred and is
continuing thereunder, by the holders of at least a majority of the outstanding
principal amount of such Equipment Notes (provided that, for so long as the
Subordination Agent is the registered holder of the Equipment Notes, the
Subordination Agent shall act with respect to this clause (i) in accordance with
the directions of the Trustees (in the case of each such Trustee, with respect
to the Equipment Notes issued under such Indenture and held as Trust Property of
such Trust) constituting, in the aggregate, directions with respect to such
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 shall be: (x) the Class A Trustee; (y) upon payment of Final
Distributions to the holders of Class A Certificates, the Class B Trustee; and
(z) upon payment of Final Distributions to the holders of Class B Certificates,
the Class C Trustee. For purposes of giving effect to the foregoing, the
Trustees (other than the Controlling Party) irrevocably agree (and the
Certificateholders (other than the Certificateholders represented by the
Controlling Party) shall be deemed to agree by virtue of their purchase of
Certificates) that the Subordination Agent, as record holder of the Equipment
Notes, shall exercise its voting rights in respect of the Equipment Notes as
directed by the Controlling Party and any vote so exercised shall be binding
upon the Trustees 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 or a Non-Extension Drawing) and remain unreimbursed, (ii) the
date on which the entire amount of any Downgrade Drawing or Non-Extension
Drawing under any Liquidity Facility shall have become and remain "Applied
Downgrade Advances" or "Applied Non-Extension Advances", as the case may be,
under and as defined in such Liquidity Facility and (iii) the date on which all
Equipment Notes shall have been Accelerated, the Liquidity Provider or Liquidity
Providers holding more than 50% of the outstanding amount of Liquidity
Obligations shall have the right to elect, by Written Notice to the
Subordination Agent and each of the Trustees, to become the Controlling Party
hereunder with respect to any Indenture at any time from and including the last
day of such 18-month period.
(d) The exercise of remedies by the Controlling Party under this
Agreement shall be expressly limited by Section 4.1(a)(ii) hereof.
(e) The Controlling Party shall not be entitled to require or
obligate any Non-Controlling Party to provide funds necessary to exercise any
right or remedy hereunder.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION
OF AMOUNTS RECEIVED
SECTION 3.1. WRITTEN NOTICE OF DISTRIBUTION. (a) No later than 3:00
P.M. (New York City time) on the Business Day immediately preceding each 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 Class A Certificates, the Class A
Trustee shall separately set forth the amounts to be paid in accordance
with clause "FIFTH" of Section 3.2 or 2.4(b), as the case may be, hereof;
(ii) With respect to the Class B Certificates, the Class B
Trustee shall separately set forth the amounts to be paid in accordance
with clause "SIXTH" of Section 3.2 or 2.4(b), as the case may be, hereof;
(iii) With respect to the Class C Certificates, the Class C
Trustee shall separately set forth the amounts to be paid in accordance
with clause "SEVENTH" of Section 3.2 or 2.4(b), as the case may be,
hereof;
(iv) 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), as the case may be, hereof; and
(v) Each Trustee shall set forth the amounts to be paid in
accordance with clause "EIGHTH" of Section 3.2 hereof.
The notices required under this Section 3.1(a) may be in the form of a schedule
or similar document provided to the Subordination Agent by the parties
referenced therein or by any one of them, which schedule or similar document may
state that, unless there has been a prepayment of the Certificates, such
schedule or similar document is to remain in effect until any substitute notice
or amendment shall be given to the Subordination Agent by the party providing
such notice.
(b) Following the occurrence of a Triggering Event, the Subordination
Agent shall request the following information from the following Persons, and
each of the following Persons shall, upon the request of the Subordination
Agent, deliver a Written Notice to the Subordination Agent setting forth for
such Person the following information:
(i) With respect to the Class A Certificates, the Class A
Trustee shall separately set forth the amounts to be paid in accordance
with clauses "FIRST" (to reimburse payments made by the Class A
Certificateholders pursuant to subclause (iii) of clause "FIRST" of
Section 3.3 hereof) and "SEVENTH" of Section 3.3 hereof;
(ii) With respect to the Class B Certificates, the Class B
Trustee shall separately set forth the amounts to be paid in accordance
with clauses "FIRST" (to reimburse payments made by the Class B
Certificateholders pursuant to subclause (iii) of clause "FIRST" of
Section 3.3 hereof) and "EIGHTH" of Section 3.3 hereof;
(iii) With respect to the Class C Certificates, the Class C
Trustee shall separately set forth the amounts to be paid in accordance
with clauses "FIRST" (to reimburse payments made by the Class C
Certificateholders pursuant to subclause (iii) of clause "FIRST" of
Section 3.3 hereof) and "NINTH" of Section 3.3 hereof;
(iv) 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
(v) Each Trustee shall set forth the amounts to be paid in
accordance with clause "SIXTH" of Section 3.3 hereof.
(c) At such time as a Trustee or a Liquidity Provider shall have
received all amounts owing to it (and, in the case of a Trustee, the
Certificateholders for which it is acting) pursuant to Section 2.4, 3.2 or 3.3
hereof, as applicable, and, in the case of a Liquidity Provider, its commitment
under the related Liquidity Facility shall have terminated or expired, such
Person shall, by a Written Notice, so inform the Subordination Agent and each
other party to this Agreement.
(d) As provided in Section 6.5 hereof, the Subordination Agent shall
be fully protected in relying on any of the information set forth in a Written
Notice provided by any Trustee or any Liquidity Provider pursuant to paragraphs
(a) through (c) above and shall have no independent obligation to verify,
calculate or recalculate any amount set forth in any Written Notice delivered in
accordance with such paragraphs.
(e) Any Written Notice delivered by a Trustee or a Liquidity
Provider, as applicable, pursuant to Section 3.1(a), 3.1(b) or 3.1(c) hereof, if
made prior to 10:00 A.M. (New York City time) shall be effective on the date
delivered (or if delivered later shall be effective as of the next Business
Day). Subject to the terms of this Agreement, the Subordination Agent shall as
promptly as practicable comply with any such instructions; PROVIDED, HOWEVER,
that any transfer of funds pursuant to any instruction received after 10:00 A.M.
(New York City time) on any Business Day may be made on the next succeeding
Business Day.
(f) In the event the Subordination Agent shall not receive from any
Person any information set forth in paragraph (a) or (b) above which is required
to enable the Subordination Agent to make a distribution to such Person pursuant
to Section 3.2 or 3.3 hereof, the Subordination Agent shall request such
information and, failing to receive any such information, the Subordination
Agent shall not make such distribution(s) to such Person. In such event, the
Subordination Agent shall make distributions pursuant to clauses "FIRST" through
"NINTH" of Section 3.2 and clauses "FIRST" through "NINTH" 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 any 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 pari passu on the basis of the amount of Liquidity
Expenses owed to each Liquidity Provider;
SECOND, such amount as shall be required to pay in full the aggregate
amount of interest accrued on all Liquidity Obligations (at the rate, or
in the amount, provided in the applicable Liquidity Facility) and unpaid
shall be distributed to the Liquidity Providers pari passu 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 Cash Collateral
Account had been previously funded as provided in Section 3.6(f), to fund
such Cash Collateral Account up to its Required Amount shall be deposited
in such Cash Collateral Account, (B) if any Liquidity Facility shall
become a Downgraded Facility or a Non-Extended Facility at a time when
unreimbursed Interest Drawings under such Liquidity Facility have reduced
the Available Amount thereunder to zero, to deposit into the related Cash
Collateral Account an amount equal to such Cash Collateral Account's
Required Amount shall be deposited in such Cash Collateral 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 in 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, pari passu on the basis of the
amounts of all such deficiencies and/or unreimbursed Liquidity
Obligations;
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) the Required Amount for the
relevant Class, pari passu 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 Class A Certificates on such
Distribution Date shall be distributed to the Class A Trustee;
SIXTH, such amount as shall be required to pay in full Expected
Distributions to the holders of the Class B Certificates on such
Distribution Date shall be distributed to the Class B Trustee;
SEVENTH, such amount as shall be required to pay in full Expected
Distributions to the holders of the Class C Certificates on such
Distribution Date shall be distributed to the Class C Trustee;
EIGHTH, such amount as shall be required to pay in full the aggregate
unpaid amount of fees and expenses payable as of such Distribution Date to
the Subordination Agent and each Trustee pursuant to the terms of this
Agreement and the Trust Agreements, as the case may be, shall be
distributed to the Subordination Agent and such Trustee; and
NINTH, the balance, if any, of any such 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. (a) Except as otherwise provided in Sections 3.1(f) and 3.6(b)
hereof, upon the occurrence of a Triggering Event and at all times thereafter,
all funds in the Collection Account or the Special Payments Account shall be
promptly distributed by the Subordination Agent in the following order of
priority:
FIRST, such amount as shall be required to reimburse (i) the
Subordination Agent for any out-of-pocket costs and expenses actually
incurred by it (to the extent not previously reimbursed) in the protection
of, or the realization of the value of, the Equipment Notes or any Trust
Indenture Estate, shall be applied by the Subordination Agent in
reimbursement of such costs and expenses, (ii) each Trustee for any
amounts of the nature described in clause (i) above actually incurred by
it under the applicable Trust Agreement (to the extent not previously
reimbursed), shall be distributed to such Trustee, and (iii) any Liquidity
Provider or Certificateholder for payments, if any, made by it to the
Subordination Agent or any Trustee in respect of amounts described in
clause (i) above, shall be distributed to such Liquidity Provider or to
the applicable Trustee for the account of such Certificateholder, in each
such case, pari passu on the basis of all amounts described in clauses (i)
through (iii) above;
SECOND, such amount remaining as shall be required to pay all accrued
and unpaid Liquidity Expenses shall be distributed to each Liquidity
Provider pari passu on the basis of the amount of Liquidity Expenses owed
to each Liquidity Provider;
THIRD, such amount remaining as shall be required to pay accrued and
unpaid interest on the Liquidity Obligations as provided in the Liquidity
Facilities shall be distributed to each Liquidity Provider pari passu on
the basis of the amount of such accrued and unpaid interest owed to each
Liquidity Provider;
FOURTH, such amount remaining as shall be required (A) if any 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 such Liquidity Facility, to fund such Cash Collateral
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 Cash Collateral Account,
(B) if any Liquidity Facility shall become a Downgraded Facility or a
Non-Extended 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 such Liquidity Facility, to deposit into the related Cash
Collateral Account an amount equal to such Cash Collateral 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 Cash Collateral 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, pari passu on the basis of the amounts of all such deficiencies
and/or unreimbursed Liquidity Obligations;
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) the Required Amount for the
relevant Class (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), pari passu 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) each Trustee for any Tax (other than Taxes imposed on
compensation paid under the applicable Trust Agreement), expense, fee,
charge, loss or any other amount payable to such Trustee under the
applicable Trust Agreements (to the extent not previously reimbursed),
shall be distributed to such Trustee, and (iii) each Certificateholder for
payments, if any, made by it pursuant to Section 5.2 hereof in respect of
amounts described in clause (i) above, shall be distributed to the
applicable Trustee for the account of such Certificateholder, in each such
case, pari passu on the basis of all amounts described in clauses (i)
through (iii) above;
SEVENTH, such amount remaining as shall be required to pay in full
Adjusted Expected Distributions on the Class A Certificates shall be
distributed to the Class A Trustee;
EIGHTH, such amount remaining as shall be required to pay in full
Adjusted Expected Distributions on the Class B Certificates shall be
distributed to the Class B Trustee; and
NINTH, such amount remaining as shall be required to pay in full
Adjusted Expected Distributions on the Class C Certificates shall be
distributed to the Class C Trustee.
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 Final Distributions for each Class of
Certificates have been made, in the manner provided in clause "first" of Section
3.3 hereof.
(b) On any Interest Payment Date under each Liquidity Facility which
is not a Distribution Date, the Subordination Agent shall pay to the Liquidity
Provider under such Liquidity Facility from, and to the extent of, amounts on
deposit in the Collection Account, an amount equal to the amount of interest
then due and payable to such Liquidity Provider under such Liquidity Facility.
(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 "eighth" 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", "sixth" or "seventh" of Section 3.2 to "Distribution Date" shall
be deemed to refer to such Scheduled Payment Date.
SECTION 3.5. PAYMENTS TO THE TRUSTEES AND THE LIQUIDITY PROVIDERS.
Any amounts distributed hereunder to any Liquidity Provider shall be paid to
such Liquidity Provider by wire transfer of funds to the address such Liquidity
Provider shall provide to the Subordination Agent. The Subordination Agent shall
provide a Written Notice of any such transfer to the applicable Liquidity
Provider, as the case may be, at the time of such transfer. Any amounts
distributed hereunder by the Subordination Agent to any Trustee which shall not
be the same institution as the Subordination Agent shall be paid to such Trustee
by wire transfer funds at the address such Trustee shall provide to the
Subordination Agent.
SECTION 3.6. LIQUIDITY FACILITIES. (a) INTEREST DRAWINGS. If on any
Distribution Date, after giving effect to the subordination provisions of this
Agreement, the Subordination Agent shall not have sufficient funds for the
payment of any amounts due and owing in respect of accrued interest on the Class
A Certificates, the Class B Certificates or the Class C Certificates (at the
Stated Interest Rate for such Class of Certificates), then, prior to 12:00 noon
(New York City time) on the Business Day following such Distribution Date, the
Subordination Agent shall request a drawing (each such drawing, an "INTEREST
DRAWING") under the Liquidity Facility with respect to such Class of
Certificates in an amount equal to the lesser of (i) an amount sufficient to pay
the amount of such accrued interest (at the Stated Interest Rate for such Class
of Certificates) and (ii) the Available Amount under such Liquidity Facility,
and shall pay such amount to the Trustee with respect to such Class of
Certificates in payment of such accrued interest.
(b) APPLICATION OF INTEREST DRAWINGS. Notwithstanding anything to the
contrary contained in this Agreement, (i) all payments received by the
Subordination Agent in respect of an Interest Drawing under the Class A
Liquidity Facility and all amounts withdrawn by the Subordination Agent from the
Class A Cash Collateral Account, and payable in each case to the Class A
Certificateholders, shall be promptly distributed to the Class A Trustee, (ii)
all payments received by the Subordination Agent in respect of an Interest
Drawing under the Class B Liquidity Facility and all amounts withdrawn by the
Subordination Agent from the Class B Cash Collateral Account, and payable in
each case to the Class B Certificateholders, shall be promptly distributed to
the Class B Trustee and (iii) all payments received by the Subordination Agent
in respect of an Interest Drawing under the Class C Liquidity Facility and all
amounts withdrawn by the Subordination Agent from the Class C Cash Collateral
Account, and payable in each case to the Class C Certificateholders, shall be
promptly distributed to the Class C Trustee.
(c) DOWNGRADE DRAWINGS. If at any time the short-term unsecured debt
rating of any Liquidity Provider issued by either Rating Agency is lower than
the applicable Threshold Rating, within 10 days after receiving notice of such
downgrading (but not later than the expiration date of the Liquidity Facility
issued by the downgraded Liquidity Provider (the "DOWNGRADED FACILITY")), such
Liquidity Provider or Continental may arrange for a Replacement Liquidity
Provider to issue and deliver a Replacement Liquidity Facility to the
Subordination Agent. If a Downgraded Facility has not been replaced in
accordance with the terms of this paragraph, the Subordination Agent shall, on
such 10th day (or if such 10th day is not a Business Day, on the next succeeding
Business Day) (or, if earlier, the expiration date of such Downgraded Facility),
request a drawing in accordance with and to the extent permitted by such
Downgraded Facility (such drawing, a "DOWNGRADE DRAWING") of all available and
undrawn amounts thereunder. Amounts drawn pursuant to a Downgrade Drawing shall
be maintained and invested as provided in Section 3.6(f) hereof. The Liquidity
Provider may also arrange for a Replacement Liquidity Provider to issue and
deliver a Replacement Liquidity Facility at any time after such Downgrade
Drawing so long as such Downgrade Drawing has not been reimbursed in full to the
Liquidity Provider.
(d) NON-EXTENSION DRAWINGS. If any Liquidity Facility with respect to
any Class of Certificates 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 for such Class of Certificates, then, no earlier than the 60th
day and no later than the 40th day prior to the then Stated Expiration Date, the
Subordination Agent shall request that such Liquidity Provider extend the Stated
Expiration Date for a period of 364 days after the Stated Expiration Date
(unless the obligations of such Liquidity Provider thereunder are earlier
terminated in accordance with such Liquidity Facility). The Liquidity Provider
shall advise the Borrower, no earlier than 40 days and no later than 25 days
prior to such Stated Expiration Date, whether, in its sole discretion, it agrees
to so extend the Stated Expiration Date. If, on or before such 25th day, such
Liquidity Facility shall not have been so extended or replaced in accordance
with Section 3.6(e), or if the Liquidity Provider fails irrevocably and
unconditionally to advise the Borrower on or before the 25th day prior to the
Stated Expiration Date then in effect that such Stated Expiration Date shall be
so extended, the Subordination Agent shall, on such 25th day (or as soon as
possible thereafter), in accordance with and to the extent permitted by the
terms of the 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.
(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 for any Class
of Certificates (including any Replacement Liquidity Facility provided pursuant
to Section 3.6(e)(ii) hereof); PROVIDED, HOWEVER, that WestLB shall not be
replaced by Continental as a Liquidity Provider with respect to any Class of
Certificates (x) prior to the fifth anniversary of the Closing Date unless (A)
there shall have become due to WestLB, or WestLB shall have demanded, amounts
pursuant to Section 3.01, 3.02 or 3.03 of any Liquidity Facility or pursuant to
the Tax Letter and the replacement of WestLB would reduce or eliminate the
obligation to pay such amounts or Continental determines in good faith that
there is a substantial likelihood that WestLB will have the right to claim any
such amounts (unless WestLB waives, in writing, any right it may have to claim
such amounts), which determination shall be set forth in a certificate delivered
by Continental to WestLB setting forth the basis for such determination and
accompanied by an opinion of outside counsel selected by Continental and
reasonably acceptable to WestLB verifying the legal conclusions, if any, of such
certificate relating to such basis, PROVIDED that, in the case of any likely
claim for such amounts based upon any proposed, or proposed change in, law,
rule, regulation, interpretation, directive, requirement, request or
administrative practice, such opinion may assume the adoption or promulgation of
such proposed matter, (B) it shall become unlawful or impossible for WestLB (or
its Lending Office) to maintain or fund its LIBOR Advances as described in
Section 3.10 of any Liquidity Facility, (C) the short-term unsecured debt rating
of WestLB is downgraded by Standard & Poor's from A-1+ to A-1 and there is a
resulting downgrade in the rating by any Rating Agency of any Class of
Certificates, (D) any Liquidity Facility of WestLB shall become a Downgraded
Facility or a Non-Extended Facility or a Downgrade Drawing or a Non-Extension
Drawing shall have occurred under any Liquidity Facility of WestLB or (E) WestLB
shall have breached any of its payment (including, without limitation, funding)
obligations under any Liquidity Facility and (y) after the fifth anniversary of
the Closing Date unless (A) WestLB is replaced as Liquidity Provider with
respect to all Classes of Certificates or (B) the Liquidity Facility for such
Class of Certificates shall become a Downgraded Facility or Non-Extended
Facility or a Downgrade Drawing or a Non-Extension Drawing shall have occurred
under such Liquidity Facility. If such Replacement Liquidity Facility is
provided at any time after a Downgrade Drawing or Non-Extension Drawing has been
made, all funds on deposit in the relevant Cash Collateral Account will be
returned to the Liquidity Provider being replaced.
(ii) If any Liquidity Provider shall determine not to extend any
of its Liquidity Facility in accordance with Section 3.6(d), 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 of such Liquidity Facility.
(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 Class A Certificateholders, the Class B Certificateholders or the
Class C Certificateholders under any of the Operative Agreements, the
applicable Trustee shall have consented, in writing, to the execution and
issuance of such Replacement Liquidity Facility 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 any
Class of Certificates by such Rating Agency (without regard to any
downgrading of any rating of any Liquidity Provider being replaced
pursuant to Section 3.6(c) hereof), (y) pay all Liquidity Obligations then
owing to the replaced Liquidity Provider (which payment shall be made
first from available funds in the Cash Collateral Account as described in
clause (vii) 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), (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) the applicable
Replacement Liquidity Provider shall be deemed to be a Liquidity Provider
with the rights and obligations of a Liquidity Provider hereunder and
under the other Operative Agreements and such Replacement Liquidity
Facility shall be deemed to be a Liquidity Facility hereunder and under
the other Operative Agreements.
(f) CASH COLLATERAL ACCOUNTS; WITHDRAWALS; INVESTMENTS. In the event
the Subordination Agent shall draw all available amounts under the Class A
Liquidity Facility, the Class B Liquidity Facility or the Class C Liquidity
Facility pursuant to Section 3.6(c), 3.6(d) or 3.6(i) hereof, or in the event
amounts are to be deposited in the Cash Collateral Account pursuant to subclause
(B) of clause "THIRD" of Section 2.4(b), subclause (B) of clause "THIRD" of
Section 3.2 or subclause (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 Class A Cash Collateral Account, the Class B Cash Collateral
Account or the Class C Cash Collateral Account, respectively. All amounts on
deposit in each Cash Collateral Account shall be invested and reinvested in
Eligible Investments in accordance with Section 2.2(b) hereof. Investment
Earnings on amounts on deposit in the Cash Collateral Account with respect to
each Liquidity Facility shall be deposited in the Collection Account on each
Interest Payment Date under such Liquidity Facility and applied on such Interest
Payment Date in accordance with Section 3.2, 3.3 or 3.4 (as applicable). The
Subordination Agent shall deliver a written statement to Continental and the
Liquidity Provider one day prior to each Interest Payment Date setting forth the
aggregate amount of Investment Earnings held in the Cash Collateral Accounts as
of such date. In addition, from and after the date funds are so deposited, the
Subordination Agent shall make withdrawals from such account as follows:
(i) on each Distribution Date, the Subordination Agent shall, to
the extent it shall not have received funds to pay accrued and unpaid
interest due and owing on the Class A Certificates (at the Stated Interest
Rate for the Class A Certificates) from any other source, withdraw from
the Class A Cash Collateral Account, and pay to the Class A Trustee, an
amount equal to the lesser of (x) an amount necessary to pay accrued and
unpaid interest (at the Stated Interest Rate for the Class A Certificates)
on such Class A Certificates and (y) the amount on deposit in the Class A
Cash Collateral Account;
(ii) on each Distribution Date, the Subordination Agent shall,
to the extent it shall not have received funds to pay accrued and unpaid
interest due and owing on the Class B Certificates (at the Stated Interest
Rate for the Class B Certificates) from any other source, withdraw from
the Class B Cash Collateral Account, and pay to the Class B Trustee, an
amount equal to the lesser of (x) an amount necessary to pay accrued and
unpaid interest (at the Stated Interest Rate for the Class B Certificates)
on such Class B Certificates and (y) the amount on deposit in the Class B
Cash Collateral Account;
(iii) on each Distribution Date, the Subordination Agent shall,
to the extent it shall not have received funds to pay accrued and unpaid
interest due and owing on the Class C Certificates (at the Stated Interest
Rate for the Class C Certificates) from any other source, withdraw from
the Class C Cash Collateral Account, and pay to the Class C Trustee, an
amount equal to the lesser of (x) an amount necessary to pay accrued and
unpaid interest (at the Stated Interest Rate for the Class C Certificates)
on such Class C Certificates and (y) the amount on deposit in the Class C
Cash Collateral Account;
(iv) on each date on which the Pool Balance of the Class A Trust
shall have been reduced by payments made to the Class A Certificateholders
pursuant to Section 2.4, 3.2 or 3.3 hereof, the Subordination Agent shall
withdraw from the Class A Cash Collateral Account such amount as is
necessary so that, after giving effect to the reduction of the Pool
Balance on such date (including any such reduction resulting from a prior
withdrawal of amounts on deposit in the Class A Cash Collateral Account on
such date) and any transfer of Investment Earnings from such Cash
Collateral Account to the Collection Account on such date, an amount equal
to the sum of the Required Amount (with respect to the Class A Liquidity
Facility) plus Investment Earnings on deposit in such Cash Collateral
Account will be on deposit in the Class A Cash Collateral Account and
shall first, pay such amount to the relevant Class A Liquidity Provider
until the Liquidity Obligations (with respect to the Class A Certificates)
owing to such Liquidity Provider shall have been paid in full, and second,
deposit any remaining amount in the Collection Account;
(v) on each date on which the Pool Balance of the Class B Trust
shall have been reduced by payments made to the Class B Certificateholders
pursuant to Section 2.4, 3.2 or 3.3 hereof, the Subordination Agent shall
withdraw from the Class B Cash Collateral Account such amount as is
necessary so that, after giving effect to the reduction of the Pool
Balance on such date (including any such reduction resulting from a prior
withdrawal of amounts on deposit in the Class B Cash Collateral Account on
such date) and any transfer of Investment Earnings from such Cash
Collateral Account to the Collection Account on such date, an amount equal
to the sum of the Required Amount (with respect to the Class B Liquidity
Facility) plus Investment Earnings on deposit in such Cash Collateral
Account will be on deposit in the Class B Cash Collateral Account and
shall first, pay such amount to the relevant Class B Liquidity Provider
until the Liquidity Obligations (with respect to the Class B Certificates)
owing to such Liquidity Provider shall have been paid in full, and second,
deposit any remaining amount in the Collection Account;
(vi) on each date on which the Pool Balance of the Class C Trust
shall have been reduced by payments made to the Class C Certificateholders
pursuant to Section 2.4, 3.2 or 3.3 hereof, the Subordination Agent shall
withdraw from the Class C Cash Collateral Account such amount as is
necessary so that, after giving effect to the reduction of the Pool
Balance on such date (including any such reduction resulting from a prior
withdrawal of amounts on deposit in the Class C Cash Collateral Account on
such date) and any transfer of Investment Earnings from such Cash
Collateral Account to the Collection Account on such date, an amount equal
to the sum of the Required Amount (with respect to the Class C Liquidity
Facility) plus Investment Earnings on deposit in such Cash Collateral
Account will be on deposit in the Class C Cash Collateral Account and
shall first, pay such amount to the relevant Class C Liquidity Provider
until the Liquidity Obligations (with respect to the Class C Certificates)
owing to such Liquidity Provider shall have been paid in full, and second,
deposit any remaining amount in the Collection Account;
(vii) if a Replacement Liquidity Facility for any Class of
Certificates shall be delivered to the Subordination Agent following the
date on which funds have been deposited into the Cash Collateral Account
for such Class of Certificates, the Subordination Agent shall withdraw all
amounts on deposit in such Cash Collateral Account and shall pay such
amounts to the replaced Liquidity Provider until all Liquidity Obligations
owed to such Person shall have been paid in full, and shall deposit any
remaining amount in the Collection Account; and
(viii) following the payment of Final Distributions with respect
to any Class of Certificates, on the date on which the Subordination Agent
shall have been notified by the Liquidity Provider for such Class of
Certificates that the Liquidity Obligations owed to such Liquidity
Provider have been paid in full, the Subordination Agent shall withdraw
all amounts on deposit in the Cash Collateral Account in respect of such
Class of Certificates and shall deposit such amount in the Collection
Account.
(g) REINSTATEMENT. With respect to any Interest Drawing under the
Liquidity Facility for any Trust, upon the reimbursement of the applicable
Liquidity Provider for all or any part of the amount of such Interest Drawing,
together with any accrued interest thereon, the Available Amount of such
Liquidity Facility shall be reinstated by an amount equal to the amount of such
Interest Drawing so reimbursed to the applicable Liquidity Provider but not to
exceed the 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 shall have occurred and be continuing with respect to the relevant
Liquidity Facility or (y) a Final Drawing shall have occurred with respect to
such Liquidity Facility. In the event that, with respect to any particular
Liquidity Facility, (i) funds are withdrawn from any Cash Collateral Account
pursuant to clause (i), (ii) or (iii) of Section 3.6(f) hereof or (ii) such
Liquidity Facility shall become a Downgraded Facility or a Non-Extended 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 shall have occurred and be continuing with respect to such Liquidity
Facility 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 such Cash Collateral Account as and to the extent provided in
clause "THIRD" of Section 2.4(b), 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 and to the extent permitted by the terms of such Liquidity
Facility, request a drawing under such Liquidity Facility of all available and
undrawn amounts thereunder (a "FINAL DRAWING"). Amounts drawn pursuant to a
Final Drawing shall be maintained and invested in accordance with Section 3.6(f)
hereof.
(j) REDUCTION OF STATED AMOUNT. Promptly following each date on which
the Required Amount of the Liquidity Facility for a Class of Certificates is
reduced as a result of a reduction in the Pool Balance with respect to such
Certificates, the Subordination Agent shall, if any such Liquidity Facility
provides for reductions of the Stated Amount of such Liquidity Facility and if
such reductions are not automatic, request such Liquidity Provider for such
Class of Certificates to reduce such Stated Amount to an amount equal to the
Required Amount with respect to such Liquidity Facility (as calculated by the
Subordination Agent after giving effect to such payment). Each such request
shall be made in accordance with the provisions of the applicable Liquidity
Facility.
(k) RELATION TO SUBORDINATION PROVISIONS. Interest Drawings under the
Liquidity Facilities and withdrawals from the Cash Collateral Accounts, in each
case, in respect of interest on the Certificates of any Class, will be
distributed to the Trustee for such Class of Certificates, notwithstanding
Sections 3.2, 3.3 and 3.6(h) hereof.
(l) 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 any Liquidity Facility or any interest therein, unless (i)
Continental shall have consented to such assignment, such consent not to be
unreasonably withheld, and (ii) each Rating Agency shall have provided a Ratings
Confirmation in respect of such assignment.
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, to purchase the Equipment Notes and the provisions
of the next paragraph, if the Equipment Notes issued pursuant to any Indenture
have been Accelerated following an Indenture Default with respect thereto, the
Controlling Party may sell, assign, contract to sell or otherwise dispose of and
deliver all (but not less than all) of such Equipment Notes to any Person at
public or private sale, at any location at the option of the Controlling Party,
all upon such terms and conditions as it may reasonably deem advisable in
accordance with applicable law.
(ii) Subject to the Owner Trustees' and the Owner Participants'
rights, if any, to purchase the Equipment Notes, and notwithstanding the
foregoing, so long \as any Certificates remain Outstanding, during the
period ending on the date which is nine months after the earlier of (x)
the Acceleration of the Equipment Notes issued pursuant to any Indenture
or (y) the occurrence of a Continental Bankruptcy Event, without the
consent of each Trustee, (A) no Aircraft subject to the Lien of such
Indenture or such Equipment Notes may be sold if the net proceeds from
such sale would be less than the Minimum Sale Price for such Aircraft or
such Equipment Notes, and (B) the amount and payment dates of rentals
payable by Continental under the Lease for such Aircraft may not be
adjusted, if, as a result of such adjustment, the discounted present value
of all such rentals would be less than 75% of the discounted present value
of the rentals payable by Continental under such Lease before giving
effect to such adjustment, in each case, using the weighted average
interest rate of the Equipment Notes issued pursuant to such Indenture as
the discount rate.
(iii) At the request of the Controlling Party, the Subordination
Agent may from time to time during the continuance of an Indenture Default
(and before the occurrence of a Triggering Event) commission LTV
Appraisals with respect to the Aircraft subject to such Indenture.
(iv) After a Triggering Event occurs and any Equipment Note becomes a
Non-Performing Equipment Note, the Subordination Agent shall obtain
Appraisals with respect to all of the Aircraft (the "LTV APPRAISALS") as
soon as practicable and additional LTV Appraisals on or prior to each
anniversary of the date of such initial LTV Appraisals; provided that if
the Controlling Party reasonably objects to the appraised value of the
Aircraft shown in such LTV Appraisals, the Controlling Party shall have
the right to obtain or cause to be obtained substitute LTV Appraisals
(including any LTV Appraisals based upon physical inspection of the
Aircraft).
(b) The Controlling Party shall take such actions as it may
reasonably deem most effectual to complete the sale or other disposition of such
Aircraft or Equipment Notes. In addition, in lieu of any sale, assignment,
contract to sell or other disposition, the Controlling Party may maintain
possession of such Equipment Notes and continue to apply monies received in
respect of such Equipment Notes in accordance with Article III hereof. In
addition, in lieu of such sale, assignment, contract to sell or other
disposition, or in lieu of such maintenance of possession, the Controlling Party
may, 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 Trustees, 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 any 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 any 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 each Trust Agreement, the right of any Certificateholder or any
Liquidity Provider, respectively, to receive payments hereunder (including
without limitation pursuant to Section 2.4, 3.2 or 3.3 hereof) when due, or to
institute suit for the enforcement of any such payment on or after the
applicable Distribution Date, shall not be impaired or affected without the
consent of such Certificateholder or such Liquidity Provider, respectively.
SECTION 4.5. UNDERTAKING FOR COSTS. In any 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 a Trustee or a suit by Certificateholders holding more
than 10% of the original principal amount of any Class of Certificates.
ARTICLE V
DUTIES OF THE SUBORDINATION AGENT;
AGREEMENTS OF TRUSTEES, ETC.
SECTION 5.1. NOTICE OF INDENTURE DEFAULT OR TRIGGERING EVENT. (a) In
the event the Subordination Agent shall have actual knowledge of the occurrence
of an Indenture Default or a Triggering Event, as promptly as practicable, and
in any event within 10 days after obtaining knowledge thereof, the Subordination
Agent shall transmit by mail or courier to the Rating Agencies, the Liquidity
Providers and the Trustees notice of such Indenture Default or Triggering Event,
unless such Indenture Default or Triggering Event shall have been cured or
waived. For all purposes of this Agreement, in the absence of actual knowledge
on the part of a Responsible Officer, the Subordination Agent shall not be
deemed to have knowledge of any Indenture Default or Triggering Event unless
notified in writing by one or more Trustees, one or more Liquidity Providers or
one or more Certificateholders.
(b) OTHER NOTICES. The Subordination Agent will furnish to each
Liquidity Provider and Trustee, promptly upon receipt thereof, duplicates or
copies of all reports, notices, requests, demands, certificates, financial
statements and other instruments furnished to the Subordination Agent as
registered holder of the Equipment Notes or otherwise in its capacity as
Subordination Agent to the extent the same shall not have been otherwise
directly distributed to such Liquidity Provider or Trustee, as applicable,
pursuant to the express provision of any other Operative Agreement.
SECTION 5.2. INDEMNIFICATION. The Subordination Agent shall not be
required to take any action or refrain from taking any action under Section 5.1
(other than the first sentence thereof) or Article IV hereof unless the
Subordination Agent shall have been indemnified (to the extent and in the manner
reasonably satisfactory to the Subordination Agent) against any liability, cost
or expense (including counsel fees and expenses) which may be incurred in
connection therewith. The Subordination Agent shall not be under any obligation
to take any action under this Agreement and nothing contained in this Agreement
shall require the Subordination Agent to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it. The
Subordination Agent shall not be required to take any action under Section 5.1
(other than the first sentence thereof) or Article IV hereof, nor shall any
other provision of this Agreement be deemed to impose a duty on the
Subordination Agent to take any action, if the Subordination Agent shall have
been advised by counsel that such action is contrary to the terms hereof or is
otherwise contrary to law.
SECTION 5.3. NO DUTIES EXCEPT AS SPECIFIED IN INTERCREDITOR
AGREEMENT. The Subordination Agent shall not have any duty or obligation to take
or refrain from taking any action under, or in connection with, this Agreement,
except as expressly provided by the terms of this Agreement; and no implied
duties or obligations shall be read into this Agreement against the
Subordination Agent. The Subordination Agent agrees that it will, in its
individual capacity and at its own cost and expense (but without any right of
indemnity in respect of any such cost or expense under Section 7.1 hereof),
promptly take such action as may be necessary to duly discharge all Liens on any
of the Trust Accounts or any monies deposited therein which result from claims
against it in its individual capacity not related to its activities hereunder or
any other Operative Agreement.
SECTION 5.4. Notice from the Liquidity Providers and Trustees. If any
Liquidity Provider or Trustee has notice of an Indenture Default or a Triggering
Event, such Person shall promptly give notice thereof to all other Liquidity
Providers and Trustees and to the Subordination Agent, PROVIDED, HOWEVER, that
no such Person shall have any liability hereunder as a result of its failure to
deliver any such notice.
ARTICLE VI
THE SUBORDINATION AGENT
SECTION 6.1. AUTHORIZATION; ACCEPTANCE OF TRUSTS AND DUTIES. Each of
the Class A Trustee, the Class B Trustee and the Class C Trustee hereby
designates and appoints the Subordination Agent as the agent and trustee of such
Trustee under the applicable Liquidity Facility and authorizes the Subordination
Agent to enter into the applicable Liquidity Facility as agent and trustee for
such Trustee. Each of the Liquidity Providers and the Trustees 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 Section 2.2 hereof and (c) for liabilities that
may result from the material inaccuracy of any representation or warranty of the
Subordination Agent made in its individual capacity in any Operative Agreement.
The Subordination Agent shall not be liable for any error of judgment made in
good faith by a Responsible Officer of the Subordination Agent, unless it is
proved that the Subordination Agent was negligent in ascertaining the pertinent
facts.
SECTION 6.2. ABSENCE OF DUTIES. The Subordination Agent shall have no
duty to see to any recording or filing of this Agreement or any other document,
or to see to the maintenance of any such recording or filing.
SECTION 6.3. NO REPRESENTATIONS OR WARRANTIES AS TO DOCUMENTS. The
Subordination Agent in its individual capacity does not make nor shall be deemed
to have made any representation or warranty as to the validity, legality or
enforceability of this Agreement or any other Operative Agreement or as to the
correctness of any statement contained in any thereof, except for the
representations and warranties of the Subordination Agent, made in its
individual capacity, under any Operative Agreement to which it is a party. The
Certificateholders, the Trustees and the Liquidity Providers make no
representation or warranty hereunder whatsoever.
SECTION 6.4. NO SEGREGATION OF MONIES; NO INTEREST. Any monies paid
to or retained by the Subordination Agent pursuant to any provision hereof and
not then required to be distributed to any Trustee or any Liquidity Provider as
provided in Articles II and III hereof 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 of any Trust as of any date, the Subordination Agent may for all
purposes hereof rely on a certificate signed by any Responsible Officer of the
applicable Trustee, and such certificate shall constitute full protection to the
Subordination Agent for any action taken or omitted to be taken by it in good
faith in reliance thereon. As to any fact or matter relating to the Liquidity
Providers or the Trustees the manner of ascertainment of which is not
specifically described herein, the Subordination Agent may for all purposes
hereof rely on a certificate, signed by any Responsible Officer of the
applicable Liquidity Provider or Trustee, as the case may be, as to such fact or
matter, and such certificate shall constitute full protection to the
Subordination Agent for any action taken or omitted to be taken by it in good
faith in reliance thereon. The Subordination Agent shall assume, and shall be
fully protected in assuming, that each of the Liquidity Providers and each of
the Trustees are authorized to enter into this Agreement and to take all action
to be taken by them pursuant to the provisions hereof, and shall not inquire
into the authorization of each of the Liquidity Providers and each of the
Trustees with respect thereto. In the administration of the trusts hereunder,
the Subordination Agent may execute any of the trusts or powers hereof and
perform its powers and duties hereunder directly or through agents or attorneys
and may consult with counsel, accountants and other skilled persons to be
selected and retained by it, and the Subordination Agent shall not be liable for
the acts or omissions of any agent appointed with due care or for anything done,
suffered or omitted in good faith by it in accordance with the advice or written
opinion of any such counsel, accountants or other skilled persons.
SECTION 6.6. CAPACITY IN WHICH ACTING. The Subordination Agent acts
hereunder solely as agent and trustee herein and not in its individual capacity,
except as otherwise expressly provided in the Operative Agreements.
SECTION 6.7. COMPENSATION. The Subordination Agent shall be entitled
to reasonable compensation, including expenses and disbursements, for all
services rendered hereunder and shall have a priority claim to the extent set
forth in Article III hereof on all monies collected hereunder for the payment of
such compensation, to the extent that such compensation shall not be paid by
others. The Subordination Agent agrees that it shall have no right against any
Trustee or Liquidity Provider for any fee as compensation for its services as
agent under this Agreement. The provisions of this Section 6.7 shall survive the
termination of this Agreement.
SECTION 6.8. MAY BECOME CERTIFICATEHOLDER. The institution acting as
Subordination Agent hereunder may become a Certificateholder and have all rights
and benefits of a Certificateholder to the same extent as if it were not the
institution acting as the Subordination Agent.
SECTION 6.9. SUBORDINATION AGENT REQUIRED; ELIGIBILITY. There shall
at all times be a Subordination Agent hereunder which shall be a corporation
organized and doing business under the laws of the United States of America or
of any State or the District of Columbia having a combined capital and surplus
of at least $100,000,000 (or the obligations of which, whether now in existence
or hereafter incurred, are fully and unconditionally guaranteed by a corporation
organized and doing business under the laws of the United States 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
of the Participation Agreements. 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 Trustees and the Liquidity Providers. The Controlling Party may remove
the Subordination Agent for cause by so notifying the Subordination Agent
and may appoint a successor Subordination Agent. The Controlling Party
shall remove the Subordination Agent if:
(1) the Subordination Agent fails to comply with Section 6.9 hereof;
(2) the Subordination Agent is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Subordination Agent or its property; or
(4) the Subordination Agent otherwise becomes incapable of acting.
If the Subordination Agent resigns or is removed or if a vacancy
exists in the office of Subordination Agent for any reason (the Subordination
Agent in such event being referred to herein as the retiring Subordination
Agent), the Controlling Party shall promptly appoint a successor Subordination
Agent.
A successor Subordination Agent shall deliver (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 Trustees. The retiring Subordination Agent shall promptly
transfer its rights under each of the Liquidity Facilities and all of the
property held by it as Subordination Agent to the successor Subordination Agent.
If a successor Subordination Agent does not take office within 60
days after the retiring Subordination Agent resigns or is removed, the retiring
Subordination Agent or one or more of the Trustees may petition any court of
competent jurisdiction for the appointment of a successor Subordination Agent.
If the Subordination Agent fails to comply with Section 6.9 hereof
(to the extent applicable), one or more of the Trustees or one or more of the
Liquidity Providers may petition any court of competent jurisdiction for the
removal of the Subordination Agent and the appointment of a successor
Subordination Agent.
Notwithstanding the foregoing, no resignation or removal of the
Subordination Agent shall be effective unless and until a successor has been
appointed. No appointment of a successor Subordination Agent shall be effective
unless and until the Rating Agencies shall have delivered a Ratings
Confirmation.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS
SECTION 9.1. AMENDMENTS, WAIVERS, ETC. (a) This Agreement may not be
supplemented, amended or modified without the consent of each Trustee (acting,
except in the case of any amendment pursuant to Section 3.6(e)(v)(y) hereof and
the last sentence of this Section 9.1(a), with the consent of holders of
Certificates of the related Class evidencing interests in the related Trust
aggregating not less than a majority in interest in such Trust or as otherwise
authorized pursuant to the relevant Trust Agreement), the Subordination Agent
and each Liquidity Provider; PROVIDED, HOWEVER, that this Agreement may be
supplemented, amended or modified without the consent of any Trustee if such
supplement, amendment or modification cures an ambiguity or inconsistency or
does not materially adversely affect such Trustee or the holders of the related
Class of Certificates; PROVIDED FURTHER, HOWEVER, that, if such supplement,
amendment or modification would (x) directly or indirectly modify or supersede,
or otherwise conflict with, Section 2.2(b), Section 3.6(e), Section 3.6(f)(other
than the last sentence thereof), Section 3.6(l), 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, 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
any Trust evidenced by the Certificates issued by such Trust necessary to
consent to modify or amend any provision of this Agreement or to waive
compliance therewith or (ii) modify Section 2.4, 3.2 or 3.3 hereof, relating to
the distribution of monies received by the Subordination Agent hereunder from
the Equipment Notes or pursuant to the Liquidity Facilities. Nothing contained
in this Section shall require the consent of a Trustee at any time following the
payment of Final Distributions with respect to the related Class of
Certificates. If the Replacement Liquidity Facility for any Liquidity Facility
in accordance with Section 3.6(e) hereof is to be comprised of more than one
instrument 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 for an
individual Trust.
(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 each Series of
such Equipment Notes from the Trustee of the Trust which holds such Equipment
Notes and shall vote or consent in accordance with the directions of such
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.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. TERMINATION OF INTERCREDITOR AGREEMENT. Following
payment of Final Distributions with respect to each Class of Certificates and
the payment in full of all Liquidity Obligations to the Liquidity Providers and
PROVIDED that there shall then be no other amounts due to the
Certificateholders, the Trustees, the Liquidity Providers and the Subordination
Agent hereunder or under the Trust Agreements, and that the commitment of the
Liquidity Providers under the Liquidity Facilities shall have expired or been
terminated, this Agreement and the trusts created hereby shall terminate and
this Agreement shall be of no further force or effect. Except as aforesaid or
otherwise provided, this Agreement and the trusts created hereby shall continue
in full force and effect in accordance with the terms hereof.
SECTION 10.2. INTERCREDITOR AGREEMENT FOR BENEFIT OF TRUSTEES,
LIQUIDITY PROVIDERS AND SUBORDINATION AGENT SECTION 10.2. Intercreditor
Agreement for Benefit of Trustees, Liquidity Providers and 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 Trustees, the Liquidity Providers and the
Subordination Agent any legal or equitable right, remedy or claim under or in
respect of this Agreement.
SECTION 10.3. NOTICES. Unless otherwise expressly specified or
permitted by the terms hereof, all notices, requests, demands, authorizations,
directions, consents, waivers or documents provided or permitted by this
Agreement to be made, given, furnished or filed shall be in writing, mailed by
certified mail, postage prepaid, or by confirmed telecopy and
(i) if to the Subordination Agent, addressed to at its office at:
WILMINGTON TRUST COMPANY
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Trustee
Administration
Telecopy: (302) 651-8882
(ii) if to any Trustee, addressed to it at its office at:
WILMINGTON TRUST COMPANY
One Rodney Square
1100 N. Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust Trustee
Administration
Telecopy: (302) 651-8882
(iii) if to WestLB as Liquidity Provider, addressed to it at its
office at:
Westdeutsche Landesbank Girozentrale
Global Structured Finance
1211 Avenue of the Americas
New York, NY 10036
Attention: Alfred Heynen
Telephone: (212) 852-6115
Telecopy: (212) 869-7634
with a copy to:
Westdeutsche Landesbank Girozentrale
Loan Administration
1211 Avenue of the Americas
New York, NY 10036
Attention: Cheryl Wilson
Telephone: (212) 852-6152
Telecopy: (212) 302-7946
Whenever any notice in writing is required to be given by any Trustee or
Liquidity Provider or the Subordination Agent to any of the other of them, such
notice shall be deemed given and such requirement satisfied when such notice is
received. 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 ASSIGNS67. 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 Trustees and the Certificateholders, on the other hand,
this Agreement shall be a subordination agreement for purposes of Section 510 of
the United States Bankruptcy Code, as amended from time to time.
(b) Notwithstanding the provisions of this Agreement, if prior to the
payment in full to the Liquidity Providers of all Liquidity Obligations then due
and payable, any party hereto shall have received any payment or distribution in
respect of Equipment Notes or any other amount under the Indentures or other
Operative Agreements which, had the subordination provisions of this Agreement
been properly applied to such payment, distribution or other amount, would not
have been distributed to such Person, then such payment, distribution or other
amount shall be received and held in trust by such Person and paid over or
delivered to the Subordination Agent for application as provided herein.
(c) If any Trustee, any Liquidity Provider or the Subordination Agent
receives any payment in respect of any obligations owing hereunder (or, in the
case of the Liquidity Providers, in respect of the Liquidity Obligations), which
is subsequently invalidated, declared preferential, set aside and/or required to
be repaid to a trustee, receiver or other party, then, to the extent of such
payment, such obligations (or, in the case of the Liquidity Providers, such
Liquidity Obligations) intended to be satisfied shall be revived and continue in
full force and effect as if such payment had not been received.
(d) The Trustees (on behalf of themselves and the holders of
Certificates), the Liquidity Providers and the Subordination Agent confirm that
the payment priorities specified in Sections 2.4, 3.2 and 3.3 shall apply in all
circumstances, notwithstanding the fact that the obligations owed to the
Trustees and the holders of Certificates are secured by certain assets and the
Liquidity Obligations may not be so secured. The Trustees expressly agree (on
behalf of themselves and the holders of Certificates) not to assert priority
over the holders of Liquidity Obligations due to their status as secured
creditors in any bankruptcy, insolvency or other legal proceeding.
(e) Each of the Trustees (on behalf of themselves and the holders of
Certificates), the Liquidity Providers and the Subordination Agent may take any
of the following actions without impairing its rights under this Agreement:
(i) obtain a Lien on any property to secure any amounts owing to
it hereunder, including, in the case of the Liquidity Providers, the
Liquidity Obligations,
(ii) obtain the primary or secondary obligation of any other
obligor with respect to any amounts owing to it hereunder, including, in
the case of the Liquidity Providers, any of the Liquidity Obligations,
(iii) renew, extend, increase, alter or exchange any amounts
owing to it hereunder, including, in the case of the Liquidity Providers,
any of the Liquidity Obligations, or release or compromise any obligation
of any obligor with respect thereto,
(iv) refrain from exercising any right or remedy, or delay in
exercising such right or remedy, which it may have, or
(v) take any other action which might discharge a subordinated
party or a surety under applicable law;
PROVIDED, HOWEVER, that the taking of any such actions by any of the Trustees,
the Liquidity Providers or the Subordination Agent shall not prejudice the
rights or adversely affect the obligations of any other party under this
Agreement.
SECTION 10.10. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
SECTION 10.11. SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL;
WAIVER OF IMMUNITY. (a) Each of the parties hereto hereby irrevocably and
unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any other Operative Agreement, or
for recognition and enforcement of any judgment in respect hereof or
thereof, to the 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 and mail), postage
prepaid, to each party hereto at its address set forth in Section 10.3
hereof, or at such other address of which the other parties shall have
been notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
(b) EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF
THIS AGREEMENT AND THE RELATIONSHIP THAT IS BEING ESTABLISHED, including,
without limitation, contract claims, tort claims, breach of duty claims and all
other common law and statutory claims. Each of the parties warrants and
represents that it has reviewed this waiver with its legal counsel, and that it
knowingly and voluntarily waives its jury trial rights following consultation
with such legal counsel. THIS WAIVER IS IRREVOCABLE, AND CANNOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
(c) The Liquidity Provider hereby waives any immunity it may have
from the jurisdiction of the courts of the United States of America or of any
State and waives any immunity any of its properties located in the United States
of America 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 for each of the Trusts
By__________________________________________
Name:
Title:
WESTDEUTSCHE LANDESBANK GIROZENTRALE, acting
through its New York Branch
as Class A Liquidity Provider, Class B
Liquidity Provider and Class C
Liquidity Provider
By__________________________________________
Name:
Title:
By__________________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity except as
expressly set forth herein but solely as
Subordination Agent and trustee
By__________________________________________
Name:
Title:
------------------------------------------------------------
| CONFIDENTIAL: Subject to Restrictions on Dissemination |
| Set Forth in Section 8 of this Agreement |
------------------------------------------------------------
================================================================================
PARTICIPATION AGREEMENT ____
Dated as of April 21, 1998
Among
CONTINENTAL AIRLINES, INC.,
Lessee,
CALJET LLC,
Owner Participant,
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
Not in its individual capacity
except as expressly provided herein,
but solely as Owner Trustee,
Owner Trustee,
and
WILMINGTON TRUST COMPANY,
Not in its individual capacity
except as expressly provided herein,
but solely as Mortgagee, Subordination Agent
under the Intercreditor Agreement and Pass Through
Trustee under each of the Pass Through Trust Agreements,
Mortgagee and Loan Participant
------------------------------------------------------------
One [McDonnell Douglas Model MD-80][Boeing Model 737-3T0]
Aircraft
Bearing Manufacturer's Serial No. _____
================================================================================
CONTENTS
SECTION 1. DEFINITIONS AND CONSTRUCTION................................. 2
SECTION 2. PARTICIPATION IN LESSOR'S COST;
ISSUANCE OF EQUIPMENT NOTES;
TERMINATION OF OBLIGATION TO
PARTICIPATE.................................................. 2
2.1 Participation in Lessor's Cost............................... 2
2.2 Nature of Obligations of Participants........................ 2
2.3 Termination of Obligation to Participate..................... 3
SECTION 3. SALE OF AIRCRAFT; COMMITMENT TO LEASE
AIRCRAFT..................................................... 3
3.1 Sale of Aircraft............................................. 3
3.1.1 Delivery........................................... 3
3.1.2 Purchase Price..................................... 3
3.1.3 Disclaimer......................................... 3
3.2 Commitment to Lease.......................................... 4
SECTION 4. PROCEDURE FOR PARTICIPATION IN
PAYMENT OF LESSOR'S COST;
POSTPONEMENT OF SCHEDULED CLOSING
DATE......................................................... 4
4.1 Notices of Scheduled Closing Date............................ 4
4.2 Payment of Lessor's Cost..................................... 5
4.3 Postponement of Scheduled Closing Date....................... 6
4.3.1 Postponement....................................... 6
4.3.2 Return of Funds.................................... 6
4.3.3 Investment of Funds................................ 6
4.4 Closing...................................................... 7
SECTION 5. CONDITIONS PRECEDENT......................................... 7
5.1 Conditions Precedent to Obligations of
Participants................................................. 7
5.1.1 Notice............................................. 7
5.1.2 Delivery of Documents.............................. 7
5.1.3 Other Commitments.................................. 10
5.1.4 Violation of Law................................... 11
5.1.5 Tax Law Change..................................... 11
5.1.6 Representations, Warranties and
Covenants.......................................... 11
5.1.7 No Event of Default................................ 12
5.1.8 No Event of Loss................................... 12
5.1.9 Title.............................................. 12
5.1.10 Certification...................................... 12
5.1.11 Section 1110....................................... 12
5.1.12 Filing............................................. 12
5.1.13 No Proceedings..................................... 13
5.1.14 Governmental Action................................ 13
5.1.15 Perfected Security Interest........................ 13
5.1.16 No Accidents....................................... 13
5.2 Conditions Precedent to Obligations of
Owner Trustee................................................ 13
5.2.1 Notice............................................. 14
5.2.2 Documents.......................................... 14
5.2.3 Other Conditions Precedent......................... 14
5.3 Conditions Precedent to Obligations of
Mortgagee.................................................... 14
5.3.1 Notice............................................. 14
5.3.2 Documents.......................................... 14
5.3.3 Other Conditions Precedent......................... 14
5.4 Conditions Precedent to Obligations of
Lessee....................................................... 15
5.4.1 Documents.......................................... 15
5.4.2 Sales Tax.......................................... 15
5.4.3 Other Conditions Precedent......................... 15
5.4.4 Tax Law Change..................................... 15
5.5 Post-Registration Opinion.................................... 16
SECTION 6. REPRESENTATIONS AND WARRANTIES............................... 16
6.1 Lessee's Representations and Warranties...................... 16
6.1.1 Organization; Qualification........................ 16
6.1.2 Corporate Authorization............................ 16
6.1.3 No Violation....................................... 16
6.1.4 Approvals.......................................... 17
6.1.5 Valid and Binding Agreements....................... 17
6.1.6 Litigation......................................... 17
6.1.7 Financial Condition................................ 18
6.1.8 Registration and Recordation....................... 18
6.1.9 Chief Executive Office............................. 19
6.1.10 No Default......................................... 19
6.1.11 No Event of Loss................................... 19
6.1.12 Compliance With Laws............................... 19
6.1.13 Securities Laws.................................... 19
6.1.14 Broker's Fees...................................... 20
6.1.15 Section 1110....................................... 20
6.1.16 Title.............................................. 20
6.2 Owner Participant's Representations and
Warranties................................................... 20
6.2.1 Organization, Etc.................................. 20
6.2.2 Authorization...................................... 20
6.2.3 No Violation....................................... 20
6.2.4 Approvals.......................................... 21
6.2.5 Valid and Binding Agreements....................... 21
6.2.6 Citizenship........................................ 21
6.2.7 No Liens........................................... 22
6.2.8 Investment by Owner Participant.................... 22
6.2.9 ERISA.............................................. 22
6.2.10 Litigation......................................... 22
6.2.11 Securities Laws.................................... 22
6.2.12 Broker's Fees...................................... 22
6.3 First Security's Representations and
Warranties................................................... 23
6.3.1 Organization, Etc.................................. 23
6.3.2 Corporate Authorization............................ 23
6.3.3 No Violation....................................... 23
6.3.4 Approvals.......................................... 24
6.3.5 Valid and Binding Agreements....................... 24
6.3.6 Citizenship........................................ 24
6.3.7 Chief Executive Office............................. 24
6.3.8 Title.............................................. 24
6.3.9 No Liens; Financing Statements..................... 25
6.3.10 Litigation......................................... 25
6.3.11 Securities Laws.................................... 25
6.3.12 Expenses and Taxes................................. 25
6.4 WTC's Representations and Warranties......................... 26
6.4.1 Organization, Etc.................................. 26
6.4.2 Corporate Authorization............................ 26
6.4.3 No Violation....................................... 26
6.4.4 Approvals.......................................... 27
6.4.5 Valid and Binding Agreements....................... 27
6.4.6 Citizenship........................................ 27
6.4.7 No Liens........................................... 28
6.4.8 Litigation......................................... 28
6.4.9 Securities Laws.................................... 28
6.4.10 Investment......................................... 28
6.4.11 Taxes.............................................. 28
6.4.12 Control............................................ 29
6.4.13 Broker's Fees...................................... 29
SECTION 7. COVENANTS, UNDERTAKINGS AND
AGREEMENTS................................................... 29
7.1 Covenants of Lessee.......................................... 29
7.1.1 Corporate Existence; U.S. Air
Carrier............................................ 29
7.1.2 Notice of Change of Chief
Executive Office................................... 29
7.1.3 Certain Assurances................................. 30
7.1.4 Securities Laws.................................... 31
7.2 Covenants of Owner Participant............................... 31
7.2.1 Liens.............................................. 31
7.2.2 Revocation of Trust Agreement...................... 32
7.2.3 Change of Situs of Owner Trust..................... 32
7.2.4 Compliance with Lease Provisions................... 33
7.2.5 LLC Agreement Matters.............................. 33
7.2.6 Regarding the Owner Trustee........................ 34
7.3 Covenants of First Security and Owner
Trustee...................................................... 34
7.3.1 Liens.............................................. 34
7.3.2 Other Business..................................... 34
7.3.3 Notice of Change of Chief
Executive Office................................... 34
7.3.4 Securities Act..................................... 35
7.3.5 Performance of Agreements.......................... 35
7.3.6 Release of Lien of Trust
Indenture.......................................... 35
7.3.7 Notices; Documents................................. 35
7.3.8 Filings............................................ 35
7.3.9 Trust Agreement.................................... 36
7.4 Covenants of WTC............................................. 36
7.4.1 Liens.............................................. 36
7.4.2 Securities Act..................................... 36
7.4.3 Performance of Agreements.......................... 37
7.4.4 Withholding Taxes.................................. 37
7.5 Covenants of Note Holders.................................... 37
7.5.1 Withholding Taxes.................................. 37
7.5.2 Transfer; Compliance............................... 37
7.6 Agreements................................................... 38
7.6.1 Owner Trustee Is Owner for All
Purposes........................................... 38
7.6.2 Commencement of Bankruptcy
Proceedings........................................ 39
7.6.3 Certain Bankruptcy Matters......................... 39
7.6.4 Quiet Enjoyment; Sale by Owner
Trustee Binding.................................... 40
7.6.5 Release of Lien of Trust
Indenture.......................................... 40
7.6.6 Non-Recourse....................................... 40
7.6.7 Other Documents; Amendment......................... 41
7.6.8 Consents........................................... 42
7.6.9 Insurance.......................................... 42
7.6.10 Extent of Interest of Note Holders................. 42
7.6.11 Foreign Registration............................... 42
7.6.12 [Intentionally Omitted.]........................... 45
7.6.13 Interest in Certain Engines........................ 46
SECTION 8. CONFIDENTIALITY.............................................. 46
SECTION 9. INDEMNIFICATION AND EXPENSES................................. 47
9.1 General Indemnity............................................ 47
9.1.1 Indemnity.......................................... 47
9.1.2 Exceptions......................................... 48
9.1.3 Separate Agreement................................. 51
9.1.4 Notice............................................. 52
9.1.5 Notice of Proceedings; Defense of
Claims; Limitations................................ 52
9.1.6 Information........................................ 53
9.1.7 Effect of Other Indemnities;
Subrogation; Further Assurances.................... 53
9.1.8 Refunds............................................ 54
9.2 Expenses..................................................... 54
9.2.1 Invoices and Payment............................... 54
9.2.2 Payment of Other Expenses.......................... 54
9.3 General Tax Indemnity........................................ 55
9.3.1 General............................................ 55
9.3.2 Certain Exceptions................................. 56
9.3.3 Payment............................................ 59
9.3.4 Contest............................................ 61
9.3.5 Refund............................................. 64
9.3.6 Tax Filing......................................... 64
9.3.7 Forms.............................................. 65
9.3.8 Non-Parties........................................ 65
9.3.9 Subrogation........................................ 65
9.3.10 Foreign Tax On Loan Payments....................... 65
9.4 Payments..................................................... 66
9.5 Interest..................................................... 66
9.6 Benefit of Indemnities....................................... 66
SECTION 10. ASSIGNMENT OR TRANSFER OF INTERESTS.......................... 67
10.1 Participants, Owner Trustee and Note
Holders...................................................... 67
10.1.1 Owner Participant.................................. 67
10.1.2 Owner Trustee...................................... 68
10.1.3 Note Holders....................................... 68
10.2 Effect of Transfer........................................... 69
SECTION 11. REFUNDING AND CERTAIN OTHER MATTERS.......................... 69
11.1 Refunding Generally.......................................... 69
11.1.1 Refunding Certificate.............................. 70
11.1.2 Financing Agreements............................... 70
11.1.3 Lease Amendments................................... 70
11.1.4 Security Agreements................................ 71
11.1.5 Expenses........................................... 71
11.1.6 Make Whole Amount.................................. 71
11.1.7 Return of Equipment Notes.......................... 71
11.2 Limitations on Obligation to Refund.......................... 71
11.3 Execution of Certain Documents............................... 73
11.4 ERISA........................................................ 73
11.5 Consent to Optional Redemptions.............................. 73
SECTION 12. SECTION 1110................................................. 73
SECTION 13. CHANGE OF CITIZENSHIP........................................ 74
13.1 Generally.................................................... 74
13.2 Owner Participant............................................ 74
13.3 Owner Trustee................................................ 75
13.4 Mortgagee.................................................... 75
SECTION 14. CONCERNING OWNER TRUSTEE..................................... 75
SECTION 15. MISCELLANEOUS................................................ 76
15.1 Amendments................................................... 76
15.2 Severability................................................. 76
15.3 Survival..................................................... 76
15.4 Reproduction of Documents.................................... 76
15.5 Counterparts................................................. 77
15.6 No Waiver.................................................... 77
15.7 Notices...................................................... 77
15.8 GOVERNING LAW; SUBMISSION TO JURISDICTION;
VENUE........................................................ 78
15.9 Third-Party Beneficiary...................................... 79
15.10 Entire Agreement............................................. 79
15.11 Further Assurances........................................... 79
ANNEX, SCHEDULES AND EXHIBITS
ANNEX A - Definitions
SCHEDULE 1 - Accounts; Addresses
SCHEDULE 2 - Commitments
SCHEDULE 3 - Certain Terms
EXHIBIT A-1 - Opinion of special counsel to Lessee
EXHIBIT A-2 - Opinion of special counsel to Lessee
regarding Section 1110
EXHIBIT B - Opinion of corporate counsel to Lessee
EXHIBIT C - Opinion of special counsel to Owner Trustee
EXHIBIT D - Opinion of special counsel to Mortgagee and
Loan Participant
EXHIBIT E - Opinion of special counsel in Oklahoma City,
Oklahoma
EXHIBIT F - Delivery Receipt
PARTICIPATION AGREEMENT ____
PARTICIPATION AGREEMENT ____, dated as of April 21, 1998 (this
"Agreement"), among (a) CONTINENTAL AIRLINES, INC., a Delaware corporation
("Lessee"), (b) CALJET LLC, a Delaware limited liability company ("Owner
Participant"), (c) FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity, except as expressly provided
herein, but solely as Owner Trustee (this and all other capitalized terms used
but not defined herein shall have the respective meanings ascribed thereto in
Section 1) (in its capacity as Owner Trustee, "Owner Trustee" or "Lessor," and
in its individual capacity, "First Security"), (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 each of the Pass Through Trust
Agreements, (each, a "Pass Through Trustee") and (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").
RECITALS
A. Lessee is the owner of the Aircraft, subject to the terms of the
Existing Security Agreement.
B. Lessee desires to sell the Aircraft to Owner Trustee, Owner Trustee
desires to purchase the Aircraft from Lessee and Lessee and Owner Trustee desire
that the Aircraft thereupon be leased to Lessee, in each case upon the terms and
subject to the conditions set forth herein.
C. In order to effectuate the foregoing, the parties hereto intend that (i)
subject, among other things, to Lessee obtaining the release of the Aircraft
from the Lien of the Existing Security Agreement, the Owner Trustee purchase the
Aircraft from the Lessee utilizing the proceeds of the sale of the Equipment
Notes to the Pass Through Trustees and the investment by Owner Participant, (ii)
the Aircraft be leased to Lessee and (iii) Owner Trustee mortgage, pledge and
assign to Mortgagee all of Owner Trustee's right, title and interest in the
Trust Indenture Estate to secure the Secured Obligations, including, without
limitation, Owner Trustee's obligations under the Equipment Notes.
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. 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 each 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) Each 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 such 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 such Pass Through Trustee for the related 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
each such 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 any Participant to perform its obligations hereunder shall not affect
the obligations of Lessee toward the other Participants, 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.
SECTION 3. SALE OF AIRCRAFT; COMMITMENT TO LEASE AIRCRAFT
3.1 SALE OF AIRCRAFT
Subject to the terms and conditions hereof, Lessee hereby agrees to sell to
Owner Trustee and Owner Trustee hereby agrees to purchase from Lessee the
Aircraft and the Aircraft Documents, on the following terms:
3.1.1 DELIVERY
The Aircraft shall be delivered by Lessee to Owner Trustee at such place as
may be designated by Lessee. Upon Lessee's delivery of the Aircraft to Owner
Trustee, Owner Trustee shall execute and deliver to Lessee a Delivery Receipt
therefor in the form annexed hereto as Exhibit F. This purchase and sale shall
not be effective as to the Aircraft unless and until the Aircraft is
concurrently delivered under the Lease. The Aircraft Documents shall be deemed
transferred to Owner Trustee and leased to Lessee simultaneously with the
Aircraft.
3.1.2 PURCHASE PRICE
The full purchase price for the Aircraft in the amount of Lessor's Cost
shall be paid to Lessee in immediately available funds on delivery of the
Aircraft.
3.1.3 DISCLAIMER
Lessee does not make, has not made and shall not be deemed to have made,
and expressly disclaims, any representation or warranty, express or implied, as
to:
(v) THE AIRWORTHINESS, VALUE, CONDITION, DESIGN, 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.
The foregoing disclaimer shall in no way affect or limit (i) Lessee's
obligations under the Operative Agreements, including without limitation Section
9 of this Agreement, or (ii) Lessee's representations and warranties in Section
6.1 of this Agreement, in the Aircraft Bill of Sale, including without
limitation the warranty of good title, or any other express representation or
warranty in any Operative Agreement.
3.2 COMMITMENT TO LEASE
Subject to the terms and conditions of this Agreement, concurrently with
the issuance of the Equipment Notes and the purchase of the Aircraft by the
Owner Trustee on the Closing Date, Owner Trustee shall lease the Aircraft to
Lessee, and Lessee shall lease the Aircraft from Owner Trustee, under the Lease.
SECTION 4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S
COST; POSTPONEMENT OF SCHEDULED CLOSING DATE
4.1 NOTICES OF SCHEDULED CLOSING DATE
Lessee agrees to give Participants, Owner Trustee, and Mortgagee at
least one Business Day's written notice of the Scheduled Closing Date, which
notice shall set forth Lessor's Cost and the amount of each Participant's
Commitment. Each Participant agrees that making available its respective
Commitment shall constitute a waiver of such notice. Owner Trustee and Mortgagee
shall be deemed to have waived such notice if Mortgagee shall have received from
each Participant funds in the full amount of its respective Commitment.
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 WTC's account no. 4478-0 at WTC,
Wilmington, Delaware ABA# 031100092 (contact: Bruce Bisson, tel. no.
302-651-8584), reference Continental Lease ____, 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 Lessee 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, and
in connection therewith execute the Delivery Receipt in the form of Exhibit
F hereto;
(ii) in consideration of the transfer of title to the Aircraft to
Owner Trustee, direct WTC to pay, from the funds made available to WTC
hereunder by the Participants, Lessor's Cost, by wire transfer of
immediately available funds to Lessee's account set forth in Schedule 1 or
as otherwise directed by Lessee;
(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
(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, the Closing shall be deemed adjourned to the next
Business Day or to such other Business Day prior to the Commitment Termination
Date as Lessee shall specify by written notice to each Participant, Owner
Trustee and Mortgagee, in which case the Owner Participant will keep its funds
available, and the Loan Participant shall comply with its obligations under
Section 5.01 of each applicable 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, together with interest or
income earned thereon, if the Closing fails to occur on the Scheduled Closing
Date.
4.3.3 INVESTMENT OF FUNDS
(a) If the Closing fails to occur on the Scheduled Closing Date, WTC shall,
if so instructed by Lessee, use reasonable efforts to invest, at the risk of
Lessee, the funds received by it from Participants in Cash Equivalents. Any such
obligations purchased by WTC, whether directly or through a repurchase
agreement, shall be held in trust by WTC for the benefit of the respective
Participants that provided such funds, and not as part of the Trust Estate or
the Trust Indenture Estate.
(b) If the Closing fails to occur on the Scheduled Closing Date, unless WTC
returns all funds to the Participants by 2:00 p.m., New York City time, on the
Scheduled Closing Date, Lessee shall, on the Scheduled Closing Date or on the
date funds are required to be returned to Participants pursuant to Section
4.3.2, reimburse each Participant that has made funds available pursuant to
Section 4.2 for the loss of the use of its funds an amount equal to the excess,
if any, of (i) interest at the Debt Rate on the amount of such funds for the
period from and including the Scheduled Closing Date to but excluding the
Closing Date or, if earlier, the day on which such Participant's funds are
returned if such return is made by 2:00 p.m., New York City time (or to but
excluding the next following Business Day if such return is not made by such
time) over (ii) any amount paid to such Participant in respect of interest or
income earned by WTC pursuant to Section 4.3.3(a).
(c) On the Closing Date or on the date funds are required to be returned to
Participants pursuant to Section 4.3.2, Lessee shall reimburse WTC, for the
benefit of Participants that provided funds which are invested by WTC hereunder,
for any losses incurred on such investments. All income and profits on the
investment of such funds shall be for the respective accounts of such
Participants, and WTC shall not be liable for failure to invest such funds or
for any losses incurred on such investments, except for its own negligence or
willful misconduct.
4.4 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.
SECTION 5. CONDITIONS PRECEDENT
5.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTICIPANTS
The obligation of each Participant to make the Dollar amount of its
respective Commitment available for payment as directed by the Owner Trustee on
the Closing Date 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) shall not be a
condition precedent to the obligation of Loan Participant and Section 5.1.15
shall not be a condition precedent to the obligation of Owner Participant.
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 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 Equipment Notes dated the Closing Date; PROVIDED, that only
the Subordination Agent shall receive the authenticated Equipment Notes;
(viii) the Bills of Sale;
(ix) the Existing Security Agreement Release;
(x) the broker's report and insurance certificates required by Section
11 of the Lease;
(xi) (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, Owner Participant, First Security and
WTC as to the person or persons authorized to execute and deliver the
relevant Operative Agreements on behalf of such party; (C) a copy of the
Certificate of Formation and Limited Liability Company Agreement of the
Owner Participant, certified by the Manager of the Owner Participant; and
(D) 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 First Security and WTC, certified as of the Closing Date by the
Secretary or an Assistant or Attesting Secretary of First Security and WTC,
respectively, which authorize the execution, delivery and performance by
First Security 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 consummation of the transactions contemplated by
this Agreement and the taking of all corporate proceedings in connection
therewith;
(xii) 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);
(xiii) an Officer's Certificate of First Security, 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);
(xiv) 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);
(xv) 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, a 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);
(xvi) an application for registration of the Aircraft with the FAA in
the name of Owner Trustee; PROVIDED, that only special counsel in Oklahoma
City, Oklahoma shall receive the sole executed copy thereof for filing with
the FAA;
(xvii) the Financing Statements;
(xviii) the following opinions of counsel, in each case dated the
Closing Date:
(A) an opinion of Hughes Hubbard & Reed LLP, special counsel to
Lessee, (x) substantially in the form of Exhibit A-1 and (y)
substantially in the form of Exhibit A-2;
(B) an opinion of Lessee's Legal Department, substantially in the
form of Exhibit B;
(C) an opinion of Ray, Quinney & Nebeker, special counsel to
Owner Trustee, substantially in the form of Exhibit C;
(D) an opinion of Richards, Layton & Finger, special counsel to
Mortgagee and Loan Participant, substantially in the form of Exhibit
D;
(E) an opinion of Lytle Soule & Curlee, special counsel in
Oklahoma City, Oklahoma, substantially in the form of Exhibit E;
(xix) a copy of a current, valid Standard Certificate of Airworthiness
for the Aircraft duly issued by the FAA;
(xx) a copy of First Security's filing with the Banking Department of
New York State in connection with First Security's qualification under
Section 131.3 of the New York State Banking Law;
(xxi) an appraisal or appraisals from an Appraiser, which appraisal or
appraisals shall be reasonably satisfactory in form and substance to Owner
Participant and Lessee; provided, that only Owner Participant and Lessee
shall receive copies of such appraisal or appraisals;
(xxii) the Participants and their respective counsel shall have
received copies of such documents and papers as such Participants may
reasonably request, except in the case of parties other than Owner
Participant and its special counsel, the Tax Indemnity Agreement.
5.1.3 OTHER COMMITMENTS
Each other Participant shall have made available the Dollar amount of its
Commitment as directed by Owner Trustee 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 Participant
to make the Dollar amount of its Commitment available or, in the case of any
Loan Participant, to acquire an Equipment Note or to realize the benefits of the
security afforded by the Trust Indenture.
5.1.5 TAX LAW CHANGE
In respect of Owner Participant, no Adverse Change in Tax Law shall have
been enacted, promulgated or issued on or prior to the Closing Date. Owner
Participant agrees to consider promptly, and to consult with Lessee concerning
any such Adverse Change in Tax Law and to advise Lessee and Loan Participant
promptly if Owner Participant determines that an Adverse Change in Tax Law which
has been enacted or promulgated or, if proposed, has a substantial likelihood of
becoming effective, would cause Owner Participant to elect not to close with
respect to the Aircraft. At any time on or before the Closing Date, Owner
Participant may notify Lessee and Loan Participant that Owner Participant elects
not to close as a result of the enactment, promulgation or issuance of any
Adverse Change in Tax Law on or before the Closing Date, specifying such Adverse
Change in Tax Law; and failure to give such notice on or before the Closing Date
shall preclude Owner Participant from not closing with respect to such Aircraft
as a result of any Adverse Change in Tax Law.
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 sale, 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
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 (subject to filing and recordation of
the FAA Bill of Sale with the FAA) to the Aircraft, 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, (c) the beneficial interest of Owner Participant created by the
Trust Agreement, (d) Liens permitted by clause (d) (solely for taxes not yet
due) of Section 6 of the Lease and (e) Liens permitted by clause (e) of Section
6 of the Lease.
5.1.10 CERTIFICATION
The Aircraft shall have been duly certificated by the FAA as to type and
airworthiness.
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 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 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.
5.1.15 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.
5.1.16 NO ACCIDENTS
On or prior to the Closing Date, no accident or incident not disclosed to
the Manager prior to April 9, 1998 has occurred with respect to the Aircraft
which could reasonably be expected to materially adversely affect the value,
utility or remaining useful life of the Aircraft.
5.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF OWNER TRUSTEE
The obligation of Owner Trustee to direct the Participants to apply the
Commitments to pay Lessor's Cost 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 sell the Aircraft and to lease the Aircraft as
Lessee on the Closing Date 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
delivery of the Aircraft on the Closing Date 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 (as to all
Participants), 5.1.4, 5.1.5, 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.
5.4.4 TAX LAW CHANGE
No Adverse Change in Tax Law shall have been enacted, promulgated or
proposed on or prior to the Closing Date. Lessee agrees to consider promptly,
and to consult with Owner Participant concerning, any such Adverse Change in Tax
Law and to advise Owner Participant and Loan Participant promptly if Lessee
determines that an Adverse Change in Tax Law which has been enacted or
promulgated or, if proposed, has a substantial likelihood of becoming effective,
would cause Lessee to elect not to close the transactions contemplated by the
Lease and this Agreement. At any time on or before the Closing Date, Lessee may
notify Owner Participant and Loan Participant that Lessee elects not to close
the transactions contemplated by the Lease and this Agreement as a result of the
enactment, promulgation or proposal of any Adverse Change in Tax Law on or
before the Closing Date, specifying such Adverse Change in Tax Law.
5.5 POST-REGISTRATION OPINION
Promptly upon the registration of the Aircraft and the recordation of the
FAA Filed Documents pursuant to the Act, Lessee 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, 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 (x) obtaining the
Existing Security Agreement Release and related Financing Statements, (y) the
filing of the FAA Filed Documents and the Financing Statements (and continuation
statements periodically) and (z) 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. The sale of
the Aircraft by Lessee to Owner Trustee pursuant to this Agreement does not
constitute a fraudulent conveyance or fraudulent transfer by Lessee.
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 filed by Lessee with
the SEC subsequent to such Form 10-K and on or prior to April 1, 1998, 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, (b) any subsequent Quarterly Report
on Form 10-Q or Current Report on Form 8-K filed by Lessee with the SEC on or
prior to April 1, 1998, or (c) any prospectus or prospectus supplement filed by
Lessee with the SEC in connection with the offering of the Pass Through
Certificates.
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 placards 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 CHIEF EXECUTIVE OFFICE
The chief executive office (as such term is defined in Article 9 of the
UCC) of Lessee is located at 2929 Allen Parkway, Houston, Texas 77019.
6.1.10 NO DEFAULT
No event which, if the Aircraft were subject to the Lease, constitutes a
Lease Default or Lease Event of Default has occurred and is continuing.
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, except for
fees payable to Lessee's Advisor, if any.
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 as provided in the Lease in the event of a case under Chapter 11 of the
Bankruptcy Code in which Lessee is a debtor.
6.1.16 TITLE
On the Closing Date, Lessee will deliver to Owner Trustee good title to the
Aircraft, free and clear of all Liens (other than Permitted Liens).
6.2 OWNER PARTICIPANT'S REPRESENTATIONS AND WARRANTIES
Owner Participant represents and warrants to Lessee, Loan Participant,
Subordination Agent, Owner Trustee and Mortgagee that:
6.2.1 ORGANIZATION, ETC.
Owner Participant is a limited liability company duly organized, validly
existing and in good standing under the Laws of the State of Delaware, has 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 AUTHORIZATION
Owner Participant has taken, or caused to be taken, all necessary action
(including, without limitation, the obtaining of any consent or approval
required by its governing documents) 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 governing documents 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 a Citizen of the United States.
6.2.7 NO LIENS
On the Closing Date, there are no Lessor Liens attributable to Owner
Participant or any Member thereof 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 is being
acquired by it for its own account, for investment and not with a view to any
resale or distribution thereof, except that, subject to the restrictions on
transfer set forth in Section 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 to be used by Owner Participant to acquire or hold its
interests in the Trust Estate to be acquired by it under this Agreement directly
or indirectly constitutes assets of a Plan.
6.2.10 LITIGATION
There are no pending or, to the Actual Knowledge of Owner Participant,
threatened actions or proceedings against Owner Participant or any Member
thereof before any court, governmental body, arbitration board, administrative
agency or tribunal which, if determined adversely to Owner Participant or such
Member, would materially adversely affect the ability of Owner Participant to
perform its obligations under 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 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 FIRST SECURITY'S REPRESENTATIONS AND WARRANTIES
First Security represents and warrants to Lessee, Owner Participant, Loan
Participants, Subordination Agent and Mortgagee that:
6.3.1 ORGANIZATION, ETC.
First Security is a national banking association duly organized, validly
existing and in good standing under the Laws of the United States, holding a
valid certificate to do business as a national banking association with banking
authority to execute and deliver, and perform its obligations under, the Owner
Trustee Agreements.
6.3.2 CORPORATE AUTHORIZATION
First Security has taken, or caused to be taken, all necessary corporate
action (including, without limitation, the obtaining of any consent or approval
of stockholders required by Law or by its Articles of Association or By-Laws) to
authorize the execution and delivery by First Security, in its individual
capacity and as Owner Trustee, of each of the Owner Trustee Agreements, and the
performance of its obligations thereunder.
6.3.3 NO VIOLATION
The execution and delivery by First Security, in its individual capacity
and as Owner Trustee of the Owner Trustee Agreements, the performance by First
Security, in its individual capacity and as Owner Trustee, of its obligations
thereunder and the consummation by First Security in its individual capacity and
as Owner Trustee on the 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 First Security, (b) violate any Law of the State of Utah or federal
banking Law applicable to or binding on Owner Trustee or First Security or (c)
violate or constitute any default under(other than any violation or default that
would not result in a Material Adverse Change to First Security, 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 First
Security, in its individual capacity and as Owner Trustee, or any of its
subsidiaries under, any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, lease, loan or other material agreement, instrument
or document to which First Security, in its individual capacity and as Owner
Trustee, is a party or by which First Security, in its individual capacity and
as Owner Trustee, or any of its properties is or may be bound or affected.
6.3.4 APPROVALS
The execution and delivery by First Security, in its individual capacity
and as Owner Trustee, of the Owner Trustee Agreements, the performance by First
Security, in its individual capacity and as Owner Trustee, of its obligations
thereunder and the consummation by First Security, 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 First Security 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 First Security, in its individual capacity or as Owner Trustee, as
the case may be, and constitute the legal, valid and binding obligations of
First Security, in its individual capacity and as Owner Trustee, and, assuming
the due authorization, execution and delivery thereof by the other party or
parties thereto, are enforceable against First Security, in its individual
capacity and as Owner Trustee, in accordance with the respective terms thereof,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar Laws affecting the
rights of creditors generally and general principles of equity, whether
considered in a proceeding at law or in equity.
6.3.6 CITIZENSHIP
On the Closing Date, First Security is a Citizen of the United States.
6.3.7 CHIEF EXECUTIVE OFFICE
The chief executive office (as such term is defined in Article 9 of the
UCC) of Owner Trustee is located at 79 South Main Street, Salt Lake City, Utah
84111.
6.3.8 TITLE
On the Closing Date, Owner Trustee shall have received whatever title as
was conveyed to it by Lessee.
6.3.9 NO LIENS; FINANCING STATEMENTS
On the Closing Date, there are no Lessor Liens attributable to First
Security or Owner Trustee in respect of all or any part of the Aircraft, Trust
Estate or the Trust Indenture Estate. Except for the Financing Statements, it
has not, either in its individual capacity or as Owner Trustee, executed any UCC
financing statements relating to the Aircraft or the Lease.
6.3.10 LITIGATION
There are no pending or, to the Actual Knowledge of First Security,
threatened actions or proceedings against First Security or Owner Trustee before
any court, governmental body, arbitration board, administrative agency or
tribunal which, if determined adversely to First Security, would materially
adversely affect the ability of First Security or Owner Trustee to perform its
obligations under the Owner Trustee Agreements.
6.3.11 SECURITIES LAWS
Neither First Security, nor any person authorized to act on its behalf, has
directly or indirectly offered any beneficial interest or Security relating to
the ownership of the Aircraft or any interest in the Trust Estate or any of the
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, any 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.
6.4 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 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, a 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, a 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, a 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, a 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 Mortgagee, a 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, a 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, a Pass
Through Trustee or Subordination Agent, is a party or by which WTC, in its
individual capacity or as Mortgagee, a 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, a 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, a 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, a 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, a Pass Through Trustee or
Subordination Agent, as the case may be, and are enforceable against WTC, in its
individual capacity or as Mortgagee, a 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, a 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, a 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, a Pass Through Trustee or Subordination Agent, as the case may
be, to perform its obligations under 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 Trustees, 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 any 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
such 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 such Pass
Through Trustee or WTC, as the case may be, for services rendered in connection
with the transactions contemplated by any of the Pass Through Trust Agreements),
and there are no Taxes payable by any 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 any such 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 any such Pass
Through Trustee or WTC, as the case may be, for services rendered in connection
with the transactions contemplated by any of the Pass Through Trust Agreements),
and, assuming that the trusts created by the Pass Through Trust Agreements will
not be taxable as corporations, but, rather, each will be characterized as a
grantor trust under subpart E, Part I of Subchapter J of the Code or as a
partnership under Subchapter K of the Code, such trusts 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, any 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.
SECTION 7. COVENANTS, UNDERTAKINGS AND AGREEMENTS
7.1 COVENANTS OF LESSEE
Lessee covenants and agrees, at its own cost and expense, 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 relocation of its chief executive office (as such term is defined in Article
9 of the UCC) from its then present location and will promptly take any action
required by Section 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 refiling of the Lease, the Trust Agreement and the
Trust Indenture and the respective supplements thereto, including, without
limitation, Lease Supplement No. 1 and the 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. Lessee shall furnish to
Owner Participant or Owner Trustee such information (other than with respect to
the citizenship of Owner Participant and Owner Trustee) in Lessee's possession
or otherwise reasonably available to Lessee as may be required to enable Owner
Participant or Owner Trustee to make application for registration of the
Aircraft under the Act (subject to Lessee's rights under Section 7.1.2 of the
Lease) and shall pay or cause to be paid all out-of-pocket costs and expenses in
connection therewith (including, without limitation, reasonable attorneys' fees
and disbursements).
(c) Lessee, at its sole cost and expense, will cause the FAA Filed
Documents, the Financing Statements and all continuation statements (and any
amendments necessitated by any combination, consolidation or merger pursuant to
Section 13.2 of the Lease, or any relocation of its chief executive office) in
respect of the Financing Statements to be prepared and, subject only to the
execution and delivery thereof by Owner Trustee and 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).
(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, rerecording and
refiling of the Operative Agreements and any supplements and amendments thereto
as is necessary to establish, perfect and protect Owner Trustee's and
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, promptly take such action as may be necessary
to discharge any Lessor Lien attributable to Owner Participant on all or any
part of the Trust Estate, the Trust Indenture Estate or the Aircraft and (c)
will 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 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 (i) Lessee
prior to the end of the Term, and (ii) Mortgagee, so long as the Lien of the
Trust Indenture has not been discharged, 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 indemnify Owner
Participant, the Note Holders and the Pass Through Trustees against and hold
them harmless from any Taxes or loss of Tax benefits described in the
assumptions in the Tax Indemnity Agreement resulting from such change in the
situs of the Trust, (b) the rights and obligations under the Operative
Agreements of Owner Participant, the Note Holders, Pass Through Trustees 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 reasonably be requested by Mortgagee
to protect and maintain the perfection and priority of such Lien, (d) Owner
Participant, Pass Through Trustees and Mortgagee shall have received an opinion
or opinions of counsel (which counsel is reasonably satisfactory to Owner
Participant, Pass Through Trustees and Mortgagee) in scope, form and substance
reasonably satisfactory to Owner Participant, Pass Through Trustees 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 Trustees or
Mortgagee may reasonably request, (e) if such removal involves the replacement
of Owner Trustee, then Owner Participant, Pass Through Trustees 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
Trustees and Mortgagee covering the matters described in the opinion delivered
pursuant to Section 5.1.2(xviii)(C) and (f) Lessee shall indemnify and hold
harmless Owner Participant, Note Holders, Pass Through Trustees and First
Security, in its individual capacity and as Owner Trustee, on a net after-tax
basis against any and all reasonable out-of-pocket costs and expenses including
attorneys' fees and disbursements, fees and expenses of any new owner trustee,
registration, recording or filing fees and taxes incurred by Owner Participant,
Note Holders, Pass Through Trustees 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.
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 LLC AGREEMENT MATTERS
Owner Participant will, solely for the benefit of the Loan Participant,
each Note Holder and Mortgagee, so long as any Equipment Note is outstanding,
comply with the provisions of Sections 2.7, 11.1(b) and 13.13, the last sentence
to Section 13.14 and the proviso to the last sentence of Section 13.6 of the
Limited Liability Company Agreement. In addition, so long as any Equipment Note
is outstanding, Lessee will not (i) become the beneficial owner, directly or
indirectly, of more than 75% of the membership interest in the Owner Participant
or (ii) be or permit any Affiliate of Lessee to be the "Manager" (as defined in
the Limited Liability Company Agreement) of Owner Participant or a Transferee of
Owner Participant.
7.2.6 REGARDING THE OWNER TRUSTEE
Owner Participant will instruct Owner Trustee as necessary in order for
Owner Trustee to perform its obligations under each Owner Trustee Agreement.
7.3 COVENANTS OF FIRST SECURITY AND OWNER TRUSTEE
First Security, in its individual capacity and/or as Owner Trustee, as
provided below, covenants and agrees with Lessee, Owner Participant, each Note
Holder and Mortgagee as follows:
7.3.1 LIENS
First Security (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, promptly take such action as
may be necessary to discharge any Lessor Lien attributable to First Security or
Owner Trustee on all or any part of the Trust Estate, the Trust Indenture Estate
or the Aircraft and (c) will personally hold harmless and indemnify Lessee,
Owner Participant, each 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 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 CHIEF EXECUTIVE OFFICE
First Security, in its individual capacity and as Owner Trustee, will give
Lessee, each Participant and Mortgagee 30 days' prior written notice of any
relocation of its chief executive office (as such term is defined in Article 9
of the UCC) from its then present location and will promptly take any action
required by Section 7.3.8 as a result of such relocation.
7.3.4 SECURITIES ACT
First Security, in its individual capacity and as Owner Trustee, will not
directly or indirectly offer any beneficial interest or Security relating to the
ownership of the Aircraft or any interest in the Trust Estate or any of the
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 First Security in its individual
capacity or as Owner Trustee, any responsibility with respect to any such offer,
sale or solicitation by any other party hereto.
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 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 relocation of its chief executive
office), prepared and delivered to it by Lessee required to perfect Owner
Trustee's title to the Aircraft and the liens of and security interests granted
by the Trust Indenture (or to maintain such perfection) and to make such title,
liens and security interests valid and enforceable.
7.3.9 TRUST AGREEMENT
Each of First Security 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 First Security 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, each 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 personally 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, 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, a 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, a Pass Through Trustee or
Subordination Agent, as the case may be, shall perform its obligations under the
Indenture 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 or Section 11 hereof, 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, a 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).
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, First Security, 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,
First Security, Owner Trustee, WTC or Mortgagee from filing any claim against
the Trust Estate in any case commenced against the Trust Estate.
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,
First Security or Owner Participant is required, by reason of First Security or
Owner Participant being held to have recourse liability to any Note Holder or
Mortgagee directly or indirectly (other than the recourse liability of First
Security or Owner Participant under this Agreement, the Trust Indenture or by
separate agreement), to make payment on account of any amount payable as
principal, Make-Whole Amount, if any, interest or other amounts on the Equipment
Notes, and (c) any Note Holder or Mortgagee actually receives any Excess Amount,
as defined below, which reflects any payment by First Security or Owner
Participant on account of (b) above, then such Note Holder or Mortgagee, as the
case may be, shall promptly refund to First Security or Owner Participant
(whichever shall have made such payment) such Excess Amount.
For purposes of this Section 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 First Security or Owner Participant had not become
subject to the recourse liability referred to in clause (b) above. 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 First Security or Owner Participant under this Agreement (other than as
referred to in clause (b) above) or the Trust Indenture (and any exhibits or
annexes thereto) or from retaining any amount paid by Owner Participant under
Sections 2.13 or 4.03 of the Trust Indenture.
7.6.4 QUIET ENJOYMENT; SALE BY OWNER TRUSTEE BINDING
(a) Owner Participant, each 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 the Trust Indenture, including payment of all amounts then due and
payable to each Liquidity Provider as Supplemental Rent, 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 First
Security and (b) they will look solely to the income and proceeds from the Trust
Estate and the Trust Indenture Estate to the extent available for distribution
to Note Holder or Mortgagee as provided in the Trust Indenture and that neither
Owner Participant nor First Security 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 First Security 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 First Security, 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
adversely affect such party without the prior written consent of such party.
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 Section 2.05 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) unless a Lease Event of Default shall have occurred and be
continuing, any other provision of the Trust Indenture or Equipment Notes in a
manner that could materially adversely affect Lessee. Mortgagee and Owner
Trustee agree to promptly 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 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
Each Participant, each Pass Through Trustee, Subordination Agent, Owner
Trustee and Mortgagee 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 Trustees, 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 to the extent such
insurance would limit or otherwise adversely affect the coverage of any
insurance required to be obtained or maintained by Lessee pursuant to Section 11
and Annex D of the Lease.
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 Note Holder, and all other sums, then due and payable to such
Note 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 at such time on a lump sum basis
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;
(B) no Lease Event of Default or Special 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;
(D) such country is a Permitted Country with which the United States
then maintains normal diplomatic relations, or, if Taiwan, the
United States then maintains diplomatic relations at least as
good as those in effect on the Closing Date;
(ii) the Owner Trustee and Mortgagee shall have received an opinion in
form and substance reasonably satisfactory to Owner Participant (subject to
customary exceptions) from counsel qualified in the laws of the relevant
jurisdiction reasonably satisfactory to the Owner Participant addressed to
each such party to the effect that:
(A) such country would recognize the Owner Trustee's ownership
interest in the Aircraft, 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) the 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 the Owner Trustee and the Mortgagee on or prior to the
effective date of such change in registration);
(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 jurisdiction (or the laws of the jurisdiction
to which the laws of such jurisdiction 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) the 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 the 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 the
Owner Trustee, the Owner Participant or the Mortgagee (or any
Affiliate thereof), as the case may be, for the Owner Trustee, the
Owner Participant or the Mortgagee to qualify to do business in such
jurisdiction as a result of such reregistration in order to exercise
any rights or remedies with respect to the Aircraft pursuant to the
Lease;
(E) there is no tort liability of the owner or lessor of an
aircraft not in possession thereof under the laws of such jurisdiction
(it being agreed that, in the event such latter opinion cannot be
given in a form satisfactory to the Owner Participant, such opinion
shall be waived if insurance reasonably satisfactory to the Owner
Participant is provided to cover such risk); and
(F) unless Lessee shall have agreed to provide insurance 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, Mortgagee and Owner Participant 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;
(ii) of the payment by Lessee of all reasonable out-of-pocket expenses
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,
Owner Participant 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, and (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
(iii)to the effect that the tax and other indemnities in favor of
each person named as an indemnitee under any other Operative
Agreement afford each such person substantially the same
protection as provided prior to such change of registration (or
Lessee shall have agreed upon additional indemnities that,
together with such original indemnities, in the reasonable
judgment of Lessor, Owner Participant and Mortgagee, afford such
protection).
(c) Notwithstanding anything to the contrary contained in this Section
7.6.11, Section 7.1.2 of the Lease and paragraph (e) of Annex A to the Lease,
Lessee may not reregister the Aircraft pursuant to Section 7.1.2 of the Lease
and this Section 7.6.11 so long as a Lease Event of Default or Special Default
has occurred and is continuing.
7.6.12 [INTENTIONALLY OMITTED.]
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 and Mortgagee shall
take commercially reasonable actions to keep Annexes B, C and D and Schedules 1,
2, 3 and 4 to the Lease, the Participation Agreement, and the Tax Indemnity
Agreement confidential and shall not disclose, or cause to be disclosed, the
same to any Person, except (A) to prospective and permitted transferees of
Lessee's, Owner Participant's, a 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, a 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 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 any Pass Through Trustee, to a nationally
recognized rating agency for the purpose of obtaining a rating on the Equipment
Notes or the Pass Through Trust Certificates or to support an NAIC rating for
the Equipment Notes,(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 or (G) to the extent
information becomes publicly available other than through disclosure by such
Person in violation of this Agreement; PROVIDED, that any and all disclosures
permitted by clauses (C), (D), (E), (F) or (G) 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
Whether or not any of the transactions contemplated hereby are consummated,
Lessee shall indemnify, protect, defend and hold harmless each Indemnitee from,
against and in respect of, and shall pay on 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;
(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; and
(e) In the case of the Owner Participant and the Owner Trustee, any failure
of a refunding or refinancing transaction to occur pursuant to Section 11 after
the Mortgagee has given notice thereof to the Note Holders pursuant to Section
2.12(b) of the Trust Indenture and such notice has not been effectively revoked
pursuant to the terms of such Section 2.12(b).
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;
(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 by
Lessee of its obligations pursuant to the terms of the Lessee Operative
Agreements) that occur after the earliest of: (i) with respect to the Airframe,
any Engine or any Part, the return of possession (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 shall be
entitled to exercise remedies under such Section 15) or (ii) the termination of
the Term in accordance 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 shall be entitled to exercise remedies under such Section
15);
(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 or Section 11 hereof;
(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 transfers contemplated by Section 4.5 of the Lease and for
out-of-pocket costs and expenses incurred as a result of such Transfer, if, at
the time of such Transfer, a Lease Event of Default shall have occurred and be
continuing;
(e) To the extent 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 First Security, 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 Trust 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 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 or Owner
Participant), 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 Trustees or Owner Participant), to the extent attributable to the
failure of a Pass Through Trustee to distribute funds received and distributable
by it in accordance with the Pass Through Trust Agreements, (v) 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, (vi) 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, (vii) 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, and (viii) with respect to the Pass
Through Trustees, to the extent attributable to the negligence or willful
misconduct of a Pass Through Trustee in the distribution of funds received and
distributable by it in accordance with the Pass Through Trust Agreements.
(k) Other than during the continuation of a Lease Event of Default, 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 any related Indemnitee of Owner
Participant (not taken at the request of the Lessee) (for purposes hereof, First
Security shall not be considered a Related Indemnitee of Owner Participant);
(o) For any Lessor Lien attributable to such Indemnitee or any related
Indemnitee (for purposes hereof, neither the Owner Trust or First Security shall
be considered a related Indemnitee of the Owner Participant);
(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) Except in respect of circumstances referenced in Section 9.1.1(e), 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;
(r) To the extent incurred by or asserted against an Indemnitee (other than
as a result of Lessee's action or inaction) as a result of any "prohibited
transaction", within the meaning of Section 406 of ERISA or Section 4975(c)(1)
of the Code;
(s) To the extent attributable to any increased obligation of Lessee
resulting from a Transfer of Owner Participant's interests in the Trust Estate
or Trust Agreement pursuant to Section 10.1.1; or
(t) With respect to First Security, or any related Indemnitee, to the
extent attributable to the deregistration of the Aircraft under the Act as a
result of First Security's (or any related Indemnitee of First Security) 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 First
Security, or any related Indemnitee of First Security (not taken at the request
of the Lessee).
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.
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 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, proceeding or
compromise any such Expense during the continuance of any Lease Event of Default
arising under Section 14.1 of the Lease. 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 Article VII 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 INVOICES AND PAYMENT
Each of the Owner Trustee, Mortgagee, the Owner Participant, Lessee, the
Pass Through Trustees, and the Subordination Agent shall promptly submit to
Lessee for its prompt approval (which shall not be unreasonably withheld) copies
of invoices in reasonable detail of the Transaction Expenses for which it is
responsible for providing information as they are received (but in no event
later than the 90th day after the Closing Date). If so submitted and approved,
the Owner Participant agrees promptly, but in any event no later than the 105th
day after the Closing Date, to pay (but not in excess of 1% of Lessor's Cost)
Transaction Expenses. Lessee shall be obligated to pay directly any and all
Transaction Expenses which are in excess of 1% of Lessor's Cost. If Owner
Participant shall fail to pay any Transaction Expense that it is obligated to
pay hereunder, Lessee shall pay such Transaction Expense. Any such payment by
Lessee shall not affect Owner Participant's obligations or Lessee's rights
against Owner Participant for its failure to make any such payment.
9.2.2 PAYMENT OF OTHER EXPENSES
Lessee shall pay (i) the ongoing fees and expenses of Owner Trustee and
Mortgagee in performing their obligations under the Operative Agreements, and
(ii) all reasonable out-of-pocket costs and expenses (including the reasonable
fees and disbursements of counsel) incurred by any Participant attributable to
(A) any transfer of title to the Aircraft or any Engine contemplated by Section
4.5 of the Lease or (B) any waiver, amendment or modification of any Operative
Agreement to the extent requested by Lessee.
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, state or local withholding taxes on, based on or measured by
gross or net income), and in the event that Lessee shall be required by
applicable law to make any such withholding or deduction for any such payment
(x) 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 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, Stipulated Loss
Value (and amounts determined by reference thereto), and 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 or governmental subdivision of the United States
or therein (including any state or local Taxing Authority) (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);
(b) imposed on a Tax Indemnitee by any Taxing Authority or governmental
subdivision thereof or therein outside of the United States (including any
Taxing Authority in or of a territory, possession or commonwealth of the United
States) (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), (A) sales, use,
license or property Taxes, or (B) any Taxes imposed by any Taxing Authority
(other than a Taxing Authority within whose jurisdiction such Tax Indemnitee is
incorporated or organized or maintains its principal place of business) if such
Tax Indemnitee would not have been subject to Taxes of such type by such
jurisdiction but for (I) the location, use or operation of the Aircraft, the
Airframe, any Engine or any Part thereof by a Lessee Person within the
jurisdiction of the Taxing Authority imposing such Tax, or (II) the activities
of any Lessee Person (except for activities of a Lessee Person that is not an
Affiliate, successor or assign of the Lessee, which activities are unrelated to
the transactions contemplated by the Operative Agreements) in such jurisdiction,
including, but not limited to, use of any other aircraft by Lessee in such
jurisdiction, (III) the status of any Lessee Person as a foreign entity or as an
entity owned in whole or in part by foreign persons, (IV) Lessee having made (or
having been deemed to have made) payments to such Tax Indemnitee from the
relevant jurisdiction or (V) in the case of the Pass Through Trustees, any
Participant or any related Tax Indemnitee, the Lessee being incorporated,
organized, maintaining a place of business or conducting activities in such
jurisdiction);
(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;
(f) imposed on any Tax Indemnitee to the extent that such Taxes result from
the gross negligence or willful misconduct of such Tax Indemnitee or any
Affiliate thereof;
(g) imposed on or with respect to a Tax Indemnitee (including the
transferee in those cases in which the Tax on transfer is imposed on, or is
collected from, the transferee) as a result of a transfer or other disposition
(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, 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 or (B) a transfer pursuant to an exercise
of remedies upon a Lease Event of Default that shall have occurred and have been
continuing;
(h) Taxes 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
payments by Lessee under the Operative Agreements after such period);
(k) consisting of any interest, penalties or additions to tax imposed on a
Tax Indemnitee as a result of (in whole or in part) failure of 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;
(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 is 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 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.
(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 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 one Business Day
prior to the date the Tax to which such amount payable hereunder relates is due.
If requested by a Tax Indemnitee in writing, Lessee shall furnish to the
appropriate Tax Indemnitee the original or a certified copy of a receipt for
Lessee's payment of any Tax paid by Lessee or such other evidence of payment of
such Tax as is acceptable to such Tax Indemnitee. Lessee shall also furnish
promptly upon written request such data as any Tax Indemnitee may reasonably
require to enable such Tax Indemnitee to comply with the requirements of any
taxing jurisdiction unless such data is not reasonably available to Lessee or,
unless such data is specifically requested by a Taxing Authority, is not
customarily furnished by domestic air carriers under similar circumstances. For
purposes of this Section 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, (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 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 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.
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 effectively forecloses Lessee's rights to require a
contest of such claim) and shall take no action with respect to such claim
without the prior written consent of Lessee for 30 days following the receipt of
such notice by Lessee; provided, that, in the case of a claim made against a Tax
Indemnitee, if such Tax Indemnitee shall be required by law to take action prior
to the end of such 30-day period, such Tax Indemnitee shall, in such notice to
Lessee, so inform Lessee, and such Tax Indemnitee shall take no action for as
long as it is legally able to do so (it being understood that a Tax Indemnitee
shall be entitled to pay the Tax claimed and sue for a refund prior to the end
of such 30-day period if (i)(A) the failure to so pay the Tax would result in
substantial penalties (unless immediately reimbursed by Lessee) and the act of
paying the Tax would not materially prejudice the right to contest or (B) the
failure to so pay would result in criminal penalties and (ii) such Tax
Indemnitee shall take any action so required in connection with so paying the
Tax in a manner that is the least prejudicial to the pursuit of the contest). In
addition, such Tax Indemnitee shall (provided, that Lessee shall have agreed to
keep such information confidential other than to the extent necessary in order
to contest the claim) furnish Lessee with copies of any requests for information
from any Taxing Authority relating to such Taxes with respect to which Lessee
may be required to indemnify hereunder. If requested by Lessee in writing within
30 days after its receipt of such notice, such Tax Indemnitee shall, at the
expense of Lessee (including, without limitation, all reasonable costs, expenses
and reasonable attorneys' and accountants' fees and disbursements), in good
faith contest (or, if permitted by applicable law, 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 control the conduct of
any such proceeding and shall provide to Lessee (at Lessee's cost and expense)
with such information or data that is in such Tax Indemnitee's control or
possession that is reasonably necessary to conduct such contest. 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 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 in a manner reasonably satisfactory to such Tax
Indemnitee) (provided, that such Tax Indemnitee agrees to notify Lessee in
writing promptly after it becomes aware of any such risk), (iv) no Lease Event
of Default shall have occurred and be continuing unless Lessee has provided
security for its obligations hereunder by advancing to such Tax Indemnitee
before proceeding or continuing with such contest, the amount of the Tax being
contested, plus any interest and penalties and an amount estimated in good faith
by such Tax Indemnitee for expenses, and (v) prior to commencing any judicial
action 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, 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 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.
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 for which such Tax Indemnitee is required by law
to file, in its own name); provided, that the relevant Tax Indemnitee shall
furnish Lessee with any information in such Tax Indemnitee's possession or
control that is reasonably necessary to file any such return, report or
statement and is reasonably requested in writing by Lessee (it being understood
that the Tax Indemnitee shall not be required to furnish copies of its actual
tax returns, although it may be required to furnish relevant information
contained therein). Lessee shall either file such report, return or statement
and send a copy of such report, return or statement to such Tax Indemnitee, and
Owner Trustee if the Tax Indemnitee is not Owner Trustee, or, where Lessee is
not permitted to file such report, return or statement, it shall notify such Tax
Indemnitee of such requirement and prepare and deliver such report, return or
statement to such Tax Indemnitee in a manner satisfactory to such Tax Indemnitee
within a reasonable time prior to the time such report, return or statement is
to be filed.
9.3.7 FORMS
Each Tax Indemnitee agrees to furnish from time to time to Lessee or Loan
Trustee or to such other person as Lessee or Loan Trustee may designate, at
Lessee's or Loan Trustee's request, such duly executed and properly completed
forms as may be necessary or appropriate in order to claim any reduction of or
exemption from any withholding or other Tax imposed by any Taxing Authority, if
(x) such reduction or exemption is available to such Tax Indemnitee and (y)
Lessee has provided such Tax Indemnitee with any information necessary to
complete such form not otherwise reasonably available to such Tax Indemnitee.
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 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 the Pass Through
Trustees, Pass Through Trusts, or Note Holders, then Owner Participant shall
reimburse Lessee for any payments Lessee is required to make to or on behalf of
any Pass Through Trustee, Pass Through Trust, or 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, or Note Holder.
9.4 PAYMENTS
Except as otherwise provided in Section 9.3.3(d), any payments made
pursuant to Section 9.1 or 9.3 shall be due on demand therefor and shall be made
directly to the relevant Indemnitee or Tax Indemnitee or to Lessee, in
immediately available funds at such bank or to such account as specified by such
Indemnitee or Tax Indemnitee or Lessee, as the case may be, in written
directives to the payor, or, if no such direction shall have been given, by
check of the payor payable to the order of, and mailed to, such Indemnitee or
Tax Indemnitee or Lessee, as the case may be, by certified mail, postage
prepaid, at its address as set forth in this Agreement.
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) During the Term, Owner Participant shall not Transfer any or all of its
right, title or interest in the Trust Estate or the Trust Agreement and to this
Agreement unless:
(i) The Transferee shall have full power, authority and legal right to
execute and deliver and to perform 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 the Participation Agreement;
(iii) The terms and conditions of this Lease and the other Lessee
Operative Agreements insofar as they relate to the rights and obligations
of Lessee or the Loan Participant shall not be altered;
(iv) Owner Participant or Transferee shall deliver to Lessee, Owner
Trustee and Mortgagee an opinion of counsel reasonably satisfactory to each
of them 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 (y) that such
Transfer will not violate applicable securities laws, the Act or any other
applicable law and is in accordance with subsection (i) and (v) of this
Section 10.1.1(a) (provided that any opinion with respect to Section
10.1.1(a)(v) may rely on customary certificates and affidavits of an
appropriate officer of the Transferee, in determining the status of the
Transferee as "Citizen of the United States");
(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 may 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 may restrict
Lessee's use or operation of the Aircraft); and
(vi) The Transferee shall be a single person and shall be either (A) a
Permitted Institution or (B) any other person (other than, without Lessee's
consent, an air carrier (as defined in Section 1.1 of the FAA Regulations),
a commercial operator (as defined in Section 1.1 of the FAA Regulations) 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.
(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 a Pass Through Trustee shall not be considered a
Transfer or participation); provided, that any participant in any such
participations shall not have any direct rights under the Operative Agreements
or any Lien on all or any part of the Aircraft or Trust Indenture Estate and
Lessee shall not have any increased liability or obligations as a result of any
such participation. 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 Loan Participant or
Note Holder, shall be deemed to have paid its ratable portion of Lessor's Cost
previously made by Loan Participant 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. REFUNDING AND CERTAIN OTHER MATTERS
11.1 REFUNDING GENERALLY
Subject to Sections 11.2 and 11.4, in the event that at any time Lessee
shall have given written notice to Owner Participant, Owner Trustee, and
Mortgagee that Lessee is requesting a voluntary redemption of all, but not less
than all, of the outstanding Equipment Notes (in compliance with the provisions
of Sections 2.11 and 2.12 of the Trust Indenture) by Owner Trustee as part of a
refunding transaction, Owner Participant agrees to negotiate in good faith and
promptly conclude an agreement with Lessee as to the terms of such refunding
transaction (including the terms of any Debt to be issued in connection with
such refunding transaction and the documentation to be executed in connection
therewith), and after Lessee and Owner Participant shall have concluded such an
agreement:
11.1.1 REFUNDING CERTIFICATE
Within ten Business Days after reaching such agreement, Owner Participant
will deliver to Lessee a Refunding Certificate. Within ten Business Days of its
receipt of the Refunding Certificate, Lessee may demand a verification pursuant
to Section 3.2.1(d) of the Lease of the information set forth in the Refunding
Certificate. Upon the acceptance by Lessee of the accuracy of the information
set forth in the Refunding Certificate or the determination pursuant to such
verification procedures of the Refunding Information, the appropriate parties
will take the actions specified in Sections 11.1.2 through 11.1.7 below.
11.1.2 FINANCING AGREEMENTS
The appropriate parties will enter into appropriate documentation (which
may include an underwriting agreement or similar private placement agreement)
with the institution or institutions to be named therein providing for (a) the
issuance and sale by Owner Trustee to such institution or institutions on the
Refunding Date of the New Debt and (b) the application of the proceeds of the
sale of the New Debt to the redemption of all such Equipment Notes on the
Refunding Date. Lessee, acting on behalf of Owner Trustee, shall give Mortgagee
at least 30 days' revocable prior written notice of the proposed date of the
optional redemption.
11.1.3 LEASE AMENDMENTS
As a condition to the closing of the refunding transaction, Lessee and
Owner Trustee will amend the Lease, as contemplated by Section 3.2.1(b) of the
Lease, to provide that (a) Basic Rent in respect of the period from and after
the Refunding Date shall be as provided in the Refunding Information and (b)
amounts payable in respect of Stipulated Loss Value and Termination Value, from
and after the Refunding Date shall be as provided in the Refunding Information.
11.1.4 SECURITY AGREEMENTS
Owner Trustee will enter into an agreement to provide for the securing
thereunder of the New Debt in like manner as the Equipment Notes and will enter
into such amendments and supplements to the Trust Indenture (or such new
indenture or other security agreement) and the other Operative Agreements as may
be necessary to effect such refunding).
11.1.5 EXPENSES
Whether or not such refunding transaction is consummated, Lessee shall pay
or reimburse all of the reasonable out-of-pocket expenses of all parties to such
refunding transaction, including, without limitation, any underwriting or
placement fees and the reasonable fees and expenses of such parties' counsel and
any related loan or commitment fees.
11.1.6 MAKE WHOLE AMOUNT
At the closing of such refunding, Owner Trustee shall pay, upon receipt of
the same from Lessee (which Lessee shall pay as Supplemental Rent as a condition
to the closing to the refunding transaction), to the Mortgagee for the account
of each Note Holder, the Make-Whole Amount, if any, payable to such Note Holder
under Section 2.11 of the Trust Indenture.
11.1.7 RETURN OF EQUIPMENT NOTES
Subject to compliance by Owner Trustee and Lessee with all applicable terms
and conditions for voluntary prepayment under the Trust Indenture and this
Agreement, each Note Holder will transfer to Owner Trustee the Equipment Notes
held by it for cancellation (and Owner Trustee shall cancel the same), against
receipt by such Note Holder of the then-outstanding principal amount of such
Equipment Notes, accrued and unpaid interest and Make-Whole Amount, if any,
thereon, together with payment in full of all other amounts then payable to such
Note Holder and Mortgagee hereunder or under the Trust Indenture.
11.2 LIMITATIONS ON OBLIGATION TO REFUND
Notwithstanding the other provisions of Section 11, Owner Participant shall
have no obligation to proceed with any refunding transaction as contemplated by
this Section 11:
(a) If, in the opinion of the Owner Participant, such transaction would
have, or create any risk of, adverse tax consequences to Owner Participant
unless Lessee agrees to indemnify Owner Participant against such adverse tax
consequences;
(b) Unless Lessee indemnifies Owner Participant for any liability,
obligation (other than the obligation to pay principal and interest and related
payments in respect of the New Debt), cost or expense (including, without
limitation, reasonable attorneys' fees) related to or arising out of any such
refunding transaction;
(c) If a Lease Event of Default or Special Default shall have occurred and
be continuing;
(d) If there shall have previously been consummated two refunding
transactions at Lessee's request pursuant to this Section 11;
(e) If any amendment or supplement or other modification of the Operative
Documents contemplated by this Section 11.1 would increase the obligations or
impair the rights of the Owner Participant or the Owner Trustee under the
Operative Agreements;
(f) Unless, in the case of a refinancing involving a public offering of
debt securities, neither the Owner Trustee nor the Owner Participant shall be an
"issuer" for securities laws purposes or an "obligor" within the meaning of the
Trust Indenture Act of 1939, as amended;
(g) If such refunding transaction would result in (i) the outstanding
principal amount of the New Debt exceeding the outstanding principal amount of
the Equipment Notes immediately prior to such refinancing (after giving effect
to the payment of any Basic Rent due on the date of such refinancing), (ii) the
final maturity of the New Debt being later than the final maturity of the
Equipment Notes or (iii) the Weighted Average Life to Maturity of the New Debt
being greater or less (by more than six months) than the Weighted Average Life
to Maturity of the Equipment Notes; or
(h) If Owner Participant, after being advised by reasonably competent
counsel, (i) in the case of a refinancing involving a public offering of debt
securities, is not reasonably satisfied on the second Business Day prior to the
third day prior to the proposed Refunding Date that such refunding will be
consummated on the proposed Refunding Date (it being understood that the failure
of pricing with respect to the public offering to have occurred at such time,
shall not constitute a reason for Owner Participant not being so reasonably
satisfied) or (ii) in the case of a refinancing not involving a public offering
of debt securities, is not reasonably satisfied by the close of business on the
fifth day prior to the proposed Refunding Date that such refunding will occur on
the Refunding Date. In the event Owner Participant is not reasonably satisfied
as provided in the foregoing sentence, Owner Participant shall so notify the
Lessee, the Owner Trustee and the Mortgagee and the Owner Trustee and Mortgagee
will revoke the notice of redemption relating to the proposed refunding
transaction delivered under the Trust Indenture.
11.3 EXECUTION OF CERTAIN DOCUMENTS
Lessee, Owner Participant, Owner Trustee and Mortgagee each agree to
execute any document necessary or advisable to implement this Section 11
(including, without limitation, the execution, delivery and/or provision of any
appropriate additional or modified amendment, representation, warranty,
certificate, opinion or other document that may reasonably be requested by
Lessee, Owner Participant or any other person).
11.4 ERISA
Owner Participant shall not be obligated to conclude the proposed refunding
transaction unless the agreements utilized to effect such refunding contain an
agreement by the initial holders of the New Debt substantially the same as
Section 7.5.2(b) of this Agreement, except in the case of any refunding
transaction where the New Debt is sold in a public offering under the Securities
Act or a private placement intended for resale pursuant to Rule 144A under the
Securities Act, in which case the holders of the New Debt shall be subject to
the restrictions relating to ERISA substantially the same as those applicable to
the purchasers of the Pass Through Certificates, as described in the Prospectus
Supplement relating to the initial issuance and sale of the Pass Through
Certificates.
11.5 CONSENT TO OPTIONAL REDEMPTIONS
Each of Owner Participant, Owner Trustee and Mortgagee agrees with Lessee
not to cause an optional redemption of the Equipment Notes without Lessee's
consent except as set forth in Section 2.13 of the Trust Indenture.
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.
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, First Security, WTC and Mortgagee 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 First Security 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 and Lessee shall
pay Owner Participant's reasonable out-of-pocket costs and expenses in
connection with such appointment of a successor Owner Trustee.
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 First Security (a) to Owner Participant as expressly set forth in the Trust
Agreement, (b) in respect of the representations, warranties and agreements of
First Security expressly made as such herein or in any other Operative Agreement
to which it is a party, and (c) for the consequences of its own gross
negligence, willful misconduct, and, in receiving, handling or remitting of
funds only, its willful misconduct or simple negligence as a trustee.
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) 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.
15.9 THIRD-PARTY BENEFICIARY
This Agreement is not intended to, and shall not, provide any person not a
party hereto (other than the Liquidity Provider, each of which is an intended
third party beneficiary with respect to the provisions of Section 9.1, 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 the
Liquidity Provider, with respect to the provisions of Section 9.1, 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.
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:
CALJET LLC,
Owner Participant
By GATX/CALJET CORP.,
Manager
By_________________________________
Name:
Title:
FIRST SECURITY BANK, 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, 1998-2A
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, 1998-2B
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, 1998-2C
By_________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided
herein, but solely as
Subordination Agent
By_________________________________
Name:
Title:
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 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, Lease
Default or Special Default having occurred and be continuing if such Lease
Default, Special Default or Lease Event of Default consists of the institution
of reorganization proceedings with respect to Lessee under Chapter 11 of the
Bankruptcy Code and the trustee or debtor-in-possession in such proceedings
shall have (i) agreed to perform its obligations under the Lease with the
approval of the applicable court and thereafter shall have continued to perform
such obligations in accordance with Section 1110 or (ii) shall have assumed the
Lease with the approval of the relevant court and thereafter shall have
continued to perform its obligations under the Lease.
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 or the Corporate Trust Office, respectively, and (b) as it
applies to Owner Participant or Lessee, actual knowledge of a Vice President or
more senior officer of any Member of Owner Participant or Lessee, respectively,
or any other officer of any Member of Owner Participant or Lessee, respectively,
having responsibility for the transactions contemplated by the Operative
Agreements; PROVIDED that each of Lessee, Owner Participant, Owner Trustee and
Mortgagee 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.
"ADVERSE CHANGE IN TAX LAW" means (a) for Lessee, a Change in Tax Law that
Lessee regards as one that could adversely affect the economic consequences of
the transactions contemplated by the Participation Agreement and the other
Operative Agreements that are anticipated by Lessee or (b) for Owner
Participant, any Change in Tax Law that would adversely affect any of the
following tax assumptions:
(i) For federal income tax purposes, the Lease will be a "true" lease
for purposes of the Code and Owner Participant will be treated as the owner
of the Aircraft and Lessee will be treated as the lessee thereof;
(ii) For federal income tax purposes, Owner Participant will be
entitled to depreciation or cost recovery deductions with respect to
Lessor' s Cost of the Aircraft; and
(iii) For federal income tax purposes, Owner Participant will be
entitled to deductions for interest payments on the Equipment Notes.
"AFFILIATE" means, with respect to any person, any other person directly or
indirectly controlling, controlled by or under common control with such person.
For purposes of this definition, "control" means the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such person, whether through the ownership of voting securities or by contract
or otherwise and "controlling," "controlled by" and "under common control with"
have correlative meanings.
"AFTER-TAX BASIS" means, with respect to any payment required to be made on
an After-Tax Basis, that such payment shall be adjusted such that, after
deduction of all Taxes resulting from receipt or accrual of such payment and any
tax benefits realized as a result of the indemnified cost or liability, the net
amount received is equal to such payment required to be made.
"AIRCRAFT" means, collectively, the Airframe and Engines.
"AIRCRAFT BILL OF SALE" means the full warranty bill of sale covering the
Aircraft delivered by Lessee 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 (and any other
applicable 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 (and any other applicable 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 [McDonnell Douglas Corporation, a Maryland
corporation][The Boeing Company, a Delaware corporation].
"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 Payment 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.
"AUTHORIZED TERMINATION DATE" is defined in Schedule 1 to the Lease.
"AVERAGE LIFE DATE" for any Equipment Note shall be the date which follows
the time of determination by a period equal to the Remaining Weighted Average
Life of such Equipment Note. "Remaining Weighted Average Life" on a given date
with respect to any Equipment Note shall be the number of days equal to the
quotient obtained by dividing (a) the sum of each of the products obtained by
multiplying (i) the amount of each then remaining scheduled payment of principal
of such Equipment Note by (ii) the number of days from and including such
determination date to but excluding the date on which such payment of principal
is scheduled to be made, by (b) the then outstanding principal amount of such
Equipment Note.
"AVIATION AUTHORITY" means the FAA or, if the Aircraft is permitted to be,
and is, registered with any other Government Entity under and in accordance with
Section 7.1.2 of the Lease, such other Government Entity.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, 11 U.S.C. ss.
101 ET SEQ.
"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(a) of the Lease.
"BENEFICIAL OWNER" when used in relation to an Equipment Note means a
Person that, by reason of direct ownership, contract, share ownership or
otherwise, has the right to receive or participate in receiving, directly or
indirectly, payments of principal, interest or Make-Whole Amount in respect of
such Equipment Note; provided that a Person shall not be deemed to be a
Beneficial Owner of an Equipment Note solely because another Person in which
such a Person owns common stock or other equity securities is a registered
holder or Beneficial Owner of such Equipment Note unless such Person is an
Affiliate of such other Person.
"BILLS OF SALE" means the Aircraft Bill of Sale and the FAA 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
or Moody's equal to A1 or higher.
"CHANGE IN TAX LAW" means any amendment, modification, addition or change
in or to the provisions of the Code, any other federal tax statutes, the
Treasury Regulations promulgated thereunder, the Internal Revenue Service
Revenue Rulings, Revenue Procedures or other administrative or judicial
interpretations of the Code or the federal tax statutes that affects the tax
assumptions set forth in the Tax Indemnity Agreement or otherwise affects Owner
Participant's anticipated Net Economic Return (other than a change in the
alternative minimum tax or other change that results in Owner Participant being
subject to alternative minimum tax or unable to fully utilize tax benefits
because of its particular tax situation).
"CITIZEN OF THE UNITED STATES" 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) sale
of the Aircraft to the Owner Trustee and the filing of the FAA Bill of Sale with
the FAA in connection therewith; (ii) payment of Lessor's Cost by Owner Trustee
to Lessee; (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.
"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 Participant, the amount of its participation in
the payment of Lessor's Cost.
"COMMITMENT TERMINATION DATE" is defined in Schedule 3 to the Participation
Agreement.
"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.ss. 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, with respect to (i) any Series, the rate per annum
specified for such Series under the heading "Interest Rate" in Schedule I to the
Trust Indenture and (ii) any other purpose, with respect to any period, the
weighted average interest rate per annum during such period borne by the
outstanding Equipment Notes, excluding any interest payable at the Payment Due
Rate.
"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 established 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.
"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 originally installed on
the Airframe on delivery thereof pursuant to the Lease, and any Replacement
Engine, in any case whether or not from time to time installed on such Airframe
or installed on any other airframe or aircraft, and (b) any and all Parts
incorporated or installed in or attached or appurtenant to such engine, and any
and all Parts removed from such engine, unless title to such Parts shall not be
vested in Lessor in accordance with Section 8.1 and Annex C of the Lease. Upon
substitution of a Replacement Engine under and in accordance with the Lease,
such Replacement Engine shall become subject to the Lease and shall be an
"Engine" for all purposes of the Lease and the other Operative Agreements and
thereupon the Engine for which the substitution is made shall no longer be
subject to the Lease, and such replaced Engine shall cease to be an "Engine."
"ENGINE MANUFACTURER" means the Pratt & Whitney division of the United
Technologies Corporation, 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.
"ERISA" means the Employee Retirement Income Security Act of 1974 and any
regulations and rulings issued thereunder all as amended and in effect from time
to time.
"EVENT OF DEFAULT" is defined in Section 4.02 of the Trust Indenture.
"EVENT OF LOSS" means, with respect to the Aircraft, Airframe or any
Engine, any of the following circumstances, conditions or events with respect to
such property, for any reason whatsoever:
(a) the destruction of such property, damage to such property beyond
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;
(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 a U.S.
Government Entity) for a period exceeding 180 consecutive days or, if
earlier, at the end of the Term or, in the case of a requisition of
title, the requisition of title shall not have been reversed within 90
days from the date of such requisition of title or, if earlier, at the
end of the Term;
(e) any seizure, condemnation, confiscation, taking or requisition of use
of such property by any U.S. Government Entity that continues until
the 30th day after 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 one year (or if earlier the expiration of
the Term), provided that no Event of Loss shall be deemed to have
occurred if such prohibition has been applicable to Lessee's entire
U.S. fleet of such property and Lessee, prior to the expiration of
such one-year 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 the Aircraft by Lessee, but in any event
if such use shall have been prohibited for a period of two years or
such use shall be prohibited at the expiration of the Term.
An Event of Loss with respect to the Aircraft shall be deemed to have occurred
if an Event of Loss occurs with respect to its Airframe. The date of such Event
of Loss shall be the date of such loss, damage, insurance settlement, seizure,
condemnation, taking or requisition of title or use or prohibition, except that
for purpose of clause (c), (d), (e) and (f) above, no Event of Loss shall be
deemed to have occurred until the date of expiration of the applicable period
referred to therein (unless an insurance settlement shall have occurred prior to
such date).
"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
Transaction Expenses paid or payable by the Lessee to the Owner Trustee (to the
extent for its sole benefit) or the Owner Participant pursuant to the Lease or
the Participation Agreement, (vi) any amount payable to the Owner Participant by
any transferee as the purchase price of the Owner Participant's interest in the
Trust Estate, (vii) 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 (vi) above, (viii) any right to enforce the payment of any amount
described in clauses (i) through (vii) above (PROVIDED, that the rights referred
to in this clause (viii) 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 (ix) 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 SECURITY AGREEMENT" is defined in Schedule 3 to the Participation
Agreement.
"EXISTING SECURITY AGREEMENT RELEASE" means the release of the Aircraft,
the Aircraft Documents and certain other collateral from the Lien of the
Existing Security 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).
"EXPENSES OF SALE" is defined in Section 9.2.2(a) of the Lease.
"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 Closing Date by Lessee.
"FAA FILED DOCUMENTS" means the Lease, Lease Supplement No. 1, the Trust
Indenture, the Trust Agreement, the initial Trust Indenture Supplement, the FAA
Bill of Sale, an application for registration of the Aircraft with the FAA in
the name of Owner Trustee and the Existing Security Agreement Release.
"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 semiannually (or for any such applicable shorter period ended
on the first or last Payment Dates of any Renewal Lease Term), and (c) the
Aircraft would be leased during any such Renewal Lease 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, except otherwise provided in Section 15.4
of the Lease, the fair market sales value in Dollars for the Aircraft that would
apply in an arm's-length transaction between an informed and willing buyer under
no compulsion to buy, and an informed and willing seller under no compulsion to
sell, the Aircraft, in a transaction that would close on or about the relevant
time of determination, assuming that (a) the Aircraft has been maintained in
accordance with, and is in the condition required by, the Lease and (b) the
Aircraft would be delivered to such informed and willing buyer in the return
condition required by the Lease.
"FINANCING STATEMENTS" means, collectively, (i) UCC-1 financing statements
(a) 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 (b) 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 Texas and each other jurisdiction that,
in the opinion of Owner Trustee and Mortgagee, is reasonably desirable and (ii)
UCC-3 financing statements evidencing the release of the Aircraft, Aircraft
Documents and other collateral from the Lien of the Existing Security Agreement
for filing in Texas and each other jurisdiction that, in the opinion of Owner
Trustee and Mortgagee, is reasonably desirable.
"FIRST SECURITY" means First Security Bank, National Association, a
national banking association, not in its capacity as Owner Trustee under the
Trust Agreement, but in its individual capacity.
"GAAP" means generally accepted accounting principles as set forth in the
statements of financial accounting standards issued by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants, as
such principles may at any time or from time to time be varied by any applicable
financial accounting rules or regulations issued by the SEC and, with respect to
any person, shall mean such principles applied on a basis consistent with prior
periods except as may be disclosed in such person's financial statements.
"GOVERNMENT ENTITY" means (a) any federal, state, provincial or similar
government, and any body, board, department, commission, court, tribunal,
authority, agency or other instrumentality of any such government or otherwise
exercising any executive, legislative, judicial, administrative or regulatory
functions of such government or (b) any other government entity having
jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"GTA" means the General Terms Agreement as defined in the Purchase
Agreement Assignment.
"INDEMNITEE" means (i) First Security and Owner Trustee, (ii) WTC and
Mortgagee, (iii) each separate or additional trustee appointed pursuant to the
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.
"INDENTURE AGREEMENTS" means the Participation Agreement, the Lease, 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) the Liquidity Provider, (v) each Pass Through Trustee,
and (vi) each of the respective directors, officers, employees, agents and
servants of each of the persons described in clauses (i) through (v) inclusive
above.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement among
the Pass Through Trustees, the 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.
"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 April 21, 1998.
"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 ____, 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 Tax Indemnity Agreement, the Bills of Sale, and each
other agreement between Lessee and any other party to the Participation
Agreement, relating to the Transactions, delivered on the Closing Date.
"LESSEE PERSON" means Lessee, any sublessee, assignee, successor or other
user or person in possession of the Aircraft, Airframe or an Engine with or
without color of right, or any Affiliate of any of the foregoing (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).
"LESSEE'S ADVISOR" is defined in Schedule 3 to the Participation Agreement.
"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
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 aggregate of the amounts paid by Owner Trustee to
Lessee to purchase the Aircraft pursuant to the Participation 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.
"LIFE LIMITED PARTS" means any Part requiring replacement, overhaul, bench
check or other action that necessitates removal of such Part from the Aircraft
on a time (flight hours, cycle or calendar) specified basis as defined by the
type certificate, the MPD, the Maintenance Program or the Maintenance Manual of
the Airframe Manufacturer or Engine Manufacturer.
"LIMITED LIABILITY COMPANY AGREEMENT" means the Limited Liability Company
Agreement, dated as of the Issuance Date, relating to the organization and
operation of Owner Participant.
"LIQUIDITY FACILITIES" means the three Revolving Credit Agreements
(consisting of a separate Revolving Credit Agreement with the Liquidity Provider
with respect to each Pass Through Trust) between the Subordination Agent, as
borrower, and the Liquidity Provider, each 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, any such
Liquidity Facility shall be effective, unless consented to by Lessee.
"LIQUIDITY PROVIDER" means Westdeutsche Landesbank Girozentrale, acting
through its New York branch, as a Class A Liquidity Provider, Class B Liquidity
Provider, and Class C Liquidity Provider (as such terms are defined in the
Intercreditor Agreement) under the respective Liquidity Facilities, or any
successor thereto.
"LOAN PARTICIPANTS" mean, until the Closing shall have been consummated,
the Pass Through Trustees, 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 bank 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 semiannual basis on each Payment Date (assuming a
360-day year of twelve 30-day months) using a discount rate equal to the
Treasury Yield over (b) the outstanding principal amount of such Equipment Note
plus accrued interest to the date of determination. For purposes of determining
the Make-Whole Amount, "Treasury Yield" means, at the date of determination with
respect to any Equipment Note, the interest rate (expressed as a decimal and, in
the case of United States Treasury bills, converted to a bond equivalent yield)
determined to be the per annum rate equal to the semi-annual yield to maturity
for United States Treasury securities maturing on the Average Life Date of such
Equipment Note and trading in the public securities markets either as determined
by interpolation between the most recent weekly average yield to maturity for
two series of United States Treasury securities, trading in the public
securities markets, (A) one maturing as close as possible to, but earlier than,
the Average Life Date of such Equipment Note and (B) the other maturing as close
as possible to, but later than, the Average Life Date of such Equipment Note, in
each case as published in the most recent H.15(519) or, if a weekly average
yield to maturity for United States Treasury securities maturing on the Average
Life Date of such Equipment Note is reported on the most recent H.15(519), such
weekly average yield to maturity as published in such H.15(519) "H.15(519)"
means the weekly statistical release designated as such, or any successor
publication, published by the Board of Governors of the Federal Reserve System.
The date of determination of a Make-Whole Amount shall be the third Business Day
prior to the applicable payment or redemption date and the "most recent
H.15(519)" means the H.15(519) published prior to the close of business on the
third Business Day prior to the applicable payment or redemption date.
"MANAGER" means the manager of the Owner Participant, determined in
accordance with the Limited Liability Company Agreement.
"MANUFACTURER SUBLESSEE" means the Airframe Manufacturer, Airbus Industrie,
United Technologies Corporation, Pratt & Whitney Group, Commercial Products
Division, The General Electric Company and Rolls-Royce plc.
"MATERIAL ADVERSE CHANGE" means, with respect to any person, any event,
condition or circumstance that materially and adversely affects such person's
business or consolidated financial condition, or its ability to observe or
perform its obligations, liabilities and agreements under the Operative
Agreements.
"MEMBER" means each member of Owner Participant, determined in accordance
with the Limited Liability Company Agreement.
"MINIMUM LIABILITY INSURANCE AMOUNT" is defined in Schedule 1 to the Lease.
"MOODY'S" means Moody's Investors Service, Inc.
"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 each other agreement between Mortgagee and any other
party to the Participation Agreement, relating to the Transactions, delivered on
the Closing Date.
"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)(1)(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 or assuming 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
Basic Rent, Stipulated Loss Value percentages and Termination Value percentages,
as of the Closing Date, as such assumptions may be adjusted for events that have
been the basis for adjustments to Basic Rent pursuant to Section 3.2.1(b) of the
Lease or events giving rise to indemnity payments pursuant to Section 5.1 of the
Tax Indemnity Agreement; PROVIDED, that, if the initial Owner Participant shall
have transferred its interest, Net Economic Return shall be calculated as if the
initial Owner Participant had retained its interest; PROVIDED FURTHER, that,
notwithstanding the preceding proviso, solely for purposes of Section 11 of the
Participation Agreement and calculating any adjustments to Basic Rent,
Stipulated Loss Values and Termination Values in connection with a refunding
pursuant to such Section 11 at a time when Owner Participant is a transferee
(other than an Affiliate of the initial Owner Participant), the after-tax yield
(but not the after-tax cash flow) component of Net Economic Return shall be
calculated on the basis of the methodology and assumptions utilized by the
transferee Owner Participant as of the date on which it acquired its interest.
"NET PRESENT VALUE OF RENTS" means the present value, as of the date of
determination, discounted at 10% per annum, compounded semiannually to the date
of determination, of all unpaid Basic Rent payments during the then-remaining
portion of the Base Lease Term, expressed as a percentage of Lessor's Cost.
"NET WORTH" means, for any person, the excess of its total assets over its
total liabilities.
"NEW DEBT" means debt securities in an aggregate principal amount specified
in the Refunding Information.
"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.
"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
or, in the case of Owner Participant, of the Manager of Owner Participant.
"OPERATIVE AGREEMENTS" means, collectively, the Participation Agreement,
the Trust Agreement, the Lease, Lease Supplement No. 1, the Trust Indenture, the
initial Trust Indenture Supplement, the Bills of Sale, the Tax Indemnity
Agreement, and the Equipment Notes.
"OPERATIVE INDENTURES" means each of the indentures under which notes have
been issued and purchased by the Pass Through Trustees.
"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, the Trust Agreement and each other
agreement between Owner Participant and any other party to the Participation
Agreement relating to the Transactions, delivered on the Closing Date.
"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 First Security Bank, 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 each
other agreement between Owner Trustee and any other party to the Participation
Agreement, relating to the Transactions, delivered on the Closing Date.
"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 ____ dated as
of April 21, 1998, among Lessee, Owner Participant, Owner Trustee, the Pass
Through Trustees, Subordination Agent and Mortgagee.
"PARTS" means all appliances, parts, components, instruments,
appurtenances, accessories, furnishings, seats and other equipment 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 Agreements, the
Intercreditor Agreement, the Liquidity Facilities and the Fee Letters referred
to in Section 2.03 of each of the Liquidity Facilities, 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 Trusts (and any other pass through certificates for which such
pass through certificates may be exchanged).
"PASS THROUGH INDEMNITEES" means (i) the Subordination Agent, the Liquidity
Provider, and the Pass Through Trustees, (ii) each Affiliate of a person
described in the preceding clause (i), (iii) the respective directors, 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 each of the three separate pass through trusts
created under the Pass Through Trust Agreements.
"PASS THROUGH TRUST AGREEMENT" means each of the three separate Trust
Supplements, together in each case with the Basic Pass Through Trust Agreement,
each dated as of the Issuance Date by and between the Lessee and a Pass Through
Trustee PROVIDED, that for purposes of any obligation of Lessee, no amendment,
modification or supplement to, or substitution or replacement of, any such
Agreement shall be effective unless consented to by Lessee.
"PASS THROUGH TRUSTEE" means Wilmington Trust Company, a Delaware banking
corporation, in its capacity as trustee under each Pass Through Trust Agreement.
"PASS THROUGH TRUSTEE AGREEMENTS" means the Participation Agreement, the
Pass Through Trust Agreements and the Intercreditor Agreement.
"PAYMENT DATE" means (i) each April 15 and October 15 during the Term,
commencing with the first such date to occur after the Closing Date, (ii) the
Scheduled Expiration Date and (iii) each Scheduled Renewal Term Expiration Date.
"PAYMENT DUE RATE" is defined in Schedule 1 to the Lease.
"PAYMENT PERIOD" means each of the consecutive semiannual periods (or such
applicable shorter period ended on the Scheduled Expiration Date and the first
and last Payment Dates of any Renewal Lease Term) during the Term ending on a
Payment Date, the first such period commencing on and including the Closing
Date.
"PERMITTED AIR CARRIER" means (i) any Manufacturer Sublessee, or any
Affiliate of a Manufacturer Sublessee, in each case, based in the United States,
(ii) any Permitted Foreign Air Carrier, (iii) any person approved in writing by
Lessor and Owner Participant, (iv) the U.S. Government or (v) any U.S. Air
Carrier.
"PERMITTED COUNTRY" means any country listed on Part A of Schedule 5 to the
Lease.
"PERMITTED FOREIGN AIR CARRIER" means (i) any air carrier with its
principal executive offices in any country listed in Part B of Schedule 5 to the
Lease and which is authorized to conduct commercial airline operations and to
operate jet aircraft similar to the Aircraft under the applicable Laws of such
country or (ii) any Manufacturer Sublessee or any Affiliate of Manufacturer
Sublessee, in each case with its principal executive offices in any country
listed in Part B of Schedule 5 to the Lease.
"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 (a) any bank, trust company, insurance
company, financial institution or corporation (other than, without Lessee's
consent, an air carrier (as defined in Section 1.1 of the FAA Regulations), a
commercial operator (as defined in Section 1.1 of the FAA Regulations) or
Affiliate of any of the foregoing), in each case with a combined capital and
surplus or net worth of at least $50,000,000.
"PERMITTED LIEN" means any Lien described in clauses (a) through (g),
inclusive, of Section 6 of the Lease.
"PERMITTED SUBLEASE" means a sublease permitted under Section 7.2.7 of the
Lease.
"PERMITTED SUBLESSEE" means the sublessee under a Permitted Sublease.
"PERSONS" or "PERSONS" means individuals, firms, partnerships, joint
ventures, trusts, trustees, Government Entities, organizations, associations,
corporations, government agencies, committees, departments, authorities and
other bodies, corporate or incorporate, whether having distinct legal status or
not, or any member of any of the same.
"PLAN" means any employee benefit plan within the meaning of Section 3(3)
of ERISA, 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 April 15, 2007, in the case of the Series
A Equipment Notes, October 15, 2004 in the case of the Series B Equipment Notes
and October 15, 2002 in the case of the Series C Equipment Notes.
"PTT PERCENTAGE" means, with respect to each Pass Through Trustee, the
percentage of Lessor's Cost allocated to such Pass Through Trustee in Schedule 2
to the Participation Agreement.
"QIB" is defined in Section 2.08 of the Trust Indenture.
"REFUNDING CERTIFICATE" means a certificate of an authorized representative
of Owner Participant delivered pursuant to Section 11.1.1 of the Participation
Agreement, setting forth (a) the Refunding Date and (b) the following
information, subject to the limitations set forth in Section 11 of the
Participation Agreement: (i) the principal amount of debt to be issued by Owner
Trustee on the Refunding Date, (ii) the proposed adjusted debt/equity ratio and
(iii) the proposed revised schedules of Basic Rent, Stipulated Loss Value
percentages and Termination Value percentages, and the proposed Amortization
Schedules, calculated in accordance with Section 3.2.1 of the Lease.
"REFUNDING DATE" means the proposed date on which the outstanding Equipment
Notes will be redeemed and refinanced pursuant to Section 11 of the
Participation Agreement.
"REFUNDING INFORMATION" means the information set forth in the Refunding
Certificate (other than the Refunding Date) as such information may have been
revised by any verification procedures demanded by Lessee pursuant to Section
3.2.1(d) of the Lease.
"RENEWAL LEASE TERM" means each term for which the Lease is extended by
Lessee, if any, pursuant to the first and 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 each
Participant, Owner Trustee and Mortgagee by Lessee 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 a Renewal
Lease Term, the Scheduled Renewal Term Expiration Date as elected by Lessee
pursuant to Section 17.2 of the Lease.
"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. ss. 1110 of the Bankruptcy Code or any
successor or analogous section of the federal bankruptcy Law in effect from time
to time.
"SECURED OBLIGATIONS" is defined in Section 2.06 of the Trust Indenture.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY" means a "security" as defined in Section 2(1) of the Securities
Act.
"SENIOR HOLDER" is defined in Section 2.14(c) of the Trust Indenture.
"SERIES" means any of Series A, Series B or Series C.
"SERIES A" or "SERIES A EQUIPMENT NOTES" means Equipment Notes issued under
the Trust Indenture and designated as "Series A" thereunder, in the Original
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series A."
"SERIES B" or "SERIES B EQUIPMENT NOTES" means Equipment Notes issued under
the Trust Indenture and designated as "Series B" thereunder, in the Original
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series B."
"SERIES C" or "SERIES C EQUIPMENT NOTES" means Equipment Notes issued under
the Trust Indenture and designated as "Series C" thereunder, in the Original
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series C."
"SIMILAR AIRCRAFT" is defined in Schedule 1 to the Lease.
"SLV RATE" is defined in Schedule 1 to the Lease.
"SPECIAL DEFAULT" means (i) the failure by Lessee to pay any amount of
Basic Rent, Renewal Rent, Stipulated Loss Value or Termination Value when due or
(ii) the occurrence of any Lease Default or Lease Event of Default referred to
in Section 14.5 of the Lease.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc.
"STIPULATED LOSS VALUE" means, with respect to the Aircraft, (a) during the
Base Lease Term, the amount determined by multiplying (i) the percentage set
forth in Schedule 3 to the Lease (as adjusted from time to time in accordance
with Section 3.2.1 of the Lease) opposite the Stipulated Loss Value Date by (ii)
Lessor's Cost and (b) during any Renewal Lease Term, the amount determined
pursuant to Section 17.2.3 of the Lease. Notwithstanding anything to the
contrary in any Operative Agreement, Stipulated Loss Value shall always be
sufficient to pay in full, as of the date of payment thereof (assuming timely
payment of the Equipment Notes prior to such date), the aggregate unpaid
principal amount of all Equipment Notes outstanding as of such date, together
with accrued and unpaid interest on all such Equipment Notes as of such date.
"STIPULATED LOSS VALUE DATE" means, for any month, the day in such month
specified in Schedule 3 to the Lease or, if such day is not a Business Day, the
immediately succeeding Business Day.
"SUBORDINATION AGENT" means Wilmington Trust Company, as subordination
agent under the Intercreditor Agreement.
"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, any amounts in respect of a purchase
price payable pursuant to Section 17.3 of the Lease 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) an amount or amounts equal to the fees payable to the
relevant Liquidity Provider under Section 2.03 of each Liquidity Facility and
the related Fee Letter (as defined in the Intercreditor Agreement) multiplied by
a fraction the numerator of which shall be the then outstanding aggregate
principal amount of the Series A Equipment Notes, Series B Equipment Notes and
Series C Equipment Notes and the denominator of which shall be the then
outstanding aggregate principal amount of all "Series A Equipment Notes",
"Series B Equipment Notes" and "Series C Equipment Notes" (each as defined in
each of the Operative Indentures); (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 Non-Extension Advance
(other than any Applied Non-Extension Advance) payable under Section 3.07 of
each Liquidity Facility minus Investment Earnings from such Non-Extension
Advance multiplied by (y) the fraction specified in the forgoing clause (i);
(iv) if any payment default shall have occurred and be continuing with respect
to interest on any Series A Equipment Notes, Series B Equipment Notes or Series
C Equipment Notes, (x) the excess, if any, of (1) an amount equal to interest on
any Unpaid Advance, Applied Downgrade Advance or Applied Non-Extension Advance
payable under Section 3.07 of each 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 Lessee in
respect of the overdue scheduled interest on the Equipment Notes in respect of
which such Unpaid Advance, Applied Downgrade 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 Series A Equipment Notes,
Series B Equipment Notes and Series C Equipment Notes (other than interest
becoming due and payable solely as a result of acceleration of any such
Equipment Notes) and the denominator of which shall be the then aggregate
overdue amounts of interest on all "Series A Equipment Notes", "Series B
Equipment Notes" and "Series C Equipment Notes" (each as defined in each of the
Operative Indentures) (other than interest becoming due and payable solely as a
result of acceleration of any such "Equipment Notes"); and (v) Lessee's pro rata
share of any other amounts owed to the Liquidity Provider by the Subordination
Agent as borrower under each Liquidity Facility (other than amounts due as
repayment of advances thereunder or as interest on such advances), except to the
extent payable pursuant to clause (i), (ii), (iii) or (iv) above, (c) Lessee's
pro rata share of all compensation and reimbursement of expenses, disbursements
and advances payable by Lessee under the Pass Through Trust Agreements, (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 and (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 or 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. 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, the terms "Applied Downgrade Advance", "Applied Non-Extension
Advance", "Cash Collateral Account", "Downgrade Advance", "Final Advance",
"Investment Earnings", "Non-Extension Advance" and "Unpaid Advance" shall have
the meanings specified in each Liquidity Facility. For the avoidance of doubt,
it is understood and agreed that Supplemental Rent includes, without limitation,
any amounts payable under the third paragraph of Section 2.02 of the Trust
Indenture.
"TAX ATTRIBUTE PERIOD" is defined in Section 1(e) of the Tax Indemnity
Agreement.
"TAX INDEMNITEE" means (a) First Security 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.
"TAX INDEMNITY AGREEMENT" means the Tax Indemnity Agreement, 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 semiannual rate equal to the higher of (x) average
of the Basic Rent paid during the Base Lease Term or the applicable Renewal
Lease Term, whichever shall have ended immediately prior to such extension or
(y) Fair Market Rental Value.
"TERMINATION DATE" means any Payment Date occurring after the Authorized
Termination Date on which the Lease shall terminate in accordance with Section 9
of the Lease.
"TERMINATION VALUE" means, with respect to the Aircraft, the amount
determined by multiplying (a) the percentage set forth in Schedule 4 to the
Lease (as adjusted from time to time in accordance with Section 3.2.1 of the
Lease) opposite the Termination Value Date by (b) Lessor's Cost. Notwithstanding
anything to the contrary in any Operative Agreement, Termination Value shall
always be sufficient to pay in full, as of the date of payment thereof (assuming
timely payment of the Equipment Notes prior to such date), the aggregate unpaid
principal amount of all Equipment Notes outstanding as of such date, together
with accrued and unpaid interest on all such Equipment Notes as of such date.
"TERMINATION VALUE DATE" means, for any month, the day in such month
specified in Schedule 4 to the Lease or, if such day is not a Business Day, the
immediately succeeding Business Day.
"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: (i) the reasonable and actual fees, expenses
and disbursements incurred in connection with the preparation, execution and
delivery of the Operative Agreements and the Transactions of (1) Richards,
Layton & Finger, special counsel for Mortgagee and the Loan Participants, such
information to be furnished by Mortgagee and the Subordination Agent, (2) Ray,
Quinney & Nebeker, special counsel for the Owner Trustee under the Trust
Agreement, such information to be furnished by Owner Trustee, and (3) Lytle,
Soule & Curlee, special counsel in Oklahoma City, Oklahoma, such information to
be furnished by Lessee, (ii) all fees, taxes and other charges payable in
connection with the recording or filing of instruments and financing statements,
such information to be furnished by Lessee, (iii) the initial fee and reasonable
and actual disbursements of Owner Trustee under the Trust Agreement, such
information to be furnished by the Owner Trustee, (iv) the initial fee and
reasonable and actual disbursements of Mortgagee under the Trust Indenture, such
information to be furnished by Mortgagee, and (v) Lessee's pro rata share (as
defined in the definition of Supplemental Rent) of the underwriting fees and
expenses attributable to the offering and sale of the Pass Through Certificates.
"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 Trust Agreement ____, 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 and
requisition, indemnity or other payments of any kind for of with respect to the
Aircraft. Notwithstanding the foregoing, "Trust Estate" shall not include any
Excluded Payment.
"TRUST INDENTURE" means the Trust Indenture and Mortgage ____, 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 ____
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 of a class, (ii) the
issuance of the Pass Through Certificates of such class representing fractional
undivided interests in such trust is authorized and (iii) the terms of the Pass
Through Certificates of such class 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 United States air carrier that is a Citizen of
the United States holding an air carrier operating certificate issued by the
Secretary of Transportation pursuant to chapter 447 of title 49 of the United
States Code for aircraft capable of carrying 10 or more individuals or 6000
pounds or more of cargo, and as to which there is in force an air carrier
operating certificate issued pursuant to Part 121 of the FAA Regulations, or
which may operate as an air carrier by certification or otherwise under any
successor or substitute provisions therefor or in the absence thereof.
"U.S. 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.
"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 ____ |
--------------------------------
ACCOUNTS; ADDRESSES
ACCOUNT FOR PAYMENTS ADDRESS FOR NOTICES
-------------------- -------------------
CONTINENTAL AIRLINES, INC. The Chase Manhattan Bank Continental Airlines, Inc.
New York, New York 10081 2929 Allen Parkway
Account No.: 910-2-499291 Suite 2010
ABA#: 021-000021 Houston, Texas 77019
Attention: Paul Trupia Attention: Executive Vice
Voice: 212-552-2829 President and Chief
Facsimile: 212-552-0107 Financial Officer
Reference: Continental Lease Facsimile: (713) 520-6329
____
OWNER Nationsbank c/o GATX/Caljet Corp.
PARTICIPANT Dallas, Texas 75202 Four Embarcadero Center,
Account No.: 3751038797 Suite 2200
ABA #: 111000012 San Francisco, California 94111
Credit: Caljet LLC Attention: Air Portfolio
Reference: Continental Lease Management
____ Facsimile: 415-955-3415
FIRST SECURITY BANK, First Security Bank, National Association First Security Bank, National Association
NATIONAL ASSOCIATION 79 South Main Street 79 South Main Street
Salt Lake City, Utah 84111 Salt Lake City, Utah 84111
Account No.: 051-0922115 Attention: Corporate Trust Department
Corporate Trust Department Facsimile: (801) 246-5053
ABA#: 124-0000-12
Reference: Continental Lease
____
WILMINGTON TRUST COMPANY, AS The Chase Manhattan Bank Wilmington Trust Company
MORTGAGEE New York, New York 10081 One Rodney Square
Account No.: 920-1-014363 1100 North Market Street
ABA#: 021-000021 Wilmington, Delaware 19890
Attention: Corporate Trust Attention: Corporate Trust Administration
Administration Reference: Facsimile: (302) 651-8882
Continental Lease ____
WILMINGTON TRUST COMPANY, AS The Chase Manhattan Bank New York, Wilmington Trust Company
SUBORDINATION AGENT New York, New York 10081 One Rodney Square
Account No.: 920-1-014363 1100 North Market Street
ABA#: 021-000021 Wilmington, Delaware 19890
Attention: Corporate Trust Attention: Corporate Trust Administration
Administration Facsimile: (302) 651-8882
Reference: Continental Lease
____
WILMINGTON TRUST COMPANY, AS The Chase Manhattan Bank Wilmington Trust Company
PASS THROUGH TRUSTEE FOR THE New York, New York 10081 One Rodney Square
1998-2A PASS THROUGH TRUST Account No.: 920-1-014363 1100 North Market Street
ABA#: 021-000021 Wilmington, Delaware 19890
Attention: Corporate Trust Administration Attention: Corporate Trust Administration
Reference: Continental Lease Facsimile: (302) 651-8882
____
WILMINGTON TRUST COMPANY, AS The Chase Manhattan Bank Wilmington Trust Company
PASS THROUGH TRUSTEE FOR THE New York, New York 10081 One Rodney Square
1998-2B PASS THROUGH TRUST Account No.: 920-1-014363 1100 North Market Street
ABA#: 021-000021 Wilmington, Delaware 19890
Attention: Corporate Trust Administration Attention: Corporate Trust Administration
Reference: Continental Lease Facsimile: (302) 651-8882
____
WILMINGTON TRUST COMPANY, AS The Chase Manhattan Bank Wilmington Trust Company
PASS THROUGH TRUSTEE FOR THE New York, New York 10081 One Rodney Square 1100
1998-2C PASS THROUGH TRUST Account No.: 920-1-014363 North Market Street
ABA#: 021-000021 Wilmington, Delaware 19890
Attention: Corporate Trust Administration Attention: Corporate Trust Administration
Reference: Continental Lease Facsimile: (302) 651-8882
____
-----------------------------------
| SCHEDULE 2 |
| TO |
| PARTICIPATION AGREEMENT ____ |
-----------------------------------
COMMITMENTS
PARTICIPANT PERCENTAGE OF DOLLAR AMOUNT
----------- ------------- -------------
LESSOR'S COST
-------------
OWNER PARTICIPANT OWNER PARTICIPANT'S
PERCENTAGE
Caljet LLC
PASS THROUGH TRUSTEE LOAN PARTICIPANT'S
PTT PERCENTAGE
1998-2A
1998-2B
1998-2C
TOTAL 100%
-----------------------------------
| SCHEDULE 3 |
| TO |
| PARTICIPATION AGREEMENT ____ |
-----------------------------------
CERTAIN TERMS
DEFINED TERM DEFINITION
Commitment Termination Date
Lessor's Cost
Lessee's Advisor
Existing Security Agreement
EXHIBIT F
AIRCRAFT DELIVERY RECEIPT ____
Pursuant to Participation Agreement ____, dated as of April 21, 1998, among
Continental Airlines, Inc. (the "Lessee"), Caljet LLC, as Owner Participant,
First Security Bank, National Association, as Owner Trustee (the "Owner
Trustee"), and Wilmington Trust Company, as Mortgagee and Loan Participant, and
Lease Agreement ____ dated as of April 21, 1998, between the Owner Trustee and
the Lessee, the undersigned hereby acknowledge delivery to Owner Trustee
pursuant to such Participation Agreement and to Lessee pursuant to such Lease of
one [McDonnell Douglas Model MD-80][Boeing 737-3T0] aircraft registered with the
Federal Aviation Administration with U.S. Registration No. N_____ bearing
manufacturer's serial no. _____, which includes the items described on Annex A
hereto.
Date: ____________, 1998
Location: _____________
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Owner
Trustee
By:____________________________
Title:
Delivery of the aforesaid
Aircraft under the Lease
is hereby acknowledged.
CONTINENTAL AIRLINES, INC.
By:____________________________
Title:
- --------------------------------------------------------------------------------
----------------------------------------------------------------
| 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 ____
Dated as of April 21, 1998
Between
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
Not in its Individual Capacity,
except as expressly provided herein,
but solely as Owner Trustee,
Lessor
and
CONTINENTAL AIRLINES, INC.,
Lessee
------------------------------------------------------------------------
One [McDonnell Douglas Model DC-9-82][Boeing Model 737-3T0]
Aircraft Bearing
United States Registration No. N _____
and Bearing Manufacturer's Serial No. _____
with two ____ Model ________ Engines
Bearing Engine Manufacturer's Serial Nos. ______ and ______
========================================================================
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 ____, dated as of April 21, 1998 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......................................... 2
SECTION 3. TERM AND RENT................................................ 2
3.1 Term......................................................... 2
3.2 Rent......................................................... 2
3.3 Payments..................................................... 5
SECTION 4. DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR;
SECTION 1110 MATTERS. ....................................... 6
4.1 Disclaimer................................................... 6
4.2 Certain Agreements of Lessor................................. 6
4.3 Quiet Enjoyment.............................................. 7
4.4 Investment of Funds Held as Security......................... 7
4.5 Title Transfers by Lessor.................................... 8
4.6 Lessor's Interest in Certain Engines......................... 8
4.7 Lease For U.S. Federal Income Tax Law
Purposes; Section 1110 of Bankruptcy Code.................... 9
SECTION 5. RETURN OF AIRCRAFT........................................... 9
5.1 Compliance with Annex B...................................... 9
5.2 Storage and Related Matters.................................. 9
5.3 Return of Other Engines...................................... 10
5.4 Failure to Return............................................ 10
SECTION 6. LIENS........................................................ 10
SECTION 7. REGISTRATION, OPERATION, POSSESSION,
SUBLEASING AND RECORDS.. .................................... 11
7.1 Registration and Operation................................... 11
7.2 Possession................................................... 13
7.3 Certain Limitations on Subleasing or Other
Relinquishment of Possession................................. 18
SECTION 8. MAINTENANCE; REPLACEMENT AND POOLING OF
PARTS; ALTERATIONS, MODIFICATIONS AND
ADDITIONS; OTHER LESSEE COVENANTS............................ 19
8.1 Maintenance; Replacement and Pooling of
Parts; Alterations, Modifications and
Additions.................................................... 19
8.2 Information, Certificates, Notices and
Reports...................................................... 19
8.3 Aircraft Documents........................................... 21
SECTION 9. VOLUNTARY TERMINATION UPON OBSOLESCENCE...................... 21
9.1 Right of Termination......................................... 21
9.2 Election by Lessor to Sell................................... 22
9.3 Retention of Aircraft by Lessor.............................. 24
SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC.......................... 26
10.1 Event of Loss With Respect to Aircraft....................... 26
10.2 Event of Loss With Respect to an Engine...................... 29
10.3 Conditions to any Replacement................................ 29
10.4 Conveyance to Lessee......................................... 31
10.5 Application of Payments...................................... 32
10.6 Requisition of Aircraft for Use.............................. 32
10.7 Requisition of an Engine for Use............................. 33
10.8 Application of Payments...................................... 33
10.9 Application of Payments During Existence of
a Lease Event of Default..................................... 34
SECTION 11. INSURANCE.................................................... 34
11.1 Lessee's Obligation to Insure................................ 34
11.2 Insurance for Own Account.................................... 34
11.3 Indemnification by Government in Lieu of
Insurance.................................................... 35
11.4 Application of Insurance Proceeds............................ 35
11.5 Application of Payments During Existence of
Default...................................................... 35
SECTION 12. INSPECTION................................................... 36
SECTION 13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE.................. 37
13.1 In General................................................... 37
13.2 Merger of Lessee............................................. 37
13.3 Assignment Security for Lessor's Obligations................. 38
13.4 Successor Owner Trustee...................................... 38
SECTION 14. LEASE EVENTS OF DEFAULT...................................... 39
14.1 Payments..................................................... 39
14.2 Insurance.................................................... 39
14.3 Other Covenants.............................................. 39
14.4 Representations and Warranties............................... 40
14.5 Bankruptcy and Insolvency.................................... 40
SECTION 15. REMEDIES AND WAIVERS......................................... 41
15.1 Remedies..................................................... 41
15.2 Limitations Under CRAF....................................... 44
15.3 Right to Perform for Lessee.................................. 45
15.4 Determination of Fair Market Rental Value
and Fair Market Sales Value.................................. 45
15.5 Remedies Cumulative.......................................... 46
SECTION 16. LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC........... 46
SECTION 17. RENEWAL OPTIONS.............................................. 47
17.1 Notices Generally............................................ 47
17.2 Renewal Options.............................................. 47
17.3 [Intentionally omitted.]..................................... 49
17.4 Appraisals................................................... 49
SECTION 18. MISCELLANEOUS................................................ 50
18.1 Amendments................................................... 50
18.2 Severability................................................. 50
18.3 Third-Party Beneficiary...................................... 50
18.4 Reproduction of Documents.................................... 51
18.5 Counterparts................................................. 51
18.6 Notices...................................................... 51
18.7 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE............. 52
18.8 Application of Article 2A of the UCC......................... 53
18.9 Entire Agreement............................................. 53
18.10 No Waiver.................................................... 53
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
SCHEDULE 4 Termination Value Schedule
SCHEDULE 5 Permitted Countries and Domiciles for Permitted Sublessees
SCHEDULE 6 Placards
LEASE AGREEMENT ____
LEASE AGREEMENT ____, dated as of April 21, 1998 (this "Agreement" or
"Lease"), between (a) FIRST SECURITY BANK, 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 and the Aircraft Documents,
commencing immediately upon acquisition of the Aircraft and the Aircraft
Documents 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
and Aircraft Documents 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; ADJUSTMENTS TO BASIC RENT AND
CERTAIN OTHER AMOUNTS
(a) During the Base Lease Term, Lessee shall pay to Lessor, on each Payment
Date occurring therein, Basic Rent in the amount equal to the percentage of
Lessor's Cost specified in Schedule 2 for such Payment Date, which shall be
allocated to the Payment Period ending on such Payment Date, if designated as a
payment in arrears, or allocated to the Payment Period commencing on such
Payment Date, if designated as a payment in advance, in each case as specified
in Schedule 2, as such amount may be adjusted pursuant to Section 3.2.1(b).
(b) Basic Rent, Stipulated Loss Values and Termination Values, shall be
subject to adjustment as follows:
(i) In the event of a refinancing as contemplated by Section 11 of the
Participation Agreement, then the Basic Rent percentages set forth in
Schedule 2, Stipulated Loss Value percentages set forth in Schedule 3 and
the Termination Value percentages set forth in Schedule 4 shall be
recalculated (upwards and downwards) by the Owner Participant as
contemplated by such Section to (1) maintain the Owner Participant's Net
Economic Return and (2) to the extent possible consistent with clause (1)
hereof, minimize the Net Present Value of Rents to Lessee.
(ii) In the event that Lessee is required to indemnify the Owner
Participant under the Tax Indemnity Agreement, then 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 Tax 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 Tax Loss or Foreign Tax Credit Loss) used
to calculate the Basic Rent percentages, the Stipulated Loss Value
percentages and the Termination Value percentages on the Closing Date, in
order to (1) maintain the Owner Participant's Net Economic Return and (2)
to the extent possible consistent with clause (1) hereof, minimize the Net
Present Value of Rents to Lessee.
(c) All adjustments pursuant to Section 3.2.1(b) shall be made as promptly
as practicable after either Owner Participant or Lessee gives notice to the
other that an event has occurred that requires an adjustment. Owner Participant
and Lessee shall give prompt notice to the other of any event requiring an
adjustment. Any recalculation of the percentages of Basic Rent, Stipulated Loss
Value and Termination Value shall be prepared by Owner Participant, subject to
consultation with the Lessee at the request of Lessee in accordance with this
Section 3.2.1(c) and Section 3.2.1(d), on the basis of the same methodology and
assumptions used by Owner Participant in determining the percentages of Basic
Rent, Stipulated Loss Value and Termination Value as of the 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 shall (i) be
made so as to avoid characterization of the Lease as a "disqualified leaseback
or long-term agreement" within the meaning of Section 467 of the Code unless
such adjustments are made in a manner that holds the Owner Participant harmless
from the effect of such characterization and (ii) be in compliance with the
requirements of Sections 4.02(5), 4.07(1) and, on a prospective basis, 4.08(1)
of Revenue Procedure 75-28, except to the extent that on the Closing Date the
Lease constituted a "disqualified leaseback or long-term agreement" or was not
in compliance with the regulations referred to in clause (ii). All adjustments
required pursuant to Section 3.2.1(b) 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. Lessee shall
pay all out-of-pocket costs and expenses (including reasonable legal fees and
expenses) of the Owner Participant in connection with any adjustment pursuant to
this Section.
(d) If Lessee believes that any calculations by Owner Participant pursuant
to Section 3.2.1(c) are in error, and if, after consultation, Lessee and Owner
Participant are unable to agree on an adjustment, then a nationally recognized
firm of accountants selected by 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
3.2.1(c) and any modifications thereto made to reflect the events giving rise to
adjustments hereunder (subject to the execution by such firm of a
confidentiality agreement, reasonably acceptable to Owner Participant,
prohibiting disclosure of such methodology and assumptions to any third party).
The determination by such firm of accountants shall be final. Lessee will pay
the reasonable costs and expenses of such further verification by such
accountants, provided that if it results in a decrease in Basic Rent which
decreases the remaining Net Present Value of Rents by ten or more basis points
from the remaining Net Present Value of Rents as recalculated by the Owner
Participant, then the Owner Participant will pay such costs and expenses.
(e) Notwithstanding anything to the contrary in any Operative Agreement,
the amount of the payment of Basic Rent due and payable on each Payment Date
shall be at least sufficient to pay in full, as of such Payment Date (assuming
timely payment of the 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, (ii) any modification of the payment terms of the
Equipment Notes, other than as required or permitted by any Operative Agreement
(including, without limitation, as permitted upon the occurrence of a Lease
Event of Default) or (iii) the acceleration of any 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, in the manner and in the funds specified in Section 3.3, pay
to Lessor, or to whosoever shall be entitled thereto, any and all Supplemental
Rent when and as the same shall become due and owing. Lessee will also pay to
Lessor, or to whosoever shall be entitled thereto 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.
3.3 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 Lien of the Trust Indenture has been discharged, and notwithstanding
Section 3.3(a), Lessor hereby directs, and Lessee agrees, that all payments of
Rent and all other amounts payable by Lessee hereunder, other than Excluded
Payments, shall be paid directly to Mortgagee on behalf of Lessor by wire
transfer of immediately available Dollars to the account of Mortgagee specified
in Schedule 1 to the Participation Agreement, or to such other account in the
United States as Mortgagee may specify by written notice to Lessor and Lessee at
least 10 Business Days prior to the date such payment of Rent is due.
(d) Excluded Payments to any person shall be paid by wire transfer of
immediately available Dollars to the account of such 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.
LESSEE FURTHER WAIVES, DISCLAIMS, RELEASES AND RENOUNCES ANY LIABILITY, RIGHT,
CLAIM, REMEDY OR OBLIGATION WHETHER OR NOT ARISING FROM THE NEGLIGENCE (WHETHER
ACTIVE, PASSIVE OR IMPUTED) OF LESSOR, MORTGAGEE OR ANY PARTICIPANT, ARISING OUT
OF OR ATTRIBUTABLE TO THE USE, OPERATION OR PERFORMANCE OF THE AIRFRAME, ANY
ENGINE OR ANY PART.
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 Engine Manufacturer or any of their respective subcontractors or
suppliers, as the case may be, to the extent that the same may be assigned or
otherwise made available to Lessee, and Lessor agrees to exert its diligent
efforts to enforce such rights as Lessor may have with respect thereto for the
benefit of Lessee. Lessee shall pay Lessor's reasonable out-of-pocket costs and
expenses in connection with making available to Lessee the rights of Lessor
under the warranties referred to in the preceding sentence.
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.
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; 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 attributable to
the Lessor or Owner Participant, (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 possible, all warranties of
Airframe Manufacturer and Engine 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
attributable to the Lessor or Owner Participant, and without recourse or
warranty of any kind whatsoever (except as to the transfer described in clause
(1) above and as to the absence of such Lessor Liens, as aforesaid), and (b)
Lessor shall promptly deliver to Lessee or such other person, as the case may
be, a bill of sale and agreements of assignment, 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 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 180 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, at such storage facility in the 48
contiguous states of the United States as Lessee may select. Lessee shall, at
Lessor's written request, maintain insurance (if available) for the Aircraft
during such storage period, PROVIDED that Lessor shall reimburse Lessee for
Lessee's out-of-pocket cost of providing such insurance. 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 Lessee
and Lessor entering into an agreement prior to the commencement of the storage
period with the storage facility providing, among other things, that Lessee
shall pay only the parking fees for the initial storage period of up to 30 days
and that Lessor shall bear all maintenance charges and other costs incurred
relating to such storage.
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.
5.4 FAILURE TO RETURN
If Lessee shall, for any reason whatsoever, fail to return the Aircraft and
the Aircraft Documents at the time specified herein (including without
limitation as a result of an Event of Loss, or any event which with the passage
of time may result in an Event of Loss), all obligations of Lessee under this
Lease shall continue in effect with respect to the Aircraft until the Aircraft
is returned to Lessor and Lessee shall pay to Lessor 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 